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Credit Card Users: Are You a Frog or a Magpie?

There are so many different types of credit card currently on the market that there really is a credit card for everyone. However, different people are attracted to credit cards for different reasons, such as the way each type of credit card offers different benefits.

Have you ever chosen a particular type of credit card based on your financial circumstances and the incentives offered by that unique card? After doing some research I’ve decided that there are two main types of credit cards users; frogs and magpies.

Confused? Here’s a detailed explanation.

Credit Card Users – Frogs

As we all know, frogs jump around as they happily go about their day. A credit card user known as a frog will tend to hop from card to card to find the cheapest rate using balance transfers.

A balance transfer can be incredibly useful if you have an amount of debt outstanding that needs to be paid on your card but you don’t want to accrue any interest.

Many credit card providers offer specific balance transfer credit cards to meet these needs and they will typically offer up to 18 month interest free.

This means that if you transfer a balance (hop) to their credit card from your current provider then you will avoid accruing any interest for a period of up to 18 months.

As a result of being a frog and hopping to a new card, you will give yourself time to pay off your debts without paying any extra costs.

Credit Card Users – Magpies

A magpie takes a different approach to the frog, as a magpie likes shiny new objects. As a result of being attracted to these shiny new objects, magpies will swoop for introductory special offers based on what they get back in terms of rewards.

Rewards are also sometimes known as purchase credit cards, and they tend to offer great introductory benefits. If you’re a magpie then you may be swayed to swoop from your current card to a different card simply by the rewards that they can offer you.

The rewards on offer may be cash-back or it may be loyalty points, all that matters is that the rewards appeal to you and your needs.

So credit card users, do you consider yourself to be a frog that leaps from card to card chasing a better interest rate? Or do you think of yourself to be more of a magpie that constantly swoops to a new card as you’re attracted by new introductory offers?

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Visa Digital Wallet Just A Click Away

Visa Inc. is getting closer to launching its new digital wallet whereby people can make purchases online without having to pull out their credit or debit card to finalize payment. Visa is also working on solutions for people to use their smartphones to pay for in-store purchases at retailers. Visa’s digital wallet is set to launch in the U.S. and Canada this fall and may be looking to expand the technology to other countries in the future.

Mobile Payments

Visa isn’t the only company focused on expanding mobile payments. Other credit card companies, including MasterCard Inc., American Express Co. and Discover Financial Services have all been active in the field of mobile payments in the U.S. and overseas where debit and credit card use is not as prevalent. (read more about American Express mobile payment options). Mobile payments have offered convenience to both vendors and consumers, in that it enables businesses to process credit cards that do not otherwise accept them. And through the popularity of smartphones and browsing capabilities, mobile payments are becoming more available, according to Visa’s head of global products, Jim McCarthy, in an interview with Reuters.

The Digital Wallet

Visa recently announced its partnership with several large U.S. and international banks for the creation of the VISA Digital Wallet, which uses near field communications (NFC) and other technologies. Its partners include Barclay Card US, BB&T Corp., Pentagon Federal Credit Union, PNC Bank, Regions Bank, Royal Bank of Canada, US Bank, TD Bank Group and Scotiabank. Customers of these banks will have a digital wallet which securely stores credit and debit card information so the information doesn’t have to be typed in for every online or in-store purchase. This will include information for both Visa cards and other cards.

Visa is hoping merchants will revamp their websites to enable customers to pay for purchases with simply the click of a button. That should help reduce the number of abandoned shopping carts on websites and expedite customer payments.

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Bad Credit Score Still Impedes Credit Card Approval

The Federal Reserve recently reported that banks have been easing their lending standards with their credit card offers. Unfortunately, this doesn’t apply to consumers with a bad credit score who are unlikely to get approved for new cards in the near future. Because banks continue to practice tight lending standards for consumers with poor credit scores, Moody’s Investors Service expects the default rate on low interest credit cards to drop next year to a 20-year low.

Credit Card Default Data

A cardholder’s balance goes into default and is charged off when the issuer deems it uncollectible. In 2009 and 2010, the top six banks which issue cards had defaults totaling $74.5 billion. These are the household names of credit-card issuers: Bank of America, Citigroup, JPMorgan Chase, Capital One Financial, American Express and Discover Financial Services.

Banks Ease Up For Some

A survey released by Credit Land recently revealed that banks have been easing up on lending standards, including approval of credit card applications. But this does not mean they are stretching their lending practices for consumers with poor credit scores. And especially not for consumers who were unable to pay their bills and were among the default accounts.  Banks have seen delinquency rates decreasing, though, as consumers improve their bill paying habits. Consumers who are paying their bills on time are the ones reaping the benefit of eased lending practices among banks. As for consumers who have recently had cards cancelled for lack of payment, it’s unlikely they will be approved for a new credit card anytime soon. But there are credit cards for bad credit, which could help consumers in repairing their credit history.

Moody’s Expects 20-Year Low

As banks tighten their lending belts for consumers with poor credit scores, Moody’s predicts a decrease in default rates. By denying high-risk consumers new lines of credit, banks are decreasing the number of balances they will have to charge-off in the future. An improvement in delinquency rates is also a sign that default rates should improve as time goes on. These factors have led Moody’s to predict a 20-year low of credit card default rates by next year.

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Tips to Avoid Bankruptcy

Almost every day, it seems that there is some bad news about the rising cost of living. This is meaning increasing numbers of people are applying for bankruptcy. The prices of everyday essentials are going up at a time when most people’s incomes aren’t keeping up with the rising inflation.

Fuel bills, food and the cost of insurance– all essentials in our lives – are going up, meaning the money that’s left to pay for other things is becoming less and less. Finances are tight for most, even for people that do not need a debt management plan or debt consolidation. If you are facing bankruptcy then it is an even harder time to have money worries following the recession.

If you are already making payments towards a debt settlement plan or debt consolidation then it is important to keep these payments up to date. Anyone seeking to avoid entering into a debt management plan, debt consolidation or bankruptcy might be able to do so by tightening their expenditure and using the extra money to pay off debts.

Some good news is that there are some easy ways for people to save money and potentially prevent actions such as bankruptcy being taken. The first thing that can be done is look at your utility bills and insurance policies. Use a couple of price comparison websites to double check that you are getting the best deals available and if you are not then switch providers. Although, you need to check your contracts to make sure you can leave without incurring any financial penalties. Check your mobile phone bill and usage to see if you can move to a different network or get a cheaper contract on your existing one. If you’re not using all your minutes and texts then you are just wasting money. It’s also worth working out if a pay-as-you go phone would be more economical to use as some of the pay as you go plans these days offer free texts if you top up so much a month.

Food is another basic essential that none of us can do without. Having said this there are ways to cut food bills which saves money. It is estimated that the average family of four people wastes $680 worth of food every year, the equivalent of $56 a month. If you plan meals, preparing the meals from scratch and making sure you cook the right amount it’s easy to begin to reduce expenditure on food. Switching to cheaper brands at the supermarkets can also help shrink the bill. Giving up dining out and takeaways is yet another simple way to ensure you have more money left towards the end of the month.

If you need to save even more money to help with your debt management payments or debt consolidation then cutting out or cutting down alcohol and cigarettes will make a big difference to your cash flow as these are luxury items that have a high price at the till. This will also have a positive impact on your health.

Small things can really add up and help you tackle your debts before they build up and become a more serious problem which could lead to possible debt consolidation or worse filing for bankruptcy.

If all these ideas seem a bit drastic then think about the ultimate goal of becoming debt-free and the relief that you will feel when you can finally pay off your debt management plan or debt consolidation, which will mean that you avoid bankruptcy.

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Best Time for DIY Debt Settlement is Early

When you begin to realize your debts are mounting and you are about to lose control of your finances, it is in your best interest to begin the process of debt settlement on your own right away. Debt settlement sounds like a complicated process average consumers cannot handle on their own. Actually, it is this myth that often perpetuates the vicious cycle of debt.

There are many reasons why your financial status will fall into disrepair. Job loss, expensive medical treatments, investments gone wrong, overspending, and even fraud can throw your financial affairs into a spin, leaving you with creditor calls demanding money and dwindling funds in your savings accounts. Making a move as soon as you realize where your financial affairs are headed will serve you well.

How to Start the DIY Settlement Process

Settling debts on your own may sound ominous and overwhelming but that is simply not the case. All consumers have the power to settle their debts but many fear the process.

To start out you should make a list of your financial outlook. Use your existing budget or create one if you haven’t used a budget before. (Incidentally, not having a budget is the trigger that leads many into the downfall of debt.) Find out exactly how much you owe to each creditor and then figure out how much of your income or savings goes out to monthly financial obligations. Money left over should be noted.

Next, make a list of your creditors and their contact information. Decide who the priority is in the debt settlement process. Perhaps you need to contact your highest-interest credit card provider before you contact your medical provider’s office. There is no definitive answer as to who should come first so you’ll have to figure out which debts need settlement first.

The Negotiations

Once you have established your creditor list, contact the highest priority creditor. It may be wise to ask for a manager as soon as the phone is answered to ensure you are speaking with someone who has the authority to give you the answers you need. Be upfront with the company representative and briefly relate your current or impending financial hardship.

For instance, if you have just been laid off from work, let the company know the situation and how long you expect the hardship to last. Ask if there is an acceptable amount of money less than the balance you owe that you could pay to settle the debt in full since you anticipate being unable to fulfill your monthly obligation for long. If the manager can not accept a one-time payment, they may be able to suggest alternatives such as lowered monthly payments for a period of time. If you do not have the amount of cash necessary to settle the debt, ask if they will rework your payment obligations on a monthly basis.

Whatever arrangements can be made with your first creditor, be sure to request the details in writing from the company. In some cases, consumers have neglected to get a copy of the arrangements in writing and therefore were later unable to prove their deal, making them responsible once again for the total balance due regardless of previous payments being made on the account. Most creditors will not go back on their word but the written confirmation is the only proof you have on your side as a consumer.

Once you have settled the debt with the first creditor, you’ll need to re-evaluate your finances to see what debt to tackle next. In the situation where one creditor refuses to settle your debt for a lesser amount, move on to the next and do your best to keep your monthly payments going, even if you are only paying the minimum due.

Why Waiting Is Devastating

If you wait too long to contact your creditors to keep an open line of communication, your debt problems will only grow and compound financially. The added fees, penalties, and interest charges only mean you’ll have a bigger balance to fork over. As soon as you know that times will be tough for you financially, reach out to your creditors for help.

Realize you are not the only debtor with financial hardships. In most cases, creditors will be open-minded and flexible if you give them the opportunity. They are not blind to the state of the current economy and may have resources and options you do not even realize that can significantly help you pay off owed balances. Until you open up and admit where you are heading, you will get nowhere in your pursuit of your debt relief goals.

Don’t wait for collection calls to start or for someone else to step in. You are responsible for your debts and the earlier you are able to reach your debt elimination goals, the faster you can get back on the right financial track.

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3 Ways to Prevent Credit Card Identity Theft

While the likelihood of somebody stealing your entire identity has gone down in recent years, complaints of fraud have been on the rise. In other words, thieves are less likely to attempt to completely assume your identity, but they are more likely to steel just enough information in order to use it for their own purposes. Roughly nine million Americans are victimized by identity theft in one way or another each year. Here are some things that you can do in order to prevent this from happening to you.

Avoiding Online Fraud

One of the biggest reasons for the increase in credit card theft is the emergence of the internet. It doesn’t matter if you are using cash back credit cards or a debit card, you are putting yourself at risk if you enter in your information without taking a few steps to verify your security.

The threat of making a purchase online shouldn’t be overstated. It is generally safe to buy things online, but there are a few things you can do to keep yourself safe.

First of all, you should know who you are making the purchase from. Large, well known websites can generally be trusted. Before making a purchase, however, you should always check the site address in order to make sure that you are where you think you are. Site logos can be stolen and pasted on a false site, so verify the site address.

You can also check for security seals before making any purchase online in order to verify that the payment is going through safely. The bottom right corner of your browser should display a padlock that has been locked whenever you are asked for personal information.

Avoiding Phone Fraud

Never give out your personal information to somebody who calls you. It is safe to give this information over the phone, but only if you know exactly who you are talking to. If somebody calls you and asks you for your personal information, tell them that you will call them back at their corporate number to discuss the issue. If it is a legitimate call, they will understand why you are doing this.

Once a criminal has your credit card number, they can call you and pretend to be your credit card company. They may ask for personal information like your mother’s maiden name or even your social security number. They can use this information not only to use your credit card, but to take out additional loans and hurt your credit score, putting you in debt.

Protecting Your Cards

You should always keep your credit card and your other valuable information on hand when you are in public. This information should be where you can see or feel it at all times. When entering a PIN number at the store, cover your hand so that nobody can see what number you are entering.

Never leave your credit card in the car. It can be stolen, or the information on the card can be written down. Cut up old credit cards before you throw them away.

Take the same care to protect your children’s information. It is not unheard of for criminals to steel children’s social security numbers and use them to take out credit.

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Alaska Airlines Wins “Best Loyalty Credit Card”

Alaska Airlines won the award for “Best Loyalty Credit Card” thanks to voters at the Frequent Traveler Awards for its Visa Signature® card. Some of the perks that this credit card offers are 25,000 miles upon approval, attractive award levels when booking online and the ability to purchase a discount companion ticket of $99 once per year. This was the second year in a row that Alaska Airlines has been voted one of the best credit cards.

The Card

Alaska Airlines Visa Signature® cardholders receive 25,000 miles upon approval and a discount code each year for the purchase of one roundtrip companion ticket for only $99. Amazingly, this perk is not limited by blackout dates or other travel restrictions. For every $1 cardholders spend on Alaska Airlines and Horizon Air tickets and Vacations packages, they earn three miles. For all other purchases, cardholders earn one mile for every $1 they spend. The airlines also offers award levels when booking online. With their user-friendly online booking, it’s easy for customers to see all their award-seat options for one-way and roundtrip flights.

Frequent Traveler Awards

The Frequent Traveler Awards were created by the Frequent Traveler Educational Foundation in 2010. The awards ceremony was held last week, when 1.3 million frequent fliers rated airline and hotel programs. These awards honor excellence in travel programs worldwide and include an airlines and hotel winner for each category in three different regions, including the Americas, Europe/Africa, and the Middle East/Asia/Oceania. This is the second year Alaska Airlines has been the favorite among voters in the category of “Best Loyalty Credit Card.”

About Alaska Airlines

Alaska Airlines and Horizon Air, subsidiaries of Alaska Air Group, serve 90 cities between Alaska, the United States, Canada and Mexico.

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Credit Card Companies Ease Standards

Banks took a softer view toward consumers seeking new credit cards in the first three months of the year, according to the Federal Reserve’s April 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices.

The survey, which addresses the market of loans for businesses and households during the first quarter of 2011, found that lending standards used by credit card companies had eased, which means it was easier for consumers to get approved for new plastic. Ironically, though, the demand for new credit cards has been lethargic.

The Survey

Every three months the Fed requests feedback from banking executives in order to zero in on changes in the supply and demand of loans to businesses and households during the previous quarter. The Fed’s April Survey included responses from 55 domestic banks, plus 22 U.S. branches and agencies of foreign banks. According to the survey, 20% of banks reported easing their approval standards for consumers seeking new credit cards in the first quarter of 2011.

This is a dramatic improvement from the fourth quarter of 2010, when less than 10 percent reported a loosening of credit standards.. Additionally, about 6% of banks lowered the minimum credit score needed to get approved for a card, while no bank reported increasing the required score. Although 9% of banks reported increasing interest rates on new or existing accounts, this was equal to the percentage of banks that decreased them.

Consumer Credit Card Demand

According to the survey, it seems consumer demand has not increased along with the easing of credit approval standards, at least the demand for new plastic. On net, banks reported little change in credit card loans. However, when asked about new credit card accounts and credit increases for existing accounts, banks reported the demand rose by 16%. While only a net fraction of banks reported an increase in the number of credit card applications in the first quarter, it seems consumers are looking for higher credit limits on existing cards rather than opting for new ones.

The Good News

The good news for consumers is that this is a good time to shop around and check out various credit card offers with one in three major banks reporting an easing of credit standards. However, part of the reason the number of consumers seeking new credit cards has not increased might be due to the fact that companies are targeting low-risk borrowers, or people who are in a better overall financial position. Yet these consumers probably already have multiple cards and are not necessarily looking to add to their collection.

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Mobile Payment Wars: Credit Card Companies Arming for Battle

Payments are going mobile, and credit card companies do not want to be left behind. The big players are arming themselves to make sure that wherever the mobile payment field is headed, they get a little piece of the action.

Visa Invests in Square

Square is a mobile payment system that launched last May and allows anyone to accept payment through their mobile device. Square appeals to merchants who otherwise do not accept credit cards through a merchant account, such as small businesses, artists, or other vendors that want to avoid paying monthly fees to credit card companies. In the first three months of 2011 alone, Square processed $66 million in transactions. Not bad for a start-up company. But things are getting even better for Square as Visa announced this week plans to invest an undisclosed amount of money. In return, Visa gets a small piece of the action and has joined Square’s Board of Advisors.

Visa’s recent move will also open up new doors for the credit card company, as more merchants will be accepting credit cards for payment. According to the Central Penn Business Journal, this market includes some 27 million small businesses.

MasterCard in the Mobile Field

Visa isn’t the only company aiming to go big in the mobile payment field. MasterCard has been working its game since 2002 when it developed its PayPass system. PayPass-enabled cards contain a chip that allows shoppers to wave the card in front of a terminal in order to make charges. This takes advantage of a technology called radio-frequency identification, or RFID. The company now has 88 million PayPass cards and devices in use at nearly 300,000 merchant locations.

MasterCard is also teaming up with Google to allow Android users to make mobile payments. The Android device would contain everything a consumer needs, from being able to make payments to receiving offers and discounts after they make a transaction.

American Express Won’t Be Left Behind

As for American Express, it just launched Serve, a new payment network that lets people pay each other online through mobile phones or at merchant locations. Serve users manage their accounts through a smart phone app or with a prepaid card. Users can transfer funds from their debit cards, bank accounts or credit cards.

American Express also plans to partner with the start-up mobile payment company called Payfone, which also enables users to pay through their mobile phones.

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Americans Shopping for Credit Cards — Again

According to the results of a recent survey by comScore, the findings reveal that Americans are feeling more optimistic about the economy. The optimism seems to be leading Americans to take on more debt. According to the comScore study of almost 2,000 Internet users and a research panel of 1 million U.S. consumers, 34% percent of respondents said they were feeling more confident about the economy. About 20% of survey respondents shopped around for a new credit card last year. There were several important factors consumers looked for most frequently when credit card shopping.

Primary Feature

According to survey respondents, the primary importance was a low interest rate. It seems to indicate that while consumers are once again looking to take on debt, they want to do so at the lowest interest rate possible. About 38% stated a low interest rate as the most important factor in choosing a credit card.

Second and Third in Importance

After a low interest rate, the next most significant feature credit card consumers are seeking is a card without an annual fee. Approximately 25% of survey takers said that they are looking for credit cards that come without an annual fee associated with it. Coming in third as the most important factor for choosing a credit card is a rewards program. About 16% of the survey respondents cited this as the most important factor when deciding on a credit card.

Consumer Spending Behavior

Sentiments on the economy apparently are not stopping short with applying for new credit and new credit cards either. A MasterCard survey in December 2010 also revealed that 61% of customers said they had not intentions on cutting back on spending in 2011. Of shoppers earning $100,000 to $150,000, 73% said they would not cut spending. So far, consumers are keeping true to their word, which is resulting in a return to applying for credit cards.