Unsecured Credit Cards And The Facts You Need To Know
Topics: credit card, credit, credit cards, finance, wealth, unsecured credit, unsecured credit cards
There are two types of credit cards issued by banks, secured and unsecured. Unsecured credit cards and generally reserved for those with a good credit history and have demonstrated an ability to repay an accrued debt on time. The credit limit or amount of unsecured credit that is granted is determined on an individual basis and can be raised or lowered based on performance and payment history.
This also holds true regarding the terms of credit issued by the bank. Customers with higher credit scores tend to receive lower interest rates and credit card fees than those customers with slightly lower scores. This can significantly impact the amount of debt you accumulate over time if you have high interest rates on your credit purchases. It is important to manage your spending and unsecured credit card debt with appropriate income to debt ratios and pay down your credit cards quickly when using unsecured credit.
The main benefit of a credit card is instant access to more cash than you may have on hand. An example would be if you had an interview for a new job and needed to buy a suit.
Let’s say that the suit you want to buy costs $250 and the matching shoes and accessories are an additional $80. Earning the money to purchase these items could take you 2-3 weeks, however if you purchased them on a credit card, you could pay them off out of your first new paycheck and few interest rates would accrue.
Credit cards can become problematic when a consumer does not manage their spending properly and they accrue more debt than a regular monthly payment can cover. When a consumer carries over balances from month to month, significant interest rates will accrue on those balances. Missing payments or paying late will also trigger a banks reaction to raise your interest rates and charge penalties for late fees and missed payments.
In 2007, the Federal Reserve reported the total amount of consumer credit card debt to be $2.6 trillion. This is an increase of 8.3% from 2006 and 53% since 2000. It is evident by these increases that US consumers depend more and more on credit for their purchases. As the economy deteriorates, and many consumers find themselves struggling with increased living expenses and gas prices, there is a real danger in carrying high balances on unsecured credit cards.
Although efforts are being made in the Federal Reserve and other regulatory agencies to reduce practices that tend to increase credit card balances for people that face financial difficulties, the reality is that once you fall behind in payment, the credit card companies will increase your interest rates and late fees, causing you to fall deeper into debt.
The National Credit Union Administration (NCUA), the Federal Reserve Board, and the Office of Thrift Supervision issued a joint proposed rule on May 2 that would prohibit the following seven practices associated with credit card programs, possibly by the end of the year:
1. Unfair time constraints for consumers to make payments; statements to be mailed at least 21 days before payment due date.
2. Unfair allocation of payments among balances with different interest rates; require allocation in a manner beneficial to the member, for example, allocation of payment over the minimum to the item with highest interest rate.
3. Unfair application of increased annual percentage rates to outstanding balances; prohibit applying an increased interest rate retroactively to pre-existing balances; exceptions or cases.
4. Implementing a variable rate or expiration of a promotional rate when the member is more than 30 days late in making the minimum payment.
5. Unfair fees for exceeding the credit limit solely because of a hold placed on an account;
6. Unfair balance computation method; prohibit from computing the finance charge using a “two-cycle” average daily balance computation.
7. Unfair financing of security deposits and fees for issuance or availability of credit; no charges more than 50 percent of credit offered and require spreading fee over first year rather than a lump sum.
8. Deceptive firm offers of credit; require firm offer of credit with range of rates and terms to include a description of the factors used to determine whether the member will qualify for the best rates and terms.
Eliminating these major sources of outstanding debt requires long-term planning for most consumers and a dedicated objective for becoming debt free. A credit card is not a requirement for successful living, but even those who only pay for goods or services with available cash often find a credit card to be a convenient form of identification and instant credibility.
In order to avoid excessive credit card debt, the holder must decide if the goods or services are worth the added expenses.
You can read more about Unsecured Credit and other financial material from www.my-money-now.biz or www.urhowto.com. Be sure to check out Joshua’s other website at www.adcentiveswest.com
Previous Articles Highlighter:
Finding Insurance When You Are Unemployed (1)
Topics: health insurance, health, insurance, medical, medicaid, medical insurance In November of 2008, the United States lost over 500,000 jobs. And for most of those people, their health care went along with it.
How To Apply Bank Credit Card Now And Get The Best Rate (2)
It can be for managing their finances, needing extra money or in preparation to a big expenditure. But, no matter what the reason is, people apply for a best card because of the ultimate convenience it brings.
Holiday Shopping For Owner Builder Loans: The Features Your Financing Must Have (3)
o Long term rate lock. Look for an owner builder construction loan that will allow you to lock in your permanent rate before you begin building. This will give you a nice bit of protection against rate fluctuations while you build.
Real Estate Investment Mistakes (4)
While many people get in into the market with all of this, there are others who have decided to simply jump into the process. This is where a multitude of mistakes can be made.
The Credit Score Explained (5)
Topics: Credit score, credit report, bad credit, credit repair Essentially a credit score is a number that is generated by the credit bureaus and is based upon your account history, and includes items such as late payments, account amount, and most credit related issues.
Being Aware Of Debt Management (6)
An issue to a small business owner that has a debtors book would be the effective collection and the debt management, as this uncertain period may well prove to be somewhat difficult and the debt management process really requires attention and careful planning at this point.
Are You In The Gutter? (7)
Yet I can't recall anyone saying much about gutters at any repair seminar I have been to, and many rehab jobs omit gutter installation in order to cut the repair or maintenance costs.
Prevent Identity Theft And Consequently Save Lives (8)
These companies actually take the burden of having to monitor and regularly renew the fraud alert in the creditors report off the shoulders of the credit card holder. These companies therefore guarantee the credit card holder a lifetime of immunity from identity theft.
Erase Debt And Live Carefree! (9)
But forget just erasing debt, let's talk wealth. You can have actual discretionary income without having to answer to a time clock. It is possible to create a living that does not tie you down to someone else's dreams.
Tax Deduction For Homeowners (10)
For example: Your home is worth $150,000 and your first mortgage is for $125,000 and your home equity loan is for $40,000. The two mortgages combined equal $165,000 - that's $15,000 more than the value of your home.
November Foreclosure Rates Slow (11)
There are also real estate investors who buy houses in all types of markets in all areas of the nation. These real estate investors can help buy purchasing your home with cash, taking over your home payments or negotiating with the bank to buy your house.
Taking Stock Of The Increasingly Disturbing Position (12)
The young have complications, senior citizens have complications, the well off have complications, the less well off have complications, and the ex-pats have complications. All of these complications are subject to their own peculiarities and need separate understanding.
Learning The Ropes Of Smart Financial Management (13)
Weigh each one from the other. You just have to know what each can bring you. The most important things should have more advantages. The more advantages you can muster to find, the better because later on you could be able to justify what you are doing with money.
Tax Filing Tips For Faster And Easier Filing (14)
Topics: tax deductions, tax deduction, drew miles, pathfinder business strategies, tax filing tips, tax Wouldn't it be great to get a few extra tips on how to file your taxes? Filing your own individual tax form can be intimidating, but today there are many ways to make your tax filing faster and easier.
A Quick Jolt For The Auto Economy, Plus Ten (15)
Adopt comprehensive shareholder protection legislation that would control and regulate abusive salary and benefit structures afforded corporate executives. Ten. Eliminate income taxation of all forms of investment income, including rent, royalties, capital gains, and interest.
Family Tax Planning Suggestions (16)
Here are some tax-saving planning tips to help you plan for your family. Donate to your favorite charity. Charitable contributions are an excellent way to decrease your taxable income, plus they help others.
Work At Home Business Opportunities (17)
Now this might either be a pro or a con for you personally, for me it was a pro, but the more I learn and the more I read, the more I earn each month.
The Top Four List; Best Work At Home Opportunities Online! (18)
This is a more of a "advice" type site. You buy their program and they teach you all kinds of different ways to earn money such as flipping websites, selling domain names, profit from outsourcing, creating niche websites, getting traffic to your sites and much more.
Are You Interested In Cash Leveraging Companies Online? (19)
Not only is he incredibly professional but his site will earn you the money you want to earn online. This site can genuinely earn you some major money, and will eventually lead to a full-time Internet business if you choose to do so.
Scoping Out Health Insurance In West Palm Beach (20)
Most of the group packages will be lower in cost depending on the amount of people involved. But even for small groups, it is definitely an option worth looking into.
Newer Articles Highlighter:
Is It Difficult To Make Money From Forex Trading? (1)
That's just the basics. The next step, once you know how to trade, is to learn how to actually generate profits. This is where it gets really difficult.
Tax Mistakes Not To Make (2)
The regulations are convoluted, but it's worth it to see if you qualify for it - but beware, it's the IRS's sixth most common taxpayer mistake. Further, don't forget to keep your receipts.
Buying Your First Investment Property (3)
Or, how about buying tax liens? There are so many choices, how is one to know what to do when just starting out? Like any trip, you start out by deciding where you want to go.
How Does Foreclosure Work - Understand Foreclosure In 4 Simple Steps (4)
There are only a few steps to the foreclosure process. You might consider these steps if you are trying to avoid a foreclosure. These steps include things like the default being recorded, reinstatement of the loan, and more.
The Necessity Of Id Theft Protection (5)
The act earlier mentioned makes it a requirement for creditors to conduct identity verification first before issuing a credit card in your name. This is a very effective id theft protection, which however lasts only for 3 months or practically ninety days.
Which Forex Trading System Will Put Me On Easy Street? (6)
In other words, what one system considers important anther system might consider irrelevant. One of the best techniques I use for indentifying winning trades is finding trading recommendations from systems that utilize different criteria for selecting investing opportunities.
Why You Should Keep Full Records Of All Your Share Dealings (7)
Why is it this important? Well there are several reasons why. The first and most obvious one is that you can instantly tell which investments were successful and which ones were not so profitable.
The Ultimate Forex Software Trading System For Raking Up Profits And Putting You On Easy Street (8)
One of the very strongest methods I use to make huge profits with is confirming a trading recommendation one system makes with another system. Since they are all concentrating on something dissimilar, when you can get double and triple confirmations you can be assured this is a great investment opportunity.
The Benefits Of Investing In French Leaseback Property (9)
French mortgage banks have continued their responsible lending, creating confidence in the market and allowing investors from all over the world to purchase French leaseback property. The French leaseback scheme enables buyers to have full ownership of the property within a certain time period, normally between 9 to 12 months.
The FDIC And Living Trusts: When You Have More Than Five Beneficiaries (10)
Kevin Von Tungeln is the Managing Partner of EstatePlanningSpecialists.com and Thompson Von Tungeln, P.C. Kevin practices in the areas of estate planning, probate, wills, and trust administration. Visit www.EstatePlanningSpecialists.com or www.linkedin.com.
5 Frequently Asked Questions In Loan Modification (11)
Loan modification restructures a current loan to make it easier for borrowers to cope and pay back. Some individuals notice results in a span of 4 to 8 weeks with loans guaranteed by the FHA.
Home For Sale! Should You Consider Creative Financing Options? (12)
It is your job to disclose any information that might add risk to the private investment. It is important to include a clause about a change in the purpose of the property.
Smart Tips For Avoiding Debt (13)
Learn to live as self-sustaining a life as possible so that you will not have to rely on credit to get by in times of trouble. As you are paying off debts, be sure to build some savings that could see you through a few months as well.
Four Pitfalls Of Lease Options For The Seller (14)
You are obligated to sell the home at a predetermined price. If the home appreciates, as it often does, you have to sell at the price negotiated in the contract.
I Want To Be Wealthy, If I Don't Know Anything About Forex Trading, What Is The Best Way To Learn? (15)
They don't like it because the people who know how to do it correctly make too much money and they don't get very much commission. This Forex program teaches you how to fool the brokerage firms so they don't catch on to what you are doing and don't ban your account.
Tax Filing Tip - Filing Late (16)
Tax professionals will be able to deal with incomplete documentation and deal with IRS negotiations regarding your taxes, penalties or interest. Find out all about IRS tax penalties and interests charged.
Your Credit Report Needs Regular Check Ups (17)
Secondly, a credit report acts as good reflection on the way you handle your finances. Many people, after discovering a less than stellar performance, have used it as a guide to clean up their act and do better in the future.
Private Health Insurance As A Compliment To Health Services (18)
The drug Revlimid is one that will prolong the patient's life without side effects and her GP is all in favour of prescribing it. However, her local health authority claims it is not cost effective to provide the drug at 4,300 pounds per cycle.
Advantages To Buying On A Lease Option (19)
The lease option is a win-win situation for both the seller and buyer. At first, it may seem apparent that the seller has an advantage to invest in lease options.
When Business Grants Attack: How To Avoid The Scams (20)
If you get the impression that they don't want you to get in touch with them, that should sound off an alert. 2) PO Box Address If the postal address associated with the business grant is a PO Box, this may be a sign of a scam.
Permalink to Unsecured Credit Cards And The Facts You Need To Know