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About Credit Cards

A credit card is a system of [payment] named after the small [plastic] card issued to users of the system. A credit card is different from a [debit card] in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends [money] to the [consumer] (or the user). It is also different from a [charge card] (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having [credit card interest] charged. Most credit cards are the same shape and size, as specified by the [ISO 7810] standard.

How credit cards work

[Hologram]

[Credit card number]

Card brand logo

Expiry Date

Cardholder's name

[Signature] Strip

[Card Security Code]

A user is issued credit after an account has been approved by the credit provider, and is given a credit card, with which the user will be able to make purchases from [merchant]s accepting that credit card up to a pre-established [credit limit]. Often a general [bank] issues the credit, but sometimes a captive bank created to issue a particular brand of credit card, such as [JPMorgan Chase], [Wells Fargo] or [Bank of America] issues the credit.

When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates their consent to pay, by signing a [receipt] with a record of the card details and indicating the amount to be paid or by entering a [Personal identification number] (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a Card not present (CNP) transaction.

[electronics] [Credit card verification] systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a [credit card terminal] or [Point of Sale] (POS) system with a communications link to the merchant's [Acquirer]. Data from the card is obtained from a [Magnetic stripe card] or [Smart card] on the card; the latter system is in the [United Kingdom] commonly known as [Chip and PIN], but is more technically an [EMV] card.

Other variations of verification systems are used by [Electronic commerce] merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the [Card Security Code] printed on the back of the card, or the address of the cardholder.

Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect (see [Fair Credit Billing Act] for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a [expiration], or may choose to pay a higher amount up to the entire amount owed. The credit provider charges [interest] on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts.

Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.

For example, if a user had a $1,000 outstanding balance and pays it in full, there would be no interest charged. If, however, even $1.00 of the total balance remained unpaid, interest would be charged on the $1,000 from the date of purchase until the payment is received. The precise manner in which interest is charged is usually detailed in a cardholder agreement which may be summarized on the back of the monthly statement. The general calculation formula most financial institutions use to determine the amount of interest to be charged is APR/100 x ADB/365 x number of days revolved. Take the Annual percentage rate (APR) and divide by 100 then multiply to the amount of the average daily balance divided by 365 and then take this total and multiply by the total number of days the amount revolved before payment was made on the account. Financial institutions refer to interest charged back to the original time of the transaction and up to the time a payment was made, if not in full, as RRFC or residual retail finance charge. Thus after an amount has revolved and a payment has been made that the user of the card will still receive interest charges on their statement after paying the next statement in full (in fact the statement may only have a charge for interest that collected up until the date the full balance was paid...i.e. when the balance stopped revolving). The TD Gold Travel Visa Cardholder Agreement, Retrieved January 3, 2006

The credit card may simply serve as a form of [revolving credit], or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, either to encourage [balance transfer]s from cards of other issuers, or to encourage more spending on the part of the customer. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances. [Interest rate]s can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument, or even if the issuing bank decides to raise its revenue. As the rates and terms vary, services have been set up allowing users to calculate savings available by switching cards, which can be considerable if there is a large outstanding balance (see [#External links] for some on-line services).

Because of intense competition in the credit card industry, credit providers often offer incentives such as [Frequent flyer program] points, [scrip]s, or [Credit card cashback] (typically up to 1 percent based on total purchases) to try to attract customers to their program.

Low interest credit cards or even 0% interest credit cards are available. The only downside to consumers is that the period of low interest credit cards is limited to a fixed term, usually between 6 and 12 months after which a higher rate is charged. However, services are available which alert credit card holders when their low interest period is due to expire. Most such services charge a monthly or annual fee.

Grace period A credit card's grace period is the time the customer has to pay the balance before interest is charged to the balance. Grace periods vary, but usually range from 20 to 30 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met.Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply.Finance charge(s) incurred depends on the grace period and balance, with most credit cards there is no grace period if there's any outstanding balance from the previous billing cycle or statement (ie. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

The merchant's side

For merchants, a credit card transaction is often more secure than other forms of payment, such as checks, because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on their credit card payment (except for legitimate disputes, which are discussed below, and can result in charge backs to the merchant). In most cases, cards are even more secure than cash, because they discourage theft by the merchant's employees.

For each purchase, the bank charges a commission (discount fee), to the merchant for this service and there may be a certain delay before the agreed payment is received by the merchant. The commission is often a percentage of the transaction amount, plus a fixed fee. In addition, a merchant may be penalized or have their ability to receive payment using that credit card restricted if there are too many cancellations or reversals of charges as a result of disputes. Some small merchants require credit purchases to have a minimum amount (usually between $5 and $10) to compensate for the transaction costs, though this is not always allowed by the credit card consortium.

In some countries, like the [Nordic countries], banks guarantee payment on stolen cards only if an [ID card] is checked and the ID card number/civic registration number is written down on the receipt together with the signature. In these countries merchants therefore usually ask for ID. Non-Nordic citizens, who are unlikely to possess a Nordic ID card or driving license, will instead have to show their passport, and the passport number will be written down on the receipt, sometimes together with other information. Some shops use the card's PIN code for identification, and in that case showing an ID card is not necessary.

Parties involved

Cardholder: The owner of the card used to make a purchase; the [consumer].
Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case.
Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder
[Acquiring bank]: The financial institution accepting payment for the products or services on behalf of the merchant.
[Independent sales organization]: Resellers (to merchants) of the services of the acquiring bank.
[Merchant account provider]: This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with.
Credit Card association: An association of card-issuing banks such as [Visa (company)], [MasterCard], [Discover], [American Express], etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.
Transaction network: The system that implements the mechanics of the electronic transactions. May be operated by an independent company, and one company may operate multiple networks. Transaction processing networks include: Cardnet, Nabanco, Omaha, Paymentech, NDC Atlanta, Nova, Vital, Concord EFSnet, and VisaNet.http://www.vaultline.com/reseller
Affinity partner: Some institutions lend their name to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams, universities and charities.

The flow of information and money between these parties — always through the card associations — is known as the interchange, and it consists of a few steps.

Transaction steps

Authorization: In the event of a [chargeback] (when there's an error in processing the transaction or the cardholder disputes the transaction), the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it.

Secured credit cards A secured credit card is a type of credit card secured by a [deposit account] owned by the cardholder. Typically, the cardholder must deposit between 100% and 200% of the total amount of credit desired. Thus if the cardholder puts down $1000, he or she will be given credit in the range of $500–$1000. In some cases, credit card issuers will offer incentives even on their secured card portfolios. In these cases, the deposit required may be significantly less than the required credit limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special [savings deposit]. Credit card issuers offer this as they have noticed that delinquencies were notably reduced when the customer perceives he has something to lose if he doesn't repay his balance.

The cardholder of a secured credit card is still expected to make regular payments, as he or she would with a regular credit card, but should he or she default on a payment, the card issuer has the option of recovering the cost of the purchases paid to the merchants out of the deposit. The advantage of the secured card for an individual with negative or no credit history is that most companies report regularly to the major credit bureaus. This allows for rebuilding of positive credit history.

Although the deposit is in the hands of the credit card issuer as security in the event of default by the consumer, the deposit will not be debited simply for missing one or two payments. Usually the deposit is only used as an offset when the account is closed, either at the request of the customer or due to severe delinquency (150 to 180 days). This means that an account which is less than 150 days delinquent will continue to accrue interest and fees, and could result in a balance which is much higher than the actual credit limit on the card. In these cases the total debt may far exceed the original deposit and the cardholder not only forfeits their deposit but is left with an additional debt.

Most of these conditions are usually described in a cardholder agreement which the cardholder signs when their account is opened.

Secured credit cards are an option to allow a person with a poor [credit history] or no credit history to have a credit card which might not otherwise be available. They are often offered as a means of rebuilding one's credit. Secured credit cards are available with both [VISA (credit card)] and [MasterCard] [logo]s on them. Fees and service charges for secured credit cards often exceed those charged for ordinary non-secured credit cards, however, for people in certain situations, (for example, after charging off on other credit cards, or people with a long history of delinquency on various forms of debt), secured cards can often be less expensive in total cost than unsecured credit cards, even including the security deposit.

Sometimes a credit card will be secured by [home equity]. M&I Rewards Equity Card TransFund Home Equity CardThis is called a [home equity line of credit] (HELOC).

Prepaid credit cards A prepaid credit card is not really a credit card, as no credit is offered by the card issuer: the card-holder spends money which has been "stored" via a prior deposit by the card-holder or someone else, such as a parent or employer. However, it carries a credit-card brand (Visa or MasterCard) and can be used in similar ways. As more consumers require a suitable solution to rebuilding credit, recent changes have allowed some credit card companies to offer pre-paid credit cards to help rebuild credit. They are hard to find and have higher APR fees and higher interest costs.

After purchasing the card, the cardholder loads it with any amount of money and then uses the card to spend the money. Prepaid cards can be issued to minors since there is no credit line involved. The main advantage over secured credit cards is that you are not required to come up with $500 or more to open an account. Also most secured credit cards still charge you interest even though you are not actually "borrowing" any money. With prepaid credit cards you are not charged any interest but you are often charged monthly fees after an arbitrary time period. Many other fees also usually apply to a prepaid card.http://www.fcac-acfc.gc.ca/eng/publications/CreditCardsYou/PrepaidCards_e.asp

Prepaid credit cards are often marketed to teenagers for shopping online without having their parents complete the transaction.

Because of the many fees that apply to obtaining and using credit-card-branded prepaid cards, the [Financial Consumer Agency of Canada] describes them as "an expensive way to spend your own money"http://www.fcac-acfc.gc.ca/eng/media/news/default.asp?postingId=225. The agency publishes a booklet, "Pre-paid cards"http://www.fcac-acfc.gc.ca/eng/publications/CreditCardsYou/PrepaidCards_e.asp, which explains the advantages and disadvantages of this type of prepaid card.

Features As well as convenient, accessible credit, credit cards offer consumers an easy way to track [expense]s, which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for [tax]ation and [reimbursement] purposes. Credit cards are accepted worldwide, and are available with a large variety of credit limits, repayment arrangement, and other perks (such as [Loyalty program] in which points earned by purchasing goods with the card can be redeemed for further [Good (economics)] and [service]s or [credit card cashback]).

Some countries, such as the [United States], the [United Kingdom], and [France], limit the amount for which a consumer can be held [Liability] due to fraudulent transactions as a result of a consumer's credit card being lost or stolen.

Security , combining credit card and [debit card] properties. The 3 by 5 mm security chip embedded in the card is shown enlarged in the inset. The gold contact pads on the card enable electronic access to the chip.

The low security of the credit card system presents countless opportunities for [fraud]. This opportunity has created a huge [black market] in stolen [credit card number]s, which are generally used quickly before the cards are reported stolen.

The goal of the credit card companies is not to eliminate fraud, but to "reduce it to manageable levels"Thrive Business Solutions, http://www.thrivesolution.com/index.php?option=com_content&task;=view&id;=28&Itemid;=33, such that the total cost of both fraud and [fraud prevention] is minimized. This implies that high-cost low-return fraud prevention measures will not be used if their cost exceeds the potential gains from fraud reduction.

Most internet fraud is done through the use of stolen credit card information which is obtained in many ways, the simplest being copying information from retailers, either [online] or [Off-line]. Despite efforts to improve security for remote purchases using credit cards, systems with security holes are usually the result of poor implementations of card acquisition by merchants. For example, a website that uses [Transport Layer Security] to encrypt card numbers from a client may simply email the number from the webserver to someone who manually processes the card details at a card terminal. Naturally, anywhere card details become human-readable before being processed at the acquiring bank, a security risk is created. However, many banks offer systems such as [ClearCommerce], where encrypted card details captured on a merchant's webserver can be sent directly to the payment processor.

[Controlled Payment Number]s are another option for protecting one's credit card number: they are "alias" numbers linked to one's actual card number, generated as needed, valid for a relatively short time, with a very low limit, and typically only valid with a single merchant.

The [Federal Bureau of Investigation] and [U.S. Postal Inspection Service] are responsible for prosecuting criminals who engage in [credit card fraud] in the United States, but they do not have the resources to pursue all criminals. In general, federal officials only prosecute cases exceeding US $5000 in value. Three improvements to card security have been introduced to the more common credit card networks but none has proven to help reduce credit card fraud so far. First, the on-line verification system used by merchants is being enhanced to require a 4 digit [Personal Identification Number] (PIN) known only to the card holder. Second, the cards themselves are being replaced with similar-looking tamper-resistant [smart card]s which are intended to make [forgery] more difficult. The majority of smartcard (IC card) based credit cards comply with the [EMV] (Europay MasterCard Visa) standard. Third, an additional 3 or 4 digit code is now present on the back of most cards, for use in "card not present" transactions. See [CVV2] for more information.

The way credit card owners pay off their balances has a tremendous effect on their credit history. All the information is collected by [credit bureau]s. The credit information stays on the credit report, depending on the jurisdiction and the situation, for 1, 2, 5, 7 or even 10 years after the debt is repaid.

Profits and losses In recent times, credit card portfolios have been very profitable for banks, largely due to the [Economic boom] of the late nineties. However, in the case of credit cards, such high returns go hand in hand with risk, since the business is essentially one of making unsecured (uncollateralized) loans, and thus dependent on borrowers not to default in large numbers.

Costs Credit card issuers (banks) have several types of costs:

Interest expenses Banks generally borrow the money they then lend to their customers. As they receive very low-interest loans from other firms, they may borrow as much as their customers require, while lending their capital to other borrowers at higher rates. If the card issuer charges 15% on money lent to users, and it costs 5% to borrow the money to lend, and the balance sits with the cardholder for a year, the issuer earns 10% on the loan. This 5% difference is the "interest expense" and the 10% is the "net interest margin".

Operating costs This is the [operating cost] the credit card portfolio, including everything from paying the executives who run the company to printing the plastics, to mailing the statements, to running the computers that keep track of every cardholder's balance, to taking the many phone calls which cardholders place to their issuer, to protecting the customers from fraud rings. Depending on the issuer, marketing programs are also a significant portion of expenses.

Charge offs When a consumer becomes severely delinquent on a debt (often at the point of six months without payment), the creditor may declare the debt to be a [charge-off]. It will then be listed as such on the debtor's credit bureau reports ([Equifax], for instance, lists "R9" in the "status" column to denote a charge-off.) It is one of the worst possible items to have on your file. The item will include relevant dates, and the amount of the bad debt.

A charge-off is considered to be "written off as uncollectable." To banks, bad debts and even fraud are simply part of the cost of doing business.

However, the debt is still legally valid, and the creditor can attempt to collect the full amount. This includes contacts from internal collections staff, or more likely, an outside [collection agency]. If the amount is large (generally over $1500 - $2000), there is the possibility of a lawsuit or [arbitration].

In the US, as the charge off number climbs or becomes erratic, officials from the Federal Reserve take a close look at the finances of the bank and may impose various operating strictures on the bank, and in the most extreme cases, may close the bank entirely.

Rewards co-branded credit cards

Many credit card customers receive rewards, such as frequent flier points, gift certificates, or cash back as an incentive to use the card. Rewards are generally tied to purchasing an item or service on the card, which may or may not include [balance transfer]s, [Payday loan], or other special uses. Depending on the type of card, rewards will generally cost the issuer between 0.25% and 2.0% of the spend. Networks like Visa or MasterCard have increased their fees to allow issuers to fund their rewards system. However, most rewards points are accrued as a liability on a company's balance sheet and expensed at the time of reward redemption. As a result, some issuers discourage redemption by forcing the cardholder to call customer service for rewards. On their servicing website, redeeming awards is usually a feature that is very well hidden by the issuers. Others encourage redemption for lower cost merchandise; instead of an airline ticket, which is very expensive to an issuer, the cardholder may be encouraged to redeem for a gift certificate instead. With a fractured and competitive environment, rewards points cut dramatically into an issuer's bottom line, and rewards points and related incentives must be carefully managed to ensure a profitable [portfolio (finance)]. There is a case to be made that rewards not redeemed should follow the same path as gift cards that are not used: in certain states the gift card [breakage (accounting)] goes to the state's treasury. The same could happen to the value of points or cash not redeemed.

Fraud Where a card is stolen, or an unauthorized duplicate made, most card issuers will refund some or all of the charges that the customer has received for things they did not buy. These refunds will, in some cases, be at the expense of the merchant, especially in mail order cases where the merchant cannot claim sight of the card. In several countries, merchants will lose the money if no ID card was asked for, therefore merchants usually require ID card in these countries.

The cost of fraud is high; in the UK in 2004 it was over £500 million. Plastic fraud loss on UK-issued cards 2004/2005 site retrieved 7 July, 2006 Credit card companies generally guarantee the merchant will be paid on legitimate transactions regardless of whether the consumer pays their credit card bill.

"Soft fraud" is fraud committed by the customer himself: getting a card and using it with no intention ever to repay the balance. Such customers are called "diabolicals" by the credit card companies, that try to avoid them at all cost.

Security An additional feature to secure the creditcard transaction and prohibit the use of a lost creditcard is the MobiClear solution. Each transaction is authenticated through a call to the user mobile phone. The transaction is released once the transaction has been confirmed by the cardholder pushing his/her pincode during the call.

Revenues Offsetting costs are the following revenues:

Interchange fees [Interchange fee]s are charged by the merchant's acquirer to a card-accepting merchant as component of the so-called merchant discount rate (also referred to as "merchant service fee"). The merchant pays a merchant discount fee that is typically 2 to 3 percent (this is negotiated, but will vary not only from merchant to merchant, but also from card to card, with business cards and rewards cards generally costing the merchants more to process), which is why some merchants prefer [cash], [debit card]s, or even [cheque]s. The majority of this fee, called the interchange fee, goes to the issuing bank, but parts of it go to the processing network, the card association (American Express, Visa, MasterCard, etc.), and the merchant's acquirer. With a corporate card, the interchange is also often shared by the company in whose name the card is issued as an incentive to use that issuer's card instead of someone else's.

The interchange fee that applies to a particular merchant is a function of many variables including the type of merchant, the merchant's average transaction amount, whether the cards are physically present, if the card's magnetic stripe is read or if the transaction is hand-keyed or entered on a website, the specific type of card, when the transaction is settled, the authorized and settled transaction amounts, etc. For a typical credit card issuer, interchange fee revenues may represent about fifteen percent of total revenues, but this will vary greatly with the type of customers represented in their portfolio. Customers who carry high balances may generate low interchange revenue due to credit line limitations, while customers who use their cards for business and spend hundreds of thousands of dollars a year on their cards while paying off balances every month will have very healthy interchange revenues.

Industry jargon for customer categories Customers who do not pay in full the amount owed on their monthly statement (the "balance") by the due date (that is, at the end of the "grace period") and are not in a promotional period owe interest ("finance charges") are known in the industry as "revolvers." Those who pay in full (pay the entire balance) are known in the industry as "transactors," or "convenience users". Those that shift usage of their credit cards or transfer balances frequently are known in the industry as "rate surfers", "rate tarts" or "gamers."

Interest on outstanding balances Interest charges vary widely from card issuer to card issuer. Often, there are "teaser" rates in effect for initial periods of time (as low as zero percent for, say, six months), whereas regular rates can be as high as 40 percent. In the U.S. there's no federal limit on the interest or late fees credit card issuers can charge; the interest rates are set by the states, with some states, like South Dakota, having no ceiling on interest rates and fees, inviting some banks to establish their credit card operations there. Other states, like Delaware, have very weak [usury].The teaser rate no longer applies if the customer doesn't pay his bills on time, and is replaced by a penalty interest rate (for example, 24.99%) that applies retroactively. So customers should be wary of these offers, that usually contain some traps. Cash withdrawals will never carry the teaser rate, for example.

Note that for some banks, even if you had paid it off an outstanding balance along with interest fees, for the next two months, they will also charge you interest rates for anything you had purchased.

Fees charged to customers The major fees are for:

Late payments
Charges that result in exceeding the credit limit on the card (whether done deliberately or by mistake), called overlimit fees
Returned cheque fees or payment processing fees (eg phone payment fee)
Cash advances and convenience cheques (often 3% of the amount). Transactions in a foreign currency (as much as 3% of the amount). A few financial institutions do not charge a fee for this.
Membership fees (annual or monthly), sometimes a percentage of the credit limit. Issuers love monthly fees as it allows them to charge substantial amounts without the customer realizing how expensive the charge really is (a monthly amount is perceived as half the price of the equivalent annual fee)
Foreign Exchange Premium

Neutral consumer resources Canada The Government of Canada maintains a database of the fees, features, interest rates and reward programs of nearly 200 credit cards available in Canada. This database is updated on a quarterly basis with information supplied by the credit card issuing companies. Information in the database is published every quarter on the website of the [Financial Consumer Agency of Canada] (FCAC).

Information in the database is published in two formats. It is available in [PDF] comparison tables that break down the information according to type of credit card, allowing the reader to compare the features of, for example, all the student credit cards in the database.

The database also feeds into an interactive tool on the FCAC website. The interactive tool uses several interview-type questions to build a profile of the user's credit card usage habits and needs, eliminating unsuitable choices based on the profile, so that the user is presented with a small number of credit cards and the ability to carry out detailed comparisons of features, reward programs, interest rates, etc.

History The credit card was the successor of a variety of merchant credit schemes. It was first used in the 1920s, in the United States, specifically to sell [fuel] to a growing number of [automobile] owners. In 1938 several companies started to accept each other's cards.

The concept of using a card for purchases was invented in 1887 by [Edward Bellamy] and described in his utopian novel [Looking Backward]. Bellamy uses the explicit term "Credit Card" eleven times in his novel (Chapters 9, 10, 11, 13, 25 and 26) and 3 times (Chapters 4, 8 and 19) in its sequel, Equality.

The concept of paying merchants using a card was invented in 1950 by Ralph Schneider and [Frank McNamara (Diners Card)] in order to consolidate multiple cards. The [Diners Club], which was created partially through a merger with Dine and Sign, produced the first "general purpose" [charge card], which is similar but required the entire bill to be paid with each statement; it was followed shortly thereafter by American Express and Carte Blanche. [Western Union] had begun issuing charge cards to its frequent customers in 1914.

[Bank of America] created the BankAmericard in 1958, a product which eventually evolved into the [VISA (credit card)] system ("Chargex" also became Visa). [MasterCard] came to being in 1966 when a group of credit-issuing banks established MasterCharge. The fractured nature of the US banking system meant that credit cards became an effective way for those who were travelling around the country to move their credit to places where they could not directly use their banking facilities. In 1966 [Barclaycard] in the UK launched the first credit card outside of the US.

There are now countless variations on the basic concept of revolving credit for individuals (as issued by banks and honored by a network of financial institutions), including organization-branded credit cards, corporate-user credit cards, store cards and so on.

In contrast, although having reached very high adoption levels in the US, Canada and the UK, it is important to note that many cultures were much more cash-oriented in the latter half of the twentieth century, or had developed alternative forms of cash-less payments, like [Carte Bleue], or the [EC-card] (Germany, France, Switzerland, among many others). In these places, the take-up of credit cards was initially much slower. It took until the 1990s to reach anything like the percentage market-penetration levels achieved in the US, Canada or UK. In many countries acceptance still remains poor as the use of a credit card system depends on the banking system being perceived as reliable.

In contrast, because of the legislative framework surrounding banking system overdrafts, some countries, France in particular, were much faster to develop and adopt chip-based credit cards which are now seen as major anti-fraud credit devices.

The design of the credit card itself has become a major selling point in recent years. The value of the card to the issuer being related to the Customer's usage of the card. This has led to the rise of Co-Brand and [Affinity credit card scheme] cards - where the card design is related to the "affinity" (a university, for example) leading to higher card usage. In most cases a percentage of the value of the card is returned to the affinity group.

Controversy There is some controversy about credit card usage in recent years. Credit card [debt] has soared, particularly among young people. Since the late 1990s, [legislator], [consumer advocacy group]s, college officials and other higher education affiliates have become increasingly concerned about the rising use of credit cards among college students. The major credit card companies have been accused of targeting a younger audience, in particular [college] students, many of whom are already in debt with college [tuition] fees and college [loans] and who typically are less experienced at managing their own finances. A recent study by United College Marketing Services has shown that student credit lines have increased to over $6,000. Credit card usage has tripled since 2001 amongst teenagers as well. Since eighteen year olds in many countries and most U.S. states are eligible for a card without [parental consent] or employment, the likelihood of increased balances, unwise use of credit and damaged [credit score]s increases.

A 2006 [documentary film] titled [Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders] deals with this subject in detail.http://www.washingtonpost.com/wp-dyn/content/article/2007/03/08/AR2007030802178.html

According to Larry Chiang of United College Marketing Services, an example of a credit card class action was where issuers were "rolling back" posting times to extract more late fees. The due dates were "rolled back" from 1pm to 10am because mail was delivered in the afternoon so due dates were actually rolled back to charge more late fees. The following banks are listed (with the amounts penalized) in this one particular class action.

[Providian]: US$405 million
[Bank One]: US$40 million
[Chase]: US$22.2 million
[Citibank]: US$15.5 million

Another controversial area is the [universal default] feature of many North American credit card contracts. When a cardholder is late paying a particular credit card issuer, that card's interest rate can be raised, often considerably. Universal default allows creditors to periodically check cardholders' credit portfolios to view trade, thus allowing the institution to decrease the credit limit or increase rates on cardholders who may be late with another credit card issuer. Being late on one credit card will potentially affect all the cardholder's credit cards. [Citibank] has changed and does not practice this anymore, while others do still .

Another controversial area is the [trailing interest] issue. Trailing interest is the practice of charging interest on the entire bill no matter what percentage of it is paid. U.S Senator [Carl Levin] raised the issue at a U.S Senate Hearing of the woes of millions of Americans who are slaves to hidden fees, compounding interest and cryptic terms. Their woes were heard in a Senate Permanent Subcommittee on Investigations hearing which was chaired by Senator Levin who said that he intends to keep the spotlight on credit card companies and that legislative action may be necessary to purge the industry. Credit Card Executives Tough Out Senate Hearing

In the United States, some have called for [United States Congress] to enact additional regulations on the industry; to expand the disclosure box clearly disclosing rate hikes, use plain language, incorporate balance payoff disclosures, and also to outlaw [universal default]. At a congress hearing around March 1, 2007 [Citibank] announced it would no longer practice this, effective immediately. Opponents of such regulation argue that customers must become more proactive and self-responsible in evaluating and neogotiating terms with credit offerers. Some of the nation's influential top credit card issuers, who are among the top fifty corporate contributors to political campaigns, successfully opposed it.

Trailing interest When the balance on account is not paid off in full by a due date it earns interest. If you then payoff the balance the next month it will also have an interest charge. The way it works is like this, you charge $1000 receive the bill and decide to pay 500 dollars by the due date. Next month's bill comes with a balance of 500 dollars and the interest for the first month. You pay the balance on the statement. Now the next month you well get a bill with an interest charge for the balance on the account. A credit card balance earns interest until the day it is paid. The way to avoid this problem if you carry a balance on your credit card and want to pay it off call your bank and ask for the payoff figure on the speak to someone in customer service to get this number do not depend upon the voice system.

Payment Allotment Credit Card Companies well post your payment to the lowest intrest rate balnce first this means if you have an interest rate on a transfer of 2% and an intrest rate of 8% when you buy something if you did a transfer and bought something your payment well pay down the transfer first while your purchase well wait and earn interest.

Hidden costs Merchants pay a negotiated fee -- typically 1-3% for larger merchants and 3-6% for smaller merchants -- to process credit payments. They must also bear the cost of providing a point-of-sale solution to enable the acceptance of card transactions and other card services related expenses. Credit card issuers understand full well that if card holders were aware of and made to pay these additional costs with their purchases it would tend to discourage credit card usage. As a consequence, businesses who accept credit cards often must sign a "merchant agreement" or contract with the acquirer that stipulates that they are not allowed to offer different prices for card and non-card transactions (sometimes referred to as surcharging) despite the additional costs to the business for accepting the cards. The prohibition on surcharging or cash discounts is enforced by law in some countries, although some governments are beginning to lift this restriction (see below).

Some critics have observed that this results in what is effectively a hidden expense on all transactions conducted by merchants who accept credit cards since they must build the cost of transaction fees into their overall business expense. Furthermore, cash and other non-credit card using customers are in effect made to subsidize credit card user purchases. The cost of the convenience and protections enjoyed by card holders and the profits taken from transaction fees by the card industry (which has come to rely increasingly on this revenue stream over the years) is in part borne by the non-card purchaser. Critics further note that the customers most likely to pay in cash are probably the least able to afford the additional expense, the argument going that card holders are more likely to be affluent and non-card holders less so.

A counterargument is that there are also costs to the merchant in other forms of payment. For cash payments these include frequent trips to the bank or use of an armored delivery service, theft, and employee error, such that cash is actually not cheaper for the merchant than credit cards. This argument is probably specious under most circumstances, however, considering that many merchants would offer a discount for cash-paying customers were they allowed, and indeed, do so where it is legal. The fact that laws exist or have existed that prohibit such practices and that the major card issuers strongly discourage such practices can be taken as an indicator that cash transactions do not have as much cost associated with them as credit card transactions.

To illustrate, some companies offer incentives or bonus coupons for using cash, such as [Canadian Tire Money]. [Australia] is currently acting to reduce this by allowing merchants to apply surcharges for credit card users.

In the United Kingdom, merchants won the right through The Credit Cards (Price Discrimination) Order 1990 Statutory Instrument 1990 No. 2159: The Credit Cards (Price Discrimination) Order 1990 to charge customers different prices according to the payment method, but few merchants do so (the most notable exceptions being [budget airline]s, travel agents and UK government agencies, such as the [DVLA]). The United Kingdom is the world's most credit-card-intensive country, with 67 million credit cards for a population of 59 million people. The Guardian: Who killed Richard Cullen?

In the United States, until 1984 federal law prohibited surcharges on card transactions. Although the federal [Truth in Lending Act] provisions that prohibited surcharges expired that year, a number of states have since enacted laws that continue to outlaw the practice; California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Maine, New York, Oklahoma, and Texas have laws against surcharges. Regardless of what state one resides in or purchases a product, however, both Visa and MasterCard have publicly stated that surcharges on credit card transactions are against the rules. http://www.usa.visa.com/download/merchants/rules_for_visa_merchants.pdf

There also exists an economic argument that credit card use increases the "velocity" of money in an economy. The result, according to the [quantity theory of money], is an effective increase in the [money supply], as more money is flowing through the economy at a given time.

Credit card numbering The numbers found on credit cards have a certain amount of internal structure, and share a common numbering scheme.

The card number's prefix, called the [Bank Identification Number], is the sequence of digits at the beginning of the number that determine the bank to which a credit card number belongs. This is the first six digits for Mastercard and Visa cards. The next nine digits are the individual account number, and the final digit is a validity check code.

In addition to the main credit card number, credit cards also carry issue and expiration dates (given to the nearest month), as well as extra codes such as issue numbers and [card Security Code]. Not all credit cards have the same sets of extra codes nor do they use the same number of digits.

Credit cards in ATMs Many credit cards can also be used in an [Automatic teller machine] to withdraw money against the credit limit extended to the card but many card issuers charge interest on cash advances before they do so on purchases. The interest on cash advances is commonly charged from the date the withdrawal is made, rather than the monthly billing date. Many card issuers levy a commission for cash withdrawals, even if the ATM belongs to the same bank as the card issuer. Merchants do not offer [debit card cashback] on credit card transactions because they would pay a percentage commission of the additional cash amount to their bank or merchant services provider, thereby making it uneconomical.

Many credit card companies will also, when applying payments to a card, do so at the end of a billing cycle, and apply those payments to everything before cash advances. For this reason, many consumers have large cash balances, which have no grace period and incur interest at a rate that is (usually) higher than the purchase rate, and will carry those balance for years, even if they pay off their statement balance each month.

Credit cards as funding for entrepreneurs Credit cards are a creative, yet often risky way for entrepreneurs to acquire capital for their start ups when more conventional financing is unavailable. It is rumoured that [Larry Page] and [Sergey Brin]'s start up of [Google] was financed by credit cards to buy the necessary computers and office equipment, more specifically "a terabyte of memory". Google About Page under 1998 page retrieved 30 May, 2007 Similarly, filmmaker [Robert Townsend] financed part of [Hollywood Shuffle] using credit cards. Hollywood Shuffle trivia at IMDB page retrieved 7 July, 2006 Director [Kevin Smith] funded [Clerks.] in part by maxing out several credit cards. [Richard Hatch (actor)] also financed his production of [Battlestar Galactica: The Second Coming] partly through his credit cards. Famed hedge fund manager [Bruce Kovner] began his career (and, later on, his firm [Caxton Associates]) in financial markets by borrowing from his credit card.

Collectible credit cards A growing field of [numismatics] (study of money), or more specifically [Exonumia] (study of money-like objects), credit card collectors seek to collect various embodiments of credit from the now familiar plastic cards to older paper merchant cards, and even [metal] tokens that were accepted as merchant credit cards. Early credit cards were made of [celluloid], then metal and [fiber], then paper and are now mostly plastic.

Charga-Plate The Charga-Plate is an early predecessor to the credit card. They were issued by large-scale merchants, much like department store credit cards of today. In some cases, they were kept in the store. When an authorized user made a purchase, the clerk retrieved the plate from the store's files and then processed the purchase. This made it possible for stores to allow more specialized employees of their customers to use the cards, in addition to corporate officers and executives, who would normally have expense accounts and corporate credit cards. For example, an art-supply store that opened an account with a research institute might allow graphic artists employed by the institute to buy art supplies for ongoing projects. It would not be necessary for the research firm to issue a credit card to the artist: instead, a supervisor would simply say, "Go to Universal Art Supply and buy those supplies." The employee would go to the store and choose the appropriate supplies, and they would be charged to Central Institute for Research's account.

References See also

[Credit card hijacking]
[Adverse credit history]
[Electronic money]
[Stored-value card]
[Credit rating agency]
[Credit reference agency]
[Fair Credit Reporting Act]
[Identity theft]
[Merchant account]
[Code 10]
[Stoozing]
[Dynamic currency conversion], or DCC

External links

Choosing and Using Credit Cards - Consumer credit card advice from the [Federal Trade Commission]
Avoiding Credit and Charge Card Fraud - More advice from the Federal Trade Commission
Talk Your Way Out of Credit Debt - [National Public Radio] Story on how to negotiate with creditors
Steer Clear in College - NPR story on college credit card debt
Secret History of the Credit Card - [Public Broadcasting Service]/[Frontline (US TV series)]/[New York Times] documentary on credit cards

Credit card associations

American Express
Discover
MasterCard
Visa

Information Reference: Wikipedia.org

Credit cards

Questions and Answers

Credit cards??

Q) I've never wanted or needed to apply for a credit card in my life. however my fiance and I are planning to buy a flat in the next 6-12 months and realise that I'm going to need to improove my credit (apparently never owing money is a bad thing). My question is what's the best and safest way to build up credit, are credit cards used as a supplement to debit cards and if you are in credit on your credit card do you earn interest? I know I sound a bit thick but honestly don't have a clue about these things!!

A) I do not know of a single credit card that earns you interest on a credit balance. That doesn't mean there aren't any. Good luck finding one, but I'm not sure that will count a lot to establishing credit worthiness. Before creditors lend money, they need to be assured that the funds will be repaid. In other words, is the prospective borrower creditworthy? How to Establish Credit Begin by opening individual savings and checking accounts in your name. Over time, your deposits, withdrawals, and transfers will demonstrate that you can handle money responsibly. Applying for a loan is another option, but be aware that this method of establishing a credit history will cost, since loans require the payment of interest. You could take out a bank loan secured by the funds you have on deposit or by items you own, such as a car. You could also ask a friend or relative who has good credit to cosign a loan, which means that he or she shares liability for the loan with you. You could also apply for department store and gasoline credit cards, which generally are easier to obtain than major credit cards. Before you apply for any credit, however, make sure you understand the terms. For example, how long is the grace period or the time you have to pay the current balance in full before finance charges are added? Is there an annual fee or other fees associated with the credit? If you believe that you will carry a balance, you need to know how finance charges are calculated. Patience is important in this process. It takes time to establish credit and build a record of consistency in making payments to demonstrate your creditworthiness. And it is much better to go slowly and develop a strong credit record than to apply for too many credit cards or a loan that is larger than you can handle. Start slowly, be cautious, keep track of your overall debt, and pay on time. Most importantly, remember that credit actually represents real money and has to be repaid with interest.

Why is it I can get different credit cards with reasonable credit limits but I cant get a personnal loan?

Q) Ive been bringing up 2 children by myself and have got a bit into debt on credit cards. Now when Im looking for a loan to clear these debts no one wants to know. Im not working and live in rented house, so where do I turn to for help?

A) Borrowing more to get out of debt is never the answer. Go to a reputable credit management company and have them work with your creditors so you can pay them off. Some time local credit bureaus do that. If that doesn't work you could file a Ch 13 bankruptcy, have up to 5 years to pay, the interest stops on the credit cards. At the end your credit rating is fairly good, if you finish.

How is it that Americans can let other people use their credit cards?

Q) We see it al the time on tv. You seem to be able to assign your cards to other people to use whereas we just can;t do that in the UK unless you have a joint card holder.. even then that person has to be over 18 years old.. doesn't that lead to more credit card fraud?

A) Americans are all about convenience. Some stores don't even require a signature either under $50 or $20, depending on the store. Some credit card companies allow you to have an 'authorized user' added to the account, which means they can sign for purchases, but aren't responsible for paying it. That's up to the person who IS responsible, if they want that or not. Does it lead to more fraud? Doubtfully, but those convenience factors where the merchant either doesn't require a signature or doesn't look at the card to verify it sure does. The banks don't care about that though. The amount of fraud isn't high enough to offset the amount of income they get from most of the purchases. Can you believe most people just pay their bill, they don't even bother to look at what was charged!

Why are you crazy people so terrified of credit cards?

Q) Every answer in credit seems to say credit cards are bad. They can be used to get interest free money, to earn points, to defer payment so money remains invested, to improve security (sect 75 consumer credit act) + to lower payments in absolute coz some companies prefer them. Saying credit cards loose you money is like saying all shares fall. What is wrong with you?

A) 'cos they know they are unable to take responsibility for their spending. They like to blame the card companies, which is true they are partly at fault, but they are not bending your arm to buy. It's called control....most people with cards don't have it, and almost wonder why they are getting a call to pay their bill.

Can you get a debit card accepted at places that only take credit cards?

Q) I heard from a friend that it is possible to get a credit card that basically mimics your debit card and thus allows you to use your maestro debit card where only credt cards are accepted (ie online). It would make my life much easier if I only ever used a debit card, but for some purchases online this is just not possible. I don't want to get a prepaid credit card and wondered if this was a possible solution. Thanks in advance for any suggestions

A) companies actually prefer you to use your Debit Card.

Which credit card companies will give credit cards to someone who is a discharged bankrupt?

Q) A friend of mine was made bankrupt a few years ago, but has been discharged for about 18 months or so. So he can try and build his credit up, which credit card companies would allow him to obtain a credit card? He is not interested in the interest rate etc - he just wants a company who will definitely say yes, as if they say no, it will make his credit scoring worse.

A) go to moneysupermarket. go to the credit card section. They have a list of credit card companies that accept people with a bad credit history. Vanquis and capital one are just a few of the companies on the list

How much do you owe on credit cards/loans etc.?

Q) I have £31k debts now - 3 credit cards, and 2 loans. I wondered if this is normal at the moment - this is huge compared to my income - are you the same? My partner also has £30k debts. He earns £10k a year.

A) You have got one big financial problem, get some professional advice, 'cos you need it.

How do refunds work with credit cards that are completely paid off?

Q) This is probably a really stupid question, but I have just paid off my entire CC balance (which I always do) but have a £260 refund about to hit my card. My card currently has a balance of £0.00. I do NOT intend on using it again (I have just got a new, better credit card). So how do I get a refund? Will they send it as a cheque? Thanks for your help.

A) Phone the credit card company and if they can see the account is closed they have to send you a cheque for the refund amount. Similar thing happened to me a couple of years ago - I needed to phone my card provider a couple of times before I got the cheque, but principle was agreed first time.

if i get bankrupt will all my credit cards be cancelled?

Q) if i get bankrupt will all my credit cards be cancelled? even if they not a got a balance on it?

A) Your trustee will take over all your credit card accounts and bank accounts. Any where you owe money go in the creditors heap any with money in them go in the assets heap. Once all of your assets are identified, the trustee will share them out among your creditors. You can't get any more credit - with a card or anything else until you have been discharged. After that you can, but no-one's going to be keen to lend you money or give you a credit card.

How do balance transfers work on credit cards?

Q) Currently i'm paying an average of £43 per month in interest on my main credit card, on a £3.500 debt. I'm looking to transfer this debt onto a 0% balance transfer card.

A) Credit card balance transfer is one of the preferred ways to get rid of credit card debt and is used by many people to get immediate relief. Credit card balance transfer essentially means that we transfer our outstanding balances from a high APR credit card to a credit card which offers low APR's. A 0% Intro APR credit card is the preferred credit card to transfer balances, but because of the widespread misuse of such credit card offers, credit card companies have withdrawn all such offers. Indeed balance transfer saves a lot of money and can save things from going worse, but many people simply don't know the right way to do balance transfer. This article takes a look at the correct process to initiate and complete the balance transfer. The first thing to look out, when a person wants to transfer his balances is a credit card which offers the lowest apr rates and lowest balance transfer fees. Many online credit card companies offer credit card comparisons. It is indeed a good practice to search for the credit cards using their services and decide on a credit card which offers the maximum savings. It is important to note here that balance transfer APRs depend on a person's credit history. If the credit card in question offers the lowest rates, it is definitely for those with the best credit ratings. There are different balance transfer apr's for people with lower credit ratings. So, it becomes imperative that one chooses the credit card which offers the lowest apr and balance transfer fees for his credit ratings. When you decide for a balance transfer it doesn't mean that your obligation for payments towards your outstanding balances with the existing credit card company cease to exist. You will have to pay the credit card company all the monthly payments. One way you can save money is to just send the monthly minimum payments to the existing credit card company. This way you won't default and invite penalty. The next step is to sign up with the credit card which you sought for transferring your balances, and fill up the balance transfer application. Read more from: http://www.credit-card-gallery.com/article/414,The_right_way_to_credit_card_balance_transfers

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credit cards?

Q) I am planning on getting my first credit card this summer and was wondering on what is the best one to get and why? What should i look for in looking for one?

A) I like Discover because you get cash back. You can also look into Chase cards that have different types of rewards. Look for one with a low APR and good rewards for your spending.

How many credit cards is too much to affect your credit score?

Q) I am going to ask another question regarding which CC should I add to my credit card profile to add to my rewards. I have excellent credit, pay my balance in full each month, and I use my CC to pay for everything I can to rack up points/miles etc. I am at a point where I want to increase my points and miles so there are some options. The question is, what is too much. I basically share a VISA with my wife, and have an older VISA that i keep. I realize that you should keep older credit cards for history. I want to add at least one AM/EX either the Starwood points, or the Delta Miles. I also might switch our Cap1 card to the signature to get 2 points for every $1 spent, instead of 1.25 for $1. That is a new card, not a switch. And recently, I have received letters for UNITED miles (20,000 bonus) and AA Miles (21,000 Bonus). I would love to use those just to add to my miles on those flights. Could I add 3-4 cards without hurting my excellent credit? I will not rack up debt.

A) You could have 50 cards and as long as you kept them in good standing, low utilization, no lates, etc. they won't hurt your scores - you would take small dings for inquiries though. If you are adding 3-4 cards, and you already have a good card portfolio that has fairly good history, the inquiry dings should be small. After 6 months the inq's will be less of a significance on your scores and at one year they will have no impact at all. Available credit is not debt. I can see only one card that you currently have that is probably keeping your scores from actually being higher than they are now. That would be the Cap One card. Cap One is notorious for not reporting credit limits, they only report high balance - that makes it look like you are over utilizing the account.

How do I switch credit cards and not affect my credit score?

Q) I want to get a frequent flyer credit card but I already have 3 credit cards with generous limits. I don't need these credit cards and I would like to cancel them and have this "possible credit" to go towards the new card. I heard once that canceling a credit card has a negitive effect on your credit score. Is this true? If so, how do I switch credit cards and avoid affecting my credit score in a bad way?

A) Yes, it is true. Having active credit cards on your record is no problem. It shows that card issuers are willing to extend credit. If these cards have no balance on them, you should have no trouble getting a new card. Apply and start using it. If there are balances on your other cards, it is a different issue. You should pay them off, or transfer them to the card with the lowest interest rate and pay that off as quickly as possible. Then make sure you never have a balance on a card that exceeds about 30 percent of the credit limit. Paying the monthly charges in full each month is the best policy. It also means not paying any interest.

How many credit cards should you have to rebuild credit?

Q) I am trying to rebuild my credit after ID theft, a couple of problems that were mine and years of basically not having any credit reported. (I primarily use my debit card and pay cash for everything). I make good money now and am trying to rebuild in order to purchase a condo in the next couple of years. My good accounts (rental, club, cable, cell, etc.) have not reported my good credit. So how many cards should I take out that will help boost my credit score but not hinder my credit. Thank you!

A) I would take out no more than 2. I would start out with a secured card. Granted you would have to put a deposit upfront to secure a line of credit, but the deposit would also garner interest while you're proving your creditworthiness. You could start out small, like $200-300 or larger like $1000-2000. Either way, I strongly suggest you to continue to use your debit card and pay cash like you've been doing, and make small purchases that you can pay off in full every month (around $20-50). I would only use the credit card in dire emergencies. After the secured card becomes unsecured, then you could receive offers for other cards, but chances are just the one card could work just as well. Be sure to dispute anything that was involved in the identity theft and make sure that you have a POLICE REPORT. Your "good accounts" (rental, club, cable, cell, etc.) CAN be reported through this reporting agency called PRBC. (http://prbc.com/default.php?) This is for REAL. You can have your good credit reported and complied in a scored report that can be considered with your traditional credit reports. It's become increasingly popular and I'm certain that it will help you out immensely.

How many bank accounts and credit cards should I have?

Q) I am currently a college student with 2 checking accounts (Wamu- 3 years & BOA- 1 year) and 1 credit card (Citi- 1 year). I have always met the requirements for my checking accounts and paid all my credit card bills on time. As for loans, I do have about $10,000 of student loans in debt. I was wondering if it is okay for me to get another credit card. Also, many say that having a lot of credit cards are bad for you. What is the reccomendation of how many bank accounts and credit cards should I have so that my credits would not go down? Thanks in advance!

A) It's not uncommon to have multiple bank accounts with different banks, from my past and current experience, I primarily do all my business with one bank if possible. I'm going to list the types of accounts that you should have in order to prepare yourself financially: 1. Checking account- This is the primary tool to not only monitor your finances, but to pay all your bills on time. 2. Savings account- This should be used as a primary reserve that should be used in the event of emergencies and as a backup reserve to your checking account. 3. Traditional/Roth IRA- This should be your primary retirement account. Anytime that you have a 401K,402g, or 403b plan, and plan to switch employers, this would be the account to move or "rollover" your retirement savings to. Now as for credit cards, You should have 2 major credit cards and 1 department store card. Some people have more credit cards, but actually fewer cards established for a longer time, should be all that's necessary. The longer you establish credit by making payments on time and managing your available credit responsibly, the credit limit can and usually is increased to where that will be all you need. Some people have multiple credit cards for whatever reason, but the 2 most important things to remember when using them is to pay on time and manage your available credit.

How many Credit Cards are there in each country worldwide?

Q) I want to advertise a product via the internet, for the international market. It can be bought only by a Credit Card. Therefore I would like to know, per each country in the world, how many Credit Cards are there, or: How many Credit Cards per resident in each country?

A) Wow...thats a loaded question....ask the "answer man" on yahoo!

What business credit cards are not attached to my personal credit?

Q) Hello, I am trying to find out how to build my business credit without being attached to my personal credit score. I would like to know if anybody has information regarding what credit cards are available to do this. I would love any free information or links to sites that can tell me how to build my business credit. Thanks!!

A) People think once they screw up their own personal credit the next thing they can do is have a business and get credit that way but it doesn't work like that. Your personal social security number and credit rating are going to be used to extablish credit when you start out and even well beyond. Added Reality is as a beginning business you are NOT going to go out and secure credit using an unknown/ unestablished business name or identifying number!

How many credit cards should I have open for a good credit score?

Q) I have 4 credit cards (limits are 1000, 3300, and two 500s) and was considering getting rid of one 500 credit card. Should I pay the whole thing off and KEEP it or GET RID of it??

A) Keep it with a 0 balance. As long as it doesn't have an annual fee you aren't hurting yourself. Having more accounts (3-4 minimum, not more than 6-7 revolving accounts) helps you by giving a lender MORE evidence that you can manage your debts over a longer period of time. If a person has no late payments but only has one credit card with a 500 limit for the last 6 months - how do you know they are a good risk?

How many credit cards should a person have?

Q) I know having too many is not good for a person's credit score and looks bad to those checking this credit. But not having any credit (such as cards) is not good either. So is it best to have more than one card?

A) My parents told me when I was younger to have a limit of two credit cards. One Visa and one MasterCard. In case of an emergency, just about every place will take one or the other, often times both.

What kind of Credit Card processor should i use to accept credit cards at an arts and crafts fair?

Q) I'm going to have a booth at an arts and crafts fair. I'm not sure how to accept credit cards. do i have to go with the manual cordless credit card machine or are there more options. thanks How do i get the wireless equipment free?

A) For a booth at an arts and crafts fair you would definitely want to use a wireless credit card terminal. Swiping the card gives you a lower discount rate. Never lease your equipment. Get it for free or buy it.You want to find a company that has no annual fees, no start-up costs, no application fees, a low discount rate, low transaction fee, & do not pay for training on your equipment. Never sign a contract with out reading all of it. Some sales people will tell you things and it turns out differently. Take care of yourself and your business. :-) I have done research on all of these companies before. Simple Payment Systems is the best and meets all that I have stated above. I am completely satisfied with them. I did look into propay.com and there were many complaints online about them. You can go to the web site below and call them or fill out the form and they will call you. Best wishes! Tell them you want the"Free Terminal Program" (On the web site it showed which terminals are on it. ) I hope this helps!