Most people do not understand the consequences of having bad credit. They believe that they can just make mistakes with their money, and one day they will wake up and everything will be all right. However this is not true. Your personal credit is one of the most important things that a person can have in life. The ability to buy a house, a car, or finance any other major purchases will depend heavily on the quality of your credit score. If you damage your credit score then you might not be able to get financing for any major purchases at all. Or if you do get financing, then the finance company will give you the highest interest rates that are allowable by law, because you will not be able to go anyway else to negotiate a better rate. Thus having bad credit will cost you more money, and get you further into debt, which will probably damage your credit rating even more. It is fairly easy to see that if you allow yourself to damage your credit, then it will be very difficult to get your credit rating back in good standing.

Once you have bad credit you will quickly realize just how damaging it can be to your finances. More than likely you will start to look for ways to get your credit rating back in good standing. You will definitely see many different advertisements that claim they can get your credit back in good standing and negotiate on your behalf. These companies are good, but they are basically doing the same thing that you can do for yourself, except that they usually charge you for their services. The charges will just make it that much harder for you to get your bad credit erased. However you can call your creditors and try to negotiate for yourself and most of the time creditors will work with you to help you get your credit back in good standing. The first thing that you will want to do is contact your creditors and try to get them to lower your interest rates, or your monthly payment so that you can make payments on time, and try to erase your debts. Then once you get your debts paid off, slowly try to reestablish your credit by making small purchases and paying them off quickly.

If you think that you know everything there is to know about your credit card, then you could be in for a rude awakening. Credit card providers make untold billions of dollars annually because of several closely guarded secrets that they won't easily share with you. By keeping you in the dark they can make money at your expense. Don't be beaten down as I am about to shine the light in the darkness to expose trade secrets that they hope you will never learn about.

Congratulations, you have been approved for a new major credit card! However, do not let the headiness of having a better than average credit rating skew your judgment: now is the time to get very familiar with the credit card agreement that came along with your new card.

Firstly, are you being charged an annual fee? If so, you are paying for the privilege of using a card that should not cost you one red cent until you actually buy something. The prestige of that platinum card is all smoke and mirrors; chances are the same card you are holding in your hands didn't cost your neighbor anything. Contact the credit card company and ask them to waive their annual fee.

Secondly, an introductory annual percentage rate [APR] of 0% sound great on the surface. However, how long will that introductory term last? Will your new purchases automatically climb to the inflated regular rate once the honeymoon period is over? Or, will the initial APR stay the same until your balance is paid off?

Thirdly, balance transfers are a great thing to have but only if the credit card company offers to you two things:

1. No transfer fees on balance transfers. Look closely at your statement and you could discover that a 3% transfer fee has been charged on your $5000 transfer -- that's an extra $150 you must shell out for the privilege of moving your money from one credit card to another one!

2. Low APR, but for how long? If you transfer your funds to the new card will the transferred balance stay at the fixed rate or evaporate once the introductory period has ended? On the surface, a 2.9% APR on balance transfers sounds good, but if that rate jumps up to 17.49% once the introductory period is over it becomes a good deal that has gone bad. Unless, of course, you pay off the debt before the jump in the card's interest rate occurs.

Fourthly, you do have a grace period with your card don't you? If you purchase something today will interest begin to accumulate immediately or will you get up to 25 days to pay off your balance interest free? Some credit card offers are reducing or even eliminating the grace period.

Fifthly, what sort of rewards program is attached with the card? What, you didn't know that they offered to you a rewards program? Chances are you may have to sign up for this program separately. Big note: no rewards program is worth it if you run a monthly balance, which is how the credit card companies make big money off of you. The value of your rewards will quickly be cancelled out if you don't pay off your card every month.

Sixthly, are you paying your card through online banking? If so, make sure that the funds are paid to your credit card company several days in advance of the due date. Otherwise a $39 penalty charge could be assessed to your account. If paying by mail, send out payment 7-10 days before the due date. You may think that your payment is going to your Virginia bank's local payment center when it will, instead, be sent to a South Dakota post office box. The two day difference in mailing time could spell the difference between your card getting their on time or being late.

Seventhly, will one late payment to your account change the original terms of your agreement? That 11.9% interest rate you enjoyed could suddenly jump to 23% even 30% or more if you are late just once with a payment. Don't take a penalty APR lying down; contact the credit card company and politely insist that they remove the penalty interest rate at once.

No credit card is worth it to you if the credit card company socks you with a huge APR, annual fees, penalty fees, and the like. Read the updated terms of agreement that will come in the mail with your card from time to time to learn what terms they changed unilaterally. If something has been changed that works against you, contact the credit card company and tell them that you reject their changes. They may threaten to close your account, but if they do simply move on to another hungry credit card provider as there are thousands of them out there.

Finally, pull your free copies of your annual credit reports at AnnualCreditReport.com. Take care of the errors and make certain that no unwarranted negative reports are included with your report. Pay a few extra dollars and you can obtain your credit scores too. Your credit score is the ultimate number that determines the interest rate you will pay on every loan.

Credit card offers, they’re everywhere! They appear in your mailbox. They pop up while you’re surfing the Internet. They’re in slick brochures next to the cash register or gas pump. They’re in full-page ads in the Sunday papers.

If you need a new credit card, how do you choose? You should evaluate each offer carefully, and to do that you must understand these essential terms.

Annual Percentage Rate (APR):
The interest rate charged on your account balance. (But see "Balance Calculation Methods," because the rules for computing interest from your balance and your APR can vary.) Your statement will usually show the APR and a monthly and/or daily rate based on the APR that’s actually used to calculate your monthly interest. There may be several APRs applicable to different portions of your balance, for example an introductory rate, a regular purchase rate, and a regular cash advance rate.

A fixed APR is set by the credit card company, which can generally change it with as little as 15 days advance notice, especially if you run afoul of any of the "gotchas" in the terms. These "gotchas" are often very consumer-unfriendly. For example, many companies these days reserve the right to raise your rate if you’ve been late on a payment to another, unrelated company.

A variable APR is tied to some widely used economic index, such as the Prime Rate. It may be stated as "prime + x%, currently y%," for example "prime + 7%, currently 13.5%." This means that when the Prime Rate is 6.5%, your APR is 13.5%. When the Prime Rate goes up or down, so does your APR. But beware, because some of the same "gotchas" apply to variable APRs as to fixed APRs. Read the fine print. It may state that if you’re late with one payment, your APR will no longer be variable but will rise to an exorbitant fixed rate, usually over 20%.

The penalty APR is the rate to which your APR will immediately be raised when you violate any of the "gotchas" in the terms. This rate is usually at least 50% higher than the regular APR. Again, be sure to read the fine print to see what situations will trigger the penalty APR. You’ll often see these: failure to pay this or any other account on time, exceeding your credit limit on this or any other account, excessive credit balances on your accounts in aggregate.

Balance Calculation Methods:
These are important to understand, because your APR is only part of the story when it comes to calculating the interest you’ll be charged each month. The other part is how the balance is calculated to which the APR is applied. In any case the balance is multiplied by the daily or monthly interest rate. But the balance calculation is not as straightforward as you might think.

1. Two-Cycle Balance. This is the worst method from a consumer’s point of view because it can lead to the highest interest calculations. Unfortunately, it’s also becoming the most widely used method. To calculate the balance, add together the average daily balances for the current billing period (sometimes even including new charges) and the previous period. Here’s why this is so unfriendly to you. Say you have run a balance for a few months and finally pay it from $200 down to zero at the end of May. You think it’s safe to use the card in June for a new $100 purchase, and if you pay the $100 by the end of the June grace period, you won’t owe any interest on it. But you’re wrong. Since your average daily balance in May was not zero (say it was $120), and since you used the card in June, your interest will be calculated on May’s average balance again, so even if you pay the whole June purchase in June, you will still owe additional interest. In other words, you must wait two months, allow the account to cycle once with a zero balance, before it’s safe to use it again - "safe" in the sense that you won’t incur extra interest if you pay the balance in full by the end of the grace period.

2. Average Daily Balance. This was once the most common calculation method and is still popular. Add the daily balance for each day in the billing cycle, then divide by the number of days in the cycle. Depending on the terms, this may or may not include new charges.

3. Adjusted Balance. This is the best method from a consumer’s point of view, but it’s rapidly going the way of the dodo. Take the balance at the beginning of the billing cycle, then subtract any payments or other credits recorded during the cycle. Do not include new charges during the cycle. For example, if your beginning balance was $1200, and you paid $400 during the cycle, the balance to which your monthly rate will be applied is $800, regardless of any new charges.

Balance Transfer:
This means that you’re charging card X to pay off (all or part of) the balance on card Y. So the balance is, in effect, transferred from card Y to card X. Why would you want to do this? Usually to take advantage of an introductory low interest rate when applying for a new card. Look closely at the terms. Sometimes these introductory rates last only a few months. The best ones are for the life of the balance. You will often have to pay a transaction fee equal to 3% of the balance transferred. Sometimes these fees are capped at $75 or so. Be sure to see whether or not the transaction fee exceeds what you’ll save in interest. If so, don’t do it. Sometimes the credit card company will agree to waive the fee, especially on a new account. Don’t be afraid to ask.

Cash Advance:
A cash loan charged immediately to your credit card account. Usually there is no grace period for paying off a cash advance, which means you’ll be charged interest starting from the day of the loan, even if you pay it in full by the end of the billing cycle. Also this type of charge may have a higher APR than purchases or balance transfers. Check your terms. Note that some kinds of transactions, like buying casino chips or lottery tickets, may be treated as cash advances. This can also apply to writing a purchase check to your own bank account. Be sure to read the fine print.

Credit Limit:
The upper limit on your account balance. Exceeding it may result in penalties. Be very careful if your balance is close to the limit ("maxed out"), because you can exceed it without charging anything new if you fail to pay enough. Remember that just because the company has approved you for a certain limit doesn’t mean you can afford to take on that much debt.

Disclosure Chart:
An important portion of the Terms and Conditions statement. It’s a little bit like the Nutrition Statement on a food package because the law dictates what has to be listed here. If you can’t stand to read all the fine print, be sure that you read this part.

Credit card offers, they’re everywhere! They appear in your mailbox. They pop up while you’re surfing the Internet. They’re in slick brochures next to the cash register or gas pump. They’re in full-page ads in the Sunday papers.

If you need a new credit card, how do you choose? You should evaluate each offer carefully, and to do that you must understand these essential terms.

Annual Percentage Rate (APR):
The interest rate charged on your account balance. (But see "Balance Calculation Methods," because the rules for computing interest from your balance and your APR can vary.) Your statement will usually show the APR and a monthly and/or daily rate based on the APR that’s actually used to calculate your monthly interest. There may be several APRs applicable to different portions of your balance, for example an introductory rate, a regular purchase rate, and a regular cash advance rate.

A fixed APR is set by the credit card company, which can generally change it with as little as 15 days advance notice, especially if you run afoul of any of the "gotchas" in the terms. These "gotchas" are often very consumer-unfriendly. For example, many companies these days reserve the right to raise your rate if you’ve been late on a payment to another, unrelated company.

A variable APR is tied to some widely used economic index, such as the Prime Rate. It may be stated as "prime + x%, currently y%," for example "prime + 7%, currently 13.5%." This means that when the Prime Rate is 6.5%, your APR is 13.5%. When the Prime Rate goes up or down, so does your APR. But beware, because some of the same "gotchas" apply to variable APRs as to fixed APRs. Read the fine print. It may state that if you’re late with one payment, your APR will no longer be variable but will rise to an exorbitant fixed rate, usually over 20%.

The penalty APR is the rate to which your APR will immediately be raised when you violate any of the "gotchas" in the terms. This rate is usually at least 50% higher than the regular APR. Again, be sure to read the fine print to see what situations will trigger the penalty APR. You’ll often see these: failure to pay this or any other account on time, exceeding your credit limit on this or any other account, excessive credit balances on your accounts in aggregate.

Balance Calculation Methods:
These are important to understand, because your APR is only part of the story when it comes to calculating the interest you’ll be charged each month. The other part is how the balance is calculated to which the APR is applied. In any case the balance is multiplied by the daily or monthly interest rate. But the balance calculation is not as straightforward as you might think.

1. Two-Cycle Balance. This is the worst method from a consumer’s point of view because it can lead to the highest interest calculations. Unfortunately, it’s also becoming the most widely used method. To calculate the balance, add together the average daily balances for the current billing period (sometimes even including new charges) and the previous period. Here’s why this is so unfriendly to you. Say you have run a balance for a few months and finally pay it from $200 down to zero at the end of May. You think it’s safe to use the card in June for a new $100 purchase, and if you pay the $100 by the end of the June grace period, you won’t owe any interest on it. But you’re wrong. Since your average daily balance in May was not zero (say it was $120), and since you used the card in June, your interest will be calculated on May’s average balance again, so even if you pay the whole June purchase in June, you will still owe additional interest. In other words, you must wait two months, allow the account to cycle once with a zero balance, before it’s safe to use it again - "safe" in the sense that you won’t incur extra interest if you pay the balance in full by the end of the grace period.

2. Average Daily Balance. This was once the most common calculation method and is still popular. Add the daily balance for each day in the billing cycle, then divide by the number of days in the cycle. Depending on the terms, this may or may not include new charges.

3. Adjusted Balance. This is the best method from a consumer’s point of view, but it’s rapidly going the way of the dodo. Take the balance at the beginning of the billing cycle, then subtract any payments or other credits recorded during the cycle. Do not include new charges during the cycle. For example, if your beginning balance was $1200, and you paid $400 during the cycle, the balance to which your monthly rate will be applied is $800, regardless of any new charges.

Balance Transfer:
This means that you’re charging card X to pay off (all or part of) the balance on card Y. So the balance is, in effect, transferred from card Y to card X. Why would you want to do this? Usually to take advantage of an introductory low interest rate when applying for a new card. Look closely at the terms. Sometimes these introductory rates last only a few months. The best ones are for the life of the balance. You will often have to pay a transaction fee equal to 3% of the balance transferred. Sometimes these fees are capped at $75 or so. Be sure to see whether or not the transaction fee exceeds what you’ll save in interest. If so, don’t do it. Sometimes the credit card company will agree to waive the fee, especially on a new account. Don’t be afraid to ask.

Cash Advance:
A cash loan charged immediately to your credit card account. Usually there is no grace period for paying off a cash advance, which means you’ll be charged interest starting from the day of the loan, even if you pay it in full by the end of the billing cycle. Also this type of charge may have a higher APR than purchases or balance transfers. Check your terms. Note that some kinds of transactions, like buying casino chips or lottery tickets, may be treated as cash advances. This can also apply to writing a purchase check to your own bank account. Be sure to read the fine print.

Credit Limit:
The upper limit on your account balance. Exceeding it may result in penalties. Be very careful if your balance is close to the limit ("maxed out"), because you can exceed it without charging anything new if you fail to pay enough. Remember that just because the company has approved you for a certain limit doesn’t mean you can afford to take on that much debt.

Disclosure Chart:
An important portion of the Terms and Conditions statement. It’s a little bit like the Nutrition Statement on a food package because the law dictates what has to be listed here. If you can’t stand to read all the fine print, be sure that you read this part.

If you ask most 18 - 24 year olds what their life's most pressing worries are, chances are most of them will cite student debt somewhere near the top. However, while students continue to depend on large student loans to get them through their higher education, their rates of credit card usage are considerably lower than the national average: while 66% of Britian's population own a credit card, only 24% of 18-24 year olds do, and even fewer use their credit cards actively.

APACS, the UK Payments Association, has recently launched a credit card advice guide for students, called "Cards and Students", which aims to provide them with key facts and tips on how to manage responsible borrowing whilst at university. Along with full financial advice for new students, "Cards and Students" provides tips towards achieving good financial management; advice on protecting against fraud; and a list of ten questions to ask before choosing a credit card.

APACS initiative seems to have met a certain need in the student market; as the cost of living continues to spiral and the advent of top of fees this year causes even more financial pressure building up, this kind of scheme of financial advice targeted at a social group who sorely needs it is definitely a breakthrough. Sarah Quinn, APACS' Director of Communications comments:

"This advice guide is designed as a quick and easy checklist for students. It provides information they need to make informed decisions about their personal finances and clearly explains the various card payment options available to them.

“Nowadays, most students expect to be in debt when they graduate and whilst it might be impossible to avoid student loan debt, getting a handle on managing your finances can make the world of difference. We have an important role to play in educating all people, not just students, about responsible borrowing and the benefits and risks of using plastic cards."

While the rate of student debt is growing rapidly, students in Britain may perhaps be thankful that the national average student credit card usage in the UK is much smaller than that in the United States; a survey by Young Money magazine in 2002 concluded that the average American student owned three credit cards: at least 78% had at least one, and nearly 32% had four or more credit cards. Although the average British student's credit card debt is not quite this staggering, it does indicate the general direction in which credit card usage can spiral unless brakes are imposed.

If you travel frequently, you can surely benefit from travel reward credit cards. However if you only travel once in a while, you may find that the benefit of these credit cards is offset by high APR annual fees and hidden charges.

Some travel reward credit cards are specific to airline travel, or even to one specific airline. They might also provide rewards if you purchase gas, stay at hotels, rent cars, or if you buy from retail shops. You should asses what type of use you might make of travel reward credit cards, before you choose from credit cards offers. You should also find cards that offer the highest savings on the types of use you will often make of them.

Even if you are not the traveler, the discount that these credit cards offer may still be useful. For instance, if you are a recruiter who is flying job applicants in for interviews, you might find the airline or car rental perks advantageous.

Travel reward credit cards can offer cash advances that can be very handy when you travel. However you should remember to inquire about the charge for cash advances. They can also provide travel insurance that includes medical evacuation, emergency expatriation, lost luggage, and other worldwide emergencies. These can be difficult to resolve without adequate pre-travel preparation and purchase of coverage.

These cards may also offer points or discounts if you purchase from retail stores, although most cards do not unless you are carrying over a balance at the end of the month. Remember to check and see if the travel reward credit cards you are considering have a maximum limit on the monetary value on which they will offer rewards.

It is also helpful if you are familiar with the schedule and the value of the travel rewards that these credit cards may offer. You need to know if the credit card company will send the money or do you have to wait until the end of the year to get your cash from these credit cards. The majority of travel reward credit cards will offer Canada and U.S. round tip flights at the reward redemption value of a single round trip ticket for every 25,000 miles you purchase on your credit cards.

Have you heard about travel reward credit cards? These cards can be very beneficial to people who travel regularly. However, those who rarely travel might find that any benefit offered by these credit cards is offset by a high APR, annual fees and other types of charges. However, even if you are not the traveler, the discount that these credit cards offer may still be useful. For instance, if you are a recruiter who is flying job applicants in for interviews, the airline or car rental perks will be advantageous for you.

There are travel reward credit cards that are specific to airline travel, or even to one specific airline. They might also provide rewards if you stay at hotels, rent cars, purchase gas, or if you pay for merchandise from retail shops. It would be wise if you can asses what type of use you might make of travel reward credit cards, before you choose from credit cards offers. Try to take advantage of offers with highest savings on the types of use you will often make of them.

Some travel reward credit cards offer cash advances that can be very handy when you travel. However you should remember to inquire about the charge for cash advances. They can also provide travel insurance that includes lost luggage, emergency expatriation, medical evacuation, and other worldwide emergencies. These can be difficult to resolve without adequate pre-travel preparation and purchase of coverage.

These cards may also offer points or discounts if you buy from retail stores if you are carrying over a balance at the end of the month. Try to check and see if the travel rewards credit cards you are considering have a maximum limit on the monetary value on which they will offer rewards.

People who travel frequently can benefit from discounts that travel rewards credit cards offer. But those who don’t travel often can find that any benefit may be offset by the high APR annual fee and other charges that come with these credit cards. These credit cards can also come in handy even if you are not the one traveling. If you have relatives who visit you regularly every year, they can also take advantage of airline and car rental perks that are offered by travel rewards credit cards.

Travel reward credit cards can be specific to airline travel, or even to one specific airline. They might also provide rewards if you pay for fuel, rent cars, stay at hotels, or if you buy from retail shops. You should consider what type of use you might make of travel reward credit cards, before you choose from credit cards offers. You should also find cards that offer the highest savings on the types of use you will often make of them.

Some travel reward credit cards offer cash advances that can be very helpful when you travel, but you should remember to inquire about the charge for cash advances. They can also provide travel insurance that includes medical evacuation, emergency expatriation, lost luggage, and other worldwide emergencies. These can be difficult to resolve if you neglected to consider adequate pre-travel preparation and purchase of coverage.

These cards may also offer points or discounts if you purchase from retail stores, although most cards do not unless you are carrying over a balance at the end of the month. Check and see if the travel rewards credit cards you are considering have a maximum limit on the monetary value on which they will offer rewards.

Try to get information about the schedule and the value of the travel rewards that these credit cards may offer. You need to know if the credit card company will send the money or do you have to wait until the end of the year to get your cash from these credit cards. A few travel reward credit cards offer Canada and U.S. round tip flights at the reward redemption value of a single round trip ticket for every 25,000 miles you purchase on your credit cards. If you want to enjoy the best benefits from these credit cards, you should compare as many offers as possible to find the most advantageous deals.

False:

An impressive salary doesn’t translate into a good credit report or good credit score. It’s true that a lender will look at the amount of money you make to determine your ability to make your monthly payments on the loan but, that’s as far as it goes.

Your credit worthiness is based upon your credit history, not your salary. Creditors use a FICO score to determine if you are qualified to get a loan, and at what interest rate that loan needs to be paid back at if you are approved.

FICO scores range from 400 to 850 points. The higher your score, the lower your interest rate will be and the easier it will be for you to obtain credit. Here is how your FICO score is calculated:

35% - Payment History – This is the bulk of your score but not the end all, cure all. If you just make timely payments, that doesn’t mean you will have a good score but it most definitely dramatically effect’s your score if you don’t.

30% - Amounts Currently Owed – The FICO system takes into consideration the amount of existing lines of revolving credit you currently have.

It calculates the percentage of available credit on those existing lines. For an example: You have 3 credit cards with $2,500 limits on each of them. That gives you $7,500 worth of existing credit. You currently carry $2,000 balances on each one ($6,000 total). Take the $6,000 and divide it by $7,500. You will end up with an 80% utilization rate and a lower score because of it. Most lenders like to see this utilization rate below 30% so, pay your existing debt down if they are above 50% to give you a better chance at getting approved for a new loan at a good interest rate.

15% - Length of Credit History - The system will take into consideration the length of time you have had your existing lines of credit.

The older the account the better rating it gets (as long as it is in good standing). The longer you’ve been paying your bills responsibly and on time, results in a good track record that lenders will feel comfortable with in giving you those “big ticket” loans; home, auto, etc. It will also translate into a better interest rate for you, saving you thousands of dollars in the long run.

10% - New or Recent Credit Lines Opened - Don’t be too quick to open or apply for so many credit cards or loans at any given time. It can indicate to a lender that you are desperate and in dire need of a credit line. It also can result in multiple lenders pulling your credit report in a short period of time. These inquiries also affect your credit score.

You can pull your own credit reports anytime you want to and that will not affect your score.

10% - Types of Credit Cards used - Contrary to popular belief, a debit card with the Visa or MasterCard logo isn’t a credit card and does not help your credit profile. The FICO system calculates revolving credit cards (Visa, MasterCard, Amex, etc.), department store credit cards (JC Penney, Mervyn’s), Automobile Loans, Mortgages. Each type of line of credit has a different value assigned. A good payment history on a department store card doesn’t have the same weight as someone who is making payments on a mortgage or auto loan.

So, how does your FICO score translate into the interest rate you can expect on a loan (if you qualify)? Here is an example using a $216,000 30-year, fixed rate mortgage:

So you need to apply for a new credit card. Well, have you thought about applying for it online?

All of the major credit card issuers, and most of the minor ones, now allow you to apply via their websites. This offers a number of advantages compared with the old method of filling in a paper form and sending it by snail mail.

One big advantage is speed. Your application will be instantly received by the card company and at least some of the processing will be handled automatically. Admittedly the card issuer will want to make certain checks with credit reference agencies to ensure that you are creditworthy, so you shouldn't expect an immediate yes or no. However, the waiting period between applying for the card and getting approval for it is likely to be as much as a week less compared with the traditional method of application.

Another big advantage of applying for a credit card on the Internet is that it is very easy to research the best credit card offers. Nowadays there are hundreds of different credit cards available, all offering different combinations of terms and incentives. It is very important to study the market carefully, therefore, rather than simply filling in the first application form that arrives in your mailbox. Independent credit card comparison sites such as make this easy by listing all the best current credit card offers, updated daily.

Once you have found a card you are interested in, go to the issuer's website and study all the details of their offer. Check in particular for low introductory rates, cashback offers and balance transfer deals. If you are happy that this is indeed the card for you, look for a button labelled "Apply Now" or similar. Click on this and a new page should open, with an online application form ready for you to fill in.

The details you will be asked for are just the same as when applying for a card by mail. They will include your full name, address, telephone number, occupation, annual income, and so on. You are also likely to be asked some security questions, e.g. your date of birth, social security number and mother's maiden name. These are used to help prevent fraudulent applications.

Most people do not understand the consequences of having bad credit. They believe that they can just make mistakes with their money, and one day they will wake up and everything will be all right. However this is not true. Your personal credit is one of the most important things that a person can have in life. The ability to buy a house, a car, or finance any other major purchases will depend heavily on the quality of your credit score. If you damage your credit score then you might not be able to get financing for any major purchases at all. Or if you do get financing, then the finance company will give you the highest interest rates that are allowable by law, because you will not be able to go anyway else to negotiate a better rate. Thus having bad credit will cost you more money, and get you further into debt, which will probably damage your credit rating even more. It is fairly easy to see that if you allow yourself to damage your credit, then it will be very difficult to get your credit rating back in good standing.

Once you have bad credit you will quickly realize just how damaging it can be to your finances. More than likely you will start to look for ways to get your credit rating back in good standing. You will definitely see many different advertisements that claim they can get your credit back in good standing and negotiate on your behalf. These companies are good, but they are basically doing the same thing that you can do for yourself, except that they usually charge you for their services. The charges will just make it that much harder for you to get your bad credit erased. However you can call your creditors and try to negotiate for yourself and most of the time creditors will work with you to help you get your credit back in good standing. The first thing that you will want to do is contact your creditors and try to get them to lower your interest rates, or your monthly payment so that you can make payments on time, and try to erase your debts. Then once you get your debts paid off, slowly try to reestablish your credit by making small purchases and paying them off quickly.

Credit card offers, they’re everywhere! They appear in your mailbox. They pop up while you’re surfing the Internet. They’re in slick brochures next to the cash register or gas pump. They’re in full-page ads in the Sunday papers.

If you need a new credit card, how do you choose? You should evaluate each offer carefully, and to do that you must understand these essential terms.

Annual Percentage Rate (APR):
The interest rate charged on your account balance. (But see "Balance Calculation Methods," because the rules for computing interest from your balance and your APR can vary.) Your statement will usually show the APR and a monthly and/or daily rate based on the APR that’s actually used to calculate your monthly interest. There may be several APRs applicable to different portions of your balance, for example an introductory rate, a regular purchase rate, and a regular cash advance rate.

A fixed APR is set by the credit card company, which can generally change it with as little as 15 days advance notice, especially if you run afoul of any of the "gotchas" in the terms. These "gotchas" are often very consumer-unfriendly. For example, many companies these days reserve the right to raise your rate if you’ve been late on a payment to another, unrelated company.

A variable APR is tied to some widely used economic index, such as the Prime Rate. It may be stated as "prime + x%, currently y%," for example "prime + 7%, currently 13.5%." This means that when the Prime Rate is 6.5%, your APR is 13.5%. When the Prime Rate goes up or down, so does your APR. But beware, because some of the same "gotchas" apply to variable APRs as to fixed APRs. Read the fine print. It may state that if you’re late with one payment, your APR will no longer be variable but will rise to an exorbitant fixed rate, usually over 20%.

The penalty APR is the rate to which your APR will immediately be raised when you violate any of the "gotchas" in the terms. This rate is usually at least 50% higher than the regular APR. Again, be sure to read the fine print to see what situations will trigger the penalty APR. You’ll often see these: failure to pay this or any other account on time, exceeding your credit limit on this or any other account, excessive credit balances on your accounts in aggregate.

Balance Calculation Methods:
These are important to understand, because your APR is only part of the story when it comes to calculating the interest you’ll be charged each month. The other part is how the balance is calculated to which the APR is applied. In any case the balance is multiplied by the daily or monthly interest rate. But the balance calculation is not as straightforward as you might think.

1. Two-Cycle Balance. This is the worst method from a consumer’s point of view because it can lead to the highest interest calculations. Unfortunately, it’s also becoming the most widely used method. To calculate the balance, add together the average daily balances for the current billing period (sometimes even including new charges) and the previous period. Here’s why this is so unfriendly to you. Say you have run a balance for a few months and finally pay it from $200 down to zero at the end of May. You think it’s safe to use the card in June for a new $100 purchase, and if you pay the $100 by the end of the June grace period, you won’t owe any interest on it. But you’re wrong. Since your average daily balance in May was not zero (say it was $120), and since you used the card in June, your interest will be calculated on May’s average balance again, so even if you pay the whole June purchase in June, you will still owe additional interest. In other words, you must wait two months, allow the account to cycle once with a zero balance, before it’s safe to use it again - "safe" in the sense that you won’t incur extra interest if you pay the balance in full by the end of the grace period.

2. Average Daily Balance. This was once the most common calculation method and is still popular. Add the daily balance for each day in the billing cycle, then divide by the number of days in the cycle. Depending on the terms, this may or may not include new charges.

3. Adjusted Balance. This is the best method from a consumer’s point of view, but it’s rapidly going the way of the dodo. Take the balance at the beginning of the billing cycle, then subtract any payments or other credits recorded during the cycle. Do not include new charges during the cycle. For example, if your beginning balance was $1200, and you paid $400 during the cycle, the balance to which your monthly rate will be applied is $800, regardless of any new charges.

If you think that you know everything there is to know about your credit card, then you could be in for a rude awakening. Credit card providers make untold billions of dollars annually because of several closely guarded secrets that they won't easily share with you. By keeping you in the dark they can make money at your expense. Don't be beaten down as I am about to shine the light in the darkness to expose trade secrets that they hope you will never learn about.

Congratulations, you have been approved for a new major credit card! However, do not let the headiness of having a better than average credit rating skew your judgment: now is the time to get very familiar with the credit card agreement that came along with your new card.

Firstly, are you being charged an annual fee? If so, you are paying for the privilege of using a card that should not cost you one red cent until you actually buy something. The prestige of that platinum card is all smoke and mirrors; chances are the same card you are holding in your hands didn't cost your neighbor anything. Contact the credit card company and ask them to waive their annual fee.

Secondly, an introductory annual percentage rate [APR] of 0% sound great on the surface. However, how long will that introductory term last? Will your new purchases automatically climb to the inflated regular rate once the honeymoon period is over? Or, will the initial APR stay the same until your balance is paid off?

Thirdly, balance transfers are a great thing to have but only if the credit card company offers to you two things:

1. No transfer fees on balance transfers. Look closely at your statement and you could discover that a 3% transfer fee has been charged on your $5000 transfer -- that's an extra $150 you must shell out for the privilege of moving your money from one credit card to another one!

2. Low APR, but for how long? If you transfer your funds to the new card will the transferred balance stay at the fixed rate or evaporate once the introductory period has ended? On the surface, a 2.9% APR on balance transfers sounds good, but if that rate jumps up to 17.49% once the introductory period is over it becomes a good deal that has gone bad. Unless, of course, you pay off the debt before the jump in the card's interest rate occurs.

Fourthly, you do have a grace period with your card don't you? If you purchase something today will interest begin to accumulate immediately or will you get up to 25 days to pay off your balance interest free? Some credit card offers are reducing or even eliminating the grace period.

Fifthly, what sort of rewards program is attached with the card? What, you didn't know that they offered to you a rewards program? Chances are you may have to sign up for this program separately. Big note: no rewards program is worth it if you run a monthly balance, which is how the credit card companies make big money off of you. The value of your rewards will quickly be cancelled out if you don't pay off your card every month.

Sixthly, are you paying your card through online banking? If so, make sure that the funds are paid to your credit card company several days in advance of the due date. Otherwise a $39 penalty charge could be assessed to your account. If paying by mail, send out payment 7-10 days before the due date. You may think that your payment is going to your Virginia bank's local payment center when it will, instead, be sent to a South Dakota post office box. The two day difference in mailing time could spell the difference between your card getting their on time or being late.

Seventhly, will one late payment to your account change the original terms of your agreement? That 11.9% interest rate you enjoyed could suddenly jump to 23% even 30% or more if you are late just once with a payment. Don't take a penalty APR lying down; contact the credit card company and politely insist that they remove the penalty interest rate at once.

No credit card is worth it to you if the credit card company socks you with a huge APR, annual fees, penalty fees, and the like. Read the updated terms of agreement that will come in the mail with your card from time to time to learn what terms they changed unilaterally. If something has been changed that works against you, contact the credit card company and tell them that you reject their changes. They may threaten to close your account, but if they do simply move on to another hungry credit card provider as there are thousands of them out there.

Finally, pull your free copies of your annual credit reports at AnnualCreditReport.com. Take care of the errors and make certain that no unwarranted negative reports are included with your report. Pay a few extra dollars and you can obtain your credit scores too. Your credit score is the ultimate number that determines the interest rate you will pay on every loan.

If you ask most 18 - 24 year olds what their life's most pressing worries are, chances are most of them will cite student debt somewhere near the top. However, while students continue to depend on large student loans to get them through their higher education, their rates of credit card usage are considerably lower than the national average: while 66% of Britian's population own a credit card, only 24% of 18-24 year olds do, and even fewer use their credit cards actively.

APACS, the UK Payments Association, has recently launched a credit card advice guide for students, called "Cards and Students", which aims to provide them with key facts and tips on how to manage responsible borrowing whilst at university. Along with full financial advice for new students, "Cards and Students" provides tips towards achieving good financial management; advice on protecting against fraud; and a list of ten questions to ask before choosing a credit card.

APACS initiative seems to have met a certain need in the student market; as the cost of living continues to spiral and the advent of top of fees this year causes even more financial pressure building up, this kind of scheme of financial advice targeted at a social group who sorely needs it is definitely a breakthrough. Sarah Quinn, APACS' Director of Communications comments:

"This advice guide is designed as a quick and easy checklist for students. It provides information they need to make informed decisions about their personal finances and clearly explains the various card payment options available to them.

“Nowadays, most students expect to be in debt when they graduate and whilst it might be impossible to avoid student loan debt, getting a handle on managing your finances can make the world of difference. We have an important role to play in educating all people, not just students, about responsible borrowing and the benefits and risks of using plastic cards."

While the rate of student debt is growing rapidly, students in Britain may perhaps be thankful that the national average student credit card usage in the UK is much smaller than that in the United States; a survey by Young Money magazine in 2002 concluded that the average American student owned three credit cards: at least 78% had at least one, and nearly 32% had four or more credit cards. Although the average British student's credit card debt is not quite this staggering, it does indicate the general direction in which credit card usage can spiral unless brakes are imposed.

While APACS guide gives much needed advice, a large number of credit card search and credit card comparison, such as Moneynet exist to provide consumers with enough data to make an informed choice about which credit card will be best for them. Britain's leading credit card companies, like Barclaycard also offer special student credit card packages, which often include deals that are designed to ease their financial burden, such as favourable payment plans on laptops and discount vouchers from a variety of high street shops.

If you have bad credit or no credit or even a bankruptcy, you can improve your credit score.

You need all three bureaus as not all creditors report to all the bureaus.

Once you have a copy of your credit report, check it for accuracy. You can dispute incorrect items online. This is what credit card companies and lenders look at: Number of outstanding accounts and high balance. If your balances are high on many accounts, this lowers your FICO score. Pay them down.

The trick to improving your credit score is to have low balances on your accounts. Primarily on installment and credit card balances.

If you have no credit or a bankruptcy, the easiest thing to do is apply for a secured credit card. Make sure the card you get reports to the bureaus.

A note about bankruptcy: usually once the bankruptcy is discharged, you will get more credit card offers in the mail than you can stand.

Be sure to check the terms of the card. Many have tons of fees. A typical Bad credit card offer will have as much as $250 in fees and give you a $350 limit. You get a whopping $100 line of credit. Shred that one. There are better offers. You should be able to get one with little or no fees.

Use your credit cards wisely, but do use them. Use them and pay them off right away. This does two things: the credit bureaus see your good history and the credit card company will increase your limit.

Doing this just once can improve your FICO score 20 to 50 points.

It will take some time but over time your FICO score will continue to improve. After about a year or so, apply for another card with a low or no interest rate. When you get that one transfer your balances to the better card and close the other accounts.

The automobile industry is probably the only industry that defies economics. A vehicle is a depreciable asset, yet, vehicles are bought and sold by the thousands daily.

One of the reasons it defies economics is because transportation is needed everywhere, especially in big cities like Los Angeles, Houston, TX and others. Basically, people need a vehicle to move around to commute to work, run errands, go out, and so on. At the level of the ego, people want to drive a luxurious vehicle, a vehicle that defines where he/she stands at the society level.

Male and female teenagers feel more confident and more attractive driving a car they really like. It could be a big truck, a sport car, or an SUV. Adults like to drive a comfortable car that befits their personality. Some have a sense of luxury, of class, uniqueness, and sports.

The song says, “you can’t get always what you want,” and that happens a lot in many areas of people’s lives. It happens when it comes to driving a car. Many people because of circumstances get in big debts, lose their jobs, and then become unable to pay off their debts.

Because of that many people get their vehicles repossessed and their credit rating drops. It then becomes difficult to get an auto loan through a bank, or an auto dealer. Many dealers claim to pre-approve people, but there are “certain restrictions that apply.”

These restrictions include but are not limited to: “Yes, you are pre-approved for an auto loan, but you need a cosigner.” "Yes, you are pre-approved, but you need at least $2,500.00 as a down payment.” "Yes, you are pre-approved, but, you can only buy this car you don’t want to drive, so take or leave it.” "Yes, you are pre-approved, but you can only buy a pre-owned car that has no more than 30,000 miles on it."

Do you see, what I mean? It becomes really difficult to drive the car you really want if you are under these circumstances!

Now let me tell you my story and see how you can start driving your dream car, and if you are already driving a car you can trade it for the one you really, and truly want.

I had really bad credit, and I could not get any car dealer or banks to approve me unless someone would co-sign for me or I came up with a huge down payment. As a parent with bills and responsibilities saving a big lump of money for a car down payment was not going to happen.

That made feel very frustrated, and down at the same time because I could not get the car I wanted. Then, a good friend of mine referred me to an auto loan company that specializes in bad credit auto loans, and re-finance. I applied and I was approved in less than one day! I was able to buy the car I wanted! I was mailed a check with a limit based on my income, and the interest rate based on my credit score.

Having a blank check in my hands gave me a great advantage. In fact, it gave me powerful confidence to negotiate the best cash deal for the car I wanted! Car Sales People were powerless, and I was able to tell them take it or leave it! It made me feel in control, and when I purchased my car I was really happy and proud of myself that I came out a winner on the deal.

Its All About the Details

In Part II of this article, we looked at some of the things that people to need to watch out for in implementing this balance transfer arbitrage strategy. It wasn't the complete list, but it was enough to make it crystal clear that careful attention has to be paid to the details - the fine print - in order to profit from balance transfers. As I mentioned in Part I, the details are in the terms & conditions of the offer. Today, we're going to examine the terms & conditions from an actual balance transfer offer I received in the mail to determine if it is good enough to make some free money with if we accept the issuer's credit card. I recently received an offer from American Express for its Blue Cash card, so we are going to take a look at the terms & conditions for Blue Cash.

Here's What We're Looking For

Here are 4 things to know when screening balance transfer offers for this arbitrage strategy:

(1) The APR for the balance transfer;
(2) The transaction fee to transfer the balance and the caps;
(3) The annual fees; and
(4) The length of time for the promotional interest rate.

In reviewing at the terms & conditions for the American Express Blue Cash card, I noticed the following:

(a) There's a 4.99% APR for the life of the balance on balance transfer requests submitted with the credit card application - any subsequent balance transfers will be subject to the substantially higher, standard purchase APR;
(b) There's no balance transfer fee with the offer, but subsequent balance transfers may be subject to an unknown balance transfer fee;
(c) No annual fee; and
(d) The 4.99% APR is good for only 6 months.

A few other details: American Express has its own bank and by accepting their offer to transfer credit card balances to that bank, you authorize it to forward the balance transfer check to the credit card company the balance is being transferred from. The card also offers up to 5% cash back on purchases and has a 0% APR on purchases for the first 6 months of membership, but after that the purchase APR rises significantly. Depending upon your credit history the purchase APR, which is a variable one, could range from 13.24%, 15.24% or 18.24%.

The Verdict is In

If you've read Parts I & II of this article, you know that the objective of the balance transfer arbitrage strategy is to make a profit on the spread between what it costs you to borrow the money and the net interest you pocket on the borrowed money after you pay off the card balance. The greater the spread, the greater the opportunity to make a profit and the narrower the spread, the smaller the opportunity to make a profit. Based upon its terms & conditions, the American Express Blue Cash card offer is an extremely poor candidate for the arbitrage game. For starters, the balance transfer APR of 4.99% makes our cost of funds too high to overcome. 0% APR is best. Second, the 6 month time frame is too short. Look for a 12 to 15 month time frame. Lastly, by accepting the offer, a cardholder authorizes American Express' bank to issue and forward the balance transfer check to his or her old credit card issuer. This completely knocks out any chance of making money with this strategy! The offer must permit a cardholder to write a check to himself/herself, and must be able to do so without the check being treated as a cash advance. Oh well, its time to google "balance transfer offers" because, I really don't want to sort through stacks of junk mail again.

Over one million people file for personal bankruptcy every year. Consumer debt is a huge problem in America today. As a result, many people don't know how they got in debt and don't know where to turn for help. Many people go to credit counseling agencies for assistance.

A credit counseling agency is defined as a company that advises you on managing your money and debt and helps you develop a budget as well as offers free workshops. Some credit agencies or credit repair companies may advise you on managing your money, restore your debt and may develop a budget (spending plan) for you.

When choosing any agency to assist with repairing your credit ask what services are provided based on what your needs are. If you are only concerned with restoring your credit then search for those types of companies. If you are looking for a full service company then look for credit counseling agencies or credit repair service companies.

However, I would use caution when hiring a credit counseling agency or credit repair service. Here are some red flags when considering working with a credit repair counseling agency or a credit repair company:

1. If a company provides guarantees that they can increase your credit score by a certain amount of points don't use them. They are no guarantees because information can be removed from your credit report and your credit score will increase but it depends on your credit score, the type of credit that was delinquent, your debt-to-income ratio and many other factors.

2. Check out the companies' website and check to see how long the company has been in business.

3. Check to see what fees are being charged. I charge my customers a one-time flat fee of less than $200. If you have to pay a registration or initial fee and then a monthly fee of X dollars that defeats the whole purpose of getting out of debt.

4. If you are already working with a credit repair counseling agency or credit repair company ask to see sample letters that will be sent to your creditors. If a company refuses to show you (which most probably will) then you have no idea what was stated in the letter. I give all of my clients companies of the letters I write to repair their credit.

5. Don't do business with a company that says they will use rapid credit scoring to repair your credit. This method jams the credit reporting agency system by sending many letters about the same issue for inaccurate and accurate information. The system gets confused and removes the items mentioned in the letter from the person's credit report. However, the credit reporting agencies do audits of their systems and eventually the items will be put back on your credit report.

6. Ask the company w

The following tips are basic principles about obtaining and using credit cards that can save you some serious cash and keep you out of debt.

10. Have at Least One Credit Card for Emergencies – While we highly recommend having a rainy day fund for emergencies rather than relying strictly on credit cards, having a credit card with a low interest rate “just incase” is a good idea.

9. Rewards are not so Rewarding – Rewards can be a good thing, but only if used correctly. Rewards cards typically have a higher interest rate than regular credit cards, with the value of the rewards justifying the extra expense. The rewards are not usually as valuable as you may think. Typically the value of the reward is around 1 cent per dollar charged and often the rewards expire at the end of the year if you don’t use them. If you pay off your balance in full each month and charge a lot they can be worth while, otherwise you’re better off with a non-rewards card.

8. Have Two Credit Cards – If you do plan to take advantage of rewards, we recommend you carry two credit cards. The rewards card for making your daily expenses that you will pay off in full each month and a second card with the lowest possible interest rate to cover any emergency expenses when you won’t be able to pay off the balance in full by the end of the month.

7. Shop Around – Don’t apply for the first “pre-approved” offer you receive in the mail or any for that matter. Do the research for yourself. There are plenty of sites such as CreditorWeb.com that allow you to compare hundreds of credit card offers with a simple search. You’ll get the best deal by shopping around.

6. Read the Terms – The terms and conditions are the equivalent of the disclaimer you hear on car lot commercials. It cuts through the hype and reveals the true terms of the credit card such as what happens when you miss a payment and what you’re really getting from the rewards. Most terms are not that long, usually around one full page, it’s worth your time to read them.

5. Ask for a Better Rate – Once you have been a credit card customer for a few months call them and ask for a better rate. They won’t laugh at you, they get hundreds of these calls every day and if you’ve been a good customer it usually will work. Credit card companies work hard to obtain you as a customer and they will work hard to retain you.

4. Pay Off Full Balance Every Month – All credit cards have high interest rates compared to other types of loans. You should never plan to carry a balance on a credit card. If you must make a large purchase that you do not have the money for at the time, obtain a loan or a revolving line of credit from your bank. You will save a bundle on interest rates.

3. Work with Retention Department – If you ever feel you are being treated unjustly by your credit card issuer, a simple threat to leave will get you transferred to the retention department. This department will be MUCH more helpful to you and will usually do whatever it takes within reason to get you to stay.

2. Do not get a Cash Advance – This is the second worse thing you can do with a credit card, short of missing a payment is getting a cash advance. The cash advances usually come with a very high interest rate. What makes it worse is the fact that with most companies this higher rate credit will not get paid off first, or even in the order that you took it out. They will apply your payments towards all the lower rate purchases and will only begin paying off your high interest cash advance will all other items on that credit card have been paid off.

1. Never, EVER Miss a Payment – This is the absolute worse thing you can do with a credit card. Not only will you incur a late fee, but your interest rate will also skyrocket. In addition it will be a negative blemish on your credit report which can cause the rate on any other loans or credit cards you have to increase as well as insurance rates. It also makes you less likely to get approved for future credit.