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What are low-interest credit cards?

What are low-interest credit cards? It depends on what you’re looking for. Some people want a credit card that offers interest rates well below the industry average. Other people want a credit card with an introductory zero interest rate – and 0% intro APR credit cards are among some of the popular cards on the market. If you’re trying to pay off old credit debt, you might be looking for a balance transfer credit card that offers 0% intro APR on transferred balances.

If you’re thinking about applying for a low-interest credit card, you’ll want to ask yourself what kind of card you’re looking for – and how the card might help you save money on interest charges. Each type of low-interest credit card has its pros and cons, and it’s important to understand how low-interest credit cards work before you fill out any credit card applications. That way, you won’t accidentally end up paying higher interest rates than you were expecting.

Let’s dive into how to evaluate each of your options and decide which low-interest credit card is the best for you.

What are my options for a low-interest card?

If you’re looking for a low-interest credit card, you have three main options to consider – all of which can help you save money on interest charges over time.

First, you could look for a credit card that offers lower interest rates than its competitors. Currently, a credit card that offers interest rates below 16% APR, for example, is likely a good low-interest option.

Second, you could look for a card that offers an introductory zero interest rate. These 0% intro APR cards give you the opportunity to make purchases without accumulating interest charges on your balance – and the best zero-interest credit cards offer intro APR rates that last for a year or more.

Lastly, you could look for a balance transfer credit card. These cards offer temporary zero-interest rates on transferred balances and often extend the 0% intro APR offer to include new purchases as well. If you are trying to pay off old credit card debt, a balance transfer credit card with a zero-interest introductory offer is one of the best ways to pay down your credit card balances while avoiding interest charges.

What is a low-interest credit card?

A low-interest credit card offers lower interest rates than the industry average. Currently, average credit card interest rates are around 16% APR, which means that if you can find a credit card offering interest rates below 16% APR, you have a low-interest credit card on your hands.

We’ve got a list of the best low-interest credit cards to help you get started. Keep in mind that most credit cards offer interest rates in the form of a range – the Discover it® Cash Back card, for example, offers a purchase APR of between 11.99% and 22.99% – and people with better credit are more likely to be offered interest rates in the lower end of that range. This is why it’s a good idea to know your credit score before applying for a low-interest credit card.

What are low-interest cards good for?

Low-interest credit cards are good for people with good credit or excellent credit who occasionally carry a balance on their credit cards. If your credit history is strong enough for you to be offered a credit card with an interest rate below 16%, you can use that low interest rate to finance larger purchases or pay off a balance over time without being overwhelmed by interest charges.

Who shouldn’t get a low-interest card?

If you have average credit or poor credit, you might not get as much benefit out of a low-interest credit card. You’ll probably be offered interest rates at the high end of the card’s interest range if you’re approved for the card – which means that when you carry a balance, your interest charges will be higher than the industry average. That said, it is possible to contact your credit card issuer and request a lower interest rate, especially if you can prove a recent history of responsible credit use.

What are 0% intro APR cards?

Zero percent intro credit cards offer cardholders a temporary interest-free period on new charges. These cards are often called zer0-interest cards – and the best zero-interest credit cards offer introductory rates that last for at least a year. The Bank of America® Unlimited Cash Rewards credit card, for example, offers 0% intro APR on purchases for 15 billing cycles. It also offers 0% intro APR for 15 billing cycles on any balance transfers made within the first 60 days of card ownership, making the Bank of America Unlimited Cash Rewards card both a top 0% intro APR card and a top balance transfer credit card.

What’s an intro APR for credit cards? Essentially, it’s a promotional interest rate that lasts for a certain period of time. When the intro APR runs out, you’ll pay the standard interest rate on any outstanding balances. With the Bank of America Unlimited Cash Rewards card, for example, you’ll pay a variable APR of 13.99% to 23.99%.

What are 0% intro APR cards good for?

Zero percent intro APR cards are good for people who want to cover the costs of a large purchase, such as a vacation or an unexpected bill, and pay off the balance over time. As long as you pay off your balance in full before the zero-interest promotional rate expires, you won’t have to pay interest on any charges made during the promotional period.

Who shouldn’t get a 0% intro APR card?

If you aren’t sure whether you can pay off your balance before the 0% intro APR expires, you might not want to get a 0% intro APR card. Some people treat their zero-interest credit cards as free money – but if you get stuck with a high balance at the end of the zero-interest promotional period, you could end up paying a lot of interest on your charges. If you’re thinking about applying for a 0% intro APR card, make sure you have a plan to pay off any purchases you make on the card before the zero interest rate runs out.

What is a balance transfer card?

What is a balance transfer credit card? Balance transfer credit cards offer the opportunity to transfer old credit card balances onto a new card. Like 0% intro APR cards, balance transfer cards also offer an introductory zero-interest period in which you can pay off those balances without accruing interest charges.

The best balance transfer credit cards offer at least a year of 0% intro APR on balance transfers. The Wells Fargo Active Cash℠ Card, for example, offers 15 months of 0% intro APR on balance transfers made within 120 days of opening the account. The Wells Fargo Active Cash also offers 15 months of 0% intro APR on new purchases, making it a top 0% intro APR card as well – and since its standard APR is a variable 14.99% to 24.99%, it’s also a low-interest balance transfer credit card (for people with high enough credit scores to qualify for the lowest interest rates).

Be aware that balance transfer credit cards charge fees every time you transfer a balance. In most cases, you’ll pay a balance transfer fee of 3% to 5% on all balances you transfer to your card, but many people find that the cost savings associated with the 0% intro APR rate more than cancels out the transfer fees compared to the interest they were accruing on the original card.

What are balance transfer cards good for?

Balance transfer credit cards are good for paying off old debt. In fact, using a balance transfer card to consolidate and pay off debt is one of the most cost-effective debt repayment strategies out there. Once you know how to do a balance transfer, you can transfer your old balances onto your new balance transfer credit card and – with a plan and a budget in place – pay off as much of your balances as possible before the 0% intro APR runs out. In some cases, you might even be able to use a balance transfer credit card to become debt-free.

Who shouldn’t get a balance transfer card?

Like 0% intro APR credit cards, balance transfer credit cards can charge higher-than-average interest rates on any balances that remain after the promotional interest rate ends – so if you’re not sure you can pay off your transferred balances before the 0% intro APR runs out, a balance transfer card might not be the best choice for you.

That said, if you can pay off a significant chunk of your transferred balances before the promotional rate expires, a balance transfer card is still a good idea. Every dollar you pay off at 0% intro APR is a dollar that doesn’t accrue interest.

How do I choose the best low-interest card?

Start by asking yourself what kind of low-interest card is best for you. Do you want a 0% intro APR card that offers zero interest on new purchases for over a year? Are you hoping to use a balance transfer credit card to pay off old debt? Or are you simply looking for a credit card that offers interest rates below the industry average?

Choosing the best low-interest card is all about knowing what options are available and how you can use those options to save money on interest charges. You’ll want to make sure that any low-interest credit card you choose is designed for a person with your credit score – if you are working on building your credit, for example, you might want to use a balance transfer card to pay down old debt (and raise your credit score) before applying for a card that reserves its lowest interest rates for people with good or excellent credit.

Use our guide as a starting point, and remember that there are many different kinds of low-interest credit cards. If you find the right low-interest card for your financial needs, you could end up saving a lot of money.

Source: creditcards.com

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How to build business credit when you have bad personal credit

On top of having a solid business plan and steady cash flow, credit history plays a big role in how you scale and grow your business.

“Business credit is what lenders will evaluate to determine your creditworthiness,” says Rochelle Burnside, business loans expert at BestCompany. “It can determine whether you’re eligible for financing, and it demonstrates your financial responsibility to potential investors, vendors and business partners.”

Establishing business credit from scratch often means using personal credit as a jumping-off point. But what if you have poor personal credit? The following tips can help with building business credit when your personal credit history is less than perfect.

How to build business credit when you have bad personal credit

Establish your EIN
Register with Dun & Bradstreet
Apply for trade lines with your vendors
Apply for a business credit card
Consider a secured business card
Try a small working capital loan
Check your business credit reports regularly

Personal credit vs. business credit: What’s the difference?

Personal credit and business credit both measure how you manage your financial obligations but in different ways.

For example, FICO personal credit scores are calculated based on five key factors:

Payment history: 35% of your score
Credit utilization: 30% of your score
Length of credit history: 15% of your score
Credit mix: 10% of your score
New credit: 10% of your score

Business credit takes a different approach.

It focuses on factors such as time in business, number of employees, public filings and payment history.
Business credit information is primarily collected by four main reporting agencies: Dun & Bradstreet, Equifax, Experian and FICO.
Generally, payment history carries the most weight for business credit score calculations.

“Business credit scores rely even more heavily on payment history than consumer credit scores,” says Ted Rossman, senior industry analyst at CreditCards.com.

Rossman says account longevity is important, too, because in many respects, business credit scores are more straightforward than consumer scores.

“The longer you’ve been in business and the more you’ve paid your creditors on time, the better,” says Rossman.

And although there are rules about who can get personal credit reports, anyone can have access to business credit profiles.

This means potential lenders and even your customers can view a copy of your business credit history. Aside from borrowing, that’s another reason to establish good credit since customers can readily access your information.

Is business credit based on personal credit?

Even though business and personal credit are separate, business owners’ personal credit scores can still have a big impact on business lending decisions, especially when a business is just starting out, according to Rossman.

“For companies with small ownership and limited credit history, they may be asked to sign a personal guarantee for loans or financing,” says Jameson Murphy, senior sales executive at United States Equity Funding, LLC.

A personal guarantee means you agree to be personally liable for any debts your business takes on. That means if you default on a business loan or line of credit, the delinquency could show up on your personal credit history.

Your personal credit and business credit may also be intertwined if you operate your business as a sole proprietor. For financial purposes, you and the business are treated as one and the same so lenders may lean more heavily on your personal credit when applying for business loans.

How to build business credit without using personal credit

If you want to establish and build business credit without relying on personal credit, there are a few things you can do to get started.

First, you need to obtain an employer identification number (EIN) and open a business credit file with the major credit reporting agencies, says Burnside.

“An EIN is the identification number that allows you to apply for loans and business credit cards,” she says. “It’s like a Social Security number for your business.”

There’s one thing to note about getting an EIN, however. You still have to provide the IRS with your Social Security number to get an EIN. The IRS doesn’t pull your credit history, so there’s no personal credit score impact.

Once you have an EIN, you can work on applying for business credit. While many business credit cards require a Social Security number to apply, there are a few that will let you apply with just an EIN. Typically, however, these options are limited to corporate cards.

If you have a smaller business, then you’ll need to consider other ways to build business credit without relying on personal credit. Setting up vendor trade lines could be the easiest way to do that.

Vendor trade lines are essentially lines of credit you establish with your vendors or suppliers. Murphy says having trade lines in good standing can help with establishing business credit if you regularly pay on time. The key is making sure that any vendors you work with report your account history to the major business credit bureaus so that you get credit for your good payment habits.

How to build business credit with bad personal credit

Bad personal credit can make paving the way to good business credit more challenging, but it’s not impossible. Here’s what the experts recommend doing to get on theapply for a free D-U-N-S numberpoor personal credit. Just remember to ask whether your account will bepersonal credit check andworking capital loans to business owners with poor credit.business credit report may be thin if you’re just starting out with building credit, but it’s worth reviewing anyway. Specifically, you want to make sure that your business credit accounts are being reported and that there are no errors that could negatively affect your credit rating.

Bottom line

Consider what you can do to improve your personal credit profile while building business credit history. Raising your personal score could help you qualify for better rates and loan terms on business financing.

The best ways to improve personal credit are paying on time and paying down your existing debt balances, says Burnside. And when it comes to applying for new credit, be conservative since each new inquiry can drop your personal credit score a few points.

Source: creditcards.com

Irene Rogers August 16, 2021 Account Management, Business, Temporary Tent StructuresAccount management, building, Building Credit, Business, Business Credit, business loan, credit, Credit Bureaus, credit card, Credit Cards, Credit Reports, credit score, Debt, existing, Fair Credit, Financial Wize, FinancialWize, financing, Grow, how to, Loans, Main, Make, More, News, personal guarantee, savings, savings accounts, security, Small Business, Starting Out, tips, Vs., will Read more >

How to reopen a closed credit card account

Sometimes in life, you just need a do-over. That’s usually pretty easy when you’ve missed a turn on the highway or want to retake your turn at a family board game. When you’ve made a terrible first impression? Not so much.

When it comes to reopening a closed credit card, the ease of getting that do-over depends on several factors, including whether you or the issuer decided to close the card in the first place, the reason for the card’s closure and how long it’s been closed.

So, can you reopen a closed credit card? It depends.

Why are credit card accounts closed?

Both cardholders and card issuers can initiate an account closure.

“People close credit cards because the annual fee is too high and they don’t want to pay it anymore,” says Jason Steele, credit card expert at Money.com. “A lot of them close a card out of frustration. They had a negative customer experience, and they’re angry and just want to break up.”

If you did not call and request that your credit card company close your card, there are several reasons your issuer might have decided to close it.

You haven’t used your card in a while. The terms of use of most cards require that cardholders use their cards at least once within a certain period. If you’ve had a card that you haven’t used for a year or more, you card company could decide to close it.
You didn’t accept the card’s terms. If your card issuer significantly updated the terms or conditions of a credit card, it may have sent you notice and required you to opt into the revised terms. If you failed to do so, it may have closed your card.
You didn’t comply with the card’s terms. If you make repeated late payments or fail to make the minimum payment on your card, your issuer could close your card.
You’re in a debt management plan. If you enter into a debt management plan with a credit counseling agency, most card issuers will close your card.

If a credit card company allows cardholders to reopen closed accounts, it may consider it if your card was closed for the first two reasons listed above. If it closed your card because you didn’t pay it on time or have struggled with debt, they’re unlikely to allow you to reopen it.

How a closed credit card affects your credit score

A closed card can impact your credit score by increasing your credit-utilization ratio, one of five factors that credit agencies consider when determining your credit score. The credit utilization ratio makes up 30% of your credit score and represents the amount of credit you have compared to the amount that you’re using.

A closed credit card can lower the amount of available credit you have, pushing that ratio up. If you have good credit, you can typically lower your credit utilization ratio by opening a new card or requesting a higher limit on other cards in order to push back up your total available credit.

While it doesn’t impact your score, if the credit card issuer closed your card, your credit report will note that, and some lenders might consider it when deciding whether to extend you credit.

“Lender policy is not the same thing as your credit score,” says credit expert John Ulzheimer. “You can have a 780 credit score and be declined for a card because of something on your credit report that a lender finds problematic.”

Negative information will disappear from your account in seven years, and accounts closed in good standing will remain on your report for 10 years.

How to reopen a closed account

Reopening a closed account is a fairly straightforward process. Not every credit card issuer allows it, but if it does, it will typically require you to make the request within 30 days of the closure.

Simply call the credit card issuer and ask if they’ll reopen your card. Make sure you have all relevant information, including your account number and Social Security number, ready for the call.

“If the reason for the card closing was something that they didn’t find threatening, there’s a good chance they might want you back,” says Beverly Harzog, personal finance and credit card expert at U.S. News & World Report. “They may reinstate and reopen the account, or they may ask you to reapply for a new card. Either way, they’re going to do a hard inquiry on your credit report.”

A hard inquiry could take two to five points off your credit score and will remain on your report for two years, Harzog says.

“It’s not a big deal unless you’re on the bubble between very good and exceptional credit and you want the very best interest rate,” she adds.

When you shouldn’t reopen a closed account

Sometimes it’s not worth it to go through the trouble of reopening a closed account. If you have good credit and the issuer closed the card for a reason such as inactivity or failure to opt into new terms, you might instead take this as an opportunity to look for a new credit card.

That way, you can look for a card with rewards and other features that work for you, and you might even snag a new card sign-up bonus.

“If you’re getting better credit card offers elsewhere, why reopen a card where the interest rate is higher, the credit limit is lower or the overall offerings are not as good?” asks Janet Alvarez, the executive editor of personal finance website Wise Bread.

If your issuer closed your card because of missed payments or because you’ve entered a debt management plan, you might consider waiting for a bit and working on your credit before opening a new card.

“Just because your credit card issuer closed the account doesn’t mean they’ve broken up with you forever,” Ulzheimer says. “If your credit score improves or your usage patterns are different and you want to apply for a new account, you can do that.”

What to do after you’ve reopened your account

Once you’ve reopened your credit card, you should take a few steps to make sure that it doesn’t get closed again. If the issuer closed the card due to inactivity, one way to keep it active is to use it to pay for a subscription or other recurring charge. Then set the card up for autopayment to make sure you don’t forget to pay it.

As with any credit card, you’ll want to use the credit responsibly and make sure that you don’t use it to spend more than you can afford. Ideally, you’ll only charge what you’re able to pay off at the end of the month, or you’ll have a plan to pay down any longer-term debt that accrues.

It is possible to reopen some credit cards, but it will depend on several factors, including who closed the card and why. In some cases, even if it’s possible to reopen a closed card, you might want to consider opening a new one instead.

Bottom line

“Be grateful if a card issuer reopens a closed card but remember that it’s not the end of the world if one account gets closed and you can’t reopen it,” says Mike Sullivan, a spokesman at Take Charge America, an Arizona-based nonprofit that offers credit card counseling and debt management services.

If you are able to reopen a credit card, using it to pay a recurring bill (and automating your credit card payment) can ensure that it doesn’t end up closed again.

Source: creditcards.com

Irene Rogers July 20, 2021 Account Management, Temporary Tent StructuresAccount management, closing, credit, credit card, Credit Cards, credit report, credit score, Credit Scores and Reports, Debt, Debt Management, Family, Finance, Financial Wize, FinancialWize, how to, Life, Make, Money, More, News, Personal Finance, Products, security, will Read more >

American Express Pay Over Time: How it works

American Express cardholders are loyal customers. Not only do they recognize the value offered by the American Express name, cardholders enjoy tremendous perks like extended warranties, travel protections and access to presale tickets to sporting events and concerts. These card benefits can justify a pricier annual fee.

American Express strives to be competitive in the credit card marketplace and continues to look for ways to add value for their cardholders. Although American Express is widely known for its traditional charge card model – which is to pay in full when you receive a monthly statement – American Express also provides solutions for consumer and business card customers who need more flexibility, particularly as their financial needs shift during the COVID-19 pandemic.

Amex Pay Over Time: Things to know

What is Pay Over Time and how does it work?
Which American Express cards offer Pay Over Time?
How to take advantage of Pay Over Time
Understanding when interest is charged
How Pay Over Time affects your credit score
Pay Over Time vs. traditional revolving credit
Pay Over Time vs. Pay it Plan it

What is Pay Over Time and how does it work?

For cardholders who want or need a bit more flexibility when structuring payments, Pay Over Time is a feature that lets eligible American Express cardholders carry a balance on eligible purchases of $100 or more.

There are specific purchases that are not eligible for Pay Over Time. These transactions include traveler’s checks, cash advances, fees owed to American Express and gambling-related transactions like casino charges.

For those who choose the Pay Over Time feature, applicable revolving balances are subject to accrued interest. In addition to more flexible payment terms, cardholders will continue to earn rewards on all eligible purchases; it does not matter whether the Pay Over Time feature is utilized.

Pay Over Time is a feature of American Express U.S. consumer and business Green, Gold and Platinum cards, and the feature allows eligible charges to be automatically added to a balance that a cardholder can opt to revolve with interest month-to-month, until that amount reaches their Pay Over Time limit.

In short, it’s an extended payment option for cardholders who may not want to pay a balance in full.

Which American Express cards offer Pay Over Time?

The program is offered for both consumer and business Green, Gold and Platinum cards. Here’s a quick look at what the consumer cards have to offer.

American Express® Green Card*

Annual fee: $150

Rewards rate: Cardholders earn 3X points at restaurants worldwide, including takeout and food delivery and 1X points on all other eligible purchases.

American Express® Gold Card

Annual fee: $250

Rewards rate: Earn 4X points on restaurants, including takeout and delivery, and on U.S. Uber Eats purchases (learn more). Earn 4X points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X). Earn 3X points on flights booked directly with airlines or on American Express Travel. Earn 1X points on all other purchases.

The Platinum Card® from American Express

Annual fee: $695

Rewards rate: Earn 10X points on eligible purchases at restaurants worldwide and when you shop small in the U.S, on up to $25,000 in combined purchases, during the first six months of card membership. Earn 5X points on airfare booked directly with airlines or through American Express Travel. Starting January 1, 2021, earn 5X points on up to $500,000 on these purchases per calendar year. Earn 5X points on prepaid hotel bookings through American Express Travel and 1X points on all other purchases.

How to take advantage of Pay Over Time

For consumer cards, when Pay Over Time is set to “on” (cardholders can turn this feature on and off in the mobile app or via their online account), purchases $100 or more ($0 on Green) are automatically added to their Pay Over Time balance that revolves with interest month-to-month, up to their Pay Over Time limit.

For Business cardholders, Pay Over Time will be added at the start of the November billing cycle – there is nothing these users need to do to activate the feature. Pay Over Time provides business owners the option to carry a balance with interest on eligible purchases of $100 or more or to pay the balance in full.

It’s also important to note that both business and consumer cardholders will be unable to add a charge to a Pay Over Time balance if the transaction will exceed their set Pay Over Time limit. Cardholders can find their Pay Over Time limit in their app or cardholder dashboard.

Understanding when interest is charged

When using the Pay Over Time feature, cardholders use their American Express cards as they normally would. If the cardholder pays the entire balance in full at the end of the billing cycle, no interest is charged, and the card continues to function similarly to a charge card.

If you do carry a balance, however, your payments and interest charges will be dependent on your Pay Over Time terms.

Payment deadlines are outlined on your American Express dashboard, found on both the mobile app or online portal. (Note, if you need some flexibility on your monthly due date, American Express might allow you to change it.)

Your interest rate is determined by your creditworthiness. Current rates range from 15.99% to 22.99% variable.

Like a traditional credit card, Pay Over Time allows cardholders to pay just a monthly minimum and carry the rest of their balance (up to their Pay Over Time limit), the full balance or anything in between.

How Pay Over Time affects your credit score

Pay Over Time won’t affect your credit – and more particularly your credit utilization ratio – the way a traditional credit card does. Your credit utilization ratio is the amount you currently owe divided by your credit limit, but this is dependent on your card

issuer reporting your available credit limit to major credit bureaus. Since Pay Over Time isn’t technically a credit limit, it does not show up on your credit report.

Pay Over Time vs. traditional revolving credit

The Pay Over Time feature can make your charge card function more like a traditional credit. With charge cards, consumers or businesses are not able to carry a balance; your amount due on your monthly statement must be paid in full.

The difference with Pay Over Time is that it permits cardholders to finance eligible purchases beyond the month with interest.

Yet, Pay Over Time differs from a typical credit card you may have in your wallet. Notably, Pay Over Time enables you to toggle the feature on and off.

Additionally, your qualifying American Express card has no preset spending limit, while your Pay Over Time limit does resemble a traditional revolving credit limit. In effect, you can charge what you want on your American Express card and decide when and how to pay off the amount you owe. (Note, though you don’t have a hard credit limit, American Express won’t approve unlimited spending.)

Pay Over Time vs. Pay It Plan It

Beyond Pay Over Time, there are other features that American Express offers to help customers manage their finances. The Pay It Plan It feature, for instance, can be used in tandem with Pay Over Time.

Pay It Plan It helps cardholders pay off qualifying purchases over time with fixed monthly payments, for a fixed fee. No enrollment is required, although account history and credit history are evaluated. If there’s a history of missed or late payments, American Express might not grant this feature.

The “Pay it” portion of Pay It Plan It lets cardholders tap the American Express app to quickly pay for small purchase amounts, under $100, throughout the month.

”Plan it,” on the other hand, lets consumer cardholders split up qualifying large purchases of $100 or more into equal monthly payments for a fixed fee.

Bottom line

American Express offers cardholders the flexibility to decide how to pay their bill. If you are cash-strapped during a particular month, the Pay Over Time feature allows you to carry a balance on purchases.

Regardless of the flexibility, American Express offers, though, it’s important to continue your diligent payment habits, especially making minimum payments on time.

*All information about the American Express Green Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. This offer is no longer available on our site.

Source: creditcards.com

Irene Rogers July 14, 2021 Account Management, Temporary Tent StructuresAccount management, american express, Business, covid-19, credit, Credit Bureaus, credit card, credit report, Fees, Finance, Financial Wize, FinancialWize, how to, Make, Mobile App, More, pandemic, Products, Purchase, Rewards, Spending, Travel, Vs., will Read more >

How to transfer your credit limit on Discover cards

Discover has built a passionate following among its credit card customers, due largely to the cards’ valuable rewards, low fees and reputation for excellent customer service.

Some Discover card customers are so satisfied with their cards that they have more than one. When you have multiple Discover card accounts, you might encounter a situation where your credit isn’t allocated the way you need it to be. When this happens, you may be able to request a credit limit transfer.

What is a credit limit transfer?

A credit limit transfer is when a credit card issuer increases a card’s credit limit, while at the same time reducing the credit limit of another account held by the same customer, by the same amount. From the standpoint of the credit card issuer, there is no increased exposure to default, as the total amount of credit extended to the cardholder hasn’t changed.

In personal terms, imagine that you’ve lent a friend $200 to get his car fixed and another $500 to pay for a doctor’s bill. If he called you up and said that his medical expense was lower but his car repair cost more than anticipated, it might be acceptable to you, so long as he doesn’t ask for more than the $700 total that you’ve already lent him. That’s essentially what happens when a credit card issuer is asked to approve a credit limit transfer between two accounts.

A credit limit transfer should not be confused with a balance transfer. A balance transfer occurs when an actual debt is transferred from one account to another. However, a credit limit transfer, or reallocation, doesn’t involve the transfer of any part of an account’s balance. Also, balance transfers can only occur between two accounts from two different card issuers. Card issuers permit balance transfers to acquire new debt, and possibly a new customer account from a competing card issuer. Also, balance transfers usually incur a fee, while a credit line transfer does not.

Why should I transfer a credit limit to another card?

You might consider a credit limit transfer for several reasons. For example, perhaps you’re a longtime Discover card user, and you’ve recently opened a new Discover card account. If your old account had a large credit limit and your new account didn’t receive one that was nearly as large, then you could request a credit limit transfer from the old card to the new card.

This might put you in a better position to take advantage of the new card’s features and benefits. For instance, the Discover it® Cash Back card will automatically match the cash back or miles that you’ve earned in your account’s first year. If you transfer part of your credit allotment from another card, you might be able to put more of your usual spending on this card to reap the bonus rewards.

Another situation where you may want to transfer a portion of your credit limit to another card is when one card offers different bonus categories than another. For example, you may have a Discover card that offers better rewards for gas or groceries but has a lower credit limit than your other card. By transferring a portion of your credit limit to that card from another Discover card, you might be able to better maximize the opportunity to earn those rewards.

And if you decide to close one of your Discover cards, then you may wish to preserve your total credit limit by transferring as much as possible from the account you’re closing to one of the accounts that you’re keeping.

You might also want to combine credit limits in an attempt to help your credit score, but that might not necessarily be the result. Make sure you look at your options and how they’ll affect different factors, such as average age of credit accounts, before you make a move.

How do I combine Discover credit limits?

It’s easy to contact Discover to request to reallocate a portion of your credit line, but you should be aware of three rules before trying. Note that these rules aren’t specifically documented by Discover, but cardholders have widely reported having to comply with them before a credit limit transfer can be approved.

The three-month rule

Although Discover doesn’t publish this rule, numerous reports from Discover cardholders reveal they were denied a credit limit reallocation until each of their cards had been open for at least three months. If you’ve recently opened a new Discover card account, then you should wait for at least three months from the day your application was approved before contacting Discover to request your credit limits be combined.

The credit line increase rule

Rather than simply combining the credit lines from two different cards, as many card issuers will do, Discover requires that you first request a credit limit increase. Once approved for a credit limit increase on one of your cards, you can then request that a portion of the credit line from another card be transferred to that card.

For example, let’s say you have a Discover it Cash Back card with a $5,000 line of credit, and you also have a Discover it® Miles card with a $1,000 line of credit. If you’d like to move a portion of your total available credit to the Discover it Miles card, then you would first need to request a credit line increase for your Discover it Miles card. Once granted, you would then request that Discover transfer a portion of your available credit from your Discover it Cash Back card to your Discover it Miles card.

The $500 rule

Both the credit card you are transferring the credit line from and the one you are transferring the line to must have a credit limit of at least $500.

The process of requesting Discover combine credit limits

Because of the credit line increase rule mentioned above, combining credit limits between your Discover cards will require an extra step.

1. Contact Discover and request a credit line increase

Although you can request a credit line increase online or by using the Discover card mobile app, it’s important that you call its customer service line if you also want to combine credit limits. Fortunately, Discover offers 24/7, U.S.-based customer support and is widely regarded as offering excellent customer service.

2. Once approved for a credit line increase, ask to speak with the credit operations department

The Discover card’s credit operations department will be able to approve a combination of your card’s credit limits, in conjunction with the credit line increase that’s already been approved.

Bottom line

When you have multiple Discover card accounts, it’s important to manage them well. By requesting a credit line transfer, you can ensure that you have the credit you need on the card that you use the most.

Source: creditcards.com

Irene Rogers July 9, 2021 Account Management, Temporary Tent StructuresAccount management, balance transfer, Balance Transfers, car, Cash Back, closing, credit, credit card, Credit Cards, credit score, Debt, Fees, Financial Wize, FinancialWize, gas, how to, Make, Mobile App, More, News, Products, Rewards, Spending, will Read more >

How to close a Capital One account

Canceling a Capital One card is simple, but you may want to consider upgrading your card or transferring its credit limit instead

Capital One offers plenty of credit card options, from secured cards to travel cards to ones that pay you cash back on purchases. As one of the largest card issuers in the U.S., it’s possible you have at least one Capital One card in your wallet.

But what happens if that card no longer fits your needs or spending habits?

You could leave it open, but that may involve paying an annual fee for a card you no longer use. The other option is closing your Capital One credit card account.

Before you do that, it helps to know how closing an account works and what it could mean for your credit scores.

Should you close your Capital One account?

There are different reasons for wanting to close a Capital One account. For instance, you might consider it if you:

Don’t use the card for purchases that often
Want to avoid paying an annual fee
Are interested in earning a different type of rewards
Want a card with a lower APR

If you’re not using the card at all but it has an annual fee, then you may not be getting much in exchange for what you’re paying. And the same goes if you’re earning cash back when what you really need are travel miles.

Looking at your spending habits and rewards redemptions for that particular card over the past year can give you an idea of how useful it really is to you.

Other options: upgrade or downgrade your card

Before closing a Capital One account altogether, consider whether switching to a different card isn’t the better option.

For example, say you have the Capital One Savor Cash Rewards Credit Card*, which comes with a $95 annual fee. If you’re not using the card as often, you could ask to be downgraded to the Capital One SavorOne Cash Rewards Credit Card. You’ll earn a slightly lower rewards rate on dining, entertainment and other purchases. But you won’t have to contend with the annual fee.

On the other hand, upgrading your card to earn better rewards could make sense, even if it means paying an annual fee. The Capital One VentureOne Rewards Credit Card, for example, earns unlimited 1.25 miles on every purchase. But you could get unlimited 2 miles per dollar on purchases by upgrading to the Capital One Venture Rewards Credit Card and paying a $95 annual fee.

See related: How much are Capital One miles worth?

Before closing your Capital One account

If you’ve decided closing your account is the right move, check your balance first. If you have a balance, you may want to pay that off in full before you close the account. This way, you don’t have any monthly payments to worry about once the account has been shut down.

Besides that, there are a couple of other steps to take before closing a Capital One account.

Consider asking to transfer credit limit to another card

At one time, you could ask Capital One to transfer credit limits from one card to another when closing accounts. Transferring credit limits is no longer possible, however.

But there is something else you can do if you have multiple cards with Capital One. If you know for certain that you’re going to close one account, you could ask for a credit limit increase on another account.

You might consider this if you’re concerned about how closing a Capital One account might impact your credit scores.

Plot effect on your credit score

Closing any credit card account has the potential to hurt your credit score.

Part of your score is based on credit utilization, which means the amount of available credit you’re using at any given time. When you close a credit card account, that reduces your total credit limit.

If you have balances on the card you closed or any other cards, that can increase your credit utilization. The end result can mean losing credit score points.

So again, you may consider requesting a credit limit increase on a different Capital One card to balance out the loss of available credit caused by closing an account. You could also open a brand-new credit card account, though any inquiries for credit can also ding your score by a few points.

How to close a Capital One account

Closing a Capital One account is simple. If you’ve weighed the alternatives, such as upgrading or downgrading cards, and you’ve considered the credit score impacts, you’re likely ready to take the next step.

You have three options for closing your Capital One account.

Online

To close your Capital One account online, you’ll first need to log in from a desktop or laptop computer. You’ll see all of your Capital One accounts listed. Select “View Account” for the card you want to close.

Next, you’ll be taken to the main account screen. Here, you’ll see a menu option that says “I Want To…”. If you click on that, you’ll see a pop-up menu that includes multiple options for managing your account. From here, you’ll choose “Close Account.”

Capital One will ask you why you want to close the account. You can check the box that fits and then verify your contact information, including your name, address and phone number. Once you’ve reviewed all of your details you can continue with closing your account. Altogether, this process can be completed in less than two minutes.

Over the phone

If you’d rather close a Capital One account over the phone or you don’t have access to a computer to log in to your account, you can call (800) 227-4825. You’ll need to verify your identity and the account number for the card you want to close. The customer service representative may also ask your reason for wanting to close the account.

Closing your Capital One account by phone can take a little longer. That’s because the representative may try to convince you to keep the card open by offering incentives or perks or steer you toward another Capital One card instead.

By mail

If you’d rather close your account by mail, send a letter with your account number, personal information and details of your request to this address:

Capital One
Attn: General Correspondence
P.O. Box 30285
Salt Lake City, UT 84130-0287

*All information about the Capital One Savor Cash Rewards Credit Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. Capital One Savor Credit Card is no longer available through CreditCards.com.

Source: creditcards.com

Irene Rogers July 4, 2021 Account Management, Temporary Tent StructuresAccount management, Cash Back, closing, credit, credit card, Credit Cards, credit score, Entertainment, Financial Wize, FinancialWize, how to, lake, Main, Make, Managing Your Account, News, Products, Purchase, Rewards, Spending, Travel, will Read more >

Credit union cards: Weighing the pros and cons

Credit union cards might not get as much attention as popular cards from big issuers, like Chase or American Express. That doesn’t mean they’re not worth looking into. A card from a credit union can be not only an excellent option for those with lower credit scores, but also a finishing touch to a card enthusiast’s strategy.

I got a credit union card last month with good credit and some of the best credit cards already in my wallet. Now, it has potential to become one of the most valuable cards I have because of how well it matches my spending.

Read on to learn about credit union credit cards and their pros and cons and to see if this type of card could be a good choice for you.

Credit union card pros

The list of pros regarding credit union credit cards is long – see if any or all are appealing to you.

The fees and interest rates tend to be lower

Credit unions are member-owned nonprofit organizations, and the entire system works slightly differently from banks. Because of that, you may get lower interest rates as well as lower fees.

Annual fees, foreign transaction fees and late fees are also lower at a credit union versus a traditional bank. In fact, although 45% of traditional bank credit cards come with annual fees, only 10% of credit union credit cards do.

You may get great value from the card

It’s a misconception that only banks with large resources can offer generous credit card rewards and that credit unions can’t compete.

Of course, a credit union card isn’t likely to offer you premium benefits like airport lounge access or hundreds of dollars in statement credits. Still, if you like to earn cash back as much as I do, you may be surprised how much value credit union cards can provide.

Take the Affinity Cash Rewards Visa Signature® Credit Card that I have. I came across it while shopping for a credit card that would reward me for spending in bookstores (since being a bookworm can be an expensive hobby). What I got was more than just a great card for bookstores – it was the perfect finishing touch to my credit card strategy.

The Affinity Cash Rewards earns 5% back at bookstores, including Amazon.com (on up to $3,500 per month in purchases made at Amazon). Except for books, I do virtually all my shopping on Amazon. Imagine how excited I was when I got this card. This is an outrageously generous cash back rate, there’s no annual fee and no Prime membership is required.

Last year, I spent $2,168 on Amazon (I’m excluding grocery orders since I use the American Express® Gold Card for that). I also spend about $2,000 on books annually. If my spending stays the same, I’ll have earned over $200 in cash back with the Affinity Cash Rewards by my first-year card anniversary just in these two categories. But besides rewarding you for Amazon and book shopping, the card also offers 2% back at supermarkets, restaurants, gas stations and for eligible streaming and ride-sharing services, as well as 1% back on everything else. These cash back rates can put some popular rewards cards from major banks to shame.

Customer service will likely be excellent

One of the biggest advantages of credit unions is their focus on customers’ experiences.

This means you will typically receive excellent customer service and much more flexibility in terms of payments, because credit unions aim to support their customers and help them maintain financial stability.

Credit unions are local institutions that try to connect with a community, those who work for certain companies or have some specific mutual connection. As such, they focus on building trust and a brand within a community.

This, too, often translates to better, local customer service.

I was pleasantly surprised when I got my union credit card and received a call from the union’s customer service. It was a representative who had emailed me earlier letting me know she would be my point of contact in case of any questions. When she called, she asked me how my experience with the card was and whether I needed any help setting things up.

I have cards from some major issuers known for their great customer service, yet none of them were able to offer me this level of attention or a designated person I could contact.

You might find it easier to get credit

It’s usually easier for members to get credit at a credit union if their credit isn’t perfect.

This allows consumers with less-than-perfect credit an opportunity to get a quality credit card product even when more well-known cards might not be available to them.

Additionally, credit unions are more flexible with small businesses and their unique needs, such as gas cards for employees or multiple users on an account.

You may get a second chance if you get denied

Consumers with lower credit scores or even an average credit history can find it difficult to get a credit card from a bank. But if a credit union declines your application for a credit card, you can ask it to reconsider the decision.

Sometimes credit unions will grant your request and require you to enroll in financial education classes to make sure you learn to use it responsibly.

See related: How credit scores affect interest rates

Credit union cons

Most financial products come with some downsides, and credit union credit cards are no exception. Here are some things to consider before you apply for a card from a credit union.

Your other accounts are used as collateral

Perhaps one of the biggest downsides of using a credit union for a card is sometimes they may use a cross-collateralization system, which ties all your credit union accounts together.

For instance, if you have multiple loans at the same credit union and for some reason you can’t make a payment on one of them, it automatically gets secured by the other loans you have. Say someone put up a used car as collateral for a personal loan and they default on a credit card payment – that car could be repossessed to satisfy the credit card debt.

Luckily, that’s not always the case. It’s possible to get a credit union card without securing it with any collateral. Make sure to research various options and pay attention to terms to avoid getting a card on conditions you’re not comfortable with.

You must meet specific membership criteria

To get a credit card from a credit union, a customer must meet membership criteria. This can be a restriction on location, employment or a variety of membership eligibility requirements. For example, I was once rejected by a credit union in Dallas when refinancing my car loan because the union only serves U.S. citizens – no permanent residents (rude).

When you apply for a credit card at a bank, you usually don’t need more than the legal requirements, and your application depends only on your credit history and income.

On the other hand, many credit unions provide an option to become a member by paying a small fee if you don’t meet the membership criteria.

The application process may be lengthy

In my experience, getting approved by a credit union can be a bit stressful. I’ve dealt with this process three times – twice when trying to refinance my car loan and once when applying for a credit card – and each time has been a pain.

What takes five minutes when you’re applying for a card from a major issuer can take days and even weeks with a credit union. You can be asked to send your paystubs to prove your income and your utility bills to prove you live where you say you live, among other things. This slows things down considerably.

Customer service may not be available 24/7

Although a credit union may provide outstanding customer service, it might not be available 24/7.

For example, if you’re traveling and have a problem with your card, you might not be able to get in touch with the credit union’s customer service department right away.

See related: How long does it take to get a credit card?

Decision time

While there are advantages to credit union credit cards, there are some downsides, too.

Membership can be exclusive, you’re not guaranteed card approval just because you’re a member, and the application process can be stressful.

On the upside, because credit unions don’t offer credit cards for a profit, members indirectly benefit from those credit cards – when credit unions make money, they can offer better interest rates, reduced fees and even valuable rewards.

Otherwise, credit union credit cards are just like big-bank credit cards.

You can use them for purchases, balance transfers and cash advances, and you must make at least the minimum monthly payment to keep your account in good standing.

In addition, most credit unions report your account history to Experian, TransUnion and Equifax, which is an extra incentive for making your payments on time as it can help you build credit.

Source: creditcards.com

Irene Rogers June 26, 2021 Account Management, Temporary Tent StructuresAccount management, building, Building Credit, car, car loan, Cash Back, cons, credit, credit card, Credit Cards, credit score, education, employment, Expert Q&A, Fees, Financial Education, Financial Wize, FinancialWize, gas, Interest Rates, Learn, Loans, Make, Make Money, Money, More, News, Personal Loan, Popular, premium, Products, pros, refinance, Refinancing, Rewards, second, Shopping, Spending, Swiping Right, used car, versus, will Read more >

How entrepreneurs can protect themselves from credit card fraud

The gig economy has led to an explosion of entrepreneurs looking to start their own businesses. In fact, QuickBooks’ 2020 State of the Self-Employed report found 28.4% of U.S. adults identified as self-employed at one point or another during 2019.

One incredibly important aspect of running your own business is security and fraud prevention. Yet, unfortunately, many small business owners underestimate the risk of bad actors and thieves targeting their establishments – whether it be cyberattacks (43% of all data breaches include small businesses, according to a recent Verizon study), cash theft, shoplifting or credit card fraud (an estimated 27% of online sales with merchants were found to be fraudulent transactions in a 2019 American Express survey).

While large businesses typically have hefty budgets to spend on fraud prevention, as a self-employed person or the owner of a small mom-and-pop shop, you may not have a lot of resources at your disposal – especially at the tail end of a global pandemic. However, there are some steps you can take to protect your business from credit card fraud no matter its size and lower the risk of fraud overall.

Protect your point-of-sale (POS) system

“When it comes to point-of-sale fraud, what businesses are most likely to run across is card skimming,” said Jason Glassberg, cybersecurity expert and co-founder of Redmond, Washington-based Casaba Security, in a previous interview.

This could be physical, such as when a chip is inserted into the POS device by a local criminal, or it could be digital, where the POS system is infected with card number-stealing malware. There is also the ever-present threat of card skimmers and shimmers, which are devices that can capture card data from EMV chip cards.

To combat this threat, provide as much physical security to your POS system as possible, Glassberg said.

“That means locking up POS devices during closed hours so they can’t be accessed by anyone except a manager,” he said.

Also, inspect POS devices at least a couple of times a week, “looking for anything out of the ordinary such as loose housing, exposed wire, bulky fitting or anything that seems out of place on the device,” Glassberg noted.

Finally, stay up to date on any software updates to your POS system.

See related: How small businesses can safely store card details

Card-not-present (CNP) fraud occurs when someone fraudulently uses a credit card number online, over the phone or in another manner where they don’t have to show you the physical card. In fact, a study out of Javelin Strategy found that CNP fraud is 81% more likely to occur compared to POS fraud. Further, retailers could lose as much as $130 billion from CNP fraud by 2023.

One of the best things you can do as a business owner to prevent CNP fraud is to require the consumer to have the card verification value (CVV) number for their card, whether the order is placed over the phone or online, said Glassberg. This three or four-digit number can typically be found on the back of the card.

“You can also ask for the ZIP code associated with the card to weed out many of these fraudulent attempts,” Glassberg said.

Also, be on the lookout for potential “friendly fraud,” or credit card chargebacks initiated by customers looking to reverse a charge on their account for fraudulent purposes, in turn hurting the business they purchased from. In genuine circumstances, a customer can dispute a purchase if their bill was incorrect, the item is damaged, etc. For more information on what to do in these situations, consider reading the following expert business credit column on false disputes.

See related: Can a collector target my business bank account over personal credit card debt?

Get third-party help

According to Keeper Security’s 2019 SMB Cyberthreat Study, 60% of small business owners said they “do not have a cyberattack prevention plan” and 25% “don’t even know where to start with cybersecurity.”

Even if you don’t have money to hire a cybersecurity staff, you don’t have to shoulder all the risk alone. There are companies, such as NoFraud and Signifyd, that specialize in fraud detection to help online merchants identify a possible risk before the sale goes through.

Dave Hermansen, CEO of e-commerce training company Store Coach, depends on such services to give incoming orders a “pass” or “fail” grade based on advanced algorithms, order histories tied to email addresses and other fraud detection methods.

“If an order gets a ‘pass,’ any loss you incur due to fraud is covered by [the fraud detection service],” said Hermansen in a previous interview. “If it is labeled, ‘fail,’ it’s up to you whether or not you want to ship the order – you will not be covered for fraud on those orders.”

Hermansen said his firm immediately cancels and refunds any orders that are marked “fail.”

See related: Retailers will lose billions to online fraud by 2023: Could a new Amex tool help?

Prevent fraud through training

If you have employees, their habits can put your business at risk (especially as many employees have transitioned to a work-from-home environment sans an in-office security team, guaranteed VPN or in-person “phishing 101” lectures). Make sure employees are aware of threats and train them on what to do and what not to do, said Yair Levy, professor of information systems and cybersecurity at Nova Southeastern University, in a previous interview.

How to dispute fraudulent charges on a corporate credit card

Make the move to mobile

As consumers increasingly use their smartphones to shop, there’s a security benefit to small business owners choosing to upgrade their equipment to accept mobile payments.

If you can accept payments from mobile wallets like Samsung Pay, Apple Pay and Google Pay, there is no credit card to be inserted into the payment terminal, which can cut down your risk of fraud, Glassberg said.

Consider cyber insurance – and a vulnerability test

As fraudsters and scammers are constantly changing their tactics and evolving, no business is 100% safe. A cyber insurance policy could save your small business from potential bankruptcy, considering it would pay for legal fees, customer notifications and other costs incurred if you do experience a data breach.

“As an added measure, if you have the means to do so, I would also highly recommend hiring a cybersecurity firm to carry out a ‘penetration test’ of your business network and POS system to see how vulnerable you really are to an attack,” Glassberg said.

An ounce of prevention could not only protect your customers, but it could save your business as well.

See related: Is your small business protected by cyber insurance? It should be

The bottom line

With the tips provided above, you can take the steps to protect your small business from fraud of all kinds, including credit card fraud, and ensure your information (and that of your patrons) is protected.

Should you ever experience other security threats related to your business (think: if your business credit card is stolen) be sure to contact your credit card issuer immediately, place a hold on the card and file a dispute if necessary; you should be able to easily contact your issuer using the number of the back of the physical credit card.

Source: creditcards.com

Irene Rogers June 15, 2021 Account Management, Business, Temporary Tent StructuresAccount management, american express, bankruptcy, Business, Business Credit, credit, credit card, Credit Card Debt, credit card fraud, Credit Cards, Debt, Economy, Fees, Financial Wize, FinancialWize, fraud, Housing, Insurance, Legal, Regulatory, and Privacy Issues, Make, Money, More, News, pandemic, Real Estate, security, Small Business, tips, will Read more >

Residual interest: What it is and how it works

You’ve been running a credit card balance for a few months, but finally, you have enough cash on hand to zero out the statement balance.

With great relief – and not a little pride – you pay it off. Thank goodness you’re done with that debt.

But wait: did you also pay the residual interest?

What is residual interest?

Residual interest is the interest that’s accrued on the unpaid credit card balance all this time that you’ve not been paying it. It’s also called trailing interest – because it trails into the next month.

The federal Consumer Financial Protection Bureau investigated residual interest charges on credit cards in 2015 as part of its biennial credit card report to Congress.

“We recognized, based on our research, that there is some confusion about this so-called ‘ghost charge,’ said Wei Zhang, the bureau’s credit card program manager. “People wanted to know, ‘What is this? Why is it happening?’”

The bureau did not find issuers doing anything illegal; however, they did discover that many details were buried in the fine print of credit card agreements. Card owners often were unaware of or did not fully understand what happened if they failed to pay their bill in full or how interest on the balance was calculated.

Before we get into those details any further, though, let’s start by explaining some terms:

Billing cycle – That’s the time between two bills. Many billing cycles are about a month long.
Closing date – That’s the date on which the billing cycle ends. When the closing date occurs, the card will post a statement balance. That’s the amount of purchases you charged during this billing cycle.
Grace period – This is the period of time between when the billing cycle closes and your payment is due. This can be a few weeks, or even up to a month.
Due date – This is the last possible day to make your payment without penalty. After this day, interest will start to accrue on the balance.

That interest that accrues? That’s residual interest.

See related: How to lower your credit card interest rate

How does residual interest work?

Here’s an example of how residual interest comes into play:

You have a credit card with a billing cycle that closes on the 15th of every month. On March 15, your statement balance is $1,200.
Your due date on the bill is April 14th. But when the date arrives, you can only afford to pay $900 – meaning you leave a balance of $300 on the credit card.
That $300 starts accruing interest the very next day. How much interest? Depends on your particular credit card. Let’s say, for this example, your card charges an APR of 22%.
To figure out how much that will be, divide the APR by the number of days in the year. So 22 divided by 365 – 0.0602%.
Multiply this by your current $300 balance, and you get 18.06 cents. That’s the amount of residual interest you will get charged on the balance each day.
By the time the next month’s due date rolls around, 30 days later, you will owe $5.41 in residual interest.

This is where things get tricky. Maybe you decided to clean up your financial act. You’ve only charged $200 this month, and now you can afford to pay off both the new balance and the $300 from last month. Everything’s squared away, right? Nope, not so fast. You still owe that $5.41. And if you don’t notice it and neglect to pay it, it will continue to accrue interest.

Or, you do pay the entire bill by sending a check in the mail. Interest may continue to accrue on the balance between the time you mail the check and the time the bank receives it and cashes it. Remember, once you enter the land of accruing interest, there is no more grace period.

“Because it accrues after the billing period closes, [residual interest] won’t appear on your current statement – meaning that this could be a surprise amount you discover in your next statement,” said Megumi Smisson, who discusses personal finance on her podcast Ms. Money Moves and her website, Money With Megumi. “Or, worst case, you think you’ve paid off your card, don’t check your next statement to make a payment, and incur a late fee and potentially damage your credit.”

See related: What happens when you miss a credit card payment?

Do all cards charge residual interest?

Residual interest is a common credit card feature. Supposedly, there are banks that don’t charge it, though those are increasingly hard to find.

“I’m not saying it’s impossible, but … [scoring a credit card that doesn’t charge residual interest] is kind of like finding the pot of gold at the end of the rainbow with a unicorn standing next to it,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling in Washington, D.C.

There are many credit cards that offer 0% APR on new and transferred balances for a number of months. To find out how your card deals with leftover balances, look at the back of the statement. It probably won’t say “residual interest” in those words.

Scan instead for writing like “finance charges may be assessed even if we receive payment in full in the current billing cycle.” Other ways to get this information, and discover what the APR is for your card, are to look at your card’s terms and conditions, go to the card issuer’s website or call the issuer.

How to avoid residual interest

There’s no reason you should have to pay months’ worth of residual interest on your credit card for a balance that’s quickly resolved. Here’s how to make sure this isn’t a problem for you.

Pay your card in full each month. “The No. 1 rule, the best advice for avoiding residual interest altogether, is to pay off your purchases immediately,” McClary said.
First timer? See if you can get a break. There’s no harm in calling your credit card issuer and asking if you can get an extension on your payment deadline, so you can avoid late fees, finance charges and any residual interest on this one cycle. “You never know what you’ll get until you ask,” McClary said.
If that’s not possible, check your balance and pay it online. The credit card issuer should post real-time information about your leftover balance and any accruing interest.
Get confirmation from the card issuer. This is particularly important if you are paying your balance by mail, either from a paper statement or from what you see online. Interest on the balance continues to accrue until the moment the bank cashes your check. If the check is insufficient because it doesn’t include those extra few days of interest, interest will accrue on the unpaid balance. Instead, before you write the check, pick up the phone and ask the credit card issuer for the payoff balance. “That is the best, the most foolproof way to accurately know the balance that would pay off the account,” McClary said. He advises overestimating the day the payment will arrive by a day or two; the company will repay you any overpayment but will charge more interest if you fall short again.

See related: Should I pay off my credit card all at once?

Bottom line

Remember, if you’ve let a balance carry from one statement to the next, you don’t just have to pay off the balance on your statement. You may also owe residual interest that is not included in your current statement. Check your total online. Call the card issuer to double-check. You can also check your credit card agreement to find out about residual interest or minimum finance charges.

And after you’ve paid what you believe you owe, check again, to be sure.

“Don’t just anticipate ‘I’m off the hook’ next month,” Zhang said. “In many cases, you are probably not off the hook. Make sure there are not any residual balances next month.”

Source: creditcards.com

Irene Rogers June 6, 2021 Account Management, Temporary Tent StructuresAccount management, agreements, closing, credit, credit card, Credit Cards, Debt, Fees, Finance, Financial Wize, FinancialWize, Fine Print, how to, Learn, Make, Money, More, News, Personal Finance, will Read more >

I was charged for an online service I did not receive

The pandemic has hastened the online move of services as well as goods.

Healthcare, therapy sessions and education are some of the services that have migrated online, voluntarily or involuntarily, due to the pandemic. What if you paid for an online service and either didn’t receive it or are not satisfied?

Reader Wanda finds herself in such a situation. She writes, “I have a pending charge of $200 on my credit card for a video consultation with a nurse practitioner who runs a medical marijuana spa and the fee is for a prescription for a medical marijuana card plus the video visit.

“I waited for over an hour online for the video visit, which I did not receive. The person finally called me and explained the process telling me an email would be sent to me that night with a link to get my medical marijuana card. I texted her the next day saying I received nothing and she texted back and said ‘give me about an hour’ and she would contact me. As of 9:30 p.m. today, no email or text from her. Can I get a reversal of that charge?”

See related: Filing credit card disputes in the coronavirus crisis

Chargeback for services

It seems the situation involves getting a chargeback for a service that is not provided. If the chargeback involves merchandise that you didn’t receive, the situation is clearer; either you received the merchandise, or you didn’t. In case of services not received, there is more scope for ambiguity.

Chargebacks 911, a website that helps merchants deal with chargebacks, explains how a chargeback situation could come about for services that a consumer says they didn’t receive:

“The merchant failed to do something as promised. Or, the merchant’s policies and procedures weren’t clear, and there was confusion regarding what the consumer would actually receive. It’s also common that marketing causes chargebacks; unrealistic promises might be made.”

The firm advises merchants to adhere to the following procedures to avoid these situations:

Make sure that the way they describe the services is accurate. The description should provide detailed information but should also be easy to understand. Supplementary videos and images could help explain any confusing aspects.
Get consumers to sign off on the terms for providing the service and make sure they know what they will receive in return.
Provide excellent service, responding to all customer questions and grievances quickly. Give customers various ways to get in touch, such as live chat, phone and email. And check social media accounts regularly to respond to comments.

If it comes to that, Chargebacks 911 also advises merchants to issue credits promptly. If they sense that their relationship with the customer is strained and a chargeback situation could ensue, it advises them to cancel the service and issue a refund.

See related: What to do if your online order never arrives

Disputing a charge with a credit card company

It seems a service provider would be wise enough to recognize a potential chargeback situation and promptly take steps to issue a refund if that’s called for. However, that’s not always the case, and you could also take recourse to the Fair Credit Billing Act to dispute a charge with a credit card issuer if that becomes necessary.

You should put in a billing error dispute in writing with the credit card company within 60 days of receiving the bill with the charge for the service that was not provided. You could also call the company, but you should send something in writing first, the California Attorney General’s office advises. Send this letter to the company’s address for billing inquiries or errors, not to its address for payments.

The letter should provide all your details, an account of the dispute and any evidence you have about the matter. The card issuer should acknowledge receipt of your letter within 30 days. And it has 90 days to look into the matter.

Also, you should inform the credit card issuer if you are holding back on paying the disputed amount, which you can legally do while it investigates the matter without triggering a report to the credit bureaus. However, you should continue to pay the rest of your credit card bill. If the credit card company rules in your favor, it will credit you for the disputed charge and any interest associated with it.

See related: Can I get a chargeback credit on a canceled card?

What if a chargeback is not provided?

If the card issuer rules against you, it will provide you a written explanation of its findings, and you will have to pay the disputed amount and any interest charges on it.

If you disagree with the card issuer’s findings, you can get back to it within 10 days to present any other evidence you might have. You could also ask to see any input it used to reach its decision.

Another recourse is to put in a complaint with the Consumer Financial Protection Bureau. You could even sue the card issuer if you believe the investigation was not conducted fairly.

See related: What to do when your bank won’t refund fraudulent changes

Bottom line

Wanda, if you never received the services you ordered from the medical marijuana spa, after first making your best efforts to sort out the matter with the nurse practitioner, you should initiate a dispute with your card issuer, asking for a chargeback. Since this is all online, you should have a digital trail for evidence.

Good luck getting your money back!

Contact me at pthangavelu@redventures.com with your credit card-related questions.

Source: creditcards.com

Irene Rogers June 1, 2021 Account Management, Temporary Tent StructuresAccount management, california, coronavirus, credit, Credit Bureaus, credit card, Credit Cards, education, Expert Q&A, Financial Wize, FinancialWize, Fine Print, Make, Money, More, News, pandemic, Video, will Read more >