08.6.2008 | 5:00 pm | credit cards
There’s no escaping credit card these days. Many people use them on a daily basis, but have no idea how and where they originated. Time for a quick history lesson! It’s an interesting story, we promise.
Credit has been with us since the dawn of trade. In the olden days, shops would keep open accounts, or tabs, for their customers. The customers would take the goods they needed, the shopkeeper would mark their purchases in a ledger, and the tab would be paid some time later.
Credit in card form was first documented in literature in the 1887 novel Looking Backward by Edward Bellamy. Bellamy predicted that one day customers would be able to make purchases with a small card which represented their available credit. His prophecy came true in 1914 when Western Union issued purchase cards to its best customers.
Gas cards were an early type of credit card. As more and more people bought cars in the 1920s, those cars needed fuel, so gas stations started to issue cards which could be used to make fuel purchases.
Next were store credit card which were originally designed as a marketing ploy. Store cards helped increase many retailers’ customer bases. Shoppers liked the fact that they could buy now and pay later, and retailers liked the fact that the customer had a specific amount of time in which to pay off their debt. Prompt payers gained a good reputation among merchants – an early form of credit history.
The 1930s and 40s saw the advent of revolving credit. Shops started off by allowing customers to pay off their debt over several months, making sure that the debt was paid in full before further purchases could be made. Then they abolished the repayment limits. This meant that shoppers could carry a balance on their credit card that didn’t have to be repaid in a designated time period. Instead, the customer had to repay a certain amount of debt every month – the minimum monthly payment. This meant even more convenience for customers, but wasn’t necessarily good news, as many weren’t aware that they risked getting into serious debt. Early credit card companies made money from fees and interest, as they do today.
In the 1950s, an all-purpose credit card was invented by Ralph Schneider, which could be used in place of multiple charge cards. This was when visa, American Express, Diner’s Club, and others came into being. Popularity increased throughout the 70s and 80s.
So there you have it – a quick history of those ubiquitous little bits of plastic that so many of us take for granted.
07.29.2008 | 5:49 pm | credit cards
In the past, credit card fraud and identity theft happened when thieves stole wallets, rifled through bins to find information, or even when unscrupulous waiters wrote down card numbers while processing restaurant payments. But as technology has advanced, a new menace has raised its head. What is it, and – more importantly – how can you avoid it?
Skimmers are a potential problem for anyone who owns a credit card. These devices mimic legitimate credit card swipers on chip and pin terminals. When a card is swiped through the reader, the card number, account holder name and address and sometimes the PIN are stored so the thief can access it later. This information is used to make cloned credit card for fraudulent purchases.
Amazingly, credit card skimmers can be bought easily online. Aspiring thieves only have to shell out a couple of hundred pounds and team up with counterfeit credit card makers, and they are well on their way to fleecing innocent card holders.
Credit card skimming costs companies millions of pound each year, so it is a massive problem. The best way to avoid falling prey to credit card skimmers is to make sure that you see all transactions happen in front of your eyes. Don’t let waiters or bar staff take your card out of your sight, and check for anything out of the ordinary when you use an ATM or ticket machine.
Make sure that you check your credit card statement carefully to see if any fraudulent payments have been made. If you notice anything out of the ordinary, report it to your credit card provider immediately.
07.23.2008 | 4:48 pm | credit cards
Paying off credit card debt with 0% interest is the perfect scenario, which is why many credit card companies offer such promotions. They know it will attract new customers who have debt with other credit card companies to transfer that debt to their cards. But where is the value to the company offer the credit card balance transfer offer; if they let you repay that debt with 0% interest?
Whenever you see credit card promotions that sound like they’re going to be a good deal for you, it’s best to look into them closely and make sure you read all of the small print. A 0% balance transfer is usually good for a specific length of time – normally six or twelve months. If you have several thousand pounds of debt on a higher interest credit card and take advantage of a 0% balance transfer offer for twelve months, the credit card company is betting on you still having a balance once the promotional period ends. When the six or twelve months of no interest repayments end, the balance will start being repaid with interest.
Remember to check what the interest rate will be after the promotion ends. If you’re moving a balance that you are currently paying 9% interest to a card with an interest rate of 19% after the promotional period ends - unless you are able to pay it off completely during the 0% interest period, you are not likely to benefit financially over the long term. You would have to start looking for another 0% balance transfer offer, or pay the higher interest until the balance is paid off.
Another thing to bear in mind is that most credit card companies charge a transfer fee. This can range from 1% to 5% of the amount transferred. There are some cases where the amount you pay for the balance transfer fee will result in more money paid than if you had just kept your balance on the card it was on and paid interest. To ensure you’re actually getting a good deal, you’ll need to play with the numbers and decide how much you’ll spend for the life of the balance if you keep it on the card it’s currently on.
Interest free balance transfer offers are also only good as long as you make your payments on time. This is something to bear in mind if you have difficulty keeping up with your payments, because if you are late you can lose your 0% interest rate and start paying a much higher interest rate.
In order to make balance transfer fees work for you financially, it’s better to find a low interest balance transfer offer that is fixed for the length of the balance. If you can transfer a few thousand pounds from a credit card with 9% interest or higher, to a card with 1.99% or 3.99% fixed interest on the balance transfer for the life of that balance, you will save hundreds of pounds in interest and actually make out better than the 0% offers (provided you know you can’t pay off the entire balance before the 0% offer ends).
07.15.2008 | 3:00 pm | credit cards
A time when credit card are especially useful is when you’re travelling. If you’re going away on business, credit card make it easy to track your expenditure so you can claim expenses and tax-back. If you’re travelling on a vacation a credit card is often necessary to book hotels and car hire, and you may be able to get a better exchange rate when you change currency.
But you’ve still got to be careful. Here are some tips for a smooth journey with your credit card:
Better Safe than Sorry…
Make sure you have your card cancellation phone numbers written down and stowed somewhere about your person when you are travelling. If the worst case scenario happens and your card is stolen, you’ll be able to sort it out as soon as possible.
Spread the Load
If you’re travelling with your partner or family members, it’s a good idea to have your credit card on different accounts. This is because all cards on an account will be cancelled if one is stolen or lost.
Make Note of Your Card Use
Save all your receipts and keep track of where you used your card. You can check these against your credit card statement when you get home to make sure that no suspicious transactions have been made.
Beware of Extra Fees
Lots of banks charge a conversion fee on transactions made abroad, usually 1% of the purchase amount. Make sure you check with your credit card provider before you travel so you won’t get any nasty surprises when you see your statement.
07.7.2008 | 12:05 pm | credit cards
If you shop in department stores or clothes shops you’re probably familiar with the routine when you get to the till. Would you like to take out a store card? Great discounts on future purposes, and 15% off your transaction today. Sounds tempting. Many store cards come with a raft of incentives – in store offers, money-off bonuses – but are they a good idea?
The brief answer is no.
With Britain in the grip of a credit crunch, households are feeling the pinch and any extra debt is felt more than ever. The main reason for avoiding store cards is the exorbitant interest rates - around 10 to 20% higher than the average credit card. This is okay if you pay off the balance within the interest-free period (usually between 35 and 55 days). As with any credit card, it is the unpaid balance that proves problematic when interest starts to mount.
Taking out store cards may also adversely affect your credit rating, as the more cards you apply for, the worse your rating will be.
Many people fall into store card debt because of the way they are promoted. Shop cashiers with little or no financial experience push frazzled shoppers into signing up, with no explanation of the implications. Teenagers and young adults are especially susceptible to this.
So if you’re going to use credit, it’s best to use a regular card which won’t accrue ridiculous amounts of interest.
06.27.2008 | 4:39 pm | credit cards
With so many different types of credit card out there, it’s often tricky to decide which is the best one for you. Like many people, you’ll probably be attracted to 0% interest introductory offers, so here are some tips to make sure you get the best out of the deal.
Types of 0% Introductory Offer
Before you decide which card to go for, you have to choose which 0% deal you want. There are two kinds. The first is the 0% balance transfer, which means you can move an existing debt onto the new card without having to pay interest on it for the duration of the introductory period.
Then there’s the 0% on purchases deal. With this card you won’t be charged interest on your purchases during the introductory period.
Mixing The Two
One possible problem with cards that offer 0% deals on both balance transfers and purchases is that the purchase period is normally shorter than the balance transfer period. This means that you’ll be charged interest on your purchases sooner. The problem with this is that none of your repayments will count towards clearing the purchase debt until you’ve paid your balance transfer debt. For this reason it’s best to use separate cards for transfers and spending, or get one with equal introductory 0% periods for both.
How Long is the Introductory Period?
Make sure you know how long the offer is for. It goes without saying that the longer the time period the better. Balance transfer periods used to be around six months, but you can get much better deals these days.
When the introductory period is over, you’ll be charged interest at the card’s standard rate. The best case scenario would be to clear the debt before the introductory period is over, but it’s best to go for the card which has the lowest standard interest rate just in case the best laid plans don’t come about!
05.16.2007 | 5:47 pm | credit cards
Fashion chain Laura Ashley has been named as one of several high street culprits that have sent credit card to consumers who have not asked for them.
Stores which present credit card to those who have not requested one are acting within the law but have been accused of fuelling the UK’s current debt crisis.
GE Capital, who are responsible for managing around half the store cards in the UK, has already been branded as unethical due to its responsibility for high-interest store cards.
Often - as well as being easier to obtain than a credit card - a store card will charge a fee around ten per cent higher than most credit card, leaving borrowers to repay funds at a staggering 30 per cent interest.
There have also been problems in the past when high street stores were accused by the Competition Commission of failing to display the APR or other crucial details on the store card application.
The criticism comes just a week after it was reported that the common nature of debt in Britain means that many consumers are unfazed even by five-figure sums of personal debt.
05.15.2007 | 4:58 pm | Uncategorized, credit cards
Following a relatively quiet new year, UK consumers are increasingly spending on their credit card, according to the latest figures.
The trend comes as Britons have finally managed to pay off the debts from Christmas and began to feel more confident about spending again. One factor cited for the improved popularity of credit card is the recent ruling from the Office of Fair Trading concerning the penalty fees lenders are legally allowed to levy.
Following an investigation into the level of penalty fees, the OFT ruled that credit card companies could charge just £12 per occasion a borrower exceeds the limit on their card.However, lenders have begun to hit back in order to recoup lost profits. While some credit card companies have increased their interest rates or the charges for transactions carried out abroad, the Royal Bank of Scotland is currently considering charging its customers £12 should they fail to inform the bank about a change of address.
“I’ve never come across this kind of charge before,” commented Richard Mason, a spokesman for the price comparison site Moneysupermarket.
05.14.2007 | 7:12 pm | credit cards
Store cards have come under criticism from online financial advice company MoneyFacts.co.uk, for their continued “unethical” policies.
The cards were put under pressure last year by the Competition Commission, in an attempt to reduce the number of consumers with monstrous rates of debt.
debt has been easy to obtain on such cards due to the attractive offers such as money off their purchases, which are put forward to shoppers as they reach the checkout.
The Competition Commission last year ordered that all store cards should come with warnings against only repaying the minimum monthly allowance, should contain information on penalty fees, and have the APR visible if it is 25 per cent or above.
One financial expert from Moneyfacts warned consumer against such cards in no uncertain terms: “The Competition Commission must take further action to protect consumers from these exorbitant rates.
“Don’t get lulled into signing for a card unless you are going to make a substantial discount on your initial purchase and repay your balance in full.”
05.14.2007 | 7:12 pm | credit cards
A cash-free society looks that bit nearer as leading banks announce the next generation of credit and debit cards.
Following on from the Chip and Pin revolution, the ‘Tap and Go’ initiative will allow consumers to make minor purchase, namely transactions of £10 or under, without needing to enter a Pin number or swipe their cards.
Using the latest technology, the amount will then be charged to the customer’s credit or debit card.
Banks already signed up to the new cards include the Bank of Scotland, hsbc, Lloyds and the Halifax, with London’s financial districts set to be the location of the scheme’s first trial in September.
Given the limit on transactions allowed by the cards, industry experts are confident that the ease of the Tap and Go initiative will not be exploited by fraudsters.
“In the United States where they have this technology already they’ve found they just don’t get targeted,” commented a spokeswoman for the UK Payments Association (APACS).
In addition, as a security measure, customers will occasionally be asked for their PIN, regardless of the size of the transaction.
