Category: Credit Card Loans

Credit Card Companies Lowering Credit Limit Below Existing Balances

I’ve had a store credit card for a particular home improvement store for a few years. My available credit was $2,000. The card went unused for about a year. When I moved into a new home last summer, I had reason to use the card – I needed a washing machine and refrigerator. I also decided to splurge and get a portable dishwasher (since there was no way to get the less expensive, counter-installed kind). My total charges were $1,543 and some change.

Each month my credit card statement arrived in the mail, and I would send what I could – sometimes it was just the minimum payment, sometimes I paid extra – but the company always got their payment. I have not stepped foot into the store since I bought these appliances, and have not used the credit card at all since they were purchased in August of 2008.

Imagine my surprise then, when my January 2009 statement arrived with an “over-the-limit” fee of $39 on it! How could I be over the limit when I haven’t made any new purchases?

Apparently, the credit card company lowered the credit limit below the amount I had already spent. My new credit limit was $1,090 – and I still had a balance of $1,100 on the card. I didn’t even think this would be legal – after all, they gave me a credit limit of $2,000 and I didn’t spend that much. I hadn’t made any new purchases and then they “took back” their offer to spend the money basically. I could understand lowering the limit to “reduce their risk” as the credit card companies are reporting as their reason for lowering credit limits of cardholders – but to lower it below what is already spent?! It’s sort of like if you bought groceries on sale at Walmart today, and got a phone call tomorrow saying you had to come in and pay the difference between the sale prices and the current prices because the items you purchased were no longer on sale.

After contacting the credit card company, I was told the terms and service allows them to change their credit limits at any time, to any amount they want – and that just about everyone’s credit limit had been lowered because the bank had to reduce their risk. They claimed to have sent me a letter to inform me of the change – but I didn’t receive one. Just the statement that indicated I was over-the-limit. After calling customer service, I did receive a form letter a few days later that said something to the effect of:

due to items found in your credit report, we have lowered your credit limit. If you have any questions contact the credit reporting agency.

The letter didn’t match what the customer service representative told me was the reason for the credit limit decrease – but there is absolutely nothing I can do short of paying the account in full and avoiding the store and it’s credit card all together from here on out – which I fully intend to do. This is a lesson in why you can’t afford to carry a balance on a credit card (even with low or no interest offers!) until the new Credit Card rules take affect in July of 2010 – which will prohibit card companies from doing things like this.

Getting a Good Credit Card for a Bad Credit

Credit card issuers love and pamper prosperous card holders. Well-to-do people get the most enticing offers, the most favorable terms, and the most appealing bonuses. Banks would more likely make concessions when it concerns clients with good or excellent credit than when it comes to bad credit owners. People with bad credit rating face more difficulties when they try to get a credit card they need. They pay higher interest; they are restricted in the choice of card offers, and can they hardly hope for any kind of indulgence for their credit commitments. If you are going through some financial difficulties and your credit score leaves much to be desired, or in other words, you are a bad credit owner, do not give way to despair. It is not that bad. Even with a bad credit you have a number of credit card deals to choose from. Even more, sticking to some rules and common sense you can get a bad credit card that will actually help you to start over. So, this is my vision of your road to El Dorado. (By the way, I have been through bad credit problems myself, so the guide below will be a mix of experts’ advice and my own experience).

When making a decision on a bank to apply for a card at, mind that smaller ones will more willingly issue you a plastic. Their reputation is not as solid as such financial giants as Visa, Discover, Citibank, Chase Bank, and others. But your and their trustworthiness is about equal. So, think of some small companies.

Stay with your current bank, credit union, or a savings institution. If they know you as a responsible client, they might overlook your money troubles and issue you a credit card without numerous checking procedures.

Pay special attention to banks that specialize on working with bad credit owners. First PREMIER and Orchard, for instance. These banks have, probably, the widest range of credit cards for bad credit. Among Orchard credit cards, Orchard Bank Platinum MasterCard is issued to credit consumers with poor credit rating. It comes with a pretty low APR and gives you a chance to enjoy the card’s Platinum status.

In case all your attempts to get an unsecured credit card fitting your financial status quo have failed, think of applying for a secured credit card. Of course, a secured plastic does not give you so many opportunities like an unsecured does. To activate an unsecured card’s account you are to make a deposit. The amount of money deposited will determine your credit line. But the main advantage of such a card is that it is perfectly safe for your credit score. You will not be able to spend more than you have deposited.

Find a co-signer. If you talk someone with good credit into co-signing with you, you will, most probably, get approved for a credit card. But remember that you will have to share the responsibility for the account. All your financial missteps will be reflected in your co-signer’s credit report.

When you apply for a new credit card try to pay all your bills on other plastics on time.

Mind an annual fee. Why pay more? Find a no annual fee credit card. There are plenty of them for all types of credit.

And, if you did not qualify for a credit card you had applied for, claim for an explanation. A credit card issuer, legally, has to tell you the reasons for their denial.

I hope you will find these tips helpful. I did a few years ago. Now I am a lucky owner of a good credit. I wish you go the same track.

Using Student Credit Cards to Build Positive Credit History

College life might be the most crucial moment of a person’s life. But most of us consider college life the most memorable and exciting one. During this stage, we learn a lot of things that we could benefit from in the future. This is also the time where we start building our own career to push through life. One way to start this is by using a student credit card and building positive credit history.

In countries, such as Canada, the UK, and the US, building good credit is the most important thing in a person’s life. When you have positive credit history, you could buy a house and lot, cars, and many other things that you and your family want and need through loans with the best interest rate. Bad credit history would give you a hard time seeking for a job and would even force you to get bad credit credit cards. Thus, building positive credit history is very essential in your future. So, why not get a student credit card and start as early as now?

To start, find a bank that gives students the opportunity to own a credit card. A lot of banks do offer student credit cards. As a matter of fact, these banks do not give interest for about six to twelve months. This is actually a very good offer because you can buy anything and pay for them without interest.

In addition, most banks offer incentives like cash back for every purchase you make. This means that you would be given reward points for each purchase and with these points collected, you would be able to get various rewards, such as PlayStation gadgets, television sets, or even concert tickets.

By using your card continuously, you are not only taking advantage of the incentives but obtaining positive credit history as well, which is the real incentive. The agency would keep track of your credit history records, like paying your credit on time, having a good experience with your student credit card expenditures, and the like. Remember to use your card wisely and effectively and you would eventually be able to build positive credit history.

Even with all the incentives offered by the banks, do not use your student credit card on useless things if you do not want to be like those unlucky people who end up getting credit cards for bad credits.