Credit News and Advice

U.S. Credit Cards with ‘Chip and PIN’ Technology

We recently received word from a reader wanting to know if any credit cards issued by U.S. Banks have the “chip and PIN” technology that is standard in Europe and other parts of the world. The reader noted that when traveling in the U.K. a few years ago, many retailers refused to accept a card that didn’t have this feature.

What is ‘chip and pin’ technology, anyway?

Chip and PIN is actually a brand name (like Visa or MasterCard), that banks in the U.K. adopted to refer to new smart payment system on credit and debit cards. The high-tech cards feature a computer chip embedded in the plastic that allows retailers to read the card by proximity rather than requiring them to physically swipe a card with a magnetic stripe. All chip and PIN cards also require a personal identification number (PIN) common to U.S. debit cards but not credit cards.

U.S. credit cards with ‘chip and PIN’ technology

Although U.S. banks have not yet adopted the chip and PIN system for domestic use, some have started to offer cards marketed towards foreign travelers. Here’s a partial list:

We recommend the

• BankAmericard Travel Rewards® Credit Card ($0 annual fee)
• U.S. Bank FlexPerks® Travel Rewards Visa Signature® Card ($0 annual fee the first year, then $49).
• Citi Thank You Card ($0 annual fee)

 

All cards offer generous travel rewards and other benefits.

Other U.S. credit cards offering chip and PIN technology with higher annual fees include:

• Citi® ThankYou Preferred Card
• Citi® Hilton HHonors™ Visa Signature® Card
• Chase Marriott Rewards Premier
• Hyatt Visa Signature
• British Airways Visa

I’ll bet we’ll start seeing some more come out in the next couple years.

How Are Credit Card Finance Charges Calculated?

Every credit card user in America is well aware of this painful fact: If you keep a balance on your cards, you’re going to be paying finance charges at the end of the month.

But do you know exactly how finance charges on your credit card are calculated?  Do credit card companies simply multiply your balance by that percentage number every month?  Luckily, it’s not that simple, otherwise we’d all be paying a heck of a lot more in finance charges!

Most credit card companies use a periodic interest rate to calculate charges.  A periodic interest rate means the Annual Percentage Rate (APR) is divided by the number of billing cycles, usually twelve, for the year.

From there, there are five common methods that credit card companies use to calculate interest:

1. Average Daily Balance.  In this method, the average of each day’s balance during the billing period is used to calculate interest.  For example, each day’s ending balance is added together and then divided by the number of days in the period and multiplied by the periodic interest rate.  This is one of the more commonly used methods for calculating interest.
2. Daily Balance.  Each day’s ending balance is multiplied by the periodic interest rate and then added together.  It’s important to note that the periodic interest rate used is likely the APR divided by the number of days in the year, rather than the number of months in the year.
3. Ending Balance.  Using this method, the ending balance is simply multiplied by the periodic interest rate.  The ending balance is all-inclusive – meaning purchases, fees, and other charges are included in the balance.
4. Beginning Balance.  This method is similar to the ending balance method, the only difference being that the beginning balance is multiplied by the periodic interest rate instead of the ending balance.
5. Adjusted Balance.  This method is by far the most desirable method for credit card users because it does not take into account purchases during the current billing cycle.  Instead, the beginning balance less any payments is used to calculate interest.

Finally, since February 22, 2010, when the Federal Reserve’s new rules for credit card companies went into effect, it is illegal for credit card companies to use double-cycle billing – meaning they can only charge you interest on the balances owed in the current billing periods, not prior billing periods.

How Does Applying For A Credit Card Affect Your Credit?

Most people worry if their credit score is high enough to even qualify for a credit card. But here’s another important question to consider: How does opening a credit card affect your credit?

When you apply for a credit card – and let’s assume you’re approved – it will affect your credit in three different ways:

• An inquiry (or credit check) was processed
• A new line of credit was opened
• Your amount owed/amount of debt changed

These three events can either help or hurt your credit score, depending on the nature of your situation.  Full Article »

Can You Get a Credit Card After Bankruptcy?

Bankruptcy sucks, but sometimes it happens to the best of people.

When getting out of bankruptcy, most people want to know: “OK, how do I start putting the pieces back together and building credit again?”

Just like getting your first credit card, it can be hard to get approved for credit when you don’t have any credit history (or, in this case, a bankruptcy).

The first thing you should know is that if you’re just getting out of bankrtupcy, you won’t be able to go out and get approved for a prime credit card (the popular ones you see TV ads for that all require very good credit). These inlclude cards offered by Chase, Citi, American Express, and others.

After bankruptcy, you will have to start with a credit card designed for people with poor credit. Often, these cards carry annual fees or require that you put a security deposit into a bank account before using the card.

Although these cards are where you will start after a bankruptcy, after six months to two years of using the cards and making on-time payments, you can apply for another credit card with better odds. Keep in mind that you may have to wait many years to get approved for the best credit cards out there. Full Article »

Getting Your First Credit Card

Since I have started writing about personal finance, a question I get asked a lot is:

“I’m 20 and want to get a credit card. What can I get approved for?”

Obtaining a credit card at an early age can be an excellent way to build a credit history that can make it easier (and less expensive) to finance a car or home later in life. Of course, getting a credit card before you understand how credit works can be disastrous.

The Right Reasons To Get a Credit Card

My first piece of advice to anybody thinking about their first credit card is to get it for the right reason. If you want a credit card because you’re thinking of all the things you could buy with the $500, $1,000, or $5,000 credit line it might give you. Stop!

The only reason you should get a credit card is to begin building your credit history. Only after you get used to making a few purchases with the card each month and paying them off immediately should you think about using the credit card regularly as a financial tool to make your monthly spending easier.

Full Article »

Citibank sends out record credit card offers

You may not think that the verge of a global recession is a time big credit card banks would be hungrily shopping for new customers, but you’d be wrong.

The Wall Street Journal reports this week that Citi credit cards mailed 346 million credit card offers to U.S. consumers in the third quarter of 2011. That’s a lot of junk mail. Full Article »

Credit Cards Slash Rewards Programs

Head’s up to credit card rewards hounds: credit card companies are cracking down on rewards programs in an effort to save money as they grapple with record delinquency and default rates. If you use a credit card for everyday spending in order to earn miles or cash rewards, pay attention to any mail you receive from your credit card company to make sure they don’t change your rewards program on you. Full Article »

Credit Card Rewards Programs That Help You Save or Repay Debt

As Americans are tightening their belts, using credit less, and seeking any way to save a few pennies or get out from under debt faster, credit card companies are listening. Banks and financial institutions are starting to roll out credit cards with rewards programs that help you save or pay down debt.

For example, Wells Fargo has a program called the “Wells Fargo Debt Pay Down Solution” in which the rewards on a Wells Fargo credit card can be automatically applied to the balance or other loan balances at the bank.

Fidelity Investments also introduced the Retirement Rewards Card, a credit card that pays rewards of 2% of all purchases and automatically deposits the rebates into a Fidelity IRA.

Although not new, Discover Card also offers a credit card aimed at customers carrying a balance that will help them get out of debt—the Discover Motiva Card features cash back and a unique perk: For every six months on-time payments, Discover will waive one month of finance charges.

Do You Need Credit Monitoring?

You’ve heard the scare tactics: Use a credit monitoring service or else fall victim to an identity theft, have your credit ruined, and lose your job. Is any of it really true? Do you actually need credit monitoring? Will credit monitoring actually protect you from ID theft? Full Article »

How to Increase Your Credit Card Credit Limit

So, you have managed one or more credit cards responsibly, have a good credit score, and think you deserve an increase to your credit card credit limit. How can you increase your credit limit? Usually, all you have to do is ask. Here’s how: Full Article »

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