Frequently Asked Questions

That depends on your current situation. If you are a student, the banks offer Student cards specifically designed for your financial position, low limit and higher fees. Theses are generally a good place to start. If you are employed you may want to check out Capital One's offerings for limited credit. If you have a credit rating from other loans such as a car, you may qualify for a main-stream card from any of the issuers. Stick with cards requiring a 'good' credit level. With any card, being your first, make sure you keep the account in food standing, as this will be the base for your credit future.

Consolidating credit can be a good idea if you are having a difficult time making all the payments. A professional consolidation service can negotiate and reduce your payment and interest rates but will adversely effect your credit rating. Transferring existing balances to a lower interest rate card is a better solution if you can afford the payments. This way the old accounts remain intact and will actually help improve your credit score.

Each state has defined limit on interest rates. The laws were enacted, in part, to prevent organized crime from collecting on illegal loans. The ceiling, or cap, is a very high rate and no major credit card company will exceed the lowest state rate for a credit card type account. Further more, the banks are only restricted by the laws of the state where the card is issued. So, yes there is a cap but it does not have any real impact on credit card accounts.

Contact the issuing bank and have the card cancelled and explain that you did not open the account. Contact on of the credit reporting bureaus and explain what happened. They will lock down access to your report. File a police report so you have concrete documentation of the fraud. Contact a Identity theft solution company or take the steps to remove the illegal activity from your reports by reading the FTC's booklet on identity theft.

On average, Americans have around six credit cards. Some of these are store cards and are viewed as such by the credit bureaus. A reasonable number of general purpose cards is around 4. This can be further justified by having cards of different brands, one from each; American Express, Discover, MasterCard and Visa. This allows you to enjoy more specialized benefits and can take advantage of unique offers from the different issuers. It is also beneficial from a credit report point of view to have accounts with different, large banks.

Technically it is based on the total outstanding balance, but the actual percentage number is usually just slightly more than your monthly interest rate. This insures the bank gets it's interest without the cardholder paying off very much of the balance. Keeping the cardholder paying interest for as long as possible is the goal of the credit card issuers. The cardholder must be a little wiser and needs to pay back more than the minimum. A nice technique is to pay back $5 - $10 more this month than last month. That way you are constantly gaining ground on the lender but not feeling a large pinch at one time.

Your account will be assessed an over-the-limit charge of somewhere between $25 and $40. Another revenue stream for the banks, these fees are pure profit for the banks since they will probably approve the charge anyway. Some banks will even raise your limit slightly in the hopes that you will bump into the limit again and generate another fee. Consumer must be smarter than the banks and know their limits. Many issuers offer the tools to monitor your balance via online access, email alerts even cell phone access. Finally if you are going to hit that ceiling, call the bank ahead of time and have your limit raised. Most will do this over the phone and will prevent that fee from being charged.

To the point: Not to your advantage. First a fee of up to 4% will be charged. Next the interest starts accumulating immediately, no grace period. And the interest rate is usually higher than purchases unless there is a special incentive offer. Finally, credit card accounts are usually paid of lower interest rate first. This means that the higher rate cash advance will only start to be paid off after all other purchase or special offers balances are paid off. Although convenient in an emergency, most cash advance offers should be ignored.

Unfortunately, FICO has removed all the benefits of being an authorized user. This occurred back in the fall of 2007. There were many unscrupulous activities with good credit holders adding bad credit individuals as an authorized used to boost the bad credit individuals score. This was done for profit as a way to circumvent the credit reporting bureaus. So FICO shut it down. Now you must be an account holder to gain any credit advantage.

Many credit card issuer have use the 0% introductory APR as an incentive to attract new cardholders. An Intro rate is just that, a special rate of interest that is available only for a period of time starting when you receive your card. A 0% Intro can be very appealing and cost saving but consumers need to be aware that the intro rate can be revoked if one or more payment are not made on-time. Truly a very good deal, but you must read and adhere to the terms.