Your Credit Matters (Part II)
If Your Application Is Denied.
If you're turned down for a card, ask why. It may be that you haven't been at your current address or job long enough. Or that your income doesn't meet the issuer's criteria. Different credit card companies have different standards. But if you are turned down by several companies, it may indicate that you are not ready for a credit card.
If you've been denied credit because of information supplied by a credit bureau, federal law requires the creditor to give you the name, address and telephone number of the bureau that supplied the information. If you contact that bureau within 60 days of receiving the denial, you are entitled to a free copy of your report. If your file contains accurate negative information, only time and good credit habits will restore your credit-worthiness. If you find an error in your report, you are entitled to have it investigated by the credit bureau and corrected at no charge.
Get Our Latest News for FREE
You should dispute any inaccuracy in your report with the credit bureau and also with the company that furnished the information to the credit bureau.
Get the Best Deal
Fees, charges, and benefits vary among credit card issuers. When you're choosing a credit card, shop around. Compare these important features:
• Annual percentage rate (APR). The APR is a measure of the cost of credit, expressed as a yearly interest rate. Check out the "periodic rate," too. That's the rate the issuer applies to your outstanding balance to figure the finance charge for each billing period. For example, if you have an outstanding balance of $2,000, with 18.5 percent interest and a low minimum monthly payment, it would take over 11 years to pay off the debt and cost you an additional $1,934 just for interest, which almost doubles the total cost of your original purchase.
• Grace period. This is the time between the date of a purchase and the date interest starts being charged on that purchase. If your card has a standard grace period you have an opportunity to avoid finance charges by paying your current balance in full. Some issuers allow a grace period for new purchases even if you do not pay your balance in full every month. If there is no grace period, the issuer imposes a finance charge from the date you use your card or from the date each transaction is posted to your account.
• Annual fees. Many credit card issuers charge an annual fee for granting you credit, typically $15 to $55. Some issuers charge no annual fee.
• Transaction fees and other charges. Some issuers charge a fee if you use the card to get a cash advance, if you fail to make a payment on time, or if you exceed your credit limit. Some may charge a flat fee every month whether you use the card or not.
• Customer service. Many issuers have 24-hour, toll-free telephone numbers.
Other benefits. Issuers may offer additional benefits, some with a cost, such as: insurance, credit card protection, discounts, rebates, and special merchandise offers.
Kinds of Credit Accounts
Credit grantors generally issue three types of accounts. The basic terms of these account agreements are:
• Revolving agreement. A consumer pays in full each month or chooses to make a partial payment based on the outstanding balance. Department stores, gas and oil companies, and banks typically issue credit cards based on a revolving credit plan.
• Charge agreement. A consumer promises to pay the full balance each month, so the borrower does not have to pay interest charges. Charge cards, not credit cards, and charge accounts with local businesses often require repayment on this basis.
• Installment agreement. A consumer signs a contract to repay a fixed amount of credit in equal payments over a specific period of time. Automobiles, furniture and major appliances often are financed this way. Personal loans usually are paid back in installments, too.
Protect Your Credit
Once you get a card, sign it immediately so no one else can use it. Note that the accompanying papers have important information, such as customer service telephone numbers, in case your card is lost or stolen. File this information in a safe place.
Call the card issuer to activate the card. Many issuers require this step to minimize fraud and to give you additional information.
Keep your account information to yourself. Never give out your credit card number or expiration date over the phone unless you know who you're dealing with. A criminal can use this information to steal money from you, or even assume your credit identity.
Keep copies of sales slips and compare charges when your bill arrives. Promptly report in writing any questionable charges to the card issuer.
Don't lend your card to anyone, even to a friend. Your credit privilege and history are too precious to risk.
You're Responsible
While a credit card makes it easy to buy something now and pay for it later, you can lose track of how much you've spent by the time the bill arrives if you're not careful. And if you don't pay your bill in full, you'll probably have to pay finance charges on the unpaid balance. What's more, if you continue to charge while carrying an outstanding balance, your debt can snowball. Before you know it, your minimum payment is only covering the interest. If you start having trouble repaying the debt, you could tarnish your credit report. And that can have a sizable impact on your life. A negative report can make it more difficult to finance a car or home, get insurance, and even get a job.
You're Responsible
Federal law offers the following protections when you use credit cards.
• Errors on your bill. You must notify the card issuer in writing within 60 days after the first bill containing the error was mailed to you. In your letter, include: your name; account number; the type, date and amount of the error; and the reason why you believe the bill contains an error. In return, the card issuer must investigate the problem and either correct the error or explain to you why the bill is correct. This must occur within two billing cycles and not later than 90 days after the issuer receives your letter. You do not have to pay the amount in question during the investigation.
Loss or theft. If you lose your credit or charge cards, or if you realize they've been lost or stolen, immediately call the issuer(s). By law, once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.
For More Information
The Federal Trade Commission (FTC) works for the consumer – providing the information needed to spot and avoid fraud and deception in the marketplace. Access the more than 150 consumer publications offered by the FTC online at www.ftc.gov. Or get a free copy of Best Sellers, a list of FTC publications, by calling 1-877-FTC-HELP, or by writing to Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.
The Consumer Information Center (CIC) publishes the Consumer Information Catalog which lists more than 200 booklets on a wide variety of subjects, including credit. Access the Catalog and its full-text entries at www.pueblo.gsa.gov. Or write: Catalog, Consumer Information Center, Pueblo, CO 81009. Or call them at 719-948-4000.
________________________________________________
Bob Louder is the Founder and President of Christian Financial Ministries (www.good-steward.org). Bob is also the author of the new best selling book, "Debt Free Living God's Way," available only on the Internet (www.debtfreelivinggodsway.org). Since 1987 Bob has helped people in hundreds of churches all across the country and in the European military community learn, understand, apply and pass on "Debt Free Living God's Way" principles and practical applications. He has represented some of the top Christian financial authors and ministries to include Larry Burkett, Dave Ramsey, Christian Financial Concepts, and Crown Ministries.
Copyright 2006 Christian Financial Ministries, Inc., All Rights Reserved. You may reprint this "Special Report" in whole or in part without permission from Christian Financial Ministries, Inc. Please credit material used to Christian Financial Ministries, Inc.
