Over the past two years, the Federal Reserve has raised interest rates substantially. Consequently, credit card annual percentage rates have followed suit. Nearly all credit cards tie their interest rates to the prime rate, which has doubled to 8% from 4% during the string of rate hikes that began in 2004. This has led to interest rates on credit cards rising by 30% or more. Since August of 2006, the Federal Reserve has kept interest rates steady, and many economists believe the next move may be a reduction in rates. However, the rate reductions have yet to begin, and credit card interest rates remain relatively high.

For those who carry balances on their credit cards, high interest rates have resulted in higher monthly bills, with many seeing their minimum payment increase substantially. Fortunately, now, more than in recent years, 0% credit cards offer a safe harbor from high rates. There are two basic types of 0% credit cards: those that offer a 0% rate on balance transfers, and those that offer a 0% on purchases. The best credit cards offer 0% interest on both. How much savings can these credit cards provide? Let’s take a look at the math.

Let’s assume you’re carrying a balance of $10,000. If you simply pay the minimum each month, you will accrue close to $2000 in interest over the course of a year, thanks to daily compounding balances (too bad savings accounts don’t pay that type of interest). With a 0% balance transfer, you can expect to save all of that money, plus, you’ll be given time to pay down that debt. When the 0% period expires, not only is there a chance your interest rate will be lower, but, if rates do not go down, you can always transfer the balance to another 0% credit card. Plus, if you make a minimum payment of $150 a month, your balance at the end of the year will be closer to $8200, rather than $12,000. That’s quite a difference.

Now, if you’re fortunate enough to have no credit card debt, a 0% interest rate can be handy tool to avoid interest expenses on new purchases and free up some cash in the short term. Need a new fridge? Have to fix your car? Want granite counters for the kitchen? With a 0% credit card, you can defer the cost of these expenses for a year while taking advantage of high interest rates. How? By placing the cash that would have left your bank account into a high-yield savings account and taking advantage of rewards credit cards.

Let’s assume you will make $10,000 of purchases over the next few months. Using a credit card with a 0% interest rate and 1% cashback rewards, coupled with a high-yield savings account with a 4% interest rate can put about $500 extra in your pocket over the course of the year.

Of course, not everyone pays their balance in full each month. With average credit card interest rates in the 12% to 15% range, carrying a monthly balance of only $1000 can cost close to $150 a year. Saving $150 in interest charges may not be a fortune, but its surely enough to buy a nice dinner with a good bottle of wine.

No matter how you use your credit card, a 0% interest credit card can have a positive effect on both short and long term cash flows. Given that the alternative is paying more than 12% in interest, choosing a 0% credit card in this atmosphere of high interest rates is a no-brainer.

The Federal Trade Commission through an act of Congress has authorized that the three major credit reporting bureaus offer one free copy of your credit report to you on an annual basis. This decision has proven to be a boon for consumers who can now find out what creditors are saying about them and quickly respond to errors and omissions. Not all offers for obtaining free credit reports are truly free. Read on and we'll explore how you can know if an offer is right for you.

First off, only AnnualCreditReport.com is the internet site established by Experian, Trans Union, and Equifax to provide free credit reports for consumers directly by the three main credit reporting bureaus. At this site, you can get one free copy once annually from each company, but you will have to pay five to eight dollars to obtain your credit score, which is separate from your credit report. You don’t have to order your score, but it is valuable information that can be handy to you.

Secondly, there are companies out there who claim to offer free copies of your credit report and credit score through them. On the surface these could look like better offers, but they always have a string attached, namely other services you must purchase. These services can include credit monitoring, credit watch, and the like. Fees for these services vary, but you'll probably pay $8 to $12 per month for most services. Add it all up and you will dish out more than $100 for this type of plan while it will only cost you $20 or less through the FTC’s approved site at AnnualCreditReport.com

Finally, It is not wrong for these companies to offer these services to you. It can be a bit misleading, but they usually are upfront about what is offered to you through their plans. However, if you pull your credit reports on a regular basis, then you simply don't need their credit watch service. Just keep an eye on things through your free reports and mostly everything should be okay.

The word " Credit " is a derivative of the Latin word “creditus” (“to believe”), is equivalent to trust. A person or an institution is giving you their services or merchandise and trusts that you will pay for these items at a later date.

Credit has become part of our daily financial transactions. As people make fewer cash purchases and rely more heavily on credit cards, debit cards, and automatic banking transactions, your personal credit history is linked to every purchase you make. Consumer credit reports are widely available from the three major credit bureaus – Equifax ( http://www.myFicoCredit.com ), Experian, and TransUnion.

From electric and cable bills (non traditional credit reports ) to credit cards, vehicle financing, mortgages, personal loans, and even job applications, people are viewing your credit rating more often than the average consumer realizes. This is one reason is has become more important than ever to maintain a good credit history. Making payments on time, avoiding unnecessary debt, and keeping your spending under control are ways to ensure your good credit doesn’t become bad credit.

If you have damaged credit, the negative information can appear on your credit report for seven to ten years, depending on the type of debt incurred. There are ways to remove bad credit from your consumer credit report, but it takes time and effort by someone who knows what they are doing. If credit problems from the past are marring your good credit today, contact some credible credit repair companies to help you.

Credit card is just a piece of plastic card with your name and some sort of a credit card account number attached to it. You might as well think that it is just a simple identification card if you have not tried getting one for yourself.

However, many individuals are craving to own a credit card. Beyond that piece of plastic card lies an opportunity of making purchases without using cold cash. Yes! With just a credit card, you will be able to make several purchases on different establishments accepting credit card payments. Groceries, department stores, specialty shops-almost every establishment is now accepting payments through credit cards.

The introduction of credit cards opens the door for a "cashless society". Aside from the convenience of using credit cards for purchasing purposes, your hard-earned money will be save from crooks who want to take your money away from you or simple misplacements. In addition, you will be able to track your expenses through the summarized transactions that you have made using credit cards. You will be able to manage your expenditures without neglecting anything.

There are now millions of Americans who own several credit cards under a single name. With more and more individuals applying for it, credit card companies are becoming competitive. They are infusing new ideas to get more customers on their respective clientele bases. In fact, there are several credit card companies who teamed up with other corporate entities to offer rewards to credit card owners.

One of the corporate entities that they usually team up with are commercial airlines. Travel and credit now go hand to hand to provide clients free air miles every time they will make purchases using credit cards. Thus, it paved the way for the advent of airline credit card, which is ideal for individuals who are into traveling.

These airline credit cards are produced mainly by a particular credit card company, though it also displays the company name or logo of their airline partners. If you make any purchases using airline credit cards, you are entitled to earn points that you can exchange for free air miles. In most cases, you need to acquire necessary points before getting a free airline ticket. Thus, you need to read the terms and conditions of the card so that you will be able to understand how the points system works. The point system varies from airline to airline, so always check with your credit card companies about the guidelines for such reward points.

Airline credit cards are ideal and convenient for those individuals who travel with a specific airline. Though the fees tend to be higher with this type of credit cards, but you will be able to earn free airline miles which are comparatively cheaper than purchasing a separate airline ticket.

As a matter of fact, you can make better deals with airline credit cards than other types of credit cards. For instance, your airline fees with airline credit card A are amounting to $200 per year and the fees with the non-mile, non-airline credit card B are $100 per year. If you are frequently traveling for business, airline credit card A will help you earn 4 free airline tickets which can save you as much as $400. It is quite flexible in the sense that you do not need to purchase unnecessary airline tickets every now and then. You can exchange your reward points for free airline tickets when you just need it.

Your credit score is something you can see on your credit report. You will typically have three different credit scores on your credit report. This is one score from each of the three different credit bureaus.

These credit bureaus collect information from all of your different creditors and assign you a credit score.

Mortgage lenders usually use your middle (“mid-score”) of the three credit score as part of your mortgage application. Usually your three credit scores are usually quite similar, but sometimes they can be very different.

Collections

Your credit report will list bad debts and collections.

The more you have of these, and the more you owe on these, the lower your credit score is likely to be.

When you review a copy of your credit report you may see creditor names that you do not recognize who claim that you owe them money.

These unfamiliar names are usually the names of collections companies you have purchased your bad debt from your original creditors. For example, an unpaid cell phone bill may be sold off to a collection agency.

Your credit report will usually contain the account number, phone number, and address of each of your creditors.

You can contact them to resolve your disputes.

Either you will need to pay off bad old debts or convince the creditor that these are in error.

Either way you will need to resolve these to help improve your credit. You will usually receive a written confirmation from the creditor when an issue is resolves. You can submit this documentation to credit bureaus to make sure your credit report is updated and your credit score improved.r Score

It was one of those extra special Saturdays with a crisp coolness in the air. The sun was shining brightly through the front windshield so much so that the visor had to be lowered. Having left early from his part time job, Travis stopped at a convenience store to pick some beer and food. Three friends were meeting at his house to watch the Notre Dame versus Michigan football game. The wives were coming along later to enjoy a late cook out and to enjoy the newly installed heated spa and pool. Travis and Penny had acted on a promise they had made to themselves when they bought the home four years ago. A primary requirement, beyond the three bedrooms, two baths with a two car garage and large family room, was the need for a large lot that would allow for the construction of a big heated pool and spa. With three children and an active social life this was an important centerpiece of family activities. It was important to complete this mutual promise. It made sense of the hard work and commitment to make this happen.

As a systems engineer at a local company, Travis had not received the anticipated bonuses and pay raises that had been outlined when he hired on right out of school ten years ago. Deciding early on to stay in a smaller city where they grew up and had family with any alternative employment being somewhat limited without a major commute to the nearest active employment center 100 miles away. Penny worked as an outside pharmacy sales representative with one of the big drug companies and ran her regular route between doctor’s offices and clinics. This was the ideal job for Penny as it gave her great flexibility to spend more time with the children who were now all school age. As planned, Travis and Penny had three children in quick order to compress the parenting time into a tighter time frame. When Travis and Penny bought their home the mortgage market was very attractive and they were able to lock up a 5.75% fixed rate on a 30-year mortgage. Travis and Penny justified the expense of putting in the pool by Travis taking a part time job as a security guard at 20 hours per week to meet the payment of the new second mortgage utilized to install the pool and spa. Efforts were made to double the payments of the Home Equity Line of Credit to pay it off early and get down to one payment on the house. That rate was tied to prime and recently had been climbing and the payments were going up. Prime it seemed was going up monthly. Travis and Penny had been very responsible with credit and as a result had good credit scores in the 750 range. Now, with climbing payments on the HELOC Travis and Penny were just able to pay the minimum monthly payment. From time to time, they took advantage of credit card offers as it turns out to a big extent. In a year’s time, they had 12 credit cards with active balances. It just started to creep up on them as they were now just making the minimum payments each month. With their good credit, the credit card rates were good. Travis working the extra time on the part time job some of the bills paying duties were shared with each assuming that the bills were getting handled. In a small alcove of the kitchen was a built in desk area with small cubbyholes and pull out drawers acted as the repository for due bills and the checkbook.

As Travis pulled in the drive way with the goods from the convenience store, as was his practice before unloading, he checked the mailbox. Sure enough he had a fist full of mail. He gathered up the food and beer from the car and carried everything into the kitchen. Upon setting the groceries and such down he headed to the in-kitchen desk to deposit the mail to go over later. However, on top, was a letter from one of their credit card companies. Travis opened it and the communication indicated that they were 30 days late on the credit card payment and that they needed to call immediately to get it handled. Travis and Penny conferred and while ignoring the bagged groceries on the table, began tearing apart the desk looking in all the cubbyholes and crannies, and stuck way in the back crumpled up with another paid invoice was the original bill (now over 30 days late).

Unbeknownst to Travis and Penny, is the “Universal Default” trigger mechanism used by many credit card companies who regularly check your payment history in the bureaus. If they find a 30-day late or other derogatory information the interest rates on ALL the credit cards can be accelerated in many cases to the maximum legal limit. Thus, the sweet heart introductory rates went in some cases from 8.5% to 29.99% to varying degrees. Overnight the minimum monthly credit card payments more than doubled. They were in a real pickle now. The real estate market had pulled back recently and the full value of the pool and spa did not result in a higher appraised value. In looking at their situation, they now had a current balance $165,000 first mortgage at 5.75% with fixed principal and interest payments of $1,021.25/month with little principal pay down since origination.

The taxes and insurance added another $275/month. The second mortgage HELOC was $33,500 with current payments based on prime + at $301.41/month. Then their total monthly housing expense was $1,021.25 + $275 + $301.41 = $1,597.66/month. When they added up the credit card debt it was some $37,500 with an average of 29.99% and minimum payments of now $1,450.00/month. Their total debt was $1,581.69 + $1,450.00= $3,031.69/month. Travis and Penny were stunned. Penny called the mortgage broker who got the original 5.75% purchase money mortgage and shared their pickle and was asking for possible answers short of selling the house or going into a Chapter 13 Wage Earner Bankruptcy Plan. Bob the mortgage broker had worked out a couple of scenarios with one being to sell the house. The market-appraised price didn’t allow for much debt consolidation with the equity available. So Bob suggested either to sell the house or keep the 5.75% first mortgage in place and utilize a 125% Combined Loan To Value (CLTV) mortgage product that would allow the paying off of the HELOC (which had been going up) and payoff all the credit card debt.

This would cut all the debt down to two payments one for the first and then the second mortgage. Bob cautioned them that this is not a cure all. Debt relief was being achieved by extending the term of the debt with a rate in the 14.5% range. Bob went on to explain that they were just buying time and that they had to seriously make an effort to make extra payments and get rid of the second mortgage. Although their credit score had dropped the middle score was still above 650. The 125% Combined Loan To Value had a $75,000 maximum loan limitation. Bob proposed paying off the pool loan and all the credit cards with a new loan of $74,900 with closing costs rolled in. The payment on the 125% loan for a rate of 14.5% and a 20-year term would have a payment of $958.71/month. The savings per month then would be $3,031.69/month versus $1,021.25 P&I on the first + $275 for taxes and insurance and the new payment on the 125% CLTV of $958.71/mo. for a total new housing payment of $2,254.96 for a monthly savings of $3,031.69-$2,254.96 = $776.73/month. The Debt To Income Ratio was below 45% a 125% loan program requirement. Bob cautioned them again that while they would have monthly savings the long-term costs could be higher than before so they must commit to cutting costs and stick to a tight budget. Penny committed to making three more calls per day to boost her income. They went ahead and got the relief and made a long commitment to crawl out behind the eight ball and move ahead.