Mega Card

The emergence of electronic age made almost everything possible to people. Determining and curing terminal diseases made convenient, reaching uncharted territories became a possibility, and most of all; everyday life of people is made easy by the technology. We now have more convenient stores, easier means of transportation and a variety of gadgets that makes work and pleasure almost effortless.

When it comes to finances, technology–through efficient banking system and services–has given people better alternatives and options how to manage their finances. Among the so many financial management schemes that emerged, one alternative stands out among the rest–the credit card.

Credit card, especially to working people and those who live very busy lives, has become an ultimate financial “saviour.” More than just being a status symbol or an add-on to expensive purses and wallets, credit card has revolutionized the way people spend their money.

But, more than the glamour and the convenience credit card brings, there is much more to this card than most people could ever imagine.

Before indulging much into the never-ending list of the advantages and disadvantages of having a credit card, it is very important for people to first have a brief realization of what credit card really is in order for them to maximize its potentials.

In layman’s terms, credit card is a card that allows a person to make purchases up to the limit set by the card issuer. One must then pay off the balance in instalments with interest payments. Usually, credit card payment per month ranges from the minimum amount set by the bank to entire outstanding balance. And since it is a form of business, the longer the credit card holder waits to pay off his or her entire amount, the more interest pile up.

Since having a credit card is a responsibility, only those people who are of legal age and have the capability to pay off the amount they are going to spend through their credit card, is allowed to have one. Actually, most of the adults in the U.S. use credit card because this is very convenient compared to carrying cash or checks every time they have to purchase something.

It is also equally important to be familiar with the different types of credit cards before you begin to build up credit card balances and to avoid having a nightmare of debt. Since credit cards are indispensable to most consumers, it is a must that they understand the types of card that include charge cards, bankcards, retail cards, gold cards and secured cards. All of these types come in one of two interest rate options–the fixed and variable. Actually, it doesn’t really matter if you decide to have a fixed-rate credit card because the interest rate remains the same. Compared to variable rate cards where rate may be subject to change depends upon the credit card issuer’s discretion, fixed-rate carry higher interest rates. Basically, credit card grantors issue three types of accounts with basic account agreements like the “revolving agreement” a.k.a. Typical Credit Card Account which allows the payer to pay in full monthly or prefer to have partial payments based on outstanding balance. While the Charge Agreement requires the payer to pay the full balance monthly so they won’t have to pay the interest charges, the Instalment Agreement, on the other hand, asks the payer to sign a contract to repay a fixed amount of credit in equal payments in definite period of time. Another category of credit card accounts includes the individual and joint accounts where the former asks the individual alone to repay the debt while the latter requires the partners responsible to pay. The common types of credit cards available through banks and other financial institutions also include Standard Credit Cards like Balance Transfer Credit Cards and Low Interest Credit Cards; Credit Cards with Rewards Programs like Airline Miles Credit Cards, Cash Back Credit Cards and Rewards Credit Cards; Credit Cards for Bad Credit like Secured Credit Cards and Prepaid Debit Cards; and Specialty Credit Cards like Business Credit Cards and Student Credit Cards.

Now that you have an idea how many types of credit card there is, it is now time to review your goals before applying for one. Some of the things you should consider is how will you spend with the credit card monthly, if you plan to carry a balance at the end of the month, how much are you willing to pay in annual fees, if you have a strong credit history and is does your credit in need of rehabilitation. Once you have an idea of what you are looking for choose the right credit card for you by researching the information you need that will fit your basic needs. You may also review the credit cards you’ve research and compare them.

Regardless of the type of credit card you choose, be sure to discuss your specific financial needs with your financial advisor or accountant before applying for any credit card. It is a must that you understand the benefits of having a credit card like safety, valuable consumer protections under the law, and the accessibility and availability of services. The most popular credit cards include Chase Manhattan Bank, Citibank, Bank of America, BankOne, American Express, Discover® Card, First Premier Bank, Advanta, HSBC Bank, and MasterCard Credit Cards.

Although having a credit card is synonymous to invincibility, this may also trigger a person’s thirst for material things and may lead into the temptation of buying something they don’t really need. A credit card bearer should always have in min that having a credit card is a big responsibility. If they don’t use it carefully, these may owe more than they can repay. It can also damage their credit report, and create credit problems that are quite difficult to repair

We live in the world of credit. Most of the banking institutions offer different forms of credit from credit card to signature loans.

Majority of people often find themselves in bad credit situations like court judgment, bankruptcy, repossession, foreclosure and loan default,due to lack of enough financial knowledge and discipline which often make it difficult for them to get any credit at all in future. So – what exactly is credit?

Credit means that you are getting a service or cash grant to rent for your own purpose. You are often bound with a contract or agreement to repay in future as agreed with lender or service provider. Credit exists in different forms like loan, mortgage, signature loan, or credit card.

Every financial institution or lending agency, will first check your credit history, before they will consider giving you credit. If you have defaulted on credit or loan before or have bad credit history you will find it almost difficult to get credit any time you apply for it.

However, it’s possible for you to improve your bad credit history or build a new good credit history by repairing your bad credit, thus re-establishing your credit-worthiness. This process is called credit repair. It’s the process in which consumers with unfavorable credit histories attempt to re-establish their credit-worthiness.

Though there are lots of credit repair companies nowadays that promises repairing your bad credit for you, but if you can follow simple guide, it’s very possible for you to do it yourself – after all it’s your credit.

If you repair your bad credit it will make it easy for you to get low interest credit, car or home loans. However, with poor credit rating you may not be able to get loan or be subjected to high interest rates and several other unnecessary conditions. So it’s very important that you repair your credit if you have bad credit. You will get lots of tips on how to do this easily in this book.

Your credits score – how you can improve it.

Your credit score is a very important in any financial transaction that you make or intend making in future. So it’s good you know what exactly your score is, understand its meaning and learn how you can improve it if it’s not good enough.

“Many factors can contribute to a negative rating from the credit reporting agencies. Many factors like are non-payment of an account or late payments over an extended length of time, can contribute to someone getting a “bad credit” rating or poor score. Whether non-payment of an account is willful or due to financial hardship, the result can be the same, a negative rating. … But there is hope to get credit cards for people with bad credit, poor credit or lower credit score”

Credit report – its effect on your personal credit

Credit report is a compilation of your credit history, past financial transactions and personal information possible. This report is usually compiled by accredited agencies known as credit reporting agency.

Credit reporting agencies are organizations that help credit card companies, loan companies, banks, and departmental stores in the country to ascertain the credit worthiness of their would be clients.

Once they have detail information from these sources, they give it to any organizations in need of it when requested. Though they keep on file information concerning you and your credit, they don’t make final judgments as to your credit worthiness. The decision is up to the credit card companies or any lender which you are dealing with.

Credit cards: – types and what you need to know about them.
Nowadays, everybody wants to have at least a credit card. Everywhere you go you see adverts from various banks and other financial institution offering you credit card. However, before you apply for a credit card, there are several factors you need to consider. So it’s very important that you know more about the types of cards available, and one that will work best for you.

Secured credit card: – A secured credit cards for people with bad credit requires a security deposit as collateral before you can get approval. Its type of card that best suit the need of people with no or poor credit who are trying to build their credit history. Your collateral must be equal or greater in value of the credit amount you are applying for.

With a secured card you put up your own money (into a savings account with the bank you are applying for credit card) and that amount (or part of it) is the credit line for your card. Put in $500 and you could have up to a $500 credit line. You can deposit anywhere from two hundred to two thousand dollars into an account, and that will be your spending limit.
This will give you the flexibility of using a credit card and because if you pay off every statement you are letting creditors know that you can handle credit (again) and your bank may soon begin extending your credit line beyond what you have put in. So you are on your way back to healthier credit, to a status where you will no longer need a secured card.

Business credit cards: – These are the card that’s available for business owners, directors and business executives. They come with several features just like any traditional credit cards. You have to consider the terms and condition for these types of cards too before applying.

Student credit cards are another type of credit card specifically for students. These types of cards are made for students because of their lack of credit history, and if given chance they can build their credit history with such card.

Prepaid credit cards: – are set of cards that are just acceptable wherever the traditional credit cards are acceptable, but they are not credit card. You will have to always transfer money to your card before you can make use of the card and you may not be able to spend more than you prepaid for the card.

Presently this is almost the best card for people that want to avoid interest and other fees charged on traditional credit card and also for people with bad credit. However, other little charges like monthly fees, application; over the limit and ATM fees are still applicable, but these gets offset if you pay your bills via money order

Whichever card you decide to choose make sure that you go over the terms applicable very well to avoid putting yourself in financial bondage. In second part of this article we will continue looking at other types of credit card.

Balance credit cards are unsecured standard cards designed to allow consumers to save money in interest charges by transferring higher interest credit card balance onto a lower interest rate credit card.

Low interest credit cards are other types of non secured standard credit card. They offer either low introductory APR that change to a higher rate after a certain period of time or a low fixed rate. You can take advantage of the low introductory APRs to make larger purchases for now and pay them off several months later. It wont be possible to get this credit card for people with bad credit

Air Mile Credit cards are cards that are good for people that travel frequently or planning to go on vacation. It’s a form of reward card that allow you opportunity of obtaining a free airline ticket. You will need to accumulate specified air miles before you can be entitled to free ticket. All accumulated mile points will be based on dollar amount of your credit card purchases over a period of time based on predetermined point level.

Specialty credit cards are other set of standard non-secure cards designed specifically for individual business users and students with unique and special needs.

Make sure that you study the terms of any of the card that you pick very well to avoid risking your credit rating. Also, when you pick any of the reward cards make sure you study the forms and offers very well because credit card issuing companies do offer different reward programs and their promotional offers often change. So make sure you thoroughly look over the card’s terms and conditions of each specific card before applying.

When it comes to credit cards for people with bad credit, there are dozens to choose from. However, that doesn’t mean they are all good credit cards to have. While some bad credit credit cards really do work towards improving a person’s credit, others do nothing but fleece the pockets of those who need a second chance.

Here are seven things to look for when dealing with credit cards for people with bad credit.

1. Fees, Fees and More Fees

It is true that credit cards for people with bad credit almost always have an annual fee attached to them. That being said, a few of the questionable bad credit credit cards charge much more than just an annual fee.

One of the popular credit cards for people with bad credit advertises a $48 annual fee. Not bad, right? It wouldn’t be — if that’s where the fees ended. Unfortunately, this card also charges a processing fee of $29, a one-time program fee of $95 and a participation fee of $6 each month.

That’s a whopping total of $178 being charged to your card before you even get it in your hands. Considering most applicants only qualify for a credit limit of $250, that leaves you with an available credit line of just $72. Not exactly the credit card you were hoping for, is it?

Do yourself a favor… When dealing with credit cards for people with bad credit, make sure you understand all of the fees involved and don’t just judge a card by the annual fee or the interest rate.

2. The Facts About Secured Credit Cards

When looking for credit cards for people with bad credit, there are two categories of cards you will be looking at. These categories are called secured credit cards and unsecured credit cards.

With a secured credit card, you have to secure your line of credit with a savings account. Sometimes your credit limit will be equal to your savings account and sometimes it can be more. It really depends on the specific credit card and your personal situation.

Now understand that when you place a deposit for a secured credit card, it goes into a savings account. This is much different from a prepaid credit card. A prepaid credit card will require a deposit as well, but it works more like an ATM card than a credit card and it doesn’t get reported to the credit agencies.

Because people looking for credit cards for people with bad credit usually want to improve their credit rating, it’s important that you find a true secured card and not a prepaid card. Otherwise, you’re not doing your credit rating any good.

3. Cash Up Front Is a Con

We’ve discussed that credit cards for people with bad credit often charge fees. This doesn’t, however, mean that it is acceptable for them to ask you to pay for these fees up front before they issue you a card.

If a credit card company wants you to send them money before they send you a credit card, run in the other direction. Nine times out of ten, it’s a scam. You’ll never get the card and you’ll be out your hard-earned money.

4. They Want To Charge You What?

Yes, you have bad credit. No, it’s not the end of the world and you don’t deserve to be tortured with ridiculous interest rates.

I’ve seen credit cards for people with bad credit that charge more than 20 percent interest. Forget about them. Even with bad credit, you should be able to get a credit card with a decent interest rate (lower than 18 percent).

5. Rewards vs. Rates

When looking for credit cards for people with bad credit, you might be surprised to find rewards cards on the table. Yes, people with bad credit can qualify for rewards credit cards — but you will pay a price.

Before applying for bad credit credit cards that offer rewards, remember that these credit cards usually have higher interest rates attached. Since you’re working on rebuilding your credit, you may want to focus on the lower interest rate rather than the rewards aspect of the credit cards that are available.

6. Reasonable Grace Periods

Before applying for any bad credit credit cards, make sure you know what the grace periods are. Late payments may be what got you here in the first place, and if you want to get your payments in on time, you’re going to need time to do it.

Many credit card companies have whittled their grace periods away to little or nothing. Credit cards for people with bad credit should offer a minimum grace period of 20 days (preferably 25). If the card you are thinking about applying for offers a grace period of less than this, you should look elsewhere for your credit card needs.

7. The Respect Factor

While respect may not be something you think about when looking for credit cards for people with bad credit, it is definitely something you need to consider. Credit card companies should treat you with respect, regardless of your credit history.

One woman I know inquired about the high fees associated with a certain credit card and was yelled at by the company’s employee. She was also criticized for her credit history and was basically told she deserved to pay the high fee. This is completely unacceptable. The companies offering bad credit credit cards that treat you with anything but the utmost respect should be avoided at all costs.

Remember, bad things happen to good people. You may have credit issues now, but you won’t always be in this boat. By following the above advice and applying for good credit cards for people with bad credit, you’ll make your first steps towards repairing your past and building your future.

Credit card balances are rising faster than consumers can pay them off. And with a high interest rate card it can be difficult to even make a dent in debt. According to Consumer Action, a non-profit, membership-based organization, a March 2004 survey revealed that only 39% of the people said they pay their credit card balance in full each month. So if you are like 61% of everyone surveyed and carry a balance from month to month, then your number one priority for a credit card should be a low interest rate.

What is considered a low interest rate

According to Linda Sherry, editorial director and spokesperson for Consumer Action, anything below 10% is an attractive rate in today’s market.

Look at the Savings

Are the savings really all that much with a low
rate credit card? Here’s an example to show you just how much you will save.

Let’s say you have a $2500 balance on your credit
card, you make the minimum 2.5% payment, and you don’t add any new charges to the card. With an 18% APR (annual percentage rate) it would take you 20.3 years to pay the card off at the
cost of $3365.51 in interest alone.

If you are able to lower that interest rate to the
average standard, fixed rate of 12.99%* you will reduce the time it takes to pay off the debt to 15.2 years and your total interest will be $1732.95–a 48.5% savings over the 18% APR.

But if you can qualify for a 9% APR, your
debt will be paid off in 12.6 years with a total of $977.48 in interest–a whopping 71% savings over the 18% card. And if you commit to paying the first month’s minimum payment of $62.50 each month until the entire balance is paid off, then you will shave off another 8.6 years and another $494.01 in interest.

Who can get the lowest rates

In order to get the lowest advertised you will need a good credit rating. While most issuers have their own criteria for a good credit rating, Sherry says that in general a FICO score of
675+ is good and 750+ is excellent. If you are in a situation where you need to raise your current score, please read our article is a Credit Score Calculated and How Can I Improve My
Credit Score?

Where you Can Find the Lowest Rates

If you do have a good to excellent credit rating, then according to Gerri Detweiler, founder of DebtConsolidationRX.com and author of The Ultimate Credit Handbook, if you are paying more than 10-12% you need to start searching for a lower rate card and there are several different avenues of approach.

Read Your Mail

Often times the best offers come right to your mailbox. But you need to read through the offer very carefully to determine if it is an introductory rate or a long-term rate (ongoing). Also, Sherry says you need to look for the words “you are
pre-approved” as opposed to “you are invited to apply.” If it is an invitation only, you may not qualify for the rate advertised, and you won’t know until after you apply. You should also be aware that you may not get the rate advertised in a pre-approved offer. In fact, you may even be declined for the card. Please be aware that almost all of these mail offers are marketing schemes rather than true pre-approved offers.

Learn to Negotiate

Mail offers and other low rate credit cards you carry can come in handy as a negotiating tool with your current card issuer. Scott Bilker, creator of DebtSmart.com and author of Talk Your Way out of Credit Card Debt,
suggests calling your issuer and letting them know you have better offers elsewhere and that you are considering
switching to another card if they won’t lower your rate.

Don’t be afraid to take back control…in today’s saturated market, credit card issuers are looking to hang onto customers. If you want to know exactly what to say to a credit card customer service rep., check out Bilker’s book which contains transcripts from actual telephone conversations with reps.

Local Banks and Credit Unions

When shopping for a low rate credit card, looking to a local bank or credit union may be a good option. In addition to a good rate you may find the customer service more personal and appealing. But beware of banks that offer a rate significantly lower than the big banks or below the , especially if you know your credit is not good enough to qualify. Another thing to consider is that introductory rate offers from local banks and credit unions are not generally as aggressive as introductory offers from larger banks.

Associations

Sherry says it’s a good idea to investigate any credit card offers that may come through associations you are part of such as alumni groups. These large groups often have more muscle to negotiate special terms for their members. For example, for their members, AARP got the binding arbitration clause, which has come under scrutiny recently by consumer advocates, left out off the terms and conditions of the AARP credit card.

Online

Finally, CardRatings.com offers detailed comparisons of the lowest rate cards currently available. Browse our
Card Reports section and conveniently apply online to start reducing your interest charges.

So Many Choices…Some things to Consider

Variable vs. Fixed Rate Credit Cards

Most of the low rate credit cards offered today are variable rate cards. This means the APR is attached to an index such as Prime or LIBOR (London Inter Bank Offered Rate) and changes according to changes in the index. The credit card terms and conditions will say something like “Prime + 4%.” So if Prime is 6%, then your interest rate is 10%.

And although not currently common, it is still good to be aware that issuers can apply a floor, or minimum, to the rate. For example, if the terms are Prime + 4% with a floor of 10% and Prime drops to 5% you would get a 10% APR rather than the 9%. According to Sherry this was more common 3 years ago when interest rates really dropped, but became a less frequent practice as consumers started pressuring issuers to ban floors.

Even with low rate cards advertised as having fixed rates, keep in mind credit card issuers reserve the right to change the terms and conditions, including the APR, of the card
for virtually any reason at any time. If changes do affect your fixed APR card, your issuer is normally required to give you 15 days written notice; so it’s very important to open all your mail because if you happen to throw out the notice, then you will forfeit any right you may be given to opt-out of the rate increase. And Sherry says once you make a purchase under
the new rate terms, even if you didn’t read the notice, you have agreed to accept the new terms and conditions.

Credit card issuers can even change a fixed rate card to a variable card and vice versa with little notice. Fixed rates are rarely fixed forever. In the credit card world
Bilker defines forever as the time it takes to pay something off. :0) The only real advantage of a fixed rate card is the rate usually doesn’t increase as often as a variable rate card in a rising rate environment (this can work against you if rates are falling).

Is the low rate for purchases only?

Most of the time a low APR applies to purchases, but not cash advances. The cash advance APR is generally much higher. If you do end up taking a cash advance on a low rate card you need to be aware that issuers normally apply payments to the
balance with the lowest APR–so your cash advance balance will keep earning interest (usually at a much higher rate) until your purchase balance is paid off. However, a few cards do come with a low cash advance APR, so make sure you read all the fine print.

Fees

Annual fees are pretty much a thing of the past. The one notable exception is credit cards that have very low ongoing rates, usually defined as being within 2 points of Prime. If you do come across a card offer that has an annual fee and rate within 2 points or so of Prime, then use our online
calculators to compare the cost savings to a card without an annual fee and a little higher APR.

If you plan to transfer a balance to a low rate card, then determine how much a fee you will pay before initiating the transfer. Detweiler says a cap of $25 on balance transfer fees is generally okay, but if they charge a fee of 3-4% with no cap it’s probably not worthwhile. Doing a few calculations will help
you determine if the savings are there.

Using a Low Rate Card to Your Advantage

The point of using a low rate credit card is to save you money if you carry a balance month to month. Here are some tips to make sure you are maximizing its usefulness.

Make your Payments Early

If your credit card issuer uses the average daily balance method to calculate interest (see glossary below), then you will benefit by making payments before the due date because it reduces the average daily balance your monthly interest is based on.

Manage your Credit Well

With a low rate credit card you need to make sure your payments are always on time, you never exceed the credit limit, and that your payment will be honored by your bank, otherwise you will end up paying the default, or penalty, interest rate which is significantly higher than the normal purchase APR.

Also, don’t max out the limit (i.e. carry a balance that is close to your credit limit) on your new low rate card because that will adversely affect your credit rating; and if your credit rating goes down, many issuers have the right to raise your APR. Detweiler says to use no more than 50% of your credit limit on any given card.

In addition, defaults on any other credit accounts can affect your low rate credit card. Most credit card issuers have a universal default clause in their terms and conditions
meaning that if you default with any other creditor (not just another credit card company) they reserve the right to raise your APR to 20+% in some cases — read our Universal
Default article for more information. Sherry says they have the right to pull your credit score and review your account. If they find any reason to raise your rate they will–as Bilker says, they are just waiting for the opportunity to do so. And even though the Truth in Lending Act requires they give you notice of an increased rate it doesn’t have to be in advance. So make sure you check your statement every month for any changes in the rates.

Tips for the Savvy Consumer

• Consider consolidating higher rate credit cards to your lower rate credit cards. It’s important to keep in mind, however, that credit card companies usually apply payments to the balance with the lowest APR. This means if your low rate credit card has an introductory 0% balance transfer APR and you are carrying a monthly balance on purchases, then your payments will reduce the 0% balance transfer first while you continue paying interest on purchases–the resulting APR is called your effective rate and it is normally much higher than the balance transfer APR. The effective APR should be indicated on your monthly statement.
• Detweiler says if you really want to save as much money as possible consider using a reward card for a big-ticket item. After you earn the reward, immediately transfer the balance to a low rate credit card. This technique requires self-discpline and attention to detail.

Important Terms to Know

Credit card issuers use their own language, which can be confusing. Below is a table of some important terms you need to
understand as you shop for the lowest rate credit card.
Purchase APR Annual Percentage Rate charged when you carry a balance month to month on any purchases made with your card.

Balance Transfer APR: APR for balance transfers, typically different than the purchase APR

Default/Penalty APR: APR charged if you default on the account. For example, making a late payment, exceeding your credit limit, or bank not honoring your payment.

Variable Rate: Interest rate that changes according to the index (i.e. Prime and LIBOR) it is tied to.

Fixed Rate: Interest rate that does not change. However, in the credit card world there is no such thing as a truly fixed rate as a change in the terms and conditions can change a rate at any time.

Prime: The lowest interest rate banks charge their most credit worthy customers, usually corporations. A common index used for variable rate credit cards.

LIBOR: London Inter-bank Offered Rate, the interest rate banks borrow money from other banks in the London wholesale money market, usually lower than Prime. Another index used for variable rate credit cards.

Monthly periodic rate: Monthly interest rate. APR divided by 12 (number of months in a year).

Average Daily Balance: Daily totals of charges and payments divided by the number of days in the billing cycle.

Average Daily Balance Method: Method for calculating interest–average daily balance multiplied by the monthly periodic rate

Two-Cycle Billing Method: Method for calculating interest based on the sum of the average daily balance for the previous and current billing cycle.

Amount Due: Refers to the minimum amount due (usually around 2-4% of the entire balance)

Finance Charge: Interest charge on outstanding credit card balances.

FICO Score: Fair Isaac & Co., the company that develops credit scores (aka FICO scores) used by 75% of mortgage lenders and many credit card issuers.

With a little bit of knowledge beforehand you will be able to shop for the best low rate credit card for your needs. Investing a little bit of time doing so could save you 1000s of dollars and will definitely be time well spent!

Your credit is bad. Perhaps you have a string of unpaid bills haunting your past. Maybe you declared bankruptcy within the past 10 years, or defaulted on a student loan.

All of the above can block your access to obtaining a major credit card, such as VISA or Mastercard.

But bad credit is not the only reason you can be denied a major credit card. Some people simply have never used credit. People who like to pay cash only, have never financed a car, taken out a college loan, or a mortgage may have zero experience with credit. In that case, most card companies will reject your application, not because you have bad credit — but because you have no credit rating.

Many women who marry young and do all their borrowing under their husband’s name often find themselves with no credit rating after they are widowed or divorced. Thousands of women have been denied loans and credit cards on that basis.

Still other people carry too much debt to be considered a good risk. If you have a car loan, a student loan, a mortgage, two or three — out cards, you are unlikely to be granted another credit card.

But in any and all of the above cases, you can still obtain a credit card. No matter how bad your credit, and even if you have declared bankruptcy, you can still be granted a VISA or Mastercard with a limit as high as $5,000, if you know the right company to call, and how to make your application.

We are going to reveal these card companies and the methods by which you can obtain a VISA or Mastercard later in this report, but first, let’s talk about some of the other things you really should know about credit cards, including annual fees, interest rates, credit reports and more.

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Your Credit Rating

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How do credit card companies decide if you are a good credit risk or a bad credit risk? Well, it’s sort of a Big Brother thing. There are several large agencies in America which track the borrowing and buying behavior of just about every single American who has borrowed money at one time or another.

The four major credit rating agencies are:

CSC Credit Service :: (Phone: 800-392-7816)

TRW Information Sys. :: (Phone: 800-392-1122)

Equifax :: (Phone: 800-685-1111)

Trans Union Corp. :: (Phone: 800-851-2674)

When you send in an application for a credit card, the card company contacts one of the above agencies, which pulls your file, if one exists, and let’s the company know if you have any bad debts in your background.

If you have never borrowed money or used credit of any kind, your name will not appear in the data base of any of the above. If you have, there will almost certainly be information about you. If you have ever defaulted on a bill, or walked away from a debt owed, that information will be available. If you have never defaulted on a loan, but have made frequent late payments, that is recorded, too, and goes against your credit rating.

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25 Percent Error Rate

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If this sounds a bit like Big Brother, most would agree with you that it is. It’s scary to think that some large anonymous corporation is keeping a file on you, but it’s true. Furthermore, they will share your file with any lending institution that wants to know something about you. That’s the price you pay to obtain credit. You’ve heard the statement, “there ain’t no such thing as a free lunch.”

When it comes to the game of credit, the lunch is definitely not free, neither in the monetary sense, or in the realm of personal freedom.

To top things off, credit agencies make errors in as many as one-fourth (25 percent) of all their reports. At this minute, false information about you may be ruining your credit rating.

To check your credit rating for errors, call the agencies at the numbers I provided above. They will request that you send them a written letter asking for a copy of your credit report. They will send you a copy of the information they have about you.

Now let’s look at how card companies make the big bucks — interest rates.

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Interest Rates

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A few decades ago there were laws against charging the kinds of interest rates credit cards get today. Exorbitantly high interest rates were called “usury,” and were forbidden by federal law. Just 30 years ago loaning money at 20 percent would have landed any banker in prison. Such rates were the territory of loan sharks and organized crime.

Today, however, it’s standard business. Some cards have rates approaching 21 percent. Some product manufacturers, such as Apple Computer, have credit plans that push a whopping 23 percent.

Most credit card companies attract customers with super low interest rates, sometimes as easy as 5 percent. But what they only tell you in the fine print, which few people bother to read, it that the interest rate jumps back up after six months. Many cards that start you out at 6 percent soon jump to 18 percent, or higher. By that time, most people have chalked up a balance and are stuck. Most people simply fail to notice when their rate increases. Credit card companies count on that. They like who take no interest in details. If you don’t watch them, they’ll watch you — and your wallet — and dip into it in the most insidious ways.

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No Annual Fee Cards

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Some credit card companies charge no annual fee for use of their card. Annual fees range from $18 to $55. You pay it every year simply for the privilege of using the card. Other companies charge no annual fee. You might think, then, that this is a better deal. Most often they are not. Cards with no annual fee almost always have a higher interest rate. If you leave a monthly balance, you’ll always pay more than the annual fee in interest charges. Only if you never leave an unpaid monthly balance can you benefit form a card with no annual fee.

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Perks and Freebies

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One of those insidious ways is the offer such perks as frequent flier miles or annual rebates. Use the card so often, and get X amount of frequent flier miles. Use your card, and get credit toward the purchase of an automobile. Is this a good deal? Hardly ever. As you might have guessed, the offer of rebates and gifts is simply an inducement for you to pay super high interest rates. Unless you are a big spender and travel a lot, you’ll rarely benefit from this kind of promotion.

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Be Choosy

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In short, never sign up for a credit card until you compare rates. Shop around. Credit card companies are just as competitive as any other kind of business. That means interest rates that vary widely. In general, never go for a card that is five percent higher than the current prime rate.

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How To Get A Lower Rate

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What if you are already on the hook with a major credit card with an agonizing rate of interest? Pick up the phone, call your card company, and get tough. Often, if you ask for a lower interest rate, you’ll get one — it’s as simple as that.

As further incentive, you can threaten to transfer your balance to another card company with a lower rate. Many card companies are more than willing to take you on as a customer by paying off one of their competitors for you. Of course, you are then beholden to them. That’s okay if you score a lower interest rate.

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How Anyone Can Get a Credit Card

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Now what about all of you “hopeless cases” out there. What if you have deplorable credit, or no credit rating at all. You may have already been turned down by a half-dozen card companies. What can you do?

First, you should think long and hard about why you want a credit card in the first place. If you have a history of bad credit, a credit card may be the last thing you need. Many people feel that credit cards and the debt they lead people into is a modern form of slavery.

Credit cards are almost magically deceptive and alluring. They get at the deepest psychological lever of the human mind — a lever which allows people to have the feeling they are getting something for free, when in fact, they are paying two, three, four, even ten times as much for that product because of the interest they will pay on each purchase.

On the other hand, not having a credit card is becoming less and less practical in modern America. You can’t rent a car without a credit card. Carrying cash is dangerous. Checks are not accepted everywhere — and traveling to another city or country is extremely difficult without the confidence and identity a credit card brings.

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A Secured Card

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If you decide you really need and want a credit card despite your past problems with credit, you should get what is called a secured credit card. Even people who have declared bankruptcy are granted secured cards.

A secured card works this way: you pay a lump sum of cash upfront either to your bank or the card company itself, usually from $200 to $2,500. The card company will then grant your credit for up to 150 percent of the amount of your deposit. If you pony up $500, you will be granted a $750 credit line. If you put up $1,000, you will get $1,500 in credit, and so on.

Your deposit money will earn a very nice 4 to 5 percent interest while it is held as collateral by your bank or the card company. The deposit money acts like a buffer for the lender. In the event you default on your card debt, the lender gets to keep your money. They may still incur a net loss, but the risk is far less.

Additionally, the interest you gain on your deposit will offset the interest on your monthly balance if you have one. If you get a secured card with an 18 percent interest rate, you can feel good about the fact that your pre-payment is earning 5 percent.

Which card companies offer secured credit card plans?

The following:

(At the time of writing, these details are correct. If they change by any chance, you’ll have to look up the institutions in the Yellow Pages, or simply do a search online.)

CitiBank — Minimum deposit is $300, which earns 4%.

Call: 800-933-2484

Federal Savings Bank — Minimum deposit is $250, which earn 2.5%.

Call 800-285-9090

Orchard Bank — Minimum deposit is $400, which pays 4%

Call 800-873-7307

Key Federal — Minimum deposit is $300, which earns from 4% to 5%.

Call 800-228-2230

Signet Bank — Minimum deposit is $200, which earns 5%.

Call 800-333-7116.

Using a secured credit card can also help repair your credit rating if you use it responsibly over a number of years.

Even if you do not have bad credit, a secured credit card is recommended for anyone who wants the safety and convenience of a credit card. Secured cards are a safe, responsible way to control your spending, and you actually earn money though interest on your deposit while you enjoy the use of your card.