Manage Your Credit Card

  A lot of people don’t really know how to use their credit cards. Nevertheless, it’s very important to learn the rules of handling credit cards for success and ease of mind, encouraging sound spending habits for new and experienced credit card users alike. Here are the three basic laws for success with credit cards:

1. Buy only what you really need. It’s a matter of responsibility. Get to know all of the responsibilities in owning and using a credit card, and please make wise decisions about the items you really need to purchase versus the ones you simply wish to have. It’s important to learng to distinguish between Need to purchase and Wish to have. By using your cards responsibly we mean you should learn to recognize which things you need and which things you just want. If you use your credit card to buy things you can’t afford today, chances are that you won’t be able to afford it tomorrow, or next month, and you will quick and steadily get into debt. Then don’t live a borrowed lifestyle, be true to yourself.

Responsible purchases help to keep lower balances, which are easier to manage and pay off than those that are higher. Further, lower balances helps you maintain a good credit score, as a large part of your credit score takes into account the levels of debt you have raised. Ideally you should stay within 30% of your credit limit.

Responsibility also means remembering your credit card payment. If you cannot make your monthly payment on time, let your creditor know in advance. Call him, explain the problem and ask that any late fees be waived.

2. Rather than seeing your card as debt or emergency funds, see them as liabilities that have to be paid. It’s about focus. Don’t recur to your credit card to make everyday purchases. Goods and items such like clothing, apparel, and gas shouldn’t be purchased with a credit card. If you use your credit card as a substitute for cash you may quickly grow debt. It’s true that some transactions may require credit cards (buying an airline ticket, renting a car or shipping an overnight package), but prefer cash or debit cards when possible.

3. And pay off your cards in full every month (or at most every two months). It’s about being smart. If you pay your card balance in full each payment cycle, you can use the bank’s money interest free for about a month. If you don’t pay your bill in full each month and make further purchases you will soon find yourself clobbered by debt (specially interest payments) on a rocketing balance. This is very, very dangerous to your financial health and can heavily hurt your credit score. Similarly, keep out of the habit of making minimum-only payments. This bad habit increases the amount of time it will take to pay off your credit card debt, and also increases interest payments. In short: to pay your debts off cheaper and quicker, pay as much as you can on your balance each cycle.

Being smart also means that you should negotiate a lower interest rate whenever possible. Remember that interest rate determines how much you pay for carrying a balance on your credit card. Study your interest rate on your credit card periodically to be sure you are getting the best deal possible. And get rid of credit cards with high and hard interest rates (but take into account that closing cards that still have a balance, or cards which make up a significant part oy tour credit history may hurt your credit score.)

Finally, remember that credit cards are essentially high-interest loans. Using them to buy everyday goods (household items, apparel, food, etc) sounds silly, and that’s why credit card holders who don’t pay their bills in full each month are not being smart. Certainly, if you don’t have the money to pay for an item now, chances are you won’t have it after the credit card bill arrives. So be smart.

Select Credit Cards

In this modern world credit card is known as one of the most convenient way of payment in the transactions. This is due to the fact that using the credit card for payment is very easy and quick since we only slide the credit card on the credit card processing machines then we can make payment to anything possible. Besides credit card is the safest way of payment since we don’t need to use the real money involved in the payment transactions.

Buying Credit Card can be so much tough these days since there are so many options of credit cards to buy. If you’re a person who wants to get the fastest and easiest way to get the Best Credit Cards that match perfectly with your needs then you’re recommended to visit Comparecards.com. This website represents an online company that provides you all information related to the credit cards. When you visit this website then you can also find the tools to search the credit cards much easier and faster.

With the searching tools provided in this website then it’ll be easier for you toCompare Credit Cards so you can find the credit cards that suitable for you. Please kindly visit this website to learn more details.

About Credit Cards Work

Have you ever stood behind someone in line at the store and watched him shuffle through a stack of what must be at least 10 credit cards? Consumers with this many cards are still in the minority, but experts say that the majority of U.S. citizens have at least one credit card -- and usually two or three. It's true that credit cards have become important sources of identification -- if you want to rent a car, for example, you really need a major credit card. And used wisely, a credit card can provide convenience and allow you to make purchases with nearly a month to pay for them before finance charges kick in.

That sounds good, in theory. But in reality, many consumers are unable to take advantage of these benefits because they carry a balance on their credit card from month to month, paying finance charges that can go up to a whopping 23 percent. Many find it hard to resist using the old "plastic" for impulse purchases or buying things they really can't afford. The numbers are striking: In 1999, American consumers charged about $1.2 trillion on their general-purpose credit cards.

In this article we'll look at the credit card -- how it works both financially and technically -- and we'll offer tips on how to shop for a credit card. (Experts say this should be a project on the scale of shopping for a car loan or mortgage!) We'll also describe the different credit-card plans available, talk about your credit history and how that might affect your card options, and discuss how to avoid credit-card fraud -- both online and in the real world.

Let's start at the beginning. A credit card is a thin plastic card, usually 3-1/8 inches by 2-1/8 inches in size, that contains identification information such as a signature or picture, and authorizes the person named on it to charge purchases or services to his account -- charges for which he will be billed periodically. Today, the information on the card is read by automated teller machines (ATMs), store readers, and bank and Internet computers.

According to Encyclopedia Britannica, the use of credit cards originated in the United States during the 1920s, when individual companies, such as hotel chains and oil companies, began issuing them to customers for purchases made at those businesses. This use increased significantly after World War II.

The first universal credit card -- one that could be used at a variety of stores and businesses -- was introduced by Diners Club, Inc., in 1950. With this system, the credit-card company charged cardholders an annual fee and billed them on a monthly or yearly basis. Another major universal card -- "Don't leave home without it!" -- was established in 1958 by the American Express company.

Later came the bank credit-card system. Under this plan, the bank credits the account of the merchant as sales slips are received (this means merchants are paid quickly -- something they love!) and assembles charges to be billed to the cardholder at the end of the billing period. The cardholder, in turn, pays the bank either the entire balance or in monthly installments with interest (sometimes called carrying charges).

The first national bank plan was BankAmericard, which was started on a statewide basis in 1959 by the Bank of America in California. This system was licensed in other states starting in 1966, and was renamed Visa in 1976.

Other major bank cards followed, including MasterCard, formerly Master Charge. In order to offer expanded services, such as meals and lodging, many smaller banks that earlier offered credit cards on a local or regional basis formed relationships with large national or international banks.

History of Credit Card

The concept of using a card for purchases was described in 1887 by Edward Bellamy in his utopian novel Looking Backward. Bellamy used the term credit card eleven times in this novel.

The modern credit card was the successor of a variety of merchant credit schemes. It was first used in the 1920s, in the United States, specifically to sell fuel to a growing number ofautomobile owners. In 1938 several companies started to accept each other's cards. Western Union had begun issuing charge cards to its frequent customers in 1921. Some charge cards were printed on paper card stock, but were easily counterfeited.

The Charga-Plate, developed in 1928, was an early predecessor to the credit card and used in the U.S. from the 1930s to the late 1950s. It was a 2½ in × 1¼ in rectangle of sheet metal related toAddressograph and military dog tag systems. It was embossed with the customer's name, city and state. It held a small paper card for a signature. In recording a purchase, the plate was laid into a recess in the imprinter, with a paper "charge slip" positioned on top of it. The record of the transaction included an impression of the embossed information, made by the imprinter pressing an inked ribbon against the charge slip.[5] Charga-Plate was a trademark of Farrington Manufacturing Co. Charga-Plates were issued by large-scale merchants to their regular customers, much like department store credit cards of today. In some cases, the plates were kept in the issuing store rather than held by customers. When an authorized user made a purchase, a clerk retrieved the plate from the store's files and then processed the purchase. Charga-Plates speeded back-office bookkeeping that was done manually in paper ledgers in each store, before computers.

In 1934, American Airlines and the Air Transport Association simplified the process even more with the advent of the Air Travel Card.[6] They created a numbering scheme that identified the Issuer of card as well as the Customer account. This is the reason the modern UATP cards still start with the number 1. With an Air Travel Card passengers could "buy now, and pay later" for a ticket against their credit and receive a fifteen percent discount at any of the accepting airlines. By the 1940s, all of the major domestic airlines offered Air Travel Cards that could be used on 17 different airlines. By 1941 about half of the Airlines Revenues came through the Air Travel Card agreement. The Airlines had also started offering installment plans to lure new travelers into the air. In October 1948 the Air Travel Card become the first inter-nationally valid Charge Card within all members of the International Air Transport Association.

The concept of customers paying different merchants using the same card was expanded in 1950 by Ralph Schneider and Frank McNamara, founders of Diners Club, to consolidate multiple cards. The Diners Club, which was created partially through a merger with Dine and Sign, produced the first "general purpose" charge card, and required the entire bill to be paid with each statement. That was followed by Carte Blanche and in 1958 by American Express which created a worldwide credit card network (although these were initially charge cards that acquired credit card features after BankAmericard demonstrated the feasibility of the concept).

However, until 1958, no one had been able to create a working revolving credit financial instrument issued by a third-party bank that was generally accepted by a large number of merchants (as opposed to merchant-issued revolving cards accepted by only a few merchants). A dozen experiments by small American banks had been attempted (and had failed). In September 1958, Bank of America launched the BankAmericard in Fresno, California. BankAmericard became the first successful recognizably modern credit card (although it underwent a troubled gestation during which its creator resigned), and with its overseas affiliates, eventually evolved into the Visa system. In 1966, the ancestor of MasterCard was born when a group of banks established Master Charge to compete with BankAmericard; it received a significant boost whenCitibank merged its proprietary Everything Card (launched in 1967) into Master Charge in 1969.

Early credit cards in the U.S., of which BankAmericard was the most prominent example, were mass produced and mass mailed unsolicited to bank customers who were thought to be good credit risks. But, "They have been mailed off to unemployables, drunks, narcotics addicts and to compulsive debtors, a process President Johnson's Special Assistant Betty Furness found very like 'giving sugar to diabetics'."[7]These mass mailings were known as "drops" in banking terminology, and were outlawed in 1970 due to the financial chaos they caused, but not before 100 million credit cards had been dropped into the U.S. population. After 1970, only credit card applications could be sent unsolicited in mass mailings.

The fractured nature of the U.S. banking system under the Glass–Steagall Act meant that credit cards became an effective way for those who were traveling around the country to move their credit to places where they could not directly use their banking facilities. In 1966 Barclaycardin the UK launched the first credit card outside of the U.S.

There are now countless variations on the basic concept of revolving credit for individuals (as issued by banks and honored by a network of financial institutions), including organization-branded credit cards, corporate-user credit cards, store cards and so on.

Although credit cards reached very high adoption levels in the US, Canada and the UK in the mid twentieth century, many cultures were more cash-oriented, or developed alternative forms of cash-less payments, such as Carte bleue or the Eurocard (Germany, France, Switzerland, and others). In these places, adoption of credit cards was initially much slower. It took until the 1990s to reach anything like the percentage market-penetration levels achieved in the US, Canada, or UK. In some countries, acceptance still remains poor as the use of a credit card system depends on the banking system being perceived as reliable. Japan remains a very cash oriented society, with credit card adoption being limited to only the largest of merchants, although an alternative system based on RFIDs inside cellphones has seen some acceptance. Because of strict regulations regarding banking system overdrafts, some countries, France in particular, were much faster to develop and adopt chip-based credit cards which are now seen as major anti-fraud credit devices. Debit cards and online banking are used more widely than credit cards in some countries.

The design of the credit card itself has become a major selling point in recent years. The value of the card to the issuer is often related to the customer's usage of the card, or to the customer's financial worth. This has led to the rise of Co-Brand and Affinity cards, where the card design is related to the "affinity" (a university or professional society, for example) leading to higher card usage. In most cases a percentage of the value of the card is returned to the affinity group.

FICO's 5 factors: The components of a FICO credit score

In the land of credit scores, FICO is king. The bulk of banks in the United States use FICO scores to decide whether to offer credit to potential borrowers and at what interest rate. FICO has a major global presence, as well: According to the company'stestimonybefore a House Financial Services subcommittee, FICO scores are used in about 10 billion decisions worldwide each year.

While the inner workings of the FICO scoring system are a closely guarded secret, the company is open about the generalcomponents of a FICO credit score. Using the informfation in a borrofwer's credit report, FICO breaks that information into categories. Those five components each get different weights. "FICO scores give the most attention to how you have paid back lenders in the past and how much you are using of the credit available to you, as shown on your credit report. Those two factors contribute roughly two-thirds of a typical person's FICO score," says FICO spokesman Craig Watts. So how does FICO come up with its widely used score?

Here's a breakdown of the five elements of the FICO score:

1. Payment history: 35 percent of the total credit score is based on a borrower's payment history, making the repayment of past debt the most important factor in calculating credit scores. According to FICO, past long-term behavior is used to forecast future long-term behavior.

FICO keeps an eye on both revolving loans -- such as credit cards -- and installment loans, such as mortgages or student loans. Although the weight of each loan varies between individuals, FICO indicates that defaulting on a larger installment loan like a mortgage will damage a credit score more severely than defaulting on a smaller revolving loan. One of the best ways for borrowers to improve their credit score as a whole is by making consistent, timely payments.

2. Debt amounts: 30 percent of the total credit score is based on a borrower's total outstanding debt. Revolving lines of credit, which allow a consumer to borrow as much or as little as desired up to a limit (versus installment loans where a set amount -- say, $20,000 plus interest for a car -- is determined at the outset), are more heavily weighted. Credit cards are a type of revolving account.

Since FICO views borrowers who habitually max out credit cards -- or who get very close to their credit limits -- as people who cannot handle debt responsibly, a borrower should maintain low credit card balances. Experts recommend that the amount owed should not exceed 30 percent of the individual's credit limits. That 30 percent rule of thumb applies to each individual credit card as well as the overall level of debt.

The final components of a FICO credit score get less weight in the score's calculation. "The remaining one-third of your score is determined by how long you have managed credit, to what degree you have pursued new credit recently and the variety of credit types you have successfully handled," Watts says.

3. Length of credit history: 15 percent of the total credit score is based on the length of time each account has been open and the length of time since the account's most recent action.

As a result, it is impossible for a person who is new to credit to have a perfect credit score. A longer credit history provides more information and offers a better picture of long-term financial behavior. Therefore, to improve their credit scores, individuals without a history should begin using credit, and those with credit should maintain longstanding accounts.

4 and 5. New credit and credit mix: Each comprise 10 percent of the total credit score.

Borrowers, even those new to credit, should avoid opening too many credit lines at the same time, since such behavior could suggest they are in financial trouble and need significant access to lots of credit. FICO suggests that borrowers only take on additional credit when they must have it or when it makes sense financially.

Credit mix, meanwhile, is somewhat of a vague category, but experts say that repaying a variety of debt indicates the borrower can handle all sorts of credit. According to FICO, historical data indicates that borrowers with a good mix of revolving credit and installment loans generally represent less risk for lenders.

Knowing the various weights given to components of a FICO credit score give borrowers a better idea where to focus their attention. "So to get a good score you mostly need a credit history with no reported late payments, as well as low reported balances currently on any credit cards," Watts says.