Get credit cards nowadays
The birth of credit cards made a big innovation in payment field and plays an important roles in our day life and lenders make you get credit cards is so easy today. But there are millions of people just like struggling with credit card debts, roughly 53 million American households are carrying nearly $1 trillion in credit card debt. This averages out to nearly $18,000 per household, but the debt isn’t actually spread evenly over every- one. According to a survey by CardTrak.com, while the median household debt is just $6,700, nearly 7 million families owe more than $25,000 each— and, not surprisingly, the number of cardholders unable to make even their minimum payments is at record levels.
Getting out of debt rarely is easy or fast. It can take decades—unless you have a smart plan and know how to use it properly.Unfortunately for most of us, the credit card companies are experts at encouraging us to go into debt—and keeping us there as long as possible. In fact, keeping you in debt for as long as possible is how they make money.
And they make LOTS of money—most of it from the high interest rates we pay on our unpaid balances and the unfair penalty fees they trick us into incurring. In 2007 alone, those interest charges totaled $116 billion, while fees added another $23 billion to the industry’s coffers.
The fact is that when they’re used responsibly, credit cards are a good deal. They free you from having to pay for everything in cash, which can be a huge convenience. They also allow you to borrow money interest-free—if you pay your bill before the grace period ends. But let’s be honest. Most people don’t do this.
To be smart with your credit cards, here is what you need to know— and do.
Pick the Right Card for You
There are literally thousands of different credit cards to choose from these days: low-interest cards, rewards cards, balance-transfer cards, airline cards, student cards, prepaid cards, business cards, cash-back cards—the list goes on and on. Are you an Oakland Raiders fan? You can have an Oakland Raiders credit card. Do you love country music? You can get a Reba McEntire or Alan Jackson card. You can even get one from World Championship Wrestling with Hulk Hogan’s picture on it.
But is that the right card for you? How much is the annual fee? What’s the interest rate? Who issued the credit card? What happens if you are late paying? How much is the penalty? Does the contract include the dreaded Universal Default Clause? (More about this later.)
These are the types of questions you need to answer BEFORE you sign up for any credit card.
Some cards provide cardholders with elaborate concierge services, but they charge annual membership fees in the hundreds—and sometimes thousands—of dollars. Are these services worth that much to you? Other cards have no annual fee if you pay your balance in full every month. Are you going to carry a balance? If so, then you need a card with the lowest possible interest rate.
There are two easy ways to get a good sense of what’s out there for you to choose from. First, simply hang on to all the junk mail you get this month. I promise you—there will be a dozen credit card offers in the pile, maybe more. Simply spread them out on your kitchen table, side by side, and compare them.
The other way is to go online. Web sites like Bankrate.com, cardratings.com, creditcards.com, lowcards.com, and lowermybills.com all offer excel- lent comparisons of interest rates and card features. Also, the Federal Reserve Board surveys credit card plans every six months and publishes an interactive report that makes it easy to make comparisons. You can find it online at www.federalreserve.gov/Pubs/shop/survey.htm .
Related story: How to avoid interest on credit cards
Read the Fine Print
These agreements are not simply hard to read. They are also hard to understand. All the same, you need to read them and do your best to understand what they say. At the very least, study the disclosure box that spells out the agreement’s basic terms. These include:
- The annual percentage rates (APRs) you’ll be charged if you carry over a balance, transfer a balance, or get a cash advance.
- The minimum payment required and how long you can take to pay your bill in full before you get hit with a nance charge (known as the grace period).
- The method used to calculate your outstanding balance if you don’t pay in full.
- Your credit limit and whether they can change it without notifying you.
- What the penalty fee is if you exceed your credit limit.
- The annual fee, if any.
- When your payment is due—and when it is considered late.
- What the penalty fee is for late payments, and whether paying late will trigger an increase in your interest rate.
- Whether the agreement includes a universal default clause(which allows the credit card company to penalize you with fees or an interest- rate hike if you are late paying some other company’s bill).
Ask For A Lower Rate
More than 75% of the people who call their credit card companies to ask for a lower rate are successful on the 1st call.
Just because a credit card company sticks you with a high interest rate doesn’t mean you have to accept it. This is especially true if you have decent credit, a record of paying on time, and haven’t maxed out your card. Here’s what you do.
First make sure you know the rate you’re currently paying and the kind of rates other banks are offering. (You can do this by checking your latest credit card statement and then going online to a site like Bankrate.com that posts comprehensive lists of what kind of interest virtually every credit card company in the country is charging.) Then 2nd the “Customer Service” phone number on your statement, call your credit card company, and ask to speak with a supervisor. Don’t try to negotiate a lower rate with the 1st person who answers the phone. The people who answer the phones generally don’t have the authority to approve changes, so you’d just be wasting your time.
When you are connected to the supervisor, tell him or her that a competing bank is offering you a much lower interest rate than the one you’re currently paying—and that unless he can match or beat the competitor’s rate, you intend to transfer your balance to that competitor. Don’t be vague: Tell the supervisor the name of the competing bank and the actual interest rate it is offering. Chances are that the supervisor will agree to lower your rate on the spot. This is particularly likely if your interest rate is, say, 25% and the average on cards at the time of your call is 12%.
According to the Wall Street Journal, more than 75% of the people who call their credit card companies to ask for a lower rate are successful on the 1st call. If you are not that fortunate, don’t give up. Just call back and speak to someone else. Be aware that there are often many levels of supervisors. The departments that handle these calls have on average two to five levels of management. So if the supervisor you get the 1st time around doesn’t give you what you want, ask to speak to that supervisor’s manager. And if you don’t like what he or she tells you, ask to
speak to his or her superior. One other thing: Make sure you write down the names of everyone you talk to. If you’re told company policy forbids giving out last names, ask for an identification number. Not only will this enable you to keep track of all the different supervisors and managers you’re bound to wind up dealing with, it will also make the customer-service people wary of offending you. Generally speaking, as long as you are polite and reasonable, they will probably try their best to satisfy your request because ultimately they want to keep your business.