Prepaid Debit Card Reviews, Complaints, Etc

Tag: secured credit cards

How to Raise Your Credit Score Quickly Using Current Credit Card Trends

According to a recent New York Fed survey, Americans are feeling positive about their ability to get credit. Looking at the trends, we indicate some easy actions to take and will show you how to raise your credit score quickly. In February 2015, the number of people applying for credit cards is up 12.45% from October 2013 and the rejection rate is down 5.55% from the same time periods. That is interesting to know, but you may be asking where the big trend is. That would be in credit limit increases. The number of requests for credit limit increases is up about 10% from 2013 while the rejection rate is down 35.4% from a rejection rate of 37.6% to 24.3%. If you are looking for a quick way to help raise your credit score, it looks like now may be a good time to ask for a credit limit increase.

A credit limit increase can help you and your credit score in a number of ways. First, it gives you more credit spending power. A raise in credit limit may mean that you are simultaneously getting a higher credit score. With a raised limit and no increase in new debt, you just lowered your credit utilization. So, what is that? Your credit utilization makes up the part of your score called “amounts owed”, and that accounts for around 30% of the scoring formula. Your credit utilization shows how much actual credit you are using compared to how much is available to you. So, with all things being equal and no new debt, your utilization lowers, which is a good thing when your credit limit increases. How about that? So, we are looking at a trend of a lower rejection rate for credit limit increases. If it has been a while since you last saw an increase, now may be the time to call your card company and ask.

So, with the ups come the downs in the data world. So, what’s down on this report? As mentioned earlier, the number of rejected card apps is down nearly 6% since October 2013 as well as involuntary account closures, which is down 29.27% since 2013. And, of course, should I mention again that the rejection rate for credit limit increases is down a whopping 35.4%?

It looks like the trends will be continuing with more people asking for credit limit increases over the next 12 months. It is also predicted that there will also be a rise in the number of people applying for credit cards over the next year.

In the 2015 Chase Slate Credit Survey, one sees that although 90% of Americans think that access to credit is important, less than 40% actually know their credit score. But, even more disturbing is that over 50% don’t know the primary driver for credit score. So, let’s see if we can help lower that number. The primary driver of credit score is your payment history. The more on time payments you have and the less delinquent payments, the better the payment history. Having a great payment history helps the most in determining your credit score. If you did not know that before, now you do. You would no longer be part of that over 50% statistic.

These are the primary drivers of the credit score formula.

Your payment history. When looking at your credit report these are the 0s, 1s and other numbers that go across the page over time. You want as many 1s as you can get, which means account current and paid on time.

The next one is the credit utilization or credit already used. You want to stay under 30 percent of your available credit to help qualify for higher credit scores.

The next driver is the negative information found in the Public Record such as bankruptcies, collections or judgments. Needless to say, you do not want these words to appear on your credit report.

If you are just establishing credit or are in the process of rebuilding your credit after some financial troubles, one great way to work on your credit score is to apply for a secured card. It does require a deposit, but it is great for starting out or rebuilding. We have some great cards listed on our Best Credit Building Cards page. You may also find a card or two that is available to those with lower credit scores that do not require a deposit, but those are typically harder to find and may have higher rates than many secured cards. But, if you do not have the money to deposit, the Milestone Gold MasterCard found on that page is an option to consider.

To wrap up, applications are trending up, rejections are trending down and credit limit increase rejections are really trending down. So, to answer the question of how to raise your credit score quickly, within reason, ask for that credit limit increase and see if you can’t qualify for a new card so that you can improve your credit utilization and raise that score. Along the way, stop by sites like BestPrepaidDebitCards.com to collect some great information about credit and tips to improve your score.

If you like what you have read and want to comment or add your thoughts, please comment below.

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April 10, 2015
One-third of Americans in Debt and Facing Collection

Have a few blemishes on your credit report? You’re not alone. According to a new study from the Urban Institute, over one-third of Americans had debt in collections in 2013. The debts averaged $5,178 and include debt like medical bills, credit card balances, student loans, parking tickets and utility bills.

In a very real sense, the phenomenon is making the US a debtor nation. People all over the country have debt in collections. However, some areas have higher concentrations of debt than others. Nevada residents have the highest rate of debt in collections, with 47% of residents with delinquent debt and an averaged owed of $7,198. Eleven of the twelve states where 40% of more of the residents have debt are in the South.

Once a debt goes into collections, it can remain on a person’s credit report for up to seven years. And, even after a debt in collections is paid off, it can still reduce a credit score for a period of time. These delinquent debts can have a serious effect on people’s credit, job prospects and more.

People with low credit scores are often considered bad candidates for certain jobs. Bad credit can keep you, for instance, from getting a security clearance, which is necessary for certain companies that work with the federal government. Not only can delinquent debts keep someone from qualifying for a mortgage; they can cause apartment rental applications to be turned down, as well. When you have bad credit, you can pay more for everything from insurance to renting a car. The reduced opportunities and higher costs can keep people from the financial stability that would, in the future, reduce their chances of winding up in debt.

Dealing with Debt Collectors

Calls from debt collectors can be embarrassing and intimidating. But, as a consumer, you have rights and protections. If you are contacted by a debt collector:

• Always ask for communication about the debt in writing. This gives you time to research the debt and verify whether it is valid.

• Check your credit report. If you have been reported for debts that you do not owe, you can have those records removed so they do not affect your credit score.

• Know that you can negotiate debt payments. In some cases, debt collectors will be willing to accept a lower amount if you can pay off the debt all at once. You can also ask for payments.

• Do not hesitate to report debt collectors who harass you. Actions that legally qualify as harassment include calling outside of approved hours, calling you at work after you have asked them to stop and seeking unjustified amounts. Both your state’s Attorney General’s office and the FTC can help.

August 7, 2014
Three Alternatives to Traditional Credit Cards

Long gone are the days when credit cards were the only choice for people in need of plastic. Here are some other options

Imagine walking into a restaurant and being told that a menu is not needed because there’s only one dish being served. From time to time that happens – set price, or prix fixe, menus pop up at fancy restaurants and around holidays – but for the most part it would prompt many of us to head for the door. We all like choices.

Major financial institutions, like most restaurants, understand the need to offer different card offerings to meet the varied circumstances and tastes of their customers. As a result, many now offer three card options beyond traditional credit cards. Consumers can choose between secured credit cards, conventional debit cards and prepaid debit cards. Banks are tailoring their cards to meet the needs of different market segments, offering secured cards to young people and others eager to build good credit, issuing conventional debit cards to most checking account customers, and providing prepaid services to those who do not have bank accounts or who have other reasons for wanting prepaid cards. The choices assure almost all consumers can enjoy the safety and convenience of shopping or paying bills with bank or brand imprinted cards. Here’s a bit more about each option.

Secured Credit Cards
An inevitable part of life is to face financial stresses and setbacks. It just happens. And that has especially been the case over the past few years, as the economy has limped along and many have had to contend with lost jobs, lower wages and, often, a resulting damaged credit history. Secured credit cards are intended for people who have had some financial difficulties and thus have trouble qualifying for the sort of unsecured lines of credit typical with a standard credit card. By contrast, secured credit cards require you to pay a deposit in exchange for borrowing privileges. Think of it this way: rather than the $10,000 or $20,000 limit many credit card companies grant their customers, secured credit cards generally set your limit at whatever amount you can deposit into your account upfront. So, if you open a secured credit card account with $1,500, then you have a credit line of $1,500. Not all cards have such a strict formula for establishing credit lines, especially after you’ve proven that you reliably pay your bills. Qualifying standards are relatively lenient because that upfront deposit acts as collateral. In exchange, however, you face strict payment requirements and risk substantial penalties and interest hikes if you fail to use your card responsibly. The average secured card requires $50 in annual fees, and some charge more than 20 percent interest. The cards also typically assess late charges. The good news, however, is that prudent use of secured credit cards can help rebuild a person’s credit rating.

Conventional Debit Cards
“Free” checking is very seldom completely fee-free. When you open a conventional checking account, the majority of banks issue a debit card as part of their service. You may use a debit card to withdraw funds from your account on those occasions when you cannot write checks. You can also take advantage of online shopping and bill-paying services, which make spending and tracking your money far easier than writing out checks and combing through your register to balance your account. While conventional debit cards combine the convenience of a credit card with the security of a check, they can often come with fees. More and more banks are charging their customers monthly fees when they opt to use their debit cards for both PIN and purchases that require a signature.

Prepaid Debit Cards
Prepaid debit cards offer the same convenience as credit and conventional debit cards without the risk of overspending. That’s because prepaid debit cards require consumers to deposit, or load, money into their account upfront. And the amount of money loaded onto the card is all that you can spend. Most prepaid debit cards require no application, and they charge no monthly fees when you meet minimum monthly loading requirements. Major financial institutions offer prepaid debit cards that carry all the same consumer protections as their conventional cards, and many are now including Federal Deposit Insurance Corporation (FDIC) protection as well. Consumers, however, must compare prepaid debit cards, because many providers still charge “maintenance” and “inactivity” fees. Mitchell Weiss, co-founder of the University of Hartford’s Center for Personal Financial Responsibility, tells U.S. News & World Report, “These cards prey on the under and unbanked consumers, who mistakenly believe they’re more economical than having a traditional checking account.” In the very worst cases, consumers may lose up to 20 percent of the money they put on their cards to hidden fees.

How to Choose a Card
Because they submit regular monthly reports to the three major credit bureaus, secured credit cards help you establish, restore or improve your credit. Tied to your checking account, conventional debit cards make routine transactions more convenient. Retailers and service providers typically accept debit cards even when they do not accept personal checks, and conventional debit cards make online shopping easy. With most conventional debit cards, however, you run the risk of overdraft penalties. For many families, prepaid debit cards can be a good choice, because they offer the convenience of credit and conventional debit cards while they make sure you stay on your budget. If you want to shift your family to a “cash only” economy, prepaid debit cards can help.

No single card is the best choice for everyone. Your best choice depends on your financial situation and objectives. Many credible online sources provide tools for comparing prepaid debit cards and calculating which best satisfies your needs. And picking a card doesn’t have to be an either-or proposition; many families choose to carry and use one of each.

April 18, 2013