How to Protect yourself From Bad Credit Cards

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Creditors can either enlist collection agencies to recover debt on their behalf, or they can sell your debt to the collection agency. If it is the latter, then the account is closed. If it is the former, the account is probably "active", but there may be a block on it. For example, when I worked in the library, we used an outside collection agency to collect on library fines over $50. The library card is blocked. Only until they pay off their balance will we allow them to use the card again. (The books are assets of the City….a library card is like a credit card in which you're borrowing property.)

Your credit report will show that your collection accounts have been closed. They'll still show up on your credit report, so your credit will be ruined until you are able to repair it (through time and more responsible care of your credit).

Even if your accounts are still active, you will be paying high interest rates because you defaulted, which allows them to charge the regular rate. You might want to start anew, so that you have a better interest rate and your limit will be much lower, allowing you to maintain control of your credit.

Only if you do not manage them well.

The number of credit cards a person has is not important, how they manage them is.

Keep your balances below 30% of your credit limit and pay on time every month and you will be fine.

I had 14-credit cards at one time and my score was over 750. I only have 8 now and it's still over 750 because I manage them well.

What about cards for people with an 800+ credit score?

Three things such people, who are just 13% of the population, want in a card:

1. Convenience. We use a card because it's easier than cash. Don't bother with a card that doesn't have a completely automated pay system. If the card only allows you to schedule a payment online manually, apply for a different card. You want a card that allows you to sign up once and have all future payments automated without your having to intervene manually.

Look for ease of tax accounting and business expense accounting. Find one that gives a periodic summary by purchase category and/or vendor, so that it's easy to use during tax or expense reimbursement time. Business cards are better at this than personal cards.

2. Protection. When inadequate service or defective product is purchased, it's easier to reverse payment from a credit card than from a debit card or other payment vehicle. You're also limited in the amount of theft or fraud that can be charged up.

3. Rewards: The best rewards for you are those that reward you for routine, necessary behavior. For many, that's for gasoline, grocery and utilities purchases. For others, it's travel purchases. The cost is that you have to pick the right specialty rewards card out of your wallet, or sign up the utility to be paid by credit card.

These incentives come at a risk: loss of privacy, and outright identity theft. Read your cards' Privacy Notices and act. Read your credit reports regularly. Each of the three major Credit Reporting Agencies (CRAs) offers you one free report per year. Savvy credit users will space out their requests: every 4 months, ask for a free credit report from a different CRA.

Why aren't they advertised?

Point 1: The most money is made off people who are lazy, complacent, ignorant or addicted. Thus, there is little incentive for credit card companies to advertise competitive products and services that reduce their revenue streams. Credit cards are demand inelastic: people will keep using them even as rates rise steeply. That is, it's tough to break a dependency on them. Why advertise much for something people already want?

Point 2: The treasures await you, but you MUST take action to get them. The users who are complainers or are assertive dealers get the very best deals: they've made the efforts that produce the best results. They use the phone to play off one card company against others until one of the companies budges. Because I never pay finance charges, I had to learn and practice this behavior before I could train others to do it. The companies have regular customer service reps as well as Customer Retention Departments, backup departments hired to keep you happy and loyal.

Point 3: If you've opted out of prescreened credit card offers (see opt-out link, below), you may not be receiving the offers. Or do you toss your junk mail without reading it?

Solutions:

1. Avail yourself. Try picking up the phone and in a pleasant, cheerful, polite tone, telling your creditor, "I'm thinking of closing my account unless you lower my rates and improve my rewards. What can you do for me today?" If the front-line rep doesn't satisfy, ask for his/her direct supervisor. Then move over to customer retention. If you don't use your trump card of offering to abandon them unless they actively compete for you, they have no incentive to compete for you. It's sad that many customers don't act because of their unrealistic fear of being seen as a troublemaker by an authority figure like a credit card company: the top (unrealistic) barriers in people when phoning creditors: fear of retribution and a sense of shame and undeservedness. The big discovery awaiting such people: entire departments are hired to keep customers happy, delighted.

2. Entire web sites are devoted to comparing the terms and rewards of credit cards. Comparisons are by category: secured, rewards, etc. Moreover, the marketing departments of credit card companies spend about $200 to capture another user successfully, and part of that expense is designing cards that have innovative and competitive terms and conditions. Put the following 3 words into a browser:

compare credit cards

and start comparing based on your personal needs. Mark your calendar to do another check up in about 2 years, after new products have arrived. And if you're wondering whether an offer is really a good deal or has catches, know that other web sites are specialized message boards in which people discuss the details of such offers and people's experiences with them. Browse on:

message boards credit card

The cost of getting a card with better rewards? 10% of your FICO score is about hard inquiries into your credit history when you apply for credit. You'll lose a few FICO points for each credit card company's inquiry, but you'll get the points back over the following two years.

And don't close your unwanted old cc accounts if they've been open longer than any of your open cc accounts. 15% of your FICO score is about length of credit history. Close a card that was opened long ago and it could hurt your FICO score. Check your credit report under Date Opened to be sure. Closing a cc account can never improve your score, but it can hurt your score.

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Get one there : http://index-go.com/prepaid-credit-cards.asp

Check out Capital One. I was approved four months out of chapter 7. The link will show you all that they have to offer, is set to "credit needs improvement", check the other tabs if you think you might qualify. If you are approved it will be no less than $300, and when you make your first 3 payments on time they bump it to $500. Has a fee of $19, billed at close of first monthly cycle, then yearly.
Those "load as you go" cards are secured cards, and you have to have absolutely horrible credit to go that route. If I had $300-$500 to set aside as a deposit and sit on it for a year, plus pay the fees associated with opening an account, just in hopes of getting a un-secured card for $300-$500 a year from now, I would go open a CD at the bank and let it build interest. The bank would be more apt to give you a loan in a month or two, especially if you pledge the CD, and let the lender know you are trying to build your credit – with their services.