Applying For A Credit Card - A Quick Glimpse Into The Formalities Involved

Today’s world revolves on the hinges of the “superfast” - ultrasonic jets, speedy vehicles, flyovers, expressways… the economy booming all around. So is the world of money doing the fast lanes… small little plastic cards able to accomplish a host of purchases and transactions the world over. People are literally crazy about owning these little plastic cards. These cards called credit cards are the entrants to the financial portals. Banks are overflowing with applications from people from all walks of life, young and old, educated as well as peasants, rich as well as the not-so-rich, the businessman, the professionals, bankers, as well as students, eager to own the magic plastic card. Now the currency notes and the hard cash changing hands are being replaced by the credit cards everywhere. People prefer the convenience of credit cards instead of wallets overflowing with dollar bills. But before we become accustomed to the modern wonder, it is prudent to spare a thought to the responsibility that goes with it. One should be aware of the several “do’s” and “don’ts” that are an integral part of the protection the federal law offers you. Be very careful while filling up your details in that hurried application for credit card. A lot of effort, time and expense goes into verifying every little detail about the applicant vis-a-vis the identity. Such applications have become quite tedious in the United States as the US Patriotic Act requires further verification of the applicant for a host of utilities including credit card. But nobody in the US seems to mind the tedious formalities associated with the issue of the credit cards as credit cards have become a necessity rather than a luxury these days.

Every average American today uses scores of credit cards at least once every day. This is the state of the middle class only so you can just imagine the number of credit card applications the banks and the verifying authorities are flooded with every day. As of date, about ten million application for credit cards are getting processed a day. This number is sure to go on increasing day by day with credit and debit cards becoming a way of life. It has become a very pressing need of the day to educate people on the prudent use of the credit cards so that they do not throw away their hard-earned money on wasteful and meaningless expenses that benefit no one or at best, only a few . So when you get down to write out that application for obtaining the credit card, remember that you are changing over to life’s fast track and reforming your purchasing power.

You will be surprised to be asked by the statesto whom your application has been forwarded, to fill out another form or acceptance form even though you have filled in the details in the original application. This is a way of ensuring and verifying that the applicant making the application and the person receiving the credit card is one and the same. The credit card bank or the credit card company issuing the credit card needs to verify that they are sending the card to the correct person who has made the application originally. These days online application forms and online verification is available to simplify the process. One needs to be aware of implications of the replies he gives over and above the mandatory name, address and contact numbers as well as the hidden charges that could prove costly in the long run.

High Volume Merchant Account

A merchant account is a special account with a bank that enables acceptance of credit cards, debit cards, gift cards and such other cards for businesses. It is generally used for accepting customer credit card and electronic payments through an ecommerce web site. This kind of a process is also known as credit card processing or merchant card processing.

High volume merchant accounts process unlimited sales volume. It helps in increasing operating capacity to process exponential numbers of customers and credit transactions. Such accounts are beneficial for companies that need an internet merchant account for their ecommerce business, especially if they face risk management issues and high volume sales. Businesses that process high volume transactions each month require a merchant account provider who will provide them with a high volume merchant account that is able to process unlimited volume sales. Absence of such an account can limit and restrict a business.

All High Volume Merchant Accounts are multicurrency accounts. It allows you to present and charge clients in different currencies and also settle your accounts in the currencies of your choice.

Generally, high volume merchant accounts are considered as high risk businesses on account of their susceptibility to chargebacks and fraud. Hence, such accounts processing involves a heavy volume of transactions that requires a system that is able to take care of the requirements for security, scalability, speed, fraud minimization, customer support and uninterrupted service.

The advantage of a high volume merchant account involves improving the performance of an online business and expanding his company’s potential. A virtual terminal is one of the most important feature of high volume merchant accounts as they help in reforming the documentations and operations involved to a great extent. A good high volume merchant account results into higher sales volumes, increased profits and enhanced savings.

Bankruptcy Due To Medical Bills

Financial distress is caused by a number of things, among them medical expenses. This happens when a family member becomes ill prompting them to be put under medical care. In case there is no health insurance available for such an individual, the medical expense may be too much for the person responsible to cater for. In such instances, the person ends up using whatever they have in savings in order to pay the bill.

At times, they end up borrowing and are never able to pay back. This in most cases leads to bankruptcy. Among the promises that president Obama made when he was campaigning for presidency was that his government would help those Americans who always found themselves in debt to come out of it. While still at the senate the current president of the United States of America did not support the credit card industry.

He argued that it did more harm than good in helping the poor get out of financial crisis. President Obama urged America that he would institute a five-star organization that would help those trapped in bankruptcy to make informed decisions on what was best in solving their financial distress.

He proposed bankruptcy reforms in which financially distressed persons who proved that they got into the situation due to high medical bills would get a second chance. Though this proposal of relieving people who were in financial distress out of medical expenses was opposed by John McCain, it was the only way for most of American to come out of debt. Among other reforms, this exemption was a fair way of helping most poor people.

Our Addiction to Credit

The plastic in our wallets, a credit line or line of credit and the handy loans that we get at the bank are all ways that we overextend ourselves. Long gone are the days when people spent only what they earned and did not spend it before they earned it. With the advance of bill pay most people can even set up automatic payments ahead of the fact. It takes only a moment for us to bury ourselves in piles of debt.

Recently, the government has begun to make a plan for reform when it comes to the plastic that we use so easily. They are attempting to pass measurements that will limit credit card companies from allowing consumers to go over their limits. Perhaps this will help people curb their spending appetites, at least somewhat. There should be a point when those people that have maxed out all their cards and borrowed all they can are stopped. These people will never get out of debt if they are continually allowed to charge every purchase they make.

Perhaps instead of the many ways that creditors punish consumers when they are trying to collect their money, they should make them enroll in budgeting classes or ways that they can learn to pay for their purchases without relying on the money they don’t have. When consumers have to declare bankruptcy, perhaps programs could be instituted that would force these people to take classes to better learn how to manage their money. Either they can take the classes or the cards are frozen.

In the current economic state we are all working a little harder to manage our money. It is an essential skill that people must learn in order to make sure they are prepared, not only for difficult times as they come, but also for the future and retirement. Whether it is a school program in high school or college or whether parents need to be teaching their children how to manage money, I’m not sure. But, programs, in one way or the other should be made more accessible so that all individuals can begin to use less plastic and more paper.

Budgeting is hard. Making the choice not to buy something is sometimes painful, especially when the world demands that we compare ourselves to our well off neighbors and friends. However, we can all mentally make the choice not to get wrapped up in the comparison game. We can all make the choice to spend our money wisely and to prepare for the future. We can all make the choice to be good stewards of what we’ve earned.

When I speak to my friends that have a lot of debt I hear the frustration in their voices and the hardness with which they speak. They are not happy to constantly pay the money. People don’t need to live in constant chains to their credit cards, credit lines or loans. If we all learn to use our money wisely then we can avoid the large debts that go along with making unwise choices. While we may have to practice patience when making large purchases, in the long run we are going to feel much better about our financial state.

What do Y/A republicans have to say about the credit card reform legislation passing in the senate 90-5?

Considering the staunch opposition I’ve seen from republicans to this bill, are you’ll surprised to see such GOP support in the senate for this legislation to regulate the credit card industry?

The Universal Default Clause: You Could be a Victim

Have you ever been in a situation where you were able to pay most of your bills but perhaps you let the least essential debt go for a month? Well this can hurt not only your credit rating but also affect your interest rates and credit limits with all of your creditors. This is the practice of Universal Default. It is a relatively new clause added to the terms and conditions of banks and credit card companies. Now banks and credit card companies have yet another excuse to charge you more money and potentially wreak havoc on your credit scores. All without your knowledge.

Universal Default involves banks and credit card companies monitoring your payment histories with other creditors, even your utility bills. Essentially this means that if you are late paying a bill with one company, your other creditors, which you are paying on time, can raise your interest rates. They can use your late payment with other credit card or utility companies as a justification to raise your interest rates as high as 30%. Some banks even go as high as 35%. Because you have paid one bill late, even something like a telephone bill, your other creditors may now see you as a risk. Higher risks equate to higher interest rates.

Banks and credit card companies who practice universal default generally monitor a consumer’s credit reports on a monthly, quarterly, or yearly basis. The following are some reasons the universal default clause is activated:

• Late payment on a credit card, mortgage, auto loan or utility bill.

• Exceeding the credit limit on any credit card.

• Using 50% or more of your available credit limit on any of your credit cards.

• Having too many credit inquiries.

• Carrying too much overall debt.

• Getting a new mortgage, auto or personal loan.

How can you tell if you have been affected by a universal default clause? First, take a look at your credit card statements and check to see if your interest rates have changed. Second, order your credit reports. You will want to pay attention to the following sections on each of your credit reports:

(1) Experian—“Inquiries Shared Only With You.”

(2) Equifax—“Inquiries that Do Not Display to Companies.”

(3) TransUnion—“Account Review Inquiries.”

More than likely, if you see your credit card company listed in these sections, you are being monitored. Make sure you thoroughly check your reports for, errors, mistakes and any incorrect information. Any inaccuracies should be disputed as this information may be the reason universal default occurred. Unfortunately, at this time, there is not much you can do if you have been affected by a universal default clause. Calling your creditors and attempting to negotiate lower interest rates is one option.

Consumers who are already over burdened with debt certainly do not need another heap of debt unfairly forced upon them. Universal default punishes consumers and has the potential to ruin credit history and credit scores. There is help on the horizon.

Lawmakers are responding to consumer groups who oppose such practices. In June of 2006, New York became the first state to outlaw the practice of universal default. This issue has also gained attention on the federal level. Recently, Democratic Rep. Keith Ellison of Minnesota introduced a bill to the House which seeks to protect consumers from universal default clauses.

Rep. Ellison’s Universal Default Reform Act of 2007 would prohibit credit card companies from raising interest rates on consumers based upon payment histories with other credit card companies, utility companies and other lenders. Rep. Ellison has a series of legislative proposals he plans to introduce as part of his consumer justice agenda. His Reform Act has the backing of many consumer groups.

In the meantime, monitor your credit card statements, make it a practice to read the fine print on all credit card applications and most of all, stay informed.

New Credit Card Rules

Recently, new rules adopted by the Office of Thrift Supervision will help protect consumers from certain abusive credit card lending practices that can result in excessive fees and interest rate charges. The rules were developed in conjunction with the Federal Reserve Board and National Credit Union Administration.

What Are The Changes?

According to Demos, a public policy research organization, the recently issued rules will ban some of the bait-and-switch tactics in credit card lending. The new rules will:

Prohibit banks from retroactively increasing the interest rate their customers must pay on existing balances

Prohibit banks from allocating payments to lower-rate balances first to maximize finance charges

Ban the practice of “double-cycle billing,” which calculates interest over more than one month, and can result in higher finance charges

Eliminate upfront fees on so-called fee harvesting credit cards when they eat up the majority of the available balance on the cards

Require banks to provide consumers a reasonable amount of time to make payments

What Prompted These Changes?

The new regulations were finalized after the Federal Reserve Board received a flood of comments from approximately 66,000 people during a consumer testing study. Also, during this struggling economy, many banks have been lowering credit limits and raising interest rates to compensate for the losses from the mortgage crisis. Demos reports that these tactics are causing more borrowers to carry higher balances for longer periods of time and run the risk of exceeding the credit limits.

When Do These Changes Take Effect?

These rules will not officially take effect until July 1, 2010. However, the Office of Thrift Supervision encourages institutions to make their best efforts to conform as soon as possible, particularly to the provisions related to high-fee cards.

What Still Needs To Be Done?

While the new rules will provide important new protections, more safeguards may be needed to address other lending practices that can make it difficult for consumers to manage their credit. According to the Consumers Union, other reforms needed to address some of the abusive practices that hurt consumers are:

Limiting the amount of “penalty” interest rates, and how long card companies can keep you at these extremely high rates.

Prohibiting fees for paying a credit card by phone or internet.

Prohibiting account-opening fees no more than 10 percent of the credit limit.

Banning multiple over-limit fees during a single billing cycle.

How Do These New Rules Affect Me?

These new rules are a positive step in the right direction for consumers. Once you complete your debt settlement program, these regulations may help you make a fresh start as you strive to rebuild your credit rating. Keep in mind that it will still benefit you to practice prudent credit card use. Avoid additional interest and fees by only charging what you can afford to pay in full that month. Timely credit card payments may slowly improve your credit score.

Bankruptcy Backfire! Is Bankruptcy “Reform” Biting the Hand that Fed it?

As anyone who follows the world of bankruptcy knows, as of October 17, 2005, substantial and, from the point of view of consumers, painful changes were made to the Federal Bankruptcy Laws. At the behest, primarily, of the credit card providers and banks, who had been lobbying for years, new legislation was drafted and approved setting the stage for stricter requirements governing (primarily, though not exclusively) personal bankruptcy. This legislation came at great cost to its proponents, and it was expected that it would lead to fewer defaults and more repayment plans, all of which would redound to the benefit of the banks and credit card issuers.

While it is still too early to say, with any certainty, what the overall effect on defaults will be, it seems that, statistically, Chapter 7 filings are rising again, and the expected relative increase of Chapter 13 repayment plans may not, in fact, be materializing. Fewer debtors than one might expect have been disqualified from Chapter 7 relief by “means testing.”

In addition, at the same time that the new bankruptcy laws were taking effect, credit card issuers and banks were finding creative ways to avoid usury problems by domiciling themselves in creditor-friendly states, such as South Dakota, and default rates for consumers now exceed 30% in some cases. Defaults, for those consumers (virtually all of them, I daresay) who have not read the fine print in their credit card disclosures, may be caused not only by late payments, but by high debt to income ratios observed in periodic reviews by card issuers, and defaults under other credit card agreements. The consolidation of issuers, of course, means that there are only a few issuers out there now. Coupled with this have been changes to “minimum payment” rules, so that where a credit card holder carrying a balance might have been able to carry a $250 per month minimum payment, the combination of 30+% APR’s and higher minimum payment rules may have increased that to $600, or more. Multiply that by the 5 or 6 cards that a consumer might be holding, and, well, one can easily see where this is going. But that same cardholder is now facing higher obstacles to Chapter 7 filings, simply by being, statistically, in the “middle class” and exceeding his or her state’s median income.

What will the result of this be? It’s hard to tell, but one likely scenario is higher defaults with no bankruptcy option. For those cardholders who own a home, with equity, Chapter 13 may not be a viable option because of the sheer amount of debt they are now carrying, relative to their incomes, so the risk of losing their homes may be substantially enhanced. If this happens on a large-scale basis, there will surely be an outcry to “reform” the “reform.” The credit card issuers and banks, having paid dearly for this legislation, may well have overplayed their hand.

Furthermore, those cardholder who can, have, in large numbers, been paying off their balances, outraged as they are by being socked with APR’s exceeding 30%. This has already hurt the bottom line of credit card issuers and their bank affiliates, who make nothing on cardholders who don’t carry a balance. The pot of gold for them is in cardholders carrying balances and paying high rates, and even better, those consumers paying late fees when they get in over their heads, or overlimit fees when, as in many cases, the suddenly increased interest rates take them unexpectedly over their limits. Late fees and overlimit fees are often now in the $40-$50 range.

The result? Less income for the creditors as consumers have wised up. MBNA and Capital One, two huge credit card providers, are seeing their profits sink. Other credit card providers are reporting similar results. Highly dependent on your desire to run up debt, these companies are now seeing their profit margins drop sharply. In a nutshell: high consumer debt equals big profits; low consumer debt levels equals low profits.

During the last five to ten years, beginning in the halcyon days of the late 1990’s when, it seems, everyone was an internet or high tech millionaire on paper, Congress was amenable to bankruptcy reform to address real or perceived abuses. The banks had the will and the cash to finance legislation and, after years of almost getting there, finally got to the “Promised Land” in 2005. By contrast, consumers, many of them unsophisticated, who had been given credit cards as if they were candy, with low “teaser” rates, just couldn’t resist the lure of easy credit, big screen TV’s. Predictably, they acted irresponsibly. But while the lobbyists worked their magic for MBNA and Chase, the consumer had no lobby with which to oppose bankruptcy reform. I’m sure that for the most part, they had no clue as to what was in store for them. Those consumers in the lower economic strata still have no lobby, but they will still be eligible for Chapter 7 relief. The challenge for the banks is the pain is moving up the ladder to the middle class homeowner. The howling is bound to be heard, and soon.

Warren R. Graham

Copyright 2006

What legislation would you propose to reform the credit card industry?

Its obvious that there will be legislation since both parties are upset in the hearings on the current practices. But as we know most legislators have no idea what is going on with the typical citizen and there needs on an issue so crucial. So what would you want that could be put in legilation that this Congress would pass to make the industry more responsive to people who are at risk.

Balance Transfer Cards - An Introduction

Most credit cards offer the balance transfer facility. Balance transfer implies transferring the outstanding or balance amount payable on one credit card to another credit card with a lower interest rate. Before you go ahead and opt for a new credit card, solely because of the balance transfer facility, keep the following pointers in mind.

Low introductory rates on credit cards last anywhere between 6-12 months. Most of the major credit card companies have zero percent rates on balance transfers. However, one late payment is all the invitation your credit card company needs to increase the interest rates.

Some low-rate cards levy a transaction fee, to avail of the balance transfer facility. Run in the opposite direction (without the credit card being offered) when you hear of a transaction fee.

Ensure that your old credit card company has sent you a billing statement which states that you have cleared your outstanding balance. Make sure this tallies with the billing statement issued by your new credit card company, which confirms all the balance has indeed been transferred. Only then should you close your old credit line.

Keep making minimum payments on your old card, while availing of the balance transfer facility, which may take anywhere between 2-4 weeks. Do not make the mistake of not closing the credit line on your old card. You might succumb to the temptation of charging credit to your old card and will soon be left with 2 cards and very high debt.

Ensure that the rock bottom rate being offered is applicable to you also. Offers may boast of rock bottom rates, which shoot up by a large margin after an introductory period. You could qualify for a 5 percent initial rate which increases to 20% after 6 months. Some one else might qualify for a 4 percent initial rate that increases to 15 percent after 8 months. Drive a hard bargain for the best rate.

Other Balance transfer credit card features include:

APR rate ranging between 9 - 11 % Typically 3 other interest rates offered (Introductory, Monthly, and Annual). The Introductory rate is usually 0%, the monthly rate varies between 0. - 1.5 % percent, and the annual rate varies between 9-11%. Minimum and Maximum credit limit Cover against online fraud when purchasing on the Internet Card replacement in case of loss Customer service support 24/7/365.

Inspite of the host of credit card related features on offer, the best protection against getting sucked into the whirlpool of credit card debt is to reform your spending habits. Make a keen distinction between needs and wants before your next purchase.

Visit Smallbusiness-creditcard.com to get more information on credit cards and to compare features of balance transfer cards

Credit Card Reform Bill

Credit Card Reform Act of 2009