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Archive for August 2011

Split happens: Why a joint credit card might not be a good idea

Published 8/29/11  (Modified 8/30/11)

Split happens: Why a joint credit card might not be a good idea By Jennifer Rose Hale

"I can't get a credit card on my own. Will you help?"

Imagine this conversation with your boyfriend or girlfriend, child, or even a newly divorced parent. They're asking you to co-sign on a new credit card account, and you're tempted--or pressured--to help out. It might just be one more account for you, but it can make a big difference for their financial futures. What do you do?

Opening a joint credit card may seem like a good solution for a number of situations. But signing your name to joint accounts has risks. Understanding those risks can reduce the chance that you will pay for this decision, literally, in years to come.

Best case scenario

When you share a joint account with someone, you both are equally responsible for the card's balance. Every purchase made, every charge incurred: From the issuing bank's perspective, they're as much your purchases and charges as your fellow account holder's.

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Beyond the card: 5 ways to build credit

Published 8/25/11  (Modified 9/6/11)

Beyond the card: 5 ways to build credit By Francine Huff

Don't wait until graduating from college to think about your credit score. It's easy to get pulled into a debt trap as a student if you have student loans, credit cards, utility bills, rent, etc. But there are some things you can do even while attending college that can help you build excellent credit.

If you regularly pull out your credit card to pay for purchases with the attitude that you'll pay off your balance once you graduate and have a job, you could be setting yourself up for major financial disaster.

Worse yet, don't rely on your parents' promise to pay off the card for you because they could end up unemployed or have some other financial catastrophe that strips them of their income.

Keep your credit history clean

All it takes to derail your finances are regular late-night pizza parties, shopping sprees at the mall and impulse purchases, among other things. So make sure you do all you can to build your credit score going forward. Here are five things that can help:

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10 signs you're a credit card abuser

Published 8/22/11  (Modified 8/24/11)

10 signs you're a credit card abuser By Angela Spires

Five years ago, I was asked at the register at Victoria's Secret if I would like to apply for a Secret Angel's card. And as if my dreams of becoming a Secret Angel (never mind that it was for Victoria and not Charlie) weren't enough, the card came with a coupon book with over a hundred dollars in savings and other offers. Naturally, I applied.

Every six months to a year, my limit increased because I paid my bills on time. Soon, I had a $1,000 credit limit--maxed out--to an underwear store. Who needs $1,000 in underwear? I needed to be stopped.

High debt-to-credit limit ratios, paying credit cards late, and having too many credit cards can all have negative impacts on your credit score. If you're not paying attention to your spending, or you think using your credit limit to its full potential is as good as sticking to your budget, you're probably a credit card abuser. And you're not alone.

I was finally able to get control of my financial debt, and I cut up the card. So, how will you know if you are a credit card abuser?

You might be a credit card abuser if…

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Visa offers merchant incentives for processing EMV cards

Published 8/19/11  (Modified 12/18/13)

Visa offers merchant incentives for processing EMV cards By Melissa Rudy

Consumers who haven't yet heard of the new, more secure "chip and PIN" credit cards are about to get an earful, as Visa prepares to push through readers for the improved chip credit card to merchants throughout the United States.

Although EMV microchip credit cards have become the norm in Europe and other parts of the world, American retailers have been slow to adopt the new payment processing systems, delaying the widespread use of these cards in the United States.

That's about to change with Visa's new initiative to encourage retailers to adopt the microchip card processing systems. According to their press release, Visa plans to offer incentives to retailers who implement the new payment systems and eliminate older ones that can only read magnetic stripe cards.

"Carrot and stick" approach

Visa is taking a "carrot and stick" approach to pushing EMV card readers on merchants...

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Is your rewards card taking you on a trip to bankruptcy court?

Published 8/18/11

Is your rewards card taking you on a trip to bankruptcy court? By Maryalene LaPonsie

Alec Baldwin is so smooth, isn't he? With his charming smile, he makes you want to whip out your Capital One Venture rewards card and buy, buy, buy! But amusing commercials aside, I cringe a little at the thought of unsuspecting folks racking up thousands in debt for a plane ticket worth $500.

Rewards credit cards can be great if you know how to use them, so let's make sure you are using them right by going over the pros and cons of what's in your wallet.

The pitfalls of rewards credit cards

Let's start with the bad news: That rewards card in your pocket may be paying you some cash, but it's also likely leading you into debt.

At the end of 2010, the Federal Reserve Bank of Chicago completed a study on consumer habits and rewards cards. They found that, when offered a one percent cash back reward, consumers increased their credit card spending by $68 each month. Meanwhile, their payments decreased, which meant their total quarterly credit card debt increased by $115. The pay-off for the extra $115 in debt? A $25 reward.

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5 financial facts of life every parent should teach

Published 8/11/11

5 financial facts of life every parent should teach By Richard Barrington

Were you taught the facts of life by your parents, or did you have to pick them up here and there and by experience?

No, this isn't referring to those facts of life, but to some of the basic financial skills just about everyone needs as they go out into the world. Here are five financial facts you should make sure your children understand before you help them open their first bank accounts:

1. Smart shopping makes a huge difference in banking

Your children may think of smart shopping as a way to occasionally save a few dollars, but there is a whole new world waiting for them when it comes time to find a bank account. Because a bank account is there every day, either earning interest or incurring fees, the right choices add up to big bucks over the course of a year.

For example, many banks, led by some of the biggest names in the business, have been raising fees on checking accounts. At the same time, free checking does still exist at some banks. The difference between a $12 monthly fee and no fee comes to $144 a year--a huge chunk of what the typical student is likely to have in a checking account.

Similarly, shopping for a high interest savings account means making more money each and every day. "High interest savings account" might seem like a contradiction of terms these days, but everything is relative. With average savings account rates at 0.15 percent, a Read the full article »