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reliable information on credit cards - online investing - personal loans - owning and operating your own home business. indepth information from professionals in their field. dont forget to check out our links to the best sources on the internet, these days information and research is critical to making the best educated decision to suit your needs.

Sunday, August 13, 2006

What You Need To Know About Getting Your First Credit Card



In spite of a lot of people owning their own credit cards nowadays, there�s still a significant majority who haven�t joined the bandwagon of having a credit card as a precaution to ending up with debt that will haunt them for the rest of their lives. However, the allure of having a credit card is sometimes too hard to resist which is why more and more people are now contemplating on how to get a credit card of their own � but they still need a lot of help when it comes to choosing the right one.

Here�s some easy tips on what to prioritize when it comes to choosing your first credit card:

* When it comes to trying to establish a credit history, there are actually a lot of banks out there that have made it their specialty to extend VISA or even Master Card credit cards even to those who are still greenhorns when it comes to owning a credit card. However, don�t go �applying crazy� as each application will actually reflect on your credit reports so if, unfortunately, you end up getting rejected - lots of times, it�ll make you look pretty bad in the eyes of creditors as you may be deemed desperate.

* If you failed in that kind of application, you can still pursue two other possible approaches. One is to try your hand with credit cards from department stores or the ones from oil companies - gas cards as most people call them. These pseudo credit cards will actually help you get some credit history and are much easier to obtain as compared with credit bigwigs like VISA or Master Card. These will help you become more qualified for a real credit card, still, don�t get too excited and start pursuing multiple applications at one time, even if you already got the thumbs up from one company, still wait a little while before once again applying for a new card.

* Once you�ve been given a bank issued credit card through the proper management and handling of your department store or gas company issued cards, you must prove to your new creditors that you really are worthy of owning a credit card. Don�t start to shop �till you drop because even though credit card companies will make more money out of your debts, this will still leave room for them to question your ability as well as maturity to really manage a credit card well. Always make sure that you pay your credit card charges on time and if you can, don�t just pay off the interest as this may accumulate over the years, try to actually pay off the entire thing so that you�ll have a really good record with your company, prompting them to possibly giving you more credit lines, benefits or special offers.

* Assess your �credit history� after a year of getting your bank issued credit card, a good and well managed credit card history actually entitles you to the possibility of getting another credit card, however, if there�s really no need for a new one or if you�ve mismanaged you first one, don�t even think of applying for a second credit card line as you may end up acquiring more and more debt.

-->by: Stewart Smith

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Credit Card Traps, And How To Avoid Them



"0% interest* for the first six months, no annual fees**
and a low fixed*** rate of only 8.9%****!"

* Unless you count the deferred interest we will charge you
if you don't pay off the full balance transfer amount when
the promotional period ends.

** Except the ones we charge for "late payments****", going
over your balance, cash advances, balance transfers,
membership in "rewards" programs, etc., etc., etc.

*** Fixed for the first month, but after we may change it
without notice for: late payments, going over your balance,
changes in the prime rate, or just cause we want more of
your money.

**** Rate depends on your credit score. (Which we already
checked and intend to charge you 19.8% or we wouldn't bother
sending you this great***** offer.)

***** A payment may be late if we just don't get around to
processing it in time no matter when you actually mailed it
to us.

****** May not be great in all states.

Yes, folks, "the devil is in the details" and the truth is
in the fine print.

While this is obviously an exaggerated and fictitious
example I have seen most of these "weasel" clauses in the
100s of credit card offers I receive each year.

Some of these tricks and traps are practiced by local and
national merchants with their "store credit cards" and
"discount cards".

I have seen stores and even car dealerships make "no
interest for a year" type announcements and advertisements.
But when you actually read the contract (and who does that -
they count on you to not read the whole thing and you
probably won't understand it without your attorney) you may
find that instead of the regular payments you would expect
to start at the end of the no interest period, you are
required to pay the full purchase price.

If you want to make installment payments, you will be
required to pay the payment plus the interest (look for the
rate in the fine print) and you may also be required to pay
the interest that accrued during your "interest free"
period. Gotcha!

Or how about the "no annual fees" bit. Look out for the
contract to say "no annual fees FOR THE FIRST YEAR". Or
first two years or that a "membership" fee is required. How
that differs from an "annual fee" is beyond me.

Also watch out for the "no annual fees" for the use of the
card but "membership fee required" to participate the in
frequent flyer miles or cash back points program (which was
probably why you chose that card to begin with). Gotcha!

And how about the "fixed" rate? Read the fine print, it
will actually say "subject to change without notice". Is it
just me or do I misunderstand the meaning of the word
"fixed"?

Also your "fixed" rate may be raised to the "maximum
allowable by state law" if you go over your credit limit
(including fees that may put you over your limit before you
even know it), make a late payment, miss a payment or do not
pay the full amount. Gotcha!

And then there is that low "teaser rate". Yes that's what
it is called in the industry and it is appropriately
descriptive. That rate is given out, they aren't lying
about that. But it is only given to the people who have 700
or above credit scores, minimal debt, and a high paying job.

The majority of the people who are sent the ad will not get
the lowest rate. But you won't know your rate until you
apply for the card. But by the time they tell you what rate
you will be at they have already signed you up and issued
your card.

They count on the fact that most people will just accept the
rate and go from there. Gotcha!

So how can you avoid these traps?

Rule #1, read ALL of the fine print. If you are not clear
on something ask someone else what they think it means. Ask
an attorney friend, CPA (certified public accountant),
financial planner, banker or other person in the financial
industry. Chances are they will have several questions
about the fine print, too.

Rule #2, don't apply for a card unless or until they tell
you what your actual rate will be. This is hard because
most of them are not set up to tell you. Generally you will
need to know your credit scores and have a copy of your
credit report handy.

Even then you are unlikely to find someone through their
telephone maze that will or can actually answer your
question. Try to find a card that gives you a confirmed
rate before you apply. A conscientious company will first
request a copy of your credit report from one of the credit
bureaus before quoting you a rate.

Look on http://www.bankrate.com for current rates offered by
various credit card companies and banks. Often smaller
banks and companies offer better deals and are not as strict
or hard to deal with. Check with your local banks also. At
least with a locally issued credit card "you know where they
live".

Rule #3, always mail your payment at least 7 days before it
is due. Or try paying through the Internet. Many companies
now offer that payment method. It can also save you time
and stamps.

Rule #4, check your statement each month to be sure you are
still at the interest rate you signed up for. If your rate
has been increased, look for a late payment fee, or some
other reason for the increase. Call the company and ask
them why they increased your rate.

If your rate was unjustly increased (they processed the
payment late or credited it to your account late, but it was
not received late) then ask them to change your rate back to
what it should be.

Even if you did make a late payment, most companies will
reduce your rate after six months of on-time payments. But
if you don't ask, they will keep you at the higher rate as
long as they can.

In the credit card business it is definitely "caveat emptor"
or buyer beware!

ABOUT THE AUTHOR

� Simple Joe, Inc.
David Berky is president of Simple Joe,
Inc. which sells the Simple Joe's Debt Eraser PC software.
Debt Eraser can help anyone get out of debt quickly and
inexpensively by creating a Rapid Debt Reduction Plan.

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