All About Credit Card: Agustus 2009

Credit Card and Terrorism

We should be extremely concerned about the scope of the credit card fraud problem involving terrorists. There is limited or no empirical data to gauge the extent of the problem. Looking back at three specific cases, we get a snapshot of how serious the problem is.

1. Ali Al Marri was arrested in Illinois in December 2001 for having lied to FBI Agents about having contact with facilitators of the 9/11 terrorist attack. At the time of arrest, Al Marri had 36 credit card numbers and account information in his possession. A subsequent search of his computer found he had compiled over 1,000 credit card numbers and other identifying information.

2. Imam Samudra was the mastermind of the Bali bombing. Following his arrest he wrote an autobiography about his jihadist life. He wrote a chapter entitled “Hacking, Why Not.” In it, he urged fellow Muslim radicals to take holy war into cyberspace by attacking U.S. computers. Samudra described America’s computer network as being vulnerable to hacking, credit card fraud and money laundering. The chapter did not focus on specific techniques. It focused on how to find techniques on the internet and how to connect with people in chat rooms to perfect hacking and carding skills. It was a course of study for aspiring hackers and carders. Samudra discussed the process of scanning for websites vulnerable to hacking and then went on to discuss the basics of online credit card fraud and money laundering. One of the concerns posed by Samudra’s book was that it could serve as a roadmap leading terrorists to more accomplished hackers.

3. In the case of Younes Tsouli, aka Terrorist 007, and his two associates, Waseem Mughal and Tariq al-Daour, investigators in the United States (U.S.) and the U.K. determined the trio used computer viruses and stolen credit card accounts to set up a network of communication forums and web sites that hosted everything from tutorials on computer hacking and bomb making to videos of beheadings and suicide bombing attacks in Iraq. These individuals were not murderous terrorists like Samudra, but were facilitators for individuals who were, making them every bit as despicable. They raised funds through massive credit card information theft and fraud, which were used to support the communications, propaganda and recruitment for terrorists worldwide, as well as to purchase equipment for Jihadists in the field. One expert described their activities as “operating an online dating service for al-Qaeda.” The three men pled guilty to inciting terrorist murder via the internet.

The above cases are particularly troubling because of the upward trend of terrorists communicating on and using the internet as a learning tool. In both the Samudra and Terrorist 007 cases, they left their successful tradecraft on web pages and in chat rooms for aspiring terrorists to learn and grow from.

(counterblogterrorismblog.com)

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The $23,148,855,308,184,500 Credit Card Bill

What is the biggest credit card purchase in history? Here’s the answer… sort of…

Imagine opening up your monthly credit card statement to discover that you owe $23 quadrillion dollars! Well, around 13,000 cardholders of Bank of America’s prepaid cards saw exactly that - an amount that is more than the entire planet’s GDP! Of course, there was not an actual purchase of that amount, but rather a glitch which caused these accounts to reflect that amount. A New Jersey man discovered this when routinely logging on to his B of A online accounts to check his balances. He first fled to the gas station where he last bought a pack of smokes to inquire on the charge. They had no idea what it was, so only then did he call Bank of America’s customer service, where he was on hold for more than two hours before they were finally able to resolve the problem. Visa responded by saying it was a “temporary programming error” in there systems… that sure is one heck of an error! They claimed they have correct the problem and refunded the overdraft fees associated with these errors.

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Man Charged With Stealing Over 130 Million Credit Cards

Right now on the US version of the CNN homepage, the main story is about a suspect who allegedly has set the all-time record for the number of credit card numbers stolen - more than 130,000,000! Furthermore, the previous record was also allegedly set by him; stealing 40,000,000 account numbers.

Who is this suspect? Well his name is Albert Gonzalez, a 28 year-old from Miami. Fortunately, he’s already in jail awaiting trial for various hacking charges. However this latest charge lays out the numbers for the estimated number of accounts that were compromised in a different series of attacks. Gonzalez, along with his Russian cohorts, reportedly hacked the computers of major corporate retailers to get this information. Officials from the Justice Department said they have no idea exactly what the losses have been from these attacks.

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Credit Card Net Losses Continue To Improve

The numbers for July have recently been released and show continued improvement in the number of unpaid accounts. The latest figures for net loss are as follows:

American Express: 10.18% down to 8.92%
Bank of America: 13.86% to 13.81%
Capital One: 8.82% to 8.78%
Chase: 8.04% to 7.92%
Citibank: 10.51% to 10.03%
Discover: 8.75% to 8.43%

However it’s important to note that while the above numbers reflect the net loss, the number of accounts which were 30-59 days late did go up slightly for some issuers. Also these were based off figures from a Credit Suisse report. There have been other reports (such as Capital One’s regulatory filing on the 17th) which differ.

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The Biggest Four Credit Mistakes

Your credit score is an important number in your life. It is the key to loans and mortgages, so long as it is well cared for. Managing your finances to ensure a favorable credit score is not difficult. Despite this ease, there are a few big mistakes that can really hurt your credit score.

Do not, for any reason, max out your credit card. The ideal amount is only a third of the limit on any card. Using the majority of the limit on one or more of your cards, is an indication that you are living off of the card and may not be able to pay it back as easily as you have spent it. This is not an easy task, but it is essential for maintaining a good credit score.

Along the same lines, do not make a late payment. While easy to say, this is a big way to help or hurt your credit score. Late payments can cause your rates to rise and hit you with major penalties, but it brings into question your financial responsibility. Nobody is going to lend money to someone who is shown to have a bad history with making payments on time. Establish yourself as a responsible person with regards to making payments, and lenders will be more willing to lend to you.

Do not give up. Making mistakes is part of being human. Missing a payment will not ruin your score, so you should not give up, as that can really hurt your score. Even if your score is trashed, above all else seven years will erase all negative entries. Late payments may not even hurt the score if they are very isolated with no other issues appearing on the report. Being late a day is much better than a week, which is much, much better than for two months. Practicing good financial management techniques over an extended length of time will give great benefit. While items will stick around for seven years, the last two years are the most vital.

The last big mistake to make is to use a card that does not report to the credit bureaus. Reporting is not required, and many cards do not report at all. While this may seem like it would be a benefit, since any bad issues will not appear on your credit report, if your account ever goes to collections that will appear on the report. So now you have a card that seems like it would not be a factor in your score, but it is in fact the worst card to have. It will never improve your credit score since it does not report to the bureaus, but it can hurt your credit score very hard, since collections is the worst thing that can occur. Whenever you sign up for a new credit card, be sure to check that the creditor will report back to one of the three bureaus.

Practicing good finance is important to maintaining a good credit score. However there are mistakes that one should avoidin order to keep the score high.

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Reduced Credit Card Limits Could Hurt Your Credit Score

While you many not think this affects you cause your credit cards are not maxed out, there may be other repercussions. Most notably if you carry a balance and your credit limit is lowered, your credit card utilization (credit card balance/credit limit) may increase. Higher credit card utilization could then lower your credit score which could then increase your interest rate or lower your limit again. It is a vicious cycle and can be very unfair. Here are a few tips to avoid the trap.

Keep an eye on your credit cards limits. Your credit card company should notify of any impending changes. But with all the junk mail it can be easy to miss. Almost most people take their credit limit as a constant and only look at balances.

Try to lower your credit card debt. This is easier said than done but this should be a goal at all times to improve your credit.

Have several credit cards. Having a 3-6 credit cards gives you options should one of your issuers lower your limit or increase your interest rate. If you are looking for a card, these are some of the best credit cards for each credit range.

Keep your balances on any given card low. High credit card utilization on any single card can be a sign of future risk so make sure that your credit card utilization is lower than 35% on any single card.

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How A Credit Card Limit Is Determined

The two main factors in the credit approval and credit limit determination were credit score and gross annual income. Based on those two factors, my old company would determine if you were approved and what your credit limit would be.

Realistically, it was a bit more complicated than just this chart. We had dozens of these charts based age of credit and many other factors. But at the heart of the underwriting was your credit score and income.

When it comes to increasing your credit line on an existing card, the same metrics apply. In addition, credit card companies will then employ a custom score specific to that company. That custom score was called a behavior score in my credit days and it was specific to how you interacted with that specific credit card company. That is, were you ever late, do you use the card for cash advances, do you pay your account off in full, etc.

The best way to increase your credit limit was to call in and request one. At the time, we had automatic credit line increase procedures but if you think about the sample matrix, a key factor is your income. Many people don’t know this but banks rely on your self reported income. So in the automatic process, we never knew if you got a raise or new job. When you call in they will often ask if your income has change.

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The Stripe on a Credit Card

The stripe on the back of a credit card is a magnetic stripe, often called a magstripe. The magstripe is made up of tiny iron based magnetic particles in a plastic-like film. Each particle is really a tiny bar magnet about 20-millionths of an inch long.

The magstripe can be "written" because the tiny bar magnets can be magnetized in either a north or south pole direction. The magstripe on the back of the card is very similar to a piece of cassette tape.

A magstripe reader (you may have seen one hooked to someone's PC at a bazaar or fair) can understand the information on the three-track stripe. If the ATM isn't accepting your card, your problem is probably either:

A dirty or scratched magstripe
An erased magstripe (The most common causes for erased magstripes are exposure to magnets, like the small ones used to hold notes and pictures on the refrigerator, and exposure to a store's electronic article surveillance (EAS) tag demagnetizer.)

There are three tracks on the magstripe. Each track is about one-tenth of an inch wide. The ISO/IEC standard 7811, which is used by banks, specifies:

Track one is 210 bits per inch (bpi), and holds 79 6-bit plus parity bit read-only characters.
Track two is 75 bpi, and holds 40 4-bit plus parity bit characters.
Track three is 210 bpi, and holds 107 4-bit plus parity bit characters.

Your credit card typically uses only tracks one and two. Track three is a read/write track (which includes an encrypted PIN, country code, currency units and amount authorized), but its usage is not standardized among banks.

The information on track one is contained in two formats: A, which is reserved for proprietary use of the card issuer, and B, which includes the following:

Start sentinel - one character
Format code="B" - one character (alpha only)
Primary account number - up to 19 characters
Separator - one character
Country code - three characters
Name - two to 26 characters
Separator - one character
Expiration date or separator - four characters or one character
Discretionary data - enough characters to fill out maximum record length (79 characters total)
End sentinel - one character
Longitudinal redundancy check (LRC) - one character
LRC is a form of computed check character.

The format for track two, developed by the banking industry, is as follows:

Start sentinel - one character
Primary account number - up to 19 characters
Separator - one character
Country code - three characters
Expiration date or separator - four characters or one character
Discretionary data - enough characters to fill out maximum record length (40 characters total)
LRC - one character

There are three basic methods for determining whether your credit card will pay for what you're charging:

Merchants with few transactions each month do voice authentication using a touch-tone phone.
Electronic data capture (EDC) magstripe-card swipe terminals are becoming more common -- so is swiping your own card at the checkout.
Virtual terminals on the Internet

This is how it works: After you or the cashier swipes your credit card through a reader, the EDC software at the point-of-sale (POS) terminal dials a stored telephone number (using a modem) to call an acquirer. An acquirer is an organization that collects credit-authentication requests from merchants and provides the merchants with a payment guarantee.

When the acquirer company gets the credit-card authentication request, it checks the transaction for validity and the record on the magstripe for:

Merchant ID
Valid card number
Expiration date
Credit-card limit
Card usage

Single dial-up transactions are processed at 1,200 to 2,400 bits per second (bps), while direct internet attachment uses much higher speeds via this protocol. In this system, the cardholder enters a personal identification number (PIN) using a keypad.

The PIN is not on the card -- it is encrypted (hidden in code) in a database. (For example, before you get cash from an ATM, the ATM encrypts the PIN and sends it to the database to see if there is a match.) The PIN can be either in the bank's computers in an encrypted form (as a cipher) or encrypted on the card itself. The transformation used in this type of cryptography is called one-way. This means that it's easy to compute a cipher given the bank's key and the customer's PIN, but not computationally feasible to obtain the plain-text PIN from the cipher, even if the key is known. This feature was designed to protect the cardholder from being impersonated by someone who has access to the bank's computer files.

Likewise, the communications between the ATM and the bank's central computer are encrypted to prevent would-be thieves from tapping into the phone lines, recording the signals sent to the ATM to authorize the dispensing of cash and then feeding the same signals to the ATM to trick it into unauthorized dispensing of cash.

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What Credit Card Numbers Mean

Although phone companies, gas companies and department stores have their own numbering systems, ANSI Standard X4.13-1983 is the system used by most national credit-card systems.

Here are what some of the numbers stand for:

The first digit in your credit-card number signifies the system:
- 3 - travel/entertainment cards (such as American Express and Diners Club)
- 4 - Visa
- 5 - MasterCard
- 6 - Discover Card
The structure of the card number varies by system. For example, American Express card numbers start with 37; Carte Blanche and Diners Club with 38.
- American Express - Digits three and four are type and currency, digits five through 11 are the account number, digits 12 through 14 are the card number within the account and digit 15 is a check digit.
- Visa - Digits two through six are the bank number, digits seven through 12 or seven through 15 are the account number and digit 13 or 16 is a check digit.
- MasterCard - Digits two and three, two through four, two through five or two through six are the bank number (depending on whether digit two is a 1, 2, 3 or other). The digits after the bank number up through digit 15 are the account number, and digit 16 is a check digit.

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How to Avoid Credit Card Finance Charges

A finance charge is the fee you pay for carrying a balance on your credit card. Finance charges increase the cost you pay for having a credit card. Avoiding finance charges is one way to lower the cost of having a credit card.

How to Avoid a Finance Charge

When you make a purchase on your credit card, you have a grace period. If you pay your balance in full during the grace period, you won't have any finance charges on your balance. Your grace period is typically listed on the front or back of your billing statement. Your statement may even include a disclosure stating the date by which your payment must be received to avoid finance charges. If you leave the balance on the credit card beyond the grace period, you'll see finance charges on your next billing statement.

Finance Charges You Can't Avoid

If you had a balance at the beginning of the billing cycle, you may not be able avoid a finance charge. Many credit card issuers only give a grace period when your previous balance was paid in full.

You may not be able to avoid finance charges on all types of balances. For example, balance transfers and cash advances don't have a grace period, so finance charges start accruing as soon as the balance hits your card. When it comes to these types of balances, the best way to avoid a finance charge is to stay away from balance transfers and cash advances completely. The exception is when your credit card has a 0% interest rate promotion. You can leave a balance on the credit card and still avoid a finance charge as long as the promotion is in effect. Pay your balance in full before the promotion ends to avoid a finance charge when the 0% interest rate offer expires.

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Credit Card Companies Don't Want Balance Transfer

The first stage of the end of balance transfers began with the elimination of no fee balance transfers and the substantial increases in balance transfer fees. A year ago, the average fee was 3% up to a maximum of $75. Today, many companies are charging as much as 5% and there are no maximum fees. This has, for example, increased the cost of doing a $10,000 balance transfer with some credit card companies from $75 to $500! That’s about a 700% balance transfer fee increase.

Now, even with higher fees, balance transfers still offer consumers substantial saving options, especially when 0% interest rates lasted one full year. Unfortunately, most credit card companies have eliminated 0% rates lasting more than 6 months.

Despite increased fees and shortened 0% rate periods,balance transfersare still a great deal for many consumers. Sure, there where hundreds of extra dollars to be saved by getting a card with a 0% APR for a full year. But for many customers whose rates have been raised to the high teens and mid to high twenties, transferring balances still provides many benefits, particularly lower long term interest rates.

The latest move by credit card companies serves to underscore how 0% balance transfers still save consumers money. What is this move? Some credit card companies no longer want to be advertised in balance transfer categories-let alone balance transfer websites such as Smart Balance Transfers. This effectively limits consumer options and removes the idea of balance transfers from consumers who might not know about them.

Simply put, credit card companies do not want your business, especially if you are not generating new charge fees. And despite massive balance transfer fee increases, credit card companies just don’t want to offer consumers a good deal. For the moment, the balance transfer situation is difficult. And, as it has all year long, it could get worse. So, once again, I encourage anyone who could save money with a balance transfer-and that is most people-to get a new balance transfer credit card while issuing banks are still providing these lifelines.

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Credit Card Balance Transfer Reward

A growing number of credit card holders are taking advantage of the many balance transfer credit card offers available as a way of getting interest-free or low interest funds. Transferring an outstanding balance to a credit card that offers an introductory 0% APR can be an effective way for cardholders to manage their debt. Balance transfer offers are a method used by companies to encourage new business from cardholders. An attentive cardholder can keep track of these offers and transfer balances without incurring high interest charges. These credit cards listed below have an introductory 0% interest rate on balance transfers ranging from three to 18 months.

There may be a fee to transfer the balance even if no interest is charged and cardholders should be aware that when the introductory offer terminates, interest rates will apply, often without warning. Cardholders should be aware of regular charges, including annual fees and also be aware that if interest rates are applied after an introductory period they may be above average. It is also worth noting that applying for a lot of credit cards frequently may be viewed as a credit risk.

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Credit Card Balance Transfer: Tips, Trick and Trap

For those who are carrying a balance on their cards and who are interested in how to pay off credit card debtmore efficiently, one popular strategy is to find ways to lower your interest rates on your existing balance.

frugality, discipline and budgeting are ways to get rid of debt and as the means to debt elimination. But I haven’t much focused on the use of credit cards themselves as a tool to help you get out of the credit card debt you already have. It’s kind of like fighting fire with fire, I suppose! The fact is, you can get “cheaper debt” or retire your debt much faster simply by getting a better interest rate on it. Shifting your debt to cards with lower rates is certainly one way to do it.

Unfortunately, with changes in the credit card industry of late, some things have gotten tougher in the land of balance transfer credit cards! Let’s discuss a few of those issues here.

10 Balance Transfer Credit Card Tips, Facts and Traps

1. Compare credit card offers.
There are still some companies out there with balance transfer deals worth checking out. Make sure you review their terms to pick the ones most suitable for you.

2. Realize the limits of balance transfer deals.
I remember the days when balance transfer offers would overflow my mailbox. These days, I see nary a piece of mail from credit card companies — they’re fewer and farther between. When credit was flowing so freely not too long ago, lifetime balance transfer cards were the rage, which are cards that provide a low interest rate upon transfer. The low rate remains in effect throughout the life of the balance. Unfortunately, this sweet deal became the downfall of companies like Advanta, which were forced to close credit card operations due to the cost of maintaining these card programs. Needless to say, balance transfer credit cards are now available only with more restrictive terms: 0% for a limited time (6 to 12 months), a balance transfer fee with no ceilings, higher rates when the promotional period is over.

3. Know how balance transfers work.
Balance transfer cards work as follows: they have a promotional period during which you’ll get a 0% or very low rate for a certain number of months, but once that period is over, rates are adjusted to much higher levels (perhaps to undesirable levels). Not only that, to do a transfer, you may have to pay a certain fee (typically 3%) for the privilege of owning such a card. If you believe you can pay off your balance quickly (within the limits provided by the program) or if you’re certain you’ll be paying less in charges over time by using your new card, then doing the switch will be worth it. Check this balance transfer card calculator to see how much you can save with a balance transfer card!

Warning: Although you may think you will save more money over time by switching to a new card, note that the terms and rules imposed by credit card companies are never permanent and may be changed at any time.

4. Be careful about leveraging balance transfer cards.
Credit card arbitrage is the practice of borrowing money from your credit card and depositing the borrowed funds in some vehicle that returns you higher interest than you need to pay for maintaining your loan. It was all the rage when 0% balance transfer credit card offers were a dime a dozen. There are people who rake in good money using this strategy, but I won’t be joining this game anytime soon. This may only be worth doing if:

You use cards with high enough credit limits to allow you the volume to generate returns that make the hassle of doing this worthwhile.
The earnings you get from this scheme are far beyond the costs incurred (from the card program itself and from the potential effect on your credit score).
You’re a very organized and disciplined person who’s able to track and manage the funds involved. And you actually enjoy doing this.

5. Ask the right questions before signing up.
Get some points of comparison. Size up your options by asking some questions before you apply for a card. At least, find out the basics: how long is the promotional period for? What kind of fees will you incur for late or missed payments? How is your credit card payment applied against your debt?

6. Weigh the effects of doing a transfer.
I will reiterate here that before you switch your balance onto any card, make sure you know the costs and risks of doing so. For instance, aside from the pesky balance transfer fee you’ll pay, there’s also the credit card pull that can affect your credit score whenever you apply for a new card. If you’re going to be in the market for a mortgage or some other big loan sometime soon, it’s best not to risk changes to your credit standing within a few months to a year of this big loan application.

7. Know when to use your balance transfer card.
Use your card wisely! Know how your payments will be applied against your debt; card companies will usually apply your monthly payment towards recent purchases first, then towards your balance transfer fee and finally to your actual transferred balance. So the advice? Use separate cards for spending on new purchases and for your balance transfer to ensure your payments are applied optimally. I’d also steer away from using the balance transfer card so liberally: for instance, avoid expensive cash advances because of the high fees and rates involved!

8. Close out your old cards with care.
Once you’ve switched your balance to a new card, you may debate the possibility of closing your old card accounts. I personally prefer keeping as few accounts as I can get away with because I don’t like financial clutter. But there are caveats to this; I’d tread carefully so that I don’t accidentally harm my credit score in the process.

9. Be aware of card requirements you need to uphold.
Don’t assume that just because you don’t buy anything using your new balance transfer card doesn’t mean you’re off the hook with monthly payments. If you’ve got a balance, you’ll be required to pay a minimum each month towards your debt. Making the wrong assumptions about your program’s requirements can cost you extra in penalties, so read the terms carefully.

10. Look for alternatives if you aren’t approved!
You may decide to apply for a new balance transfer credit card, but with tighter credit all around, don’t be surprised if your application is rejected. If this happens to you, you can always do the next best thing: if you’ve got several credit cards, transfer as much of your balance from high interest rate cards to your existing cards with relatively lower interest. Again, check if this is worth doing (based on cost). Just be careful that you don’t go over your credit limit for any card while you’re performing the transfers.

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What is Credit Card Balance Transfer?

In an effort to lure consumers to their credit card, many companies offer free balance transfers from your old credit card. Once the money is safely owed to the new company, they will often provide a grace period where they charge far less on the transferred balance. Finding two, one, or even zero percent interest is possible. Oftentimes this introductory rate lasts for around six months to a year after the balance transfer takes place.

For a savvy consumer, this can be an excellent method of reducing credit card debt. It leaves the person free to pay down the balance on a credit card without incurring interest charges. Using this strategy, a person could potentially open a new account that offers a balance transfer when the old one expires. Then transfer all of the balance to the new card to begin a new grace period of low or non-existent finance charges. If you plan to do a balance transfer, be sure to close your old account.

Making a balance transfer work for you is an excellent practice, but diligence is required. Sometimes there is fine print attached with hidden charges. Some banks may charge a transfer fee that can be a percentage of the balance transferred. Be sure that there is a cap on the amount, like fifty or seventy-five dollars, or else a balance transfer in the thousands may end up costing a couple hundred dollars. Also, be sure the bank doesn't charge a high annual fee, or joining fee. The credit card companies are already getting your business, so don't let them take the upper hand in a balance transfer.

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Common Credit Card Fees

Credit cards aren't free. find out some of the most commonly charged credit card fees and when you might get charged. since different types of credit cards charge different kinds of fees, it's a good idea to know when your credit card might charge you.

ANNUAL FEE
What is it: a yearly fee charged for the convience of having the credit card
Which cards have it: mostly secured cards, charge cards, and subprime credit cards
How much is it: varies, usually from $25 to $300/year
How often is it charged: once a year
How to avoid it: ask your creditor to waive the fee. Some credit cards automatically waive the fee if you make a certain amount of purchases in a year.

APPLICATION FEE
What is it: A fee charged when you make an application for a credit card
Which cards have it: All credit cards can have it, mostly secured credit cards
How much: varies by credit card, $10 - $50 per application
How often is it charged: once each time you make a credit card application
How to avoid it: ask to have it waived or apply for a card without an application fee

CASH ADVANCE FEE
What is it: making a cash advance
Which cards have it: cards that allow you to withdraw a cash advance
How much: usually 1-3% of the advance per cash advance transaction
How often is it charged: once each time you make a cash advance
How to avoid it: use a card that doesn't charge fees for cash advances

BALANCE TRANSFER FEE
What is it: making a balance transfer
Which cards have it: cards that allow balance transfers
How much: usually 1-3% of the amount transferred per transfer
How often is it charged: once per balance transfer
How to avoid it: use a card that doesn't charge balance transfer fees

FINANCE CHARGE
What is it: a monthly charge for the the convenience of carrying a credit card balance beyond the grace period
Which cards have it: all cards except those with zero percent interest rates
How much: depends on your card's APR, balance, and method of calculating finance charge How often is it charged: once per billing cycle
How to avoid it: pay your balance in full before the grace period expires

LATE FEE
What is it: a charge for making less than the minimum payment or after the payment due date or both
Which cards have it: all cards
How much: $15 - $39 each billing cycle you miss a payment or pay less than the minimum
How often is it charged: once each billing cycle you are late
How to avoid it: pay your bills on time or call your creditor ahead of time to make payment arrangements

OVER-THE-LIMIT FEE
What is it: having a balance above your credit limit
Which cards have it: all cards with a credit limit
How much: $15 - $39 each billing cycle you are over the limit
How often is it charged: once each billing cycle you are over your credit limit
How to avoid it: Keep your credit card balance below the credit limit

RETURN CHECK FEE
What is it: having a payment check returned from your bank
Which cards have it: all cards
How much: varies, ~$38
How often is it charged: once each time your check is returned by the bank
How to avoid it: make sure you have funds available in your account when you write a check for payment

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Types of Credit Card

Since each consumer's financial needs are different, it makes sense that there are different types of credit cards. Before you apply for a credit card, become familiar with the various kinds of credit cards to make sure you're choosing the best credit card for you.

STANDARD CREDIT CARD
The most common type of credit card allows you to have a revolving balance up to a certai. Credit is used up when you make a purchase and made available again once you've made a payment. A finance charge is applied to outstanding balances at the end of each month. Credit cards have a minimum payment that must be paid by a certain due date to avoid late-payment penalties.

PREMIUM CREDIT CARD

These cards offer incentives and benefits beyond that of a regular credit card. Examples of premium credit cards are Gold and Platinum cards that offer cash back, reward points, travel upgrades, and other rewards to cardholders. Premium cards can have higher fees and usually have minimum income and credit score requirements.

Both standard credit cards and premium credit cards have specific types of credit cards. Student credit cards, zero percent interest cards, and travel cards are just a few types available.

Charge Cards

Charge cards do not have a credit limit. The balance on a charge card must be paid in full at the end of each month. Charge cards typically do not have a finance charge or minimum payment since the balance is to be paid in full. Late payments are subject to a fee, charge restrictions, or card cancellation depending on your card agreement.

LIMITED PURPOSE CARDS Limited purpose credit cards can only be used at specific locations. Limited purpose cards are used like credit cards with a minimum payment and finance charge. Store credit cards and gas credit cards are examples of limited purpose credit cards.

SECURED CREDIT CARDS
Secured credit cards are an option for those without a credit history or those with blemished credit. Secured cards require a security deposit to be placed on the card. The credit limit on a secured credit card is equal to the amount of the deposit made. Secured credit cards have revolving balances depending on the purchases and payments made.

Prepaid Credit Cards

Prepaid credit cards require the cardholder to load money onto the card before the card can be used. Purchases are withdrawn from the card's balance. The credit limit does not renew until more money is loaded onto the card. Prepaid cards do not have finance charges or minimum payments since the balance is withdrawn from the deposit. Prepaid cards are similar to debit cards, but are not tied to a checking account.

Business Credit Cards

Business credit cards are designed specifically for business use. They provide business owners with an easy method of keeping business and personal transactions separate. There are standard business credit and charge cards available.

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How To Choose Credit Card

Before you choose a credit card, get the answers to a few key questions. The answers to most of these questions can be found in the disclosure included with the credit card application.

What kind of card is it?

There are many different types of credit cards to choose from. Understand what kind of card you’re applying for before filling out the application. This will help you make sure you’re applying for the right card.

How are you going to use the credit card?

Do you plan to pay your balance in full each month? If so, a charge card might be the best option. Will you be using your card for balance transfer? You should look for a card with a low interest rate on balance transfers. Do you plan to carry a balance from one month to the next? A credit card with a low interest rate is ideal.

What’s the annual percentage rate?

The annual percentage rate, or APR, is the percentage applied to balances that you carry beyond the grace period. The higher the APR, the higher your finance charge will be when you have a revolving balance. Most credit cards have a different APR for purchases, balance transfers, and cash advances. Make sure you know the APR for each.

How long is the grace period?

The grace period is the amount of time you have to pay your balance in full before a finance charge is added. The period is usually expressed in days from the billing date, i.e. “28 days from the billing date.” Longer grace periods are better because they give you more time to pay your bill without incurring a cost for the convenience of using credit. If you already have a balance on the credit card, new purchases may not have a grace period.

What are the fees?

You should know the amount of any fees and the circumstances under which the fees are applied. The most common types of fees include: annual fee, Late fee, and over-the-limit fee. You may also be assessed fees for paying your account over the phone, requesting additional copies of your statement, or for having your check returned.

How is the finance charge calculated?

The credit card company’s method of calculating the finance charge has an impact on the amount of the charge. Some methods consider only the current month’s balance while others consider the current and previous months’ balances. New purchases may or may not be included in the calculation. Common methods of calculating your finance charge include the average daily balance and double billing cycle method. Of these two, the average daily balance method is the least expensive.

What is the credit limit?

The credit limit influences your purchasing power. If you’re new to credit, it’s wise to start out with a low credit limit to become familiar with responsible credit card habits. Some financial situations allow a higher credit limit. Be wary of no-limit credit cards because they can sometimes look maxed out on your credit report. This can have a negative effect on your credit score.

What are the rewards?

Some credit cards offer rewards for using your credit card. Make sure you fully understand the

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How Does Credit Card Work?

when you swipe your card through a card reader, it reads the data on the magnetic stripe and adds information that identifies the merchant and the dollar value of the purchase. This electronic message automatically goes via telephone line to a computer maintained by the merchant’s acquirer, also a member of the Visa association. That computer reads the message and determines that you used a Visa card. It calls up Visa’s computer, which checks with Citibank’s computer to verify that you have a credit balance sufficient to cover the purchase.

If you have enough credit, the Citibank computer will send back a message to the Visa computer authorizing the transaction. Visa relays the message back to the terminal at the store. The entire process takes just seconds, and finishes by printing out the credit charge receipt that you must sign. Since the transaction is captured and stored electronically, the receipt is used only to settle disputes that might arise for example due to a stolen card with a forged signature,

The merchant submits a request for payment to its acquirer, which in turn sends it to Visa’s computer. The Visa computer passes on the request to Citibank’s computer, which posts the transaction to your account with Citibank. Visa’s computer consolidates this transaction with all other Visa transactions that day and settles the accounts among banks.

The merchant receives about 2 percent less than the amount you paid for the TV. That 2 percent is called the merchant discount, and is paid to the acquirer. The acquirer keeps a portion for his services, and pays about 1.4 percent of the purchase amount to the issuer, in this case Citibank. That 1.4 percent is called the interchange fee which is set by Visa. American Express does not have an interchange fee because it is both the issuer and acquirer, and keeps the entire merchant discount.

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Do We Need Credit Card?

Definitely, if we know how to manage it.

Building a good credit history is important if we want to get a job, buy a house, buy a car, get a good insurance rate, among other things. A good credit score doesn't just happen. Using credit wisely is the only way to raise your credit score. we need to have CURRENT positive credit history to maintain a high credit score.
Credit cards can be used as a tool to change the payment, so we do not need to bring a lot of cash, which can risk missing or fall on the road. If we use it with caution, in fact a credit card can be useful because if we get a double salary, as a new credit card charges paid in the following month.
One of the credit card facilities is one bill, means we can ask the Bank to the credit card issuer to pay bills all at once on account of: electricity, phonebill, PAM bills, internet bills and other bills with the issue of the company charges. Thus, every month, we won't be busy to pay some institutions, because the payment can be made via credit card at a time, a direct debit conducted each month.

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History of Credit Card

Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange - the forerunner of banknotes - was established in the 14th century. Debts were settled by one-third cash and two-thirds bill of exchange. Paper money followed only in the 17th century.

The first advertisement for credit was placed in 1730 by Christopher Thornton, who offered furniture that could be paid off weekly.

From the 18th century until the early part of the 20th, tallymen sold clothes in return for small weekly payments. They were called "tallymen" because they kept a record or tally of what people had bought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. In the 1920s, a shopper's plate - a "buy now, pay later" system - was introduced in the USA. It could only be used in the shops which issued it.

In 1950, Diners Club and American Express launched their charge cards in the USA, the first "plastic money". In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.

The first use of magnetic stripes on cards was in the early 1960's, when the London Transit Authority installed a magnetic stripe system. San Francisco Bay Area Rapid Transit installed a paper based ticket the same size as the credit cards in the late 1960's.

The word credit comes from Latin, meaning "trust". Ironically. Almost half of all credit card disputes are about internet transactions.

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