Your Fixed Rate Credit Card Could Cost You More

Fixed rate credit card appear like an attractive option, especially if the credit card with fixed rate of interest is set low. There are many credit card issuers who offer fixed rate credit cards, and combined with a really low introductory rate followed by a low fixed rate, it looks like the best thing to go in for. It could be, as long as the credit card with fixed rates stays that way. But that is not what happens. Banks and credit card issuers hold the right to alter this fixed rate of interest – all they have to do is provide the fixed rate credit card holder a written notice before a specific period. Make sure that you read this clause in the card agreement that you sign with the issuer. Also don’t ignore the flyers that look like promotional material that you receive with your fixed rate credit card statement – they might be a means to let you know that your credit card with fixed rates are being increased.

If the market lending rates fluctuate, your fixed rate credit card issuer may just inform you that your fixed rate credit card is being converted into a variable rate card.

Benefits of a fixed rate credit card

What can you expect when you choose a fixed rate credit card? Your monthly repayments can be lowered, giving you better scope to reduce your debts. There are fixed rate credit cards that promise you zero annual percentage rates that appear very attractive. But no rate is fixed forever; so don’t be surprised when you realize that your annual percentage rate is higher than when you began using the card! Fixed rate credit cards are mainly beneficial because they seem stable. You feel secure when you know that your credit card with fixed rate will stay that way for a particular time. It helps you plan your personal finances according to your budget.

Used with discretion, fixed rate credit cards are convenient when your aim is to maintain good credit rating and clear off your monthly dues in full. You even get perks like cash back offers, travel discounts etc. In fact when you hold a fixed rate credit card, if you have a watchful eye on your spending habits, you ought not to worry at all about whether the fixed rate credit card interest rates will go up or not.

How the Credit CARD Act of 2009 Will Save You Money

The Credit CARD Act of 2009 is being welcomed by many consumer advocates because it establishes a number of new regulations that will protect consumers from some of the unsavory practices of the credit card industry. There are a number of different ways in which the protections provided by this new law will save consumers money, and in this article I will describe three of those ways.

First of all, one major benefit of this legislation is that it will eliminate the practice known as “universal default.” A universal default provision basically allows the card issuers to raise your interest rate if they find that you have been more than 30 days late on any of your payments to any of your creditors. A critical point here is that the card issuer can raise your interest rate even if all of your payments on that particular card have been made on time. Because they don’t understand (or don’t read) the fine print in their credit card terms and conditions, most consumers are not even aware of the existence of this provision until they are informed that their interest rate is being increased, sometimes doubling or tripling, and perhaps getting as high as 29.99 percent. To make matters worse, these consumers may find themselves stuck with this higher interest rate for years, unless they are able to pay off their entire balance or transfer it to a different card. The outlawing of universal default will undoubtedly save many consumers hundreds of dollars in interest each year.

Second, the new regulations regarding over limit fees will also save some consumers a lot of money. Presently, over limit fees are a big moneymaker for banks and credit card companies. Although consumer should know and remain aware of their credit limit, there are still a large number who sometimes make multiple credit card charges before they even realize that they have exceeded their credit limit. Presently, for each one of these charges, the card issuers can smack the consumer with an over limit fee ($39 is pretty typical). So, if a person makes five over limit transactions, he/she will find themselves facing up to $195 just in over limit fees, even though the total amount of the five purchases might have been only $50 or $60. Once the Credit CARD Act goes into effect in February 2010, consumers can no longer be charged any over limit fees unless they choose to opt in to overdraft protection. And those who opt in cannot be charged more than one over limit fee per billing cycle, even if they make multiple over limit transactions. Consumers who choose not to opt-in will simply not be allowed to exceed their credit limit, but in this writer’s opinion, that is not necessarily a bad thing.

A third way in which the new law will save consumers money is through requiring credit card issuers to change the way in which payments are applied to existing balances. Consumers will sometimes find themselves carrying credit card balances for which they are being charged different interest rates. This can occur when you make some purchases at a low promotional interest rate and other purchases at the regular interest rate. Or, part of your balance could be from taking cash advances for which you are usually charged a higher rate of interest. Currently, when you carry balances that are being charged different interest rates, the credit card companies apply your payment first to the lower interest rate balance and then to the higher interest rate balance. This means that 1) you will pay off your lower rate balances first, 2) you end up taking longer to pay off the higher interest balances, and 3) the credit card company makes more money as a result. The Credit CARD Act will require that any amount paid above the monthly minimum payment must first be applied to the highest interest rate balance. This requirement will enable consumers to pay off their higher interest balances sooner and thereby save money.

Credit Card – An Angel Or an Evil?

Nowadays, all the commercial banks and credit card companies are competing with each other to promote their cards to every “affordable” consumer. Even a college student who doesn’t have any income will also be offered a credit card. Is this card beneficial or harmful to us? The principal is simple. If you know how to use it to your advantage, it is an angel for you. However, if you don’t really understand the rules of the card game, then the card is an evil to you that will put you into deep debt.

Here are some ways to utilize credit cards to your advantage:

o Swipe the card when you travel overseas for safety purpose. It is also convenient for you as you don’t need to look for money changer to get the currency converted when you are abroad.

o Purchase items or services from shops which offer zero interest or low interest installments. Rather than paying high interest rate, you can save a lot of cost and yet you are able to purchase things you want.

o Swipe the card when you are having emergencies. For instance, you pay your medical bills through the card when you or your family members are admitted to the hospitals. When it is not convenient for you to withdraw cash from the bank, credit card is the best solution.

On the other hand, the card will turn to be the root of all evils if it is utilized in the wrong way.

Here are some incorrect ways in using the card and you get caught:

o Swipe the card to purchase luxurious items which are not necessary in life.

o Obtain cash advance from the card to pay off other debts.

o Charge the card to reach the maximum credit limit on entertainment and shopping.

It is fun when you go for shopping with credit cards but if you can’t afford to pay back the debt monthly, you would definitely be in big trouble!

An important reminder: Currently there are many banks and card companies competing in getting young people hooked on credit. Make sure you don’t become their “prey”. Be a smart credit card holder and make the card as your angel.