Money Wise Blog

Many consumers receive convenience checks in the mail and regard them as a monetary gift, another source of funds from a special-purpose checking account. Don’t be fooled. Convenience checks aren’t like regular checks attached to a checking account. They are a type of loan, a cash advance against the credit availability on your credit card. Below are 6 reasons why these checks can come back to haunt you.

1. High Interest Rates

Convenience checks usually carry a higher annual percentage rate than the rate charged for credit card account purchases, often in excess of 20%. If there is a low introductory interest rate promotion, read the fine print to understand the promotion time period and what the default rate will be once the period has expired.

2. Immediate Interest Accrual

Interest charges begin immediately after a convenience check is cashed, unlike with credit card accounts where you have a “float” of several weeks before interest starts accruing. In other words, when you buy an item and pay with a credit card account, you don’t pay interest on the amount owed until after the payment due date (if there is a balance). If you buy an item with a convenience check, the annual percentage rate clock starts ticking when the check clears.

3. Fees

Convenience checks have a transaction fee attached, which can be up to 5%. For example, if you use a check to pay a $1000 bill, you could be charged a $50 fee. Using the check to do a “low interest” balance transfer from a higher interest card could also trigger a transfer fee.

4. Lower Credit Availability

As stated earlier, a convenience check is taking out a loan using the credit availability on your card. If you aren’t sure about the amount of available credit on your card, call the charge card company to verify the amount before using the check. These days, credit limits can be changed (i.e., frequently lowered), so if your check puts you over your limit, it could bounce or you could be charged over-the-limit fees. In addition, your credit score is closely tied to your credit availability, so if your convenience check uses up most of your available credit, your score will be negatively affected.

5. Less Protection

According to the Fair Credit Billing Act, consumers have certain protections against defective goods when making purchases with a credit card account. These protections don’t apply when you use a convenience check.

6. Temptation for Thieves

If you receive convenience checks in the mail and you aren’t tempted to use them, realize that other people might be tempted. Leaving blank checks around will invite theft, so shred the checks to avoid being on the hook for someone else’s spending spree. Studies have shown that most cases of identity theft are caused by a friend or family member.

In short, don’t use a convenience check unless you understand the terms and know all of the potential consequences. Otherwise, these checks can be truly inconvenient.

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Some consumers like to have their charge card account available for emergencies — either at home or while traveling abroad. Be careful: that card might not be available to you, just when you need it the most. This article explores the various reasons why your charge card could be canceled on you, along with some tips to help avoid having your own credit card account canceled — possibly without notice.

I speak from experience: while traveling in Australia, I found out — the hard way, in the throes of an emergency — that my charge card account had been canceled without notice, months prior.

I’m still here to tell the story though, so my emergency was not life-threatening. But I can’t possibly express the various shades of red I saw when I found out what had happened, and spent countless hours and days on overseas phone calls trying — unsuccessfully — to reinstate the card and rectify the situation.

True Horror Stories

A woman is vacationing in Europe when she discovers that her reward miles credit card is on the fritz. She is stranded and spends hundreds of dollars in cell phone calls to the credit card account company and the banks, trying to get out of this bind. There is no retribution granted from the credit card account company who had canceled her card outright. To make matters worse, she loses out on the free companion ticket she had just earned with her rewards.

How about the person who finds that the gas pump won’t take their card? Nothing is amiss: they are in their home town, use their card regularly and responsibly, and maintain an excellent credit score too. But their charge card account is also canceled, without notice. The reason cited? “Something” on their credit report was amiss. However with a spotless credit record, the real suspected reason is that their account wasn’t profitable enough for the credit card company to keep them on board.

What Gives? Reasons Charge Card Companies Will Cancel Cards

With the ability to change the terms and conditions at any time, credit card companies can cut loose card holders who aren’t making them money, especially the ones who pose additional risk or are a financial drain to the company. And when times get tough financially, credit card companies tighten their belts along with everybody else. Here are some specific reasons why the charge card company could cancel your charge card.

Non-Use

This is the most prevalent of reasons why your card will be canceled, and also the most avoidable. Charge something to the card every few months (even something very small), pay it off right away, and you can largely avoid this pitfall.

Don’t settle for a phone call to the charge card company. I had a special note put in my file that I was abroad and would only use the card rarely, in an emergency. The customer service rep I spoke to said that would not be a problem. Two months later, the card was canceled. My suspicion was that my card got canceled by an automated system and not a human being, so the preemptive phone calls and special notes in the file were worthless.

Your Credit Score Dropped

If your credit score has taken a hit, your credit card account account could be flagged.

Your Debt Increased

If you just took on a large amount of debt such that your credit utilization ratio is teetering, the charge card account company can make sure you don’t get in over your head — by canceling your card and eliminating the chance. (Ironically, this further increases your credit utilization ratio.)

Your Credit Increased

If you just applied for a line of credit or other credit vehicle that increases the overall credit available to you beyond a threshold that the credit company is comfortable with (regardless of whether you actually use that credit), they’ll take themselves out of your equation.

Market Conditions

Anything from house values dropping, to unemployment rising can affect your ability to hang on to that credit card.

Anything Else

Charge card account companies like to keep their game faces on, and won’t always reveal the true reason why they are canceling your charge card. That’s probably how our friend above had their card canceled due to “something” on the credit report, despite their spotless credit record. Ultimately, it boils down to their bottom line. Hey — that’s business. Let’s face it: owning a credit card account is a privilege, not a right.

Your Rights

Credit card account companies are required to give you 45 days notice for making significant material changes to the terms — such as a change in interest rates.

However, canceling cards isn’t actually considered a significant material change, and cancellation without notice is still allowed.

How it affects your Credit Score

More than an inconvenience, the cancellation of your credit card can negatively impact your credit score in a few ways.

Increase in Credit Utilization Ratio

If your credit card is canceled and you are carrying debt elsewhere, then that debt becomes a larger percentage of the overall credit available to you, thus increasing your credit utilization ratio. This decreases your credit score.

Decrease in Credit Longevity

Longevity of your credit vehicles is important; 15% of your credit score is attributed to longevity. If you have a credit card account that is 10 years old and others that are only a few years old, the cancelation of your 10 year old card will have a more detrimental effect on your credit score than the cancelation of one of the newer ones.

How to Prevent Cancelation

Once your charge card is canceled, talking your way into having it re-activated requires a minor miracle. So knowing what we’re up against, here are a few preventative measures you can take to increase the chances that you aren’t stranded at the gas pump (or in a distant land), idle plastic in hand.

Use it or Lose it

Avoid cancelation due to inactivity by using the card every couple of months. The size of the purchase is irrelevant, and you can pay it off immediately too.

Pay Attention to Ratios

Maintaining a credit utilization ratio below 25% will keep your credit score high.

Focus on Longevity

If you have multiple credit card accounts, pay special attention to the ones you have had for a long time. Losing them will be the most detrimental to your credit score.

Please note that you can do everything right and still end up a victim of charge card account cancelation. But hopefully these preventative measures will keep you out of the spotlight and off the top of their cancelation list.

What to do if your Charge Card Account is Canceled

If the deed has already been done and you’re looking for retribution, here are a few things you can do.

Check Your Credit Report

Order a copy of your credit report from one of the big three credit bureaus (Equifax, TransUnion, and Experian). You are entitled to one free report from each of the bureaus every year. You can also use a free service like Credit Karma. Make sure there aren’t any incorrect postings in there that have affected your credit score through no fault of your own.

Call Them

Nothing is lost (save for some time and possibly a chunk of your patience) by trying to call the credit card company. Who knows — they might take a look at your account and decide you’re worth keeping after all. You never know what you can get unless you ask. (A word of advice: be polite and friendly, and ask for the manager if you aren’t getting anywhere).

I’ve typically used one charge card account for all my expenses, keeping a second card in reserve for emergencies or when my regular card isn’t accepted. (When living abroad, charge card accounts aren’t infallible to dodgy local systems or tricky time zone glitches.)

But just because I’ve fallen victim to having a card canceled without notice (leaving me in the lurch no less), I’m not going to eschew the conveniences and benefits of charge cards that I’ve become accustomed to. To do so would be to shoot my own foot based on principle and anger, and I’m not into self-mutilation. Instead, I’ll make sure to use my backup card regularly and continue to pay the balance off each month. I’ll pay closer attention to the rules and fees, and be sure to stay on the same game page as the charge card account companies from now on.

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How much credit do you have? By this, I mean how much available credit could you go out and spend today if you really wanted to max all your charge card accounts to the hilt?

I’m actually surprised by the gradual increase in my credit limits, and by just how high some of them have gone. I try to spend no more than a few hundred on my credit cards at any time, and always make it a habit to wipe out my balances on a monthly basis. Still, my credit limits are maintained at around $6,000 per card. So what’s the concern? Well, with terms improving for many top credit card rewards programs, it’s not surprising how tempting it has become to start piling on the credit…or worse, the debt.

All this makes me reflect on the importance of being comfortable with the amount of credit I have. Now if you have charge cards yourself, take a look at them now and review the credit limits you have on them. If you have more than one card in your possession, you could very well find that you have credit lines worth five figures at your disposal. And if you are tempted to spend more than you can afford, then you could end up accumulating credit card debt over time and struggling with financial problems.

One simple way to avoid debt is to remove the temptation. You don’t need to cut up and cancel all your charge cards. But you can ask your credit card account issuers to lower your credit limits.

A lot of card companies bump up the credit limit on your card without even asking whether you want this to happen. To my chagrin, I’ve had this happen on several occasions. But if you’ve got any issues with this, you can always just call your credit card company to discuss the possibility of lowering your credit limit.

This is one thing that a lot of people fail to remember when using their credit cards — that they can easily run into debt problems by allowing themselves to accept higher credit limits. Without imposing some set boundaries on our spending, it becomes way too easy for spending to lead to bigger balances over time. Charge card companies are very much aware of how human psychology plays into our spending behavior. As it is, we don’t all have the same levels of discipline to keep our spending patterns in check, so it’s wise to implement debt and credit management strategies that enforce actual limits to the things we do.

If you’re facing higher credit limits, take the responsible approach and call up your charge card company and ask them to lower it to a limit that fits your budgeting and spending plans. If you know you’ll only need $1,000 as a credit cushion instead of $6,000, then ask for it. You’re the customer and if they won’t address your concerns, then you can threaten to go elsewhere. In fact, it’s something I’d probably just go ahead and do if I find that my card issuer shows that much disregard for their customers’ requests. And when all is said and done, I feel better knowing that I’m taking steps to keep my credit use under control.

More Ways to Keep Credit Use Under Control

So what are some more steps that you can take to get a handle on your debt and to avoid falling into a tough financial bind? Remember that it’s easier to manage issues like this before they spin out of your control:

1. If you’ve got debt, stop using your cards or applying for additional credit until you’re comfortable with your situation.
2. Stop spending and go on a budget. If need be, use budgeting software to give yourself some spending limits. Simply learn how to say NO to yourself.
3. Check your credit situation by reviewing your credit scores and reports on a regular basis. Check AnnualCreditReport.com for free credit reports every year, and credit score products like myFICO, which can help monitor your credit information for a fee.

Most of us have made some credit-related mistakes at one time or another.& You may already have run into problems with paying back what you owe. While there is a lot of credit advice out there that can help you if you are in this situation now, it’s probably best if you first gauge and assess how your finances currently stand before you do anything else.

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No amount of charge card account reform is going to help if you don’t spend the time to make your charge card accounts benefit you. As with many things, charge cards can be wonderful if you are disciplined, but they can also backfire and create a huge financial hole for you to dig out of. (If the latter is more likely for you, may I suggest measures such as freezing your charge card account?) Here are six ideas for how to benefit from your credit card account.

1. Eliminate Annual Fees

You likely looked into this before you applied to your current card of choice, but is your charge card still free to own? Many institutions started charging annual fees, and there’s a chance that yours does now as well. With companies likely adding the annual fee as a line item on one of your monthly bills, it may go unnoticed — so double check to make sure. (See also: Charge Card Account Fees: Hidden and Otherwise)

2. Pay Your Balances Off Each Month

I contemplated whether to put this one in, because it’s obvious. But it’s so important that everyone needs to hear this again and again. Don’t use a charge card account unless you can pay it off each month. Got it? Now go read it again, and follow the rules.

If you don’t believe that it’s possible to live without borrowing, just remember that consumers were fine before the invention of debt! If you can’t afford it, just don’t buy it. (See also: How Much Does Your Credit Card Debt Cost You)

3. Stick With Cash-Back Rewards

There are zillion different ways to redeem your charge card account rewards, but it’s probably best to stick with getting cash (or perhaps a statement credit) unless you were going to need to use it anyway. For example, getting a free airline ticket is good if you were going to buy the exact same ticket for the exact same price, but getting a $50 gift card and ending up buying $73.28 worth of useless junk is not worth it.

4. Know All the Benefits You Are Getting

It’s always a good idea to know every benefit that your card is providing. In addition to reward points, some cards get you into airport lounges, while others will double the warranty of a product. By knowing all the benefits, you won’t be paying extra for something that you can get for free. For example, one of my charge cards provides rental car insurance.

5. Write Down Why You Applied for the Card in the First Place

A good way to remember all those benefits is to actually write them down in simplified form somewhere, so you can look at it once in a while to refresh your memory. I know it is a bit of work, but I applied for one of my cards eight years ago. Would you remember all the details from eight years ago? Or let’s say you applied for a 0% balance transfer charge card. Now that the introductory 0% APR period is over, do you still need to keep it?

6. Use Charge Cards Whenever Possible

This is only for those who can pay off the balance of course, but remember to use your charge card every chance you get! I know there are many consumers who like to make fun of those who use charge cards for the smallest purchases, but did you know that it is actually easier (and faster) for both the buyer AND the seller when small purchases are paid using a credit card account? When you don’t even need to sign for a purchase at some of these stores, using a charge card is a no-brainer.

There are many more ways you can save with a charge card account, but if your charge card isn’t working for you yet, start with the tips up above.

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“Charge cards and debit cards have the exact same benefits.”

I’ve heard this statement for a long time, but I wanted to test it out to see if it is true. Unfortunately, we often pass along information we received because we either assume it to be true, or we’ve heard it from a single reputable source.

Basic differences between a debit card and a credit card account

When you use a charge card account, the credit card company essentially extends you a loan for the amount purchased. You typically sign for the purchase, and when they send you a bill, you are obligated to pay your balance. If you do not, the charge card company will charge you annual percentage rates and fees.

A debit card is associated with your bank account. When you make a purchase, that exact amount of cash is taken out of your bank account within days. When you use a debit card, you typically use a PIN number.

The cards look the same, are scanned the same, but are very, very, different.

Head-to-head comparison

Which offers the best card protection benefits? Credit Cards.

Credit card purchases are covered under the Fair Credit Billing Act. The act states that when you purchase something with a charge card account, you have no liability for fraudulent purchases, damaged goods, and products that were never delivered.

If you make a purchase with a debit card, the Electronic Transfer Act does provide some protection during a dispute or error. If you notify your bank within two days, your liability is limited to $50. However, between two days and six days your liability could increase to $500. Waiting more than six days could mean you have no coverage.

Currently, Visa and MasterCard do have policies in place to protect consumers. MSN reports:
Visa and MasterCard also offer zero liability for unauthorized transactions made over their networks.

But, Visa does have an exception for negligence, and MasterCard also has an exception for those with delinquent accounts or who have reported unauthorized use within the last two years.

Remember, debit cards rely on card policies for protection, while charge card liability is the law.

Which offers the most convenient way to resolve a problem with purchases? Charge card accounts.

In the case of debit cards, MSN Money claims
Consumers must try to resolve the dispute with a merchant on their own before they contact their debit card issuer. “The merchant may want to make some other arrangement like a store credit or a gift certificate or some other thing,” says Hogarth, of the Fed. “That isn’t exactly putting cash back in your account.”

My experience: I recently purchased a product online with my charge card. The item has a full 60-day cash back guarantee, but after four emails were not returned, I made a call to my charge card company. Within a day, the cash was put back into my account and the charge card company took full responsibility. It sounds like the process would not have been so simple with a debit card.

Which is better if you work for a company that uses a reimbursement system? Credit cards.

With a credit card account you have the ability to delay or float payments. This is especially convenient when you use a reimbursement system with your employer. You can make the purchase today and you have 30-40 days until the payment is due. For anyone who makes purchases on behalf of their company, a credit card account certainly carries the advantage.

Which is better when renting a car? Charge cards.

Most major credit cards offer an auto rental collision damage waiver. In addition, several major car rental companies do not accept debit cards as a form of payment.

My experience: Last year, our family was in Australia and I wanted to use a debit card to rent a car. In order for the company to accept my debit card, I would need to let them to put a $500 hold on our checking account. Since we planned to spend cash for purchases on our vacation, I wasn’t sure that we had enough available balance for the hold so I used a charge card account. When I returned the vehicle, they billed the charges on to the debit card. On that occasion I was glad to have a credit card in my wallet.

Which is better for avoiding charge card debt? No brainer — debit cards.

This, by far, is the strongest argument in favor of the debit card. If it helps you control your spending and helps you avoid credit card debt, then that one feature alone is as precious as gold. If you currently have charge card account debt or are trying to get out of charge card debt, then cutting up the charge card account and using a debt card is probably one of the smartest decisions you can make.

Which provides more rewards? Credit card accounts.

Credit card account rewards are one of the primary reasons why consumers use credit cards. Anti-charge card consumers say that credit cards don’t really offer valuable rewards, but I’ll let you be the judge.

PerkStreet Financial is an example of a bank that is now also offering cash back for debit card purchases.

Which is best to use overseas? Depends on your particular bank and charge card account.

Depending on your bank policy and your credit card foreign currency exchange rate, either one might be better. In my case, my ATM charges a 1% fee for use overseas, but I do have a Schwab Visa card that offers a 0% foreign currency exchange and 2% cash back. However, it is not uncommon to pay a 3% foreign currency exchange fee with a credit card account. If you plan to travel overseas, you will need to explore the best way to exchange foreign currency before heading on your trip.

Which is more expensive? It depends on use.

Both debit cards and charge cards have associated fees. Looking at one of my credit card account fees and finance charges, if I miss a payment, I’ll pay between $15-$39. If I don’t pay my balance in full, the default interest rate (annual percentage rate) is 23.99%. Yes, that is expensive.

ING Direct claims the average bank overdraft charge is $30. However, a bank can also manipulate overdraft fees so they really stack up. Debit cards can be expensive too.

A person who overcharges her account five times in the month and a person who pays a month of interest and late payments are probably paying a similar amount in fees.

Moral of the story: Both are extremely expensive to use if you don’t plan to learn how to budget and properly manage your finances. If you don’t track your spending well, both could mean a financial train wreck is waiting in your future.

Ultimately, it comes down to this last question.

Do debit cards feel more like real cash? I’m undecided.

Creditcards.com reports
A recent TNS Financial Services Consumer Credit Card Account Program Study indicated that over 60 percent of consumers prefer using debit cards to charge card accounts as a payment vehicle, because debit feels more like “real money.”

Ultimately, I’m yet to be convinced.

Does sliding a plastic ATM card feel more like cash than a plastic credit card? I’ve personally never felt the difference. Do you?

Last year I totaled all my charge card account purchases to find out if I really spend more with credit than cash. I was actually surprised by the results because I saved money by using a charge card account. As such, I’m guessing we really can’t answer this question until someone sits down and does some real research.

Final conclusion

Choose whichever method best helps you manage your cash, but realize credit card accounts do clearly have more benefits. The risk may outweigh the benefits, so I’m not suggesting you use a charge card. Also, you might consider comparing the cost of paying cash versus either a charge card or debit. Just understand the differences, and then make an informed decision.

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By the time you imbibe these words with your eyes it will be easier to pay your charge card bill, easier to run up your bill, and easier to absolve yourself the responsibility of charging your card to the max.

As a preface, some of the new credit card reform rules that passed earlier this week did eliminate some very annoying and predatory business practices designed to line the pockets of charge card companies, and that’s a good thing.

Practices such as randomly increasing interest rates on outstanding balances, double-cycle billing, or carry-over balance billing are shady at the very least and outright usury at the most.

That said, it’s a misnomer to, for lack of a better term, bill this as a victory for the people, to label what is essentially a passive bailout, reform. Yes it’s a misnomer — not quite a farce, but the word reform is not quite accurate either.

Let’s look at some of the fine points of the ruling, which at the end of the day is really meant to encourage you to go back into the store to get the GI Joe with the Kung-Fu grip; or take that vacation that you can’t afford to take; or go ahead and charge that engagement ring because after all, the best things in life are free and diamonds are forever.

Credit card issuers can’t randomly or just up and slap new annual percentage rates on you. This is good because you can pay your bill and budget when you can pay and how much you pay without having cartoon eyes in the next billing cycle.

Charge card account companies must give at least a month and a half (45 days) notice of any changes in card terms. This is positive because cardholders who don’t like the new terms should do what they should in most cases do anyway — pay off the balance and cut the card up.

Cardholders cannot be charged over-credit-limit fees unless the cardholder authorizes an over-limit transaction. Unless it’s literally a matter of life or debt, this shouldn’t apply to you. You don’t need those new Jet Skis and it won’t kill you to keep paragraph-paragraph passing that Kindle until the price comes down.

Credit card account companies must state their rules clearly and tell customers how long it will take to pay off their balance. This is good in spirit but any cardholder who says they read fully the terms of their card contract — that is unless they’re a lawyer or a scholar in the ancient language of Bureaucratese Latin — is fibbing, maxed out, or both. Nonetheless, the closer to plain English — probably won’t say “do not use this plastic card unless you produce more than you consume” — the better for “victims” who find themselves in the hole.

Card companies can’t push up rates in the first year. This leaves room for 45 days notice on increased rates and room for annual percentage rates to go up in the second and third year to push interest up after you charged that electronic step ladder and later decided to hire a roofer.

Charge card account payments that are more than the minimum must now to be charged to senior debt. This has nothing to do with High School, College, or Grand Slam breakfasts at Denny’s. What it means is that the older or most pressing consumer debt with the highest APR will be where your $30 bucks on your $2700 balance goes, instead of just paying for interest and late fees. Like the “over-limit transaction” rule, if you’re a beneficiary of this you’ve already done way too much.

Credit card companies cannot charge interest if debt is paid on time. This is the most sensible rule of all, and shame on charge card issuers who were doing otherwise.

Issuers must get the signature of a parent or guardian when extending credit to consumers under the age of 21. This is a great idea but probably still won’t stop college kids from going to the ATM with their charge cards or using branded cards.

In the end, the Obama administration will get a pat on the back for fighting for the little guy, but these are new rules encourage you to come back once again and spend what you don’t have. They also don’t apply to what you’ve already spent, which you didn’t have.

Unfortunately, credit as originally intended, used to be a financial tool for the industrious, used for business growth, as a promissory note against gold or something tangible. This credit model is no more. There are credit markets where you can trade debt for debt ,even trade based on the probability that a third-party will be a deadbeat. Face value for face value is no more in this system of credit.

It used to be that credit was used as a deferred payment through promise designed to spur risk and motivate borrowers to produce. Now as our unemployment, savings rates, and consumer debt levels suggest, credit has in more modern times been used by the upper class to hold everybody for ransom. The upper middle and middle class have used credit to pay off other debt and laugh heartily at the neighbor who has the Range Rover 4.0 instead of the Range Rover 4.6. The lower middle class and working poor has used credit to float ourselves as we look for better opportunities or pay our way through college or look for a new job but still want to fell “alive” via our purchases and in some cases, unemployed nights on the town.

To be sure, these new rules may be a good crusade, but what many or perhaps not enough are wondering aloud, is whether the new rules will encourage the same behavior that made them necessary in the first place.

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It’s very important to use a banking account nowadays. It’s convenient to pay using a bank card, and so, you don’t have to have much cash in your own purse. The days are gone when you needed to visit the financial institution directly as well as make application for a banking account. Currently, it is possible to make application for a bank account on the internet. You don’t require to depart the comfort of the house to turn into an account user. Listed here are some recommendations regarding how to sign up for bank account on the web and spend less.

· As already stated, you don’t need to visit financial institution, stand in queue as well as hold off until you is approved. Currently, you may simply make an online search. You will be needing to type in your individual information and facts, company name, home address etc. A few banks would need to deliver duplicates of your Identification documents.

· Tend not to open up banking accounts at the first bank you have aquired online. It is better to think about evaluations and customer feedback. Some banking institutions have poor customer support services, while others encounter difficulties with dealings.

· It is necessary to know for which purposes you uses your bank account. For example, you might use it to pay electric bills and go shopping in the nearby store. However, if you need to carry out numerous dealings, such as international procedures, it is best to seek guidance of financial institution managers. It is far better to open the correct bank-account now than to face problems in the future.

· Of course, to be able to open bank savings account you should be eighteen or maybe more, as well as have a a favorable credit record background. Nevertheless, a few banks open financial records even without having a appraisal of creditworthiness. Therefore, you must go online to look for banks as well as financial organizations that don’t require a credit history check.

· Look for banking institutions which don’t require a large deposit upon beginning of bank savings account. Needless to say, for those who have cash, you could select this choice.

· Even though you can use for bank savings account on the net, you ought to anyhow come to the bank after that. In addition, it is always great to speak to bank manager who will easily notice a lot about the best banking products and services.

· Generally, you will probably be offered a debit card when trying to get checking account. Do not decline it. A debit card is incredibly handy since you will have the ability to pull away money from Atms and order online as well as traditional.

· Apply for banking account in the lending company where your mother and father have company accounts. So, the financial institution may trust you.

If you wish to request checking account, take a moment to look at the internet site and learn just about all benefits of opening up this bank account kind.

I previously attempted to answer this question – do you spend more with credit card accounts? 

Unfortunately, I realized my attempt to answer that question was flawed for a couple of reasons.  First, I have no idea how YOU use your card.  All I can address is the question – do I spend more with charge cards?  Second, I didn’t factor any of the following: 

Overseas currency exchange savings by using credit cards
Cash back
Car rental insurance savingsSince none of you forwarded me all your personal financial information I guess I will have to use myself as the guinea pig for this post.  I’m going to give you a behind the scenes look at the math I used to see if credit card accounts or money cost me more in 2009.

Calculate the True Cost of Credit Cards 

Step #1: Isolate all the ‘fixed’ charged from the ‘variable’ charges

I went back through my two Visas and I totaled how much I spent on both cards in 2009.  The total = $20,526 charged on cards.

However, I felt that to get a fair idea of how much extra using my Visa cost I needed to separate costs that are not possibly influenced by the how I pay for the product.  For example, I don’ pay more for gas by using credit.  I don’t pay more for medical bills when I pay for credit.  There are charges that I need to pay on a regular basis regardless of my method of payment.

As an example the fixed costs included things like airfare for our trip to North America (airfare + hotels), gasoline, doctors bills for our baby born in 2009, and health insurance payments.  Total charges = $17,452.

The rest of the charges are things that we might have bought on a “whim” like groceries, clothing, dining out, and other random purchases.  This total came to $3,074

Step #2: Add charge card cash back to the equation

Since I used my Visa for the $17,452 I was able to get 2% cash back.  $349 money back.

Let’s assume that Dave Ramsey is right and for my variable expenses I paid 12% more (I don’t think this is true but I’ll give Dave the benefit of the doubt.  By the way I do think people spend more when they buy with credit instead of cash just not 12% more).  Then I would have paid $368 charge card account extra spending penalty on that $3,074 that I spend.

Hmmmm.  Looks like plastic cost me an extra $19.00 in 2009.  Even if it did cost me $19.00 it would have been worth the convenience because there are definitely advantages to credit cards over cash.

But the math is not done here.

Step #3: Account for foreign currency exchange savings with charge card

When I use my plastic overseas I have a 0% foreign exchange fee charge card.  When I get money out of the ATM overseas I pay a 1% fee. 

In 2009 I spend $7,485 in a foreign currency.  With the ATM I would have paid $74.85 in fees, but with plastic I paid $0.

Now that actually means I saved $55.85 by using a credit card.

But, we’re not done yet.

Step #4: Factor in the auto rental insurance while renting a car

I rented a car for a week during 2009.  I declined the credit card account auto insurance and instead just used my charge card account insurance.  My full insurance would have been $8.95 per day.  Thus, I saved another $107.40.

Did using a charge card account in 2009 cost more cash or save more cash?

All told a charge card account saved me $163.25 in 2009 and it was a lot, much, a lot more convenient than money.  In addition having a charge card account helped boost my FICO score. 

Now you would obviously need to add up your own numbers to see how they work out, but using a credit card account might not be as expensive as you think.  In our case, we also have some spending guidelines for credit that helps us control our variable spending on plastic.  If you are in charge card account debt I promise you that credit cost more than it saves.

Credit cards are not all bad news, nor are they all good news.  In light of this observation next week were going to explore the topic of credit card fanaticism.

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Several weeks ago I asked the question Does spending cash really save money when compared to credit card accounts? My conclusion was that consumers spend less with cash.  The more I have reflected on that post, I feel it is necessary to follow up with a more complete look at advantages of buying with charge card accounts compared to cash.  Just because something is cheaper (as I believe using money is) does not necessarily mean it is a better choice.  I do a lot of things that I know are not the “cheapest” thing – like drink Dr. Pepper.  There are cheaper beverage choices, but occasionally I like a little fizz in my diet.  There are occasions when I pay for preferences and convenience.  Photo by paalia

Do credit card account advantages outweigh the extra expenses?

Credit Card Advantages:

1. You don’t have to worry about change. One of the things that drives me crazy about paying with cash is all the change in my pocket.  When I go to buy something I find myself digging around for change because I don’t want more, but then I feel like an old lady who is holding up everyone in the store.  I often just give a larger bill and fill my pockets with even more annoying change.

2. Book keeping is easier. With money if you lose your receipt, the record of your purchase has gone MIA (unless you have an incredible memory – which I don’t).  My wife and I were trying to sort out some of our bills earlier today and I caught myself thinking that if we had just bought it with a credit card we would instantaneously know how much we spent.

3. Purchasing items for business. Where I work we use a reimbursement policy.  I buy it now and they pay me later.  Having a credit card for those types of purchases avoids forwarding any money.  It gives time for a check to be cut before the payment is due.

4. Warranties. I’ll be honest here. I have never taken advantage of a charge card warranty.  However, if you are going to buy an item, you may as well get some type of coverage since there is no extra expense.

5. It can save you money. Some cards provide discounts when used at specified organizations.  Carrying a card allows you to take advantage of those offers.  You can also save a bunch of money when you rent a car with a credit card.  When you don’t need to buy the rental insurance coverage you can save a bunch of cash.

6. Feel sophisticated. Sometimes it’s just about the feeling.  We like to feel good.  I have never fully understood pedicures, but women say it just makes them ‘feel good’.  We are often willing to pay for a feeling.  When I don’t use a charge card account I feel like I am missing out on something – bonus points or promotions.  That may or may not be true, but sometimes I just feel like I’m missing something by paying money only.

7. Convenience. I love standing at the pump and swiping my card.  The gas station is one place where taking a journey indoors is hard for me.

8. Rewards. There is no denying that charge card accounts offer some pretty nice rewards – like this Starwood American Express.  Sure, they might only be a small fraction of what you spend, but you feel like you’ve done something smart when you are getting rewards.

9. Cash can be lost. What happens when you lose your wallet three times in a few months?  Some consumers have a habit of losing their wallet.  Those poor folks ought to have the safety of plastic, not a wad of money on their person.

10. Tipping is simplified. With cash it is hard to leave a % tip.  Often I find myself with several big bills and then I need to decide how a lot change to request.  However, with the credit card account you can leave an odd tip total and no one will think anything of it.

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Internet fraud and identity theft are becoming a lot more highly sophisticated crimes of which we just cannot overlook any longer. Precautions must now be taken to prevent this wrongdoing from happening to us – and there are numerous methods you can take to protect yourself. Identity theft is described as the illegal use of your name, social insurance number, date of birth, charge card or any other personal identifying information, used without your approval or knowledge, to commit financial fraud in an attempt at ‘cloning’ you for the purpose of obtaining charge card accounts, loans, checks and other measures that allow the thief to go on a spending spree in your name.

This crime affected approximately 11.1 million consumers in the U.S., in 2009, and is increasing every year, in numbers a lot too high discount. It is also becoming extremely difficult to remedy this situation should you be targeted and unfortunately, it packs quite a punch to your wallet, among many other facets of your life. If the crime is not detected early enough, it could take months or even years to clean up the damage done. Estimations vary – but the latest costs involved in identity theft, or identity fraud, states these infractions have cost consumers, in the US alone, around $54 billion in 2009.

Credit card fraud is at the top of the list. Once the thieves get your personal information, they open charge card accounts with high limits, and before detected, can rack up quite the bill. A high number of these ‘thefts’ were initiated online, and it is not only credit card related – cell phones, auto purchases, and loans are up there on the list.

I’m not sure about you, but frustration and the feeling of personal violation are the emotions I feel related to this crime. I can’t imagine what it would feel like to have someone running around, using your name and spending money, which unfortunately in the short term, is your responsibility, until proven otherwise.

A recent movie titled, The Michelle Brown Story (aired on Lifetime Channel) and based on a true story, depicted a young woman, Michelle Brown, whose identity, and worse, were stolen from her. Michelle was in the process of purchasing her first home and the loan documents required to close escrow were confiscated. So, along with her identity, charge card accounts, drivers license and social security number, the thief also had access to her checking and saving accounts – using thousands of dollars of cash to purchase items such as a new car and expensive clothing, etc. The criminal also became obsessed with her, wanting to become her, which caused Michelle much more difficulty than the average fraud. She (Michelle) had a very difficult time proving her own identity again, and in clearing her name. She also lost the purchase of her new home due to credit indiscretions, loss of funds from her account for the down payment, and many other problems related to this crime. The movie was based on a true story and if it doesn’t prompt you to take extra precautions to avoid this sort of thing from happening to you, I don’t know what will!

The problems these criminals create for victims are seriously harmful to credit ratings, your livelihood and the quality of your everyday life – not to mention massive expense in research and reporting, etc., and also time consuming to prove and remedy. To keep identity theft of your information from happening or to attempt to catch it early, follow these basic rules:

The first and foremost is keeping a close eye on your bank account regularly, at least daily. Consider using Mint to keep track of all your accounts in one place. Banks may also have fraud warnings you can attach to your account by request. My bank recently put a stop on my debit card for unusual activity, which was inconvenient because I was trying to make a purchase which was declined – and required a phone call to clear up, however they noticed a few charges that were irregular to my usual spending habits – and stopped all activity until I called and verified that the charges were legitimate. Banks are very good about watching unusual activity, and notifying you at once.

Also, charge card companies offer this option as well, called identity theft protection, or fraud detector – when you sign up for credit card accounts, or even for the ones you already have, be sure you opt for the ‘charge card account fraud’ alert offered. And review your charge card account statements, very regularly.

Your credit report is also a great indicator, although a bit slower than the other methods, but it will disclose all information that isn’t credit card account or debit card related. There are many quick and immediate reporting agencies out there, namely Free Credit Report that can keep you updated on your credit report.

Internet scams and viruses are designed for accessing your personal information. Trojans get access to your information via emails, and if you open the infected email, the virus actually waits for you to access your bank account information and relays that information to the hacker that instigated this virus.

Worms are another method of Internet fraud, doing exactly what the name implies, worming itself onto your computer and turning off security software so that the hacker can access your information.

Several others exist that you should be aware – scams looking like friends in an effort to get you to turn over information to them – viruses that infect your files and can corrupt your hard drive which come from internet downloads and email. Phishing is also a difficult detection as this is the act of sending an email that resembles a bank (or other online merchant that you may use) email, asking you to log in by clicking a link attached to the email…. Once you click, the hacker has your personal info.

Remember – NEVER give your any of your private information to anyone in an email or online. My policy is just to make the call – do it over the phone if applying for credit or paying for something. It is just too risky and you can never be sure who is watching or how safe that site’s security is.
Unfortunately, this crime is only going to get worse before it gets better so it takes being highly aware, and never, ever clicking on links in your inbox or on the Internet that you have the slightest doubt is legitimate. Even if they come from friends! Many of my friends have been hacked into lately, and the hacker uses the friends email address to try to get you to click on the link that is attached. Don’t do it. It is much, much easier to avoid having your identity stolen, than to fix it after it happens.

By all means, if you haven’t already – purchase a high quality security suite such as Norton or McAfee and updated it regularly. Hackers can find their way around them so quickly that you must install the updates as soon as they are available. There are also some great free options like Microsoft Security Essentials, Avast! and AVG.

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