No Credit History? Choose Secured Credit Cards Over Prepaid Debit Cards

Secured credit cards and prepaid debit cards are two financial products geared toward people with no credit or bad credit. However, only one will help you build good credit. Read on to learn the key differences between these two types of cards and which you should use if you have no credit history.

What is a secured credit card?

Secured credit cards are for people with no credit or bad credit who can’t qualify for traditional credit cards. When you are approved, you must put down a security deposit as collateral. The amount you pay up-front will be equivalent to your credit limit. Let’s say you put down $500 as a deposit; that means your credit limit will be $500.

You can then use your secured card like a regular card, making purchases with borrowed money and then paying it back (your deposit is not used to pay for purchases). While it may seem silly at first to only be extended credit by putting down money first, it allows you to show the creditor you are able to pay back what you borrow, making it an ideal first time credit card. With responsible use, the creditor may raise your credit limit without you having to put down more collateral. Eventually, you will get your deposit back and your credit should have improved. Then you can qualify for a credit card that doesn’t require an up-front deposit.

What is a prepaid debit card?

A prepaid debit card is another financial tool for people with no credit, but they work a little differently. They function like debit cards, except instead of being tied to a checking account, you reload money directly onto the card. As you swipe, your balance decreases. Once you’re out of money, you’re out, and it’s time to reload. These cards may be helpful if you don’t have a traditional debit card, but they are often riddled with fees, and they won’t help you build credit.

Why people with no credit history should choose secured cards

The key difference between these two types of cards for people with no credit history is that activity from secured cards is reported to the three major credit bureaus (Equifax, TransUnion and Experian), while activity from prepaid debit cards is not.

This means a prepaid debit card really only gives you spending benefits, such being able to make online purchases and not having to carry cash. Your usage of a prepaid debit card will not help you build credit because no activity is reported to credit bureaus. Your activity from a secured card, on the other hand, is reported to the bureaus. This means when you make smart moves, such as paying your balance in full, paying on time and keeping a low balance, your credit will get better — a benefit that is very important for people who want to eventually qualify for a mortgage or other loan.

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No Credit History? Choose Secured Credit Cards Over Prepaid Debit Cards

Secured credit cards and prepaid debit cards are two financial products geared toward people with no credit or bad credit. However, only one will help you build good credit. Read on to learn the key differences between these two types of cards and which you should use if you have no credit history.

What is a secured credit card?

Secured credit cards are for people with no credit or bad credit who can’t qualify for traditional credit cards. When you are approved, you must put down a security deposit as collateral. The amount you pay up-front will be equivalent to your credit limit. Let’s say you put down $500 as a deposit; that means your credit limit will be $500.

You can then use your secured card like a regular card, making purchases with borrowed money and then paying it back (your deposit is not used to pay for purchases). While it may seem silly at first to only be extended credit by putting down money first, it allows you to show the creditor you are able to pay back what you borrow, making it an ideal first time credit card. With responsible use, the creditor may raise your credit limit without you having to put down more collateral. Eventually, you will get your deposit back and your credit should have improved. Then you can qualify for a credit card that doesn’t require an up-front deposit.

What is a prepaid debit card?

A prepaid debit card is another financial tool for people with no credit, but they work a little differently. They function like debit cards, except instead of being tied to a checking account, you reload money directly onto the card. As you swipe, your balance decreases. Once you’re out of money, you’re out, and it’s time to reload. These cards may be helpful if you don’t have a traditional debit card, but they are often riddled with fees, and they won’t help you build credit.

Why people with no credit history should choose secured cards

The key difference between these two types of cards for people with no credit history is that activity from secured cards is reported to the three major credit bureaus (Equifax, TransUnion and Experian), while activity from prepaid debit cards is not.

This means a prepaid debit card really only gives you spending benefits, such being able to make online purchases and not having to carry cash. Your usage of a prepaid debit card will not help you build credit because no activity is reported to credit bureaus. Your activity from a secured card, on the other hand, is reported to the bureaus. This means when you make smart moves, such as paying your balance in full, paying on time and keeping a low balance, your credit will get better — a benefit that is very important for people who want to eventually qualify for a mortgage or other loan.

---

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How Old Do You Have to Be to Apply for a Credit Card?

From experimental haircuts to questionable wardrobe choices, many people’s teenage years were marked by bad decisions. The good news is that most of those missteps had little long-term impact.

Credit card debt is much less forgiving. Fortunately, the Credit CARD Act of 2009 raised the minimum age to apply for a credit card to 21, unless a parent or guardian cosigns on the application or the applicant proves that he or she earns a steady income.

That said, there are plenty of benefits to establishing a credit history at a young age. Let’s take a look at the options available to people under the age of 21.

Become an authorized user on a parent’s credit card

A teenager can become an authorized user of his or her parent’s credit card at any age. Although the teen can carry and use a card, he or she won’t be responsible for making payments. However, an authorized user’s credit score will still increase slightly every time a bill is paid in full and on time.

Before taking this route with your child, be sure to have a frank conversation about spending limits and smart budgeting. Make it very clear that the card is only for emergency purposes, if that’s the case. Learning the fundamentals of money management at a young age will set a teenager up for success once he or she is old enough to apply for a credit card independently.

Recruit a cosigner for a credit card application

Once a person turns 18, he or she can apply for a credit card if a parent cosigns on the application. This ups the stakes for the cosigner, as he or she will be responsible for making payments if the primary cardholder doesn’t pay the bills on time. What’s more, both people’s credit scores will take a hit if a payment is missed.

Remedying this potential issue by keeping a close watch on your child’s credit card balance is easier than ever. Simply sign up for online access to the credit card account and set up payment alerts. Serving as a second set of eyes on your child’s spending will help ensure that any slip-ups are avoided or quickly corrected.

The takeaway: Adding your teen to your credit card account as an authorized user or cosigning on his or her own application is a great way to introduce them to the world of personal finance. Better yet, making either of those moves will help your teen establish a credit history, which will ultimately make it easier to get better rates on future loans and qualify for the best credit cards.

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How Old Do You Have to Be to Apply for a Credit Card?

From experimental haircuts to questionable wardrobe choices, many people’s teenage years were marked by bad decisions. The good news is that most of those missteps had little long-term impact.

Credit card debt is much less forgiving. Fortunately, the Credit CARD Act of 2009 raised the minimum age to apply for a credit card to 21, unless a parent or guardian cosigns on the application or the applicant proves that he or she earns a steady income.

That said, there are plenty of benefits to establishing a credit history at a young age. Let’s take a look at the options available to people under the age of 21.

Become an authorized user on a parent’s credit card

A teenager can become an authorized user of his or her parent’s credit card at any age. Although the teen can carry and use a card, he or she won’t be responsible for making payments. However, an authorized user’s credit score will still increase slightly every time a bill is paid in full and on time.

Before taking this route with your child, be sure to have a frank conversation about spending limits and smart budgeting. Make it very clear that the card is only for emergency purposes, if that’s the case. Learning the fundamentals of money management at a young age will set a teenager up for success once he or she is old enough to apply for a credit card independently.

Recruit a cosigner for a credit card application

Once a person turns 18, he or she can apply for a credit card if a parent cosigns on the application. This ups the stakes for the cosigner, as he or she will be responsible for making payments if the primary cardholder doesn’t pay the bills on time. What’s more, both people’s credit scores will take a hit if a payment is missed.

Remedying this potential issue by keeping a close watch on your child’s credit card balance is easier than ever. Simply sign up for online access to the credit card account and set up payment alerts. Serving as a second set of eyes on your child’s spending will help ensure that any slip-ups are avoided or quickly corrected.

The takeaway: Adding your teen to your credit card account as an authorized user or cosigning on his or her own application is a great way to introduce them to the world of personal finance. Better yet, making either of those moves will help your teen establish a credit history, which will ultimately make it easier to get better rates on future loans and qualify for the best credit cards.

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Can I Upgrade to an Unsecured Credit Card Once I Reach Fair Credit?

The perfect tool with which to boost your credit score, a secured credit card is an excellent way to learn the ins and outs of borrowing money. But once you’ve reached fair credit — typically a credit score of 630 to about 690 — you may want to upgrade to an unsecured credit card, as this type of plastic typically has higher monthly credit limits and will therefore increase your purchasing power.

Before upgrading to an unsecured credit card, here’s what you need to know to make the process as smooth as possible.

Be aware of your credit card issuer’s policies

Although you can exert plenty of influence by paying your bills on time and in full, your ability to upgrade to an unsecured card may depend on your card issuer. To find out whether you qualify for an unsecured card, be sure to take a careful look at your credit card issuer’s policies and fine print. Some lenders require customers to have a secured card for at least one year before making the switch.

Ask your issuer

Once you’ve determined that you aren’t restricted to a secured card, ask your credit card issuer to upgrade your card. If successful, your card will be upgraded to an unsecured card and your original deposit will be returned to you in full, assuming you don’t have an outstanding balance. If your request is denied, ask your credit card issuer how you can improve your chances of getting an unsecured credit card in the future.

If rejected, consider seeking a new issuer

Another option would be to apply for a new credit card. One word of advice: Every time you apply for a new card, an inquiry is made into your credit history, which shaves a few points off of your credit score. It’s therefore best to apply for a new unsecured card only if you know that your shot of getting approved is good.

In a dream world, other credit card issuers would take heed of your improved credit score and start extending offers your way. If that happens, and your application ends up getting approved, you could shut down your secured account and collect the original deposit. Keep in mind, though, that it would be better for your credit score to keep that account open. If your secured account’s annual fees aren’t too steep and you don’t desperately need those deposit funds, consider keeping it open. Just make sure that the account doesn’t carry a balance, as the interest will add up quickly.

Upgrading to an unsecured credit card is a big step and is proof that you’ve worked hard to improve your credit score. Taking note of the aforementioned tips can help you avoid roadblocks along the way.

---

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From Poor Credit to Fair Credit: The Road to Improvement

For many, the difference between having bad credit and average credit is like night and day. With fair credit, searching for a place to live or shopping for a car suddenly becomes much easier. You can even qualify for lower interest rates with fair credit credit cards, which could save you a bundle in the long run.

If you’re looking for ways to boost your score, here’s where you should start:

Identify the problem

If you don’t know why your credit score is low, it’s difficult to fix it. Start by requesting a free annual credit report from each of the three credit bureaus — Experian, Equifax and TransUnion — and looking for problem areas.

Some items, such as like foreclosures and bankruptcies, will stay on your credit report for seven years, and there’s nothing you can do about it. But if your score is taking a dive because of late payments, make a point of being more punctual with your bills. Because recent credit activity is weighted more heavily than old activity, making a small change like this could make a big difference.

Build an emergency fund

Relying too much on credit during hard times can lead to over-borrowing, large outstanding debts and late or missed payments, which can hurt your credit. Avoid returning to these bad habits by establishing an emergency fund.

Put aside a small amount of your earnings every month. Even if it’s just 2% a month, you’ll have more money to fall back on the next time you have to deal with one of life’s little surprises.

Get a secured credit card

To qualify for a fair credit credit card, you need to build up a good credit history, and a secured credit card is a good place to start. Because these credit cards require a security deposit as collateral, they’re easier to qualify for. Find a credit card that reports to all three credit bureaus, and your on-time payments will help you build your credit.

When it comes to rebuilding your credit, let consistency be your watchword. Make sure your recent credit history reflects your best habits and guard against using your credit card for things you don’t really need. By spending less than 30% of your credit limit and paying on time every month, you’ll boost your score and lenders will start to look at you more favorably. After awhile, your card issuer might offer to upgrade your account to an unsecured card.

---

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The post From Poor Credit to Fair Credit: The Road to Improvement appeared first on NerdWallet Credit Card Blog.

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Can I Upgrade to an Unsecured Credit Card Once I Reach Fair Credit?

The perfect tool with which to boost your credit score, a secured credit card is an excellent way to learn the ins and outs of borrowing money. But once you’ve reached fair credit — typically a credit score of 630 to about 690 — you may want to upgrade to an unsecured credit card, as this type of plastic typically has higher monthly credit limits and will therefore increase your purchasing power.

Before upgrading to an unsecured credit card, here’s what you need to know to make the process as smooth as possible.

Be aware of your credit card issuer’s policies

Although you can exert plenty of influence by paying your bills on time and in full, your ability to upgrade to an unsecured card may depend on your card issuer. To find out whether you qualify for an unsecured card, be sure to take a careful look at your credit card issuer’s policies and fine print. Some lenders require customers to have a secured card for at least one year before making the switch.

Ask your issuer

Once you’ve determined that you aren’t restricted to a secured card, ask your credit card issuer to upgrade your card. If successful, your card will be upgraded to an unsecured card and your original deposit will be returned to you in full, assuming you don’t have an outstanding balance. If your request is denied, ask your credit card issuer how you can improve your chances of getting an unsecured credit card in the future.

If rejected, consider seeking a new issuer

Another option would be to apply for a new credit card. One word of advice: Every time you apply for a new card, an inquiry is made into your credit history, which shaves a few points off of your credit score. It’s therefore best to apply for a new unsecured card only if you know that your shot of getting approved is good.

In a dream world, other credit card issuers would take heed of your improved credit score and start extending offers your way. If that happens, and your application ends up getting approved, you could shut down your secured account and collect the original deposit. Keep in mind, though, that it would be better for your credit score to keep that account open. If your secured account’s annual fees aren’t too steep and you don’t desperately need those deposit funds, consider keeping it open. Just make sure that the account doesn’t carry a balance, as the interest will add up quickly.

Upgrading to an unsecured credit card is a big step and is proof that you’ve worked hard to improve your credit score. Taking note of the aforementioned tips can help you avoid roadblocks along the way.

---

Woman with credit card image via iStock.

The post Can I Upgrade to an Unsecured Credit Card Once I Reach Fair Credit? appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1J4eK7x

Read More

From Poor Credit to Fair Credit: The Road to Improvement

For many, the difference between having bad credit and average credit is like night and day. With fair credit, searching for a place to live or shopping for a car suddenly becomes much easier. You can even qualify for lower interest rates with fair credit credit cards, which could save you a bundle in the long run.

If you’re looking for ways to boost your score, here’s where you should start:

Identify the problem

If you don’t know why your credit score is low, it’s difficult to fix it. Start by requesting a free annual credit report from each of the three credit bureaus — Experian, Equifax and TransUnion — and looking for problem areas.

Some items, such as like foreclosures and bankruptcies, will stay on your credit report for seven years, and there’s nothing you can do about it. But if your score is taking a dive because of late payments, make a point of being more punctual with your bills. Because recent credit activity is weighted more heavily than old activity, making a small change like this could make a big difference.

Build an emergency fund

Relying too much on credit during hard times can lead to over-borrowing, large outstanding debts and late or missed payments, which can hurt your credit. Avoid returning to these bad habits by establishing an emergency fund.

Put aside a small amount of your earnings every month. Even if it’s just 2% a month, you’ll have more money to fall back on the next time you have to deal with one of life’s little surprises.

Get a secured credit card

To qualify for a fair credit credit card, you need to build up a good credit history, and a secured credit card is a good place to start. Because these credit cards require a security deposit as collateral, they’re easier to qualify for. Find a credit card that reports to all three credit bureaus, and your on-time payments will help you build your credit.

When it comes to rebuilding your credit, let consistency be your watchword. Make sure your recent credit history reflects your best habits and guard against using your credit card for things you don’t really need. By spending less than 30% of your credit limit and paying on time every month, you’ll boost your score and lenders will start to look at you more favorably. After awhile, your card issuer might offer to upgrade your account to an unsecured card.

---

Image via iStock.

The post From Poor Credit to Fair Credit: The Road to Improvement appeared first on NerdWallet Credit Card Blog.

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4 Ways a 0% APR Credit Card Can Actually Hurt Your Credit

It’s hard to argue against the appeal of zero interest credit cards. You just transfer your credit balance from a high-interest card and boom: free money!

But not so fast. A 0% APR credit card offer can hold great appeal, but if you’re not careful, the process could actually hurt your FICO credit score and leave you with greater debt than before. Here’s how:

It could increase your credit utilization

To understand how a no interest credit card may hurt your credit, you need to understand how your FICO score works. The top factor is your on-time payment history, worth 35% of your score. The next most important factor is your credit utilization, worth 30% of your score. Here’s where a transfer of a balance from a high-interest card to a no-interest card can hurt.

FICO looks at your ratio of debt to available credit. Add up all the credit limits of all your cards and subtract the amount of credit used; that’s your credit utilization ratio. If you’re using 30% or less of your total available credit, that’s good (10% or less is even better for your credit rating).

So if you move a $5,000 balance from a high-interest credit card with a $20,000 limit to a no interest card with a $10,000 limit, your credit utilization will double from 25% to 50%.

Nerd note: When you transfer a balance to a new card, don’t close the old account. Keep it active, even if it goes unused. That keeps your credit utilization lower and length of your credit history (worth 15% of your FICO score) higher.

A new credit card will hurt your credit

Bad news: Evaluation by the issuer of the new card includes a “hard inquiry” of your credit history, which signals you’re looking to take on new debt. The number of new inquiries into your credit history affects about 10% of your FICO score.

Good news: Over time, a new card can help your credit score by diversifying your credit line. It’s also helpful if you keep your balances low and always — always — pay your bills on time.

Check beyond the teaser rate

Remember a zero interest card is a promotional offer. That means it ends, usually between six months and 15 months later. Then interest rates, often in the double digits, kick back in again. Is the new rate lower than your old rate? Will you reasonably be able to pay down your balance before the higher interest rate begins?

0% on purchases is still more debt

OK, so you don’t pay any interest for a limited time on new purchases. But you are still taking on new debt. Zero percent offers are great as tools to help in the short run, whether to temporarily cover a purchase or help double-down on paying off a high balance.

If your spendthrift ways got you into debt troubles in the first place, then a zero interest card can be an avenue for even more damage. Handle with care.

---

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4 Ways a 0% APR Credit Card Can Actually Hurt Your Credit

It’s hard to argue against the appeal of zero interest credit cards. You just transfer your credit balance from a high-interest card and boom: free money!

But not so fast. A 0% APR credit card offer can hold great appeal, but if you’re not careful, the process could actually hurt your FICO credit score and leave you with greater debt than before. Here’s how:

It could increase your credit utilization

To understand how a no interest credit card may hurt your credit, you need to understand how your FICO score works. The top factor is your on-time payment history, worth 35% of your score. The next most important factor is your credit utilization, worth 30% of your score. Here’s where a transfer of a balance from a high-interest card to a no-interest card can hurt.

FICO looks at your ratio of debt to available credit. Add up all the credit limits of all your cards and subtract the amount of credit used; that’s your credit utilization ratio. If you’re using 30% or less of your total available credit, that’s good (10% or less is even better for your credit rating).

So if you move a $5,000 balance from a high-interest credit card with a $20,000 limit to a no interest card with a $10,000 limit, your credit utilization will double from 25% to 50%.

Nerd note: When you transfer a balance to a new card, don’t close the old account. Keep it active, even if it goes unused. That keeps your credit utilization lower and length of your credit history (worth 15% of your FICO score) higher.

A new credit card will hurt your credit

Bad news: Evaluation by the issuer of the new card includes a “hard inquiry” of your credit history, which signals you’re looking to take on new debt. The number of new inquiries into your credit history affects about 10% of your FICO score.

Good news: Over time, a new card can help your credit score by diversifying your credit line. It’s also helpful if you keep your balances low and always — always — pay your bills on time.

Check beyond the teaser rate

Remember a zero interest card is a promotional offer. That means it ends, usually between six months and 15 months later. Then interest rates, often in the double digits, kick back in again. Is the new rate lower than your old rate? Will you reasonably be able to pay down your balance before the higher interest rate begins?

0% on purchases is still more debt

OK, so you don’t pay any interest for a limited time on new purchases. But you are still taking on new debt. Zero percent offers are great as tools to help in the short run, whether to temporarily cover a purchase or help double-down on paying off a high balance.

If your spendthrift ways got you into debt troubles in the first place, then a zero interest card can be an avenue for even more damage. Handle with care.

---

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4 Ways Having No Credit History Can Hurt You

Whether it’s a landlord reviewing your rental application or a bank thinking about giving you a loan, your credit history will stand at the center of many important decisions. If you haven’t taken the time to build your credit, it’s high time that you do so. Here are four reasons why.

Bad credit card deals

Qualifying for the best credit cards will be nearly impossible if you haven’t established your credit history. This means you’ll miss out on the best interest rates and rewards. In addition to saving you money and providing you with a wide range of perks, the advantages of good credit cards will encourage you to keep using your plastic, which will boost your credit score that much more if you continue making payments on time and in full.

For people with no credit history, secured credit cards are solid first-time credit cards and can help you improve your credit score. Once you’ve built out your credit history, chances are good you’ll qualify for an upgrade to an unsecured credit card.

Difficulty getting a loan

Whether it’s a car loan or a mortgage, lenders will be reluctant to extend credit your way if they have no insight into your credit history. As a result, you’ll either miss out on loans altogether or be offered loans with high interest rates. Over the lifespan of a 30-year mortgage, for example, a high interest rate could cost you tens of thousands of dollars.

Trouble renting an apartment

The rental market can be fiercely competitive, especially in booming cities like San Francisco. With so many applications to sort through, landlords want to find renters with the strongest credit scores, which suggests a certain level of financial trustworthiness. If you have no credit history, it’ll be hard for them to make a judgment call on your application, which could result in a higher security deposit or having to find a co-signer for your lease.

Expensive car insurance

Like landlords, car insurance companies like to evaluate the financial reliability of their potential customers. They want to know whether you’re going to end up costing them money. Car insurance companies determine this by using credit-based scores to help assess risk. Though this practice is prohibited in California, Hawaii and Massachusetts, the majority of Americans looking for car insurance will qualify for better rates if they have a strong credit history.

From becoming an authorized user on someone else’s credit card to using your secured card responsibly, there are several ways to build a credit history if you haven’t done so yet. The name of the game is remembering to pay your bills on time and in full and to monitor your credit score so that once it approaches 700, you can think about applying for an unsecured card.

The post 4 Ways Having No Credit History Can Hurt You appeared first on NerdWallet Credit Card Blog.

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4 Ways Having No Credit History Can Hurt You

Whether it’s a landlord reviewing your rental application or a bank thinking about giving you a loan, your credit history will stand at the center of many important decisions. If you haven’t taken the time to build your credit, it’s high time that you do so. Here are four reasons why.

Bad credit card deals

Qualifying for the best credit cards will be nearly impossible if you haven’t established your credit history. This means you’ll miss out on the best interest rates and rewards. In addition to saving you money and providing you with a wide range of perks, the advantages of good credit cards will encourage you to keep using your plastic, which will boost your credit score that much more if you continue making payments on time and in full.

For people with no credit history, secured credit cards are solid first-time credit cards and can help you improve your credit score. Once you’ve built out your credit history, chances are good you’ll qualify for an upgrade to an unsecured credit card.

Difficulty getting a loan

Whether it’s a car loan or a mortgage, lenders will be reluctant to extend credit your way if they have no insight into your credit history. As a result, you’ll either miss out on loans altogether or be offered loans with high interest rates. Over the lifespan of a 30-year mortgage, for example, a high interest rate could cost you tens of thousands of dollars.

Trouble renting an apartment

The rental market can be fiercely competitive, especially in booming cities like San Francisco. With so many applications to sort through, landlords want to find renters with the strongest credit scores, which suggests a certain level of financial trustworthiness. If you have no credit history, it’ll be hard for them to make a judgment call on your application, which could result in a higher security deposit or having to find a co-signer for your lease.

Expensive car insurance

Like landlords, car insurance companies like to evaluate the financial reliability of their potential customers. They want to know whether you’re going to end up costing them money. Car insurance companies determine this by using credit-based scores to help assess risk. Though this practice is prohibited in California, Hawaii and Massachusetts, the majority of Americans looking for car insurance will qualify for better rates if they have a strong credit history.

From becoming an authorized user on someone else’s credit card to using your secured card responsibly, there are several ways to build a credit history if you haven’t done so yet. The name of the game is remembering to pay your bills on time and in full and to monitor your credit score so that once it approaches 700, you can think about applying for an unsecured card.

The post 4 Ways Having No Credit History Can Hurt You appeared first on NerdWallet Credit Card Blog.

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How Library Fines Can Hurt Your Good Credit

You likely know some of the most obvious things that can send your credit score into a tailspin — filing for bankruptcy, having your home foreclosed on, habitually being late on payments and not returning a library book on time. Wait, what does the library have to do with your credit? A lot, actually.

Read between the lines

So you checked out a book from your local library and somehow lost track of the due date. Come the day that you’re supposed to turn in the novel, your borrowed literary work is still sitting on your counter and missing from its normal spot on the local librarian’s shelf. The library subsequently charges you a late fine, but since the amount is so small, you decide not to pay it. But before you know it, that late library book fine turns into a financial nightmare as your good credit is being threatened with a call from a collection agency. How did that happen?

Certain libraries are turning to collection agencies to recover the outstanding late fines that bookworm patrons aren’t paying. Going to collection — regardless of whether it’s for a library book or something else — looks bad on your credit report. The collection agency may report your unpaid fee to a credit-reporting agency, which is where your credit score and your late library book cross paths. If this happens to you, you could receive added penalties from the collection agency as well as a hit to your good credit, all in addition to that minor fee you shrugged off to start the whole situation.

Moral of the story

What can you learn from this tale of library fines gone wrong? As you carry on in your everyday life, don’t just make good on payments you assume will affect your credit. As you can see, it’s not just credit card bills that people with good credit need to be punctual on in order to keep their credit standing. It’s library fines, parking tickets and a number of other fees as well.

Try to avoid racking up such penalties in the first place. If you are faced with a charge, pay it promptly (one of the keys to good credit in general is making payments on time, as it’s an indicator of your creditworthiness). If you don’t do so, you could end up with a lower credit score, which may mean you’ll be turned down for future loans or credit cards for people with good credit that you apply for.

---

Library patron image via iStock.

The post How Library Fines Can Hurt Your Good Credit appeared first on NerdWallet Credit Card Blog.

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How Library Fines Can Hurt Your Good Credit

You likely know some of the most obvious things that can send your credit score into a tailspin — filing for bankruptcy, having your home foreclosed on, habitually being late on payments and not returning a library book on time. Wait, what does the library have to do with your credit? A lot, actually.

Read between the lines

So you checked out a book from your local library and somehow lost track of the due date. Come the day that you’re supposed to turn in the novel, your borrowed literary work is still sitting on your counter and missing from its normal spot on the local librarian’s shelf. The library subsequently charges you a late fine, but since the amount is so small, you decide not to pay it. But before you know it, that late library book fine turns into a financial nightmare as your good credit is being threatened with a call from a collection agency. How did that happen?

Certain libraries are turning to collection agencies to recover the outstanding late fines that bookworm patrons aren’t paying. Going to collection — regardless of whether it’s for a library book or something else — looks bad on your credit report. The collection agency may report your unpaid fee to a credit-reporting agency, which is where your credit score and your late library book cross paths. If this happens to you, you could receive added penalties from the collection agency as well as a hit to your good credit, all in addition to that minor fee you shrugged off to start the whole situation.

Moral of the story

What can you learn from this tale of library fines gone wrong? As you carry on in your everyday life, don’t just make good on payments you assume will affect your credit. As you can see, it’s not just credit card bills that people with good credit need to be punctual on in order to keep their credit standing. It’s library fines, parking tickets and a number of other fees as well.

Try to avoid racking up such penalties in the first place. If you are faced with a charge, pay it promptly (one of the keys to good credit in general is making payments on time, as it’s an indicator of your creditworthiness). If you don’t do so, you could end up with a lower credit score, which may mean you’ll be turned down for future loans or credit cards for people with good credit that you apply for.

---

Library patron image via iStock.

The post How Library Fines Can Hurt Your Good Credit appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1wLOyYR

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How To Know If a Bad Credit Credit Card Is Right for You

If you have a low credit score, you may think you have to take what you can get when it comes to credit cards. In reality, however, there are a number of credit cards for people with bad credit. No matter what your credit score, it’s a bad idea to apply for the first credit card offer that comes along.

Is the bad credit credit card you’re considering the right one for you? Ask yourself these four questions before you apply:

Is it secured or unsecured?

Most credit cards you encounter are unsecured. Secured cards are similar — in that you can use them to make purchases and receive a monthly bill — but opening the account requires a few extra steps. You’ll make a deposit with your lender, and then you can use the card to borrow as normal — usually up to the amount of your deposit.

If you can get an unsecured card, you should. But if you qualify only for secured cards, ensure that the issuer will transition you to an unsecured card after you’ve built a solid payment history.

What’s the interest rate?

If you have poor credit, the cards available to you will have interest rates on the higher side, but that doesn’t mean you have no choice at all. Compare the rates for available cards to get the best deal. And remember that your interest rate matters only if you run a balance on the card. If you already have poor credit, this is the last thing you should be doing.

Are there rewards?

Most rewards credit cards are out of reach for people with bad credit, but this isn’t always the case. If you want rewards, you may have a few card options. Just keep in mind that many bad credit credit cards with rewards also have an annual fee. Weigh the amount you’re likely to earn against the price you’ll pay for the card before springing for a rewards card.

Are there benefits for using your credit responsibly?

Beyond cash back rewards, some credit cards for poor credit offer perks that can help with credit repair. Look for cards that recognize on-time payments with credit limit increases. Having a higher credit limit can lower your credit utilization ratio, which can then give you a credit score bump — as long as you don’t take advantage of the opportunity to spend more.

The bottom line

Bad credit credit cards may not have all the bells and whistles that credit card commercials have taught you to expect, but they’re still credit — and credit is important. No matter what card you qualify for, use it as an opportunity to build up your score by making full, on-time payments. And when you do qualify for the best credit cards, don’t necessarily close your old one. Having a long, responsible history with a credit account works wonders for your credit score.

---

Couple using credit card image via iStock.

The post How To Know If a Bad Credit Credit Card Is Right for You appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1wLL8VW

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Will a Bad Credit Credit Card Hurt My FICO Score?

Applying for a credit card for people with bad credit won’t hurt your credit score—at least not any more than applying for another credit card would. Here’s why.

What are bad credit credit cards, anyway?

Bad credit credit cards are actually useful tools for rebuilding your credit score, also known as your FICO score. The approval process is easier than for other types of cards, because the card issuer is accustomed to dealing with people who have hit a rough patch financially. And getting approved for any credit card at all gives you a chance to prove that you’re trustworthy.

If you’re looking at cards for people with bad credit but you’re still having trouble getting approved, try applying for a secured credit card. Issuers of these cards require a refundable deposit as an extra guarantee that you’ll use your card responsibly, and secured cards sometimes have lower annual fees and lower interest rates than unsecured cards for people with scores below 630.

If you pay your bills on time and keep your credit utilization ratio—that’s the percentage of your available credit you’re actually using—to 30% or less, your credit score shouldn’t suffer from the fact that you’ve applied for a card designed for people with poor credit.

But applying for any credit card at all causes your score to drop a little bit, and bad credit credit cards are no exception.

How new cards affect your credit score

Every time you apply for a credit card, your credit score slides by about 5 points, and every little bit counts when you’re already in bad credit territory. Applying for a lot of new cards all at once can take an even bigger toll, because research shows that customers who apply for six or more cards in quick succession are more likely to declare bankruptcy, according to FICO.

New cards also hurt your score because they bring down the average age of your credit accounts, and 15% of your credit score comes from the length of your credit history. Accounts that have been open for a long time boost your score, while accounts that were opened recently bring your score down.

The bottom line: Think carefully any time you open a new credit card, whether or not it’s a card specifically for people with poor credit. All cards have a similar impact on your credit score.

The important thing for your credit score is how you use your cards: whether you pay on time, whether you keep your balances low and how long you keep the cards open. The rest is just details.

The post Will a Bad Credit Credit Card Hurt My FICO Score? appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1wLL6gP

Read More

How To Know If a Bad Credit Credit Card Is Right for You

If you have a low credit score, you may think you have to take what you can get when it comes to credit cards. In reality, however, there are a number of credit cards for people with bad credit. No matter what your credit score, it’s a bad idea to apply for the first credit card offer that comes along.

Is the bad credit credit card you’re considering the right one for you? Ask yourself these four questions before you apply:

Is it secured or unsecured?

Most credit cards you encounter are unsecured. Secured cards are similar — in that you can use them to make purchases and receive a monthly bill — but opening the account requires a few extra steps. You’ll make a deposit with your lender, and then you can use the card to borrow as normal — usually up to the amount of your deposit.

If you can get an unsecured card, you should. But if you qualify only for secured cards, ensure that the issuer will transition you to an unsecured card after you’ve built a solid payment history.

What’s the interest rate?

If you have poor credit, the cards available to you will have interest rates on the higher side, but that doesn’t mean you have no choice at all. Compare the rates for available cards to get the best deal. And remember that your interest rate matters only if you run a balance on the card. If you already have poor credit, this is the last thing you should be doing.

Are there rewards?

Most rewards credit cards are out of reach for people with bad credit, but this isn’t always the case. If you want rewards, you may have a few card options. Just keep in mind that many bad credit credit cards with rewards also have an annual fee. Weigh the amount you’re likely to earn against the price you’ll pay for the card before springing for a rewards card.

Are there benefits for using your credit responsibly?

Beyond cash back rewards, some credit cards for poor credit offer perks that can help with credit repair. Look for cards that recognize on-time payments with credit limit increases. Having a higher credit limit can lower your credit utilization ratio, which can then give you a credit score bump — as long as you don’t take advantage of the opportunity to spend more.

The bottom line

Bad credit credit cards may not have all the bells and whistles that credit card commercials have taught you to expect, but they’re still credit — and credit is important. No matter what card you qualify for, use it as an opportunity to build up your score by making full, on-time payments. And when you do qualify for the best credit cards, don’t necessarily close your old one. Having a long, responsible history with a credit account works wonders for your credit score.

---

Couple using credit card image via iStock.

The post How To Know If a Bad Credit Credit Card Is Right for You appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

Read More

Will a Bad Credit Credit Card Hurt My FICO Score?

Applying for a credit card for people with bad credit won’t hurt your credit score—at least not any more than applying for another credit card would. Here’s why.

What are bad credit credit cards, anyway?

Bad credit credit cards are actually useful tools for rebuilding your credit score, also known as your FICO score. The approval process is easier than for other types of cards, because the card issuer is accustomed to dealing with people who have hit a rough patch financially. And getting approved for any credit card at all gives you a chance to prove that you’re trustworthy.

If you’re looking at cards for people with bad credit but you’re still having trouble getting approved, try applying for a secured credit card. Issuers of these cards require a refundable deposit as an extra guarantee that you’ll use your card responsibly, and secured cards sometimes have lower annual fees and lower interest rates than unsecured cards for people with scores below 630.

If you pay your bills on time and keep your credit utilization ratio—that’s the percentage of your available credit you’re actually using—to 30% or less, your credit score shouldn’t suffer from the fact that you’ve applied for a card designed for people with poor credit.

But applying for any credit card at all causes your score to drop a little bit, and bad credit credit cards are no exception.

How new cards affect your credit score

Every time you apply for a credit card, your credit score slides by about 5 points, and every little bit counts when you’re already in bad credit territory. Applying for a lot of new cards all at once can take an even bigger toll, because research shows that customers who apply for six or more cards in quick succession are more likely to declare bankruptcy, according to FICO.

New cards also hurt your score because they bring down the average age of your credit accounts, and 15% of your credit score comes from the length of your credit history. Accounts that have been open for a long time boost your score, while accounts that were opened recently bring your score down.

The bottom line: Think carefully any time you open a new credit card, whether or not it’s a card specifically for people with poor credit. All cards have a similar impact on your credit score.

The important thing for your credit score is how you use your cards: whether you pay on time, whether you keep your balances low and how long you keep the cards open. The rest is just details.

The post Will a Bad Credit Credit Card Hurt My FICO Score? appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

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4 Bad Credit Myths

Having poor credit is bad enough. Between being limited to credit cards for people with bad credit and getting unfavorable terms on loans, there are plenty of legitimate reasons to be concerned about a low score.

Unfortunately, relying on misinformation can keep people with substandard credit from taking steps to improve it, or from getting the best deals possible on loans and credit cards. Have you fallen for one of these bad credit myths?

Myth 1: All credit inquiries damage your score.

Monitoring your credit score is a great idea, and it won’t damage your credit. As long as you pull a report from each credit bureau only once a year—or if you’re denied a job because of your credit—it’s free to access.

The kinds of inquiries lenders engage in when deciding whether or not to give you credit can have a temporary negative effect on your score. But don’t let this discourage you from shopping around for loans. As long as your auto or home loan applications take place within a short period of time, such as 14 days, the inquiries will all count as one, according to the Consumer Financial Protection Bureau.

Myth 2: Credit repair agencies are a good way to improve your credit.

If your credit could be better, you may have been tempted by companies promising to strike negative items from your credit report. Don’t believe them. Unless information is incorrect or outdated, there’s no way to have it removed, and any true errors a credit repair agency can fix, you can also find and dispute yourself—for free.

Myth 3: Paid debts are removed from your credit report.

Settling an old bill is a great step toward financial security, and can provide a welcome respite from collections calls. However, even paid debts can impact on your credit. Lenders report most negative information—like late payments—to credit bureaus for seven years and report bankruptcies for ten. You can ask your lender to stop reporting on a paid account, but there’s no guarantee they’ll say yes.

Myth 4: You can’t get a loan with poor credit.

There’s no question that having good credit is a plus when applying for loans. You’ll have your pick of lenders and receive favorable rates. But having bad credit doesn’t mean that you won’t get a loan—just that you might have to work harder for it.

Try applying for a loan at a bank or credit union at which you already have an account. Credit unions in particular tend to be flexible. If you can make a large down payment or if your credit is on the mend, you may have some room to negotiate. Just watch out for lenders offering unrealistic terms—they’re probably too good to be true.

The bottom line

No one needs good credit card information more than people who struggle with credit. So if you’re hoping to graduate from your bad credit credit card, make sure you’re going to the right sources for your facts. Government agencies like Federal Trade Commission and the FDIC are great places to start your research. And if a credit repair company is trying to get your business, look them up on the Better Business Bureau before handing over your money.

---

Image via iStock.

The post 4 Bad Credit Myths appeared first on NerdWallet Credit Card Blog.

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Read More

4 Bad Credit Myths

Having poor credit is bad enough. Between being limited to credit cards for people with bad credit and getting unfavorable terms on loans, there are plenty of legitimate reasons to be concerned about a low score.

Unfortunately, relying on misinformation can keep people with substandard credit from taking steps to improve it, or from getting the best deals possible on loans and credit cards. Have you fallen for one of these bad credit myths?

Myth 1: All credit inquiries damage your score.

Monitoring your credit score is a great idea, and it won’t damage your credit. As long as you pull a report from each credit bureau only once a year—or if you’re denied a job because of your credit—it’s free to access.

The kinds of inquiries lenders engage in when deciding whether or not to give you credit can have a temporary negative effect on your score. But don’t let this discourage you from shopping around for loans. As long as your auto or home loan applications take place within a short period of time, such as 14 days, the inquiries will all count as one, according to the Consumer Financial Protection Bureau.

Myth 2: Credit repair agencies are a good way to improve your credit.

If your credit could be better, you may have been tempted by companies promising to strike negative items from your credit report. Don’t believe them. Unless information is incorrect or outdated, there’s no way to have it removed, and any true errors a credit repair agency can fix, you can also find and dispute yourself—for free.

Myth 3: Paid debts are removed from your credit report.

Settling an old bill is a great step toward financial security, and can provide a welcome respite from collections calls. However, even paid debts can impact on your credit. Lenders report most negative information—like late payments—to credit bureaus for seven years and report bankruptcies for ten. You can ask your lender to stop reporting on a paid account, but there’s no guarantee they’ll say yes.

Myth 4: You can’t get a loan with poor credit.

There’s no question that having good credit is a plus when applying for loans. You’ll have your pick of lenders and receive favorable rates. But having bad credit doesn’t mean that you won’t get a loan—just that you might have to work harder for it.

Try applying for a loan at a bank or credit union at which you already have an account. Credit unions in particular tend to be flexible. If you can make a large down payment or if your credit is on the mend, you may have some room to negotiate. Just watch out for lenders offering unrealistic terms—they’re probably too good to be true.

The bottom line

No one needs good credit card information more than people who struggle with credit. So if you’re hoping to graduate from your bad credit credit card, make sure you’re going to the right sources for your facts. Government agencies like Federal Trade Commission and the FDIC are great places to start your research. And if a credit repair company is trying to get your business, look them up on the Better Business Bureau before handing over your money.

---

Image via iStock.

The post 4 Bad Credit Myths appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1DOVafe

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4 Ways to Know if a Balance Transfer Credit Card is for You

Is the interest rate on your credit card debt sinking you deeper into a financial hole? A 0% APR balance transfer credit card offer can provide a ladder to help climb out of the abyss.

Simply put, these balance transfer offers can help save on interest payments that make it tough to pay down credit card debt quickly. But, like all tools in your financial arsenal, they must be treated with care. Will a balance transfer help or simply kick the can on your credit woes further down the line? Here are some questions you need to ask:

Do you have a good credit score?

Most cards that offer 0% promotions require a FICO credit score of 690 or higher. In fact, the best offers are usually only available to those with a score of over 720. A lower FICO score will greatly limit your options for balance transfer credit card offers. That’s just the way it is.

So know where your credit score stands before you begin.

Does the cost of balance transfer make sense?

Even with a “0%” offer, most balance transfer cards charge a one-time balance transfer fee. Typically, this fee is 3% of the total charges you’re moving onto the card.

In general, if it will take you less than six months to pay off your credit card balance, doing a balance transfer doesn’t make sense. Otherwise, price out the offer carefully against what you’re paying in interest on your current card to see how much you’re really saving. Or, use NerdWallet’s tool to figure out the true cost of your balance transfer. This will help you decide if moving forward with this refinancing option is right for you.

Nerd note: There is one card on the market that waives its balance transfer fee under certain conditions. If you have excellent credit, be sure to check it out.

How long can you take advantage of 0% interest payments?

All good things come to an end. If you get a 0% interest credit card, the first move you should make is to note on your calendar when the promotion ends; it’s often somewhere between six and 15 months.

Let’s be honest: Credit card issuers are betting that the bulk of your debt won’t be repaid before the 0% APR period ends. Prove them wrong. Plan to use the 0% period to double-down on paying off as much of the balance as possible.

Also, read the fine print once the card arrives. Have they given you 0% rates on both the transfer balance and future purchases on the new card? No matter the advertised rate, be vigilant about what the company actually sends you in the mail.

Can you make your payments on time?

Once you make the switch to a 0% card, it’s crucial that you make your payments on time. Many cards have penalties that void the 0% deal the moment you miss a payment. This could cause your APR to spike to a rate that’s way higher than what you were paying before, so proceed with caution.

---

Image via iStock.

The post 4 Ways to Know if a Balance Transfer Credit Card is for You appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1wDFvKI

Read More

4 Ways to Know if a Balance Transfer Credit Card is for You

Is the interest rate on your credit card debt sinking you deeper into a financial hole? A 0% APR balance transfer credit card offer can provide a ladder to help climb out of the abyss.

Simply put, these balance transfer offers can help save on interest payments that make it tough to pay down credit card debt quickly. But, like all tools in your financial arsenal, they must be treated with care. Will a balance transfer help or simply kick the can on your credit woes further down the line? Here are some questions you need to ask:

Do you have a good credit score?

Most cards that offer 0% promotions require a FICO credit score of 690 or higher. In fact, the best offers are usually only available to those with a score of over 720. A lower FICO score will greatly limit your options for balance transfer credit card offers. That’s just the way it is.

So know where your credit score stands before you begin.

Does the cost of balance transfer make sense?

Even with a “0%” offer, most balance transfer cards charge a one-time balance transfer fee. Typically, this fee is 3% of the total charges you’re moving onto the card.

In general, if it will take you less than six months to pay off your credit card balance, doing a balance transfer doesn’t make sense. Otherwise, price out the offer carefully against what you’re paying in interest on your current card to see how much you’re really saving. Or, use NerdWallet’s tool to figure out the true cost of your balance transfer. This will help you decide if moving forward with this refinancing option is right for you.

Nerd note: There is one card on the market that waives its balance transfer fee under certain conditions. If you have excellent credit, be sure to check it out.

How long can you take advantage of 0% interest payments?

All good things come to an end. If you get a 0% interest credit card, the first move you should make is to note on your calendar when the promotion ends; it’s often somewhere between six and 15 months.

Let’s be honest: Credit card issuers are betting that the bulk of your debt won’t be repaid before the 0% APR period ends. Prove them wrong. Plan to use the 0% period to double-down on paying off as much of the balance as possible.

Also, read the fine print once the card arrives. Have they given you 0% rates on both the transfer balance and future purchases on the new card? No matter the advertised rate, be vigilant about what the company actually sends you in the mail.

Can you make your payments on time?

Once you make the switch to a 0% card, it’s crucial that you make your payments on time. Many cards have penalties that void the 0% deal the moment you miss a payment. This could cause your APR to spike to a rate that’s way higher than what you were paying before, so proceed with caution.

---

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The post 4 Ways to Know if a Balance Transfer Credit Card is for You appeared first on NerdWallet Credit Card Blog.

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Chase Freedom®: A Killer Credit Card Offer is Ending Tomorrow!

If you only apply for credit cards that offer a generous signup bonus, you’re going to want to act fast. Until Dec. 17, 2015, the Chase Freedom® - $200 Bonus is offering: Get a $200 Bonus after spending $500 on purchases in your first 3 months from account opening.. That means you have until tomorrow to score this card while its signup bonus is double the usual offer.

Unfamiliar with the Chase Freedom® - $200 Bonus and not sure what all the fuss is about? Take a look at the details below – the Nerds will tell you everything you need to know about this great card.

Apply Now

on Chase's

secure website

Why the Chase Freedom® - $200 Bonus credit card offer rocks

In addition to its limited-time signup bonus offer, there’s a lot of other stuff to love about the Chase Freedom® - $200 Bonus. With it, you’ll earn 5% cash back in rotating quarterly bonus categories, up to $1,500 spent per quarter. You’ll also earn unlimited 1% cash back on all of your other spending.

When it comes time to redeem your rewards, you’ll have a lot of options. You can purchase gift cards, get a statement credit or direct deposit into your bank account, or even head over to Amazon.com to do some shopping.

Apply Now

on Chase's

secure website

But if you also have the Chase Sapphire Preferred® Card, there’s actually another way you can cash in on your rewards: Because the Chase Freedom® - $200 Bonus earns Chase Ultimate Rewards points, you can move them to your Chase Sapphire Preferred® Card account and use them for travel. And remember, the Chase Sapphire Preferred® Card allows you to transfer your points to participating frequent traveler programs. This strategy is a great way to make those 5% bonus categories go the distance.

Finally, remember that all these stellar perks come at an annual fee of $0. This makes the Chase Freedom® - $200 Bonus an economical addition to your wallet.

Chase Freedom® - $200 Bonus 5% bonus categories for 2015

Earning 5% cash back in rotating quarterly bonus categories is all well and good if those featured retailers are places you actually shop. Luckily, the Nerds got a sneak peek at the Chase Freedom® - $200 Bonus’s 5% merchants for 2015 – Chase hasn’t released all the details yet, but this will give you a pretty good sense of where you can expect to earn bonus cash back next year:

• Q1 (January-March) – Grocery stores, Starbucks, movie theaters


• Q2 (April-June) – Restaurants (and more)


• Q3 (July-September) – Gas stations (and more)


• Q4 (October-December) – Amazon.com (and more)

Is the Chase Freedom® - $200 Bonus right for you?

The Chase Freedom® - $200 Bonus is one of our favorite cash back cards because so many consumers can benefit from what it has to offer.

If your spending aligns with its 5% categories, or you have the Chase Sapphire Preferred® Card and want to maximize your rewards earning, or you’re simply looking for a high-value, low-cost card, we say go for it. But again, be sure to move fast – that killer signup bonus offer will be gone before you know it!

Image via iStock

The post Chase Freedom®: A Killer Credit Card Offer is Ending Tomorrow! appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

Read More

Chase Freedom®: A Killer Credit Card Offer is Ending Tomorrow!

If you only apply for credit cards that offer a generous signup bonus, you’re going to want to act fast. Until Dec. 17, 2015, the Chase Freedom® - $200 Bonus is offering: Get a $200 Bonus after spending $500 on purchases in your first 3 months from account opening.. That means you have until tomorrow to score this card while its signup bonus is double the usual offer.

Unfamiliar with the Chase Freedom® - $200 Bonus and not sure what all the fuss is about? Take a look at the details below – the Nerds will tell you everything you need to know about this great card.

Apply Now

on Chase's

secure website

Why the Chase Freedom® - $200 Bonus credit card offer rocks

In addition to its limited-time signup bonus offer, there’s a lot of other stuff to love about the Chase Freedom® - $200 Bonus. With it, you’ll earn 5% cash back in rotating quarterly bonus categories, up to $1,500 spent per quarter. You’ll also earn unlimited 1% cash back on all of your other spending.

When it comes time to redeem your rewards, you’ll have a lot of options. You can purchase gift cards, get a statement credit or direct deposit into your bank account, or even head over to Amazon.com to do some shopping.

Apply Now

on Chase's

secure website

But if you also have the Chase Sapphire Preferred® Card, there’s actually another way you can cash in on your rewards: Because the Chase Freedom® - $200 Bonus earns Chase Ultimate Rewards points, you can move them to your Chase Sapphire Preferred® Card account and use them for travel. And remember, the Chase Sapphire Preferred® Card allows you to transfer your points to participating frequent traveler programs. This strategy is a great way to make those 5% bonus categories go the distance.

Finally, remember that all these stellar perks come at an annual fee of $0. This makes the Chase Freedom® - $200 Bonus an economical addition to your wallet.

Chase Freedom® - $200 Bonus 5% bonus categories for 2015

Earning 5% cash back in rotating quarterly bonus categories is all well and good if those featured retailers are places you actually shop. Luckily, the Nerds got a sneak peek at the Chase Freedom® - $200 Bonus’s 5% merchants for 2015 – Chase hasn’t released all the details yet, but this will give you a pretty good sense of where you can expect to earn bonus cash back next year:

• Q1 (January-March) – Grocery stores, Starbucks, movie theaters


• Q2 (April-June) – Restaurants (and more)


• Q3 (July-September) – Gas stations (and more)


• Q4 (October-December) – Amazon.com (and more)

Is the Chase Freedom® - $200 Bonus right for you?

The Chase Freedom® - $200 Bonus is one of our favorite cash back cards because so many consumers can benefit from what it has to offer.

If your spending aligns with its 5% categories, or you have the Chase Sapphire Preferred® Card and want to maximize your rewards earning, or you’re simply looking for a high-value, low-cost card, we say go for it. But again, be sure to move fast – that killer signup bonus offer will be gone before you know it!

Image via iStock

The post Chase Freedom®: A Killer Credit Card Offer is Ending Tomorrow! appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1uW6jBD

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How to Use a Bad Credit Credit Card to Boost Your FICO Score

Have you ever heard the phrase, “Rome wasn’t built in a day?” This adage can certainly be applied to a FICO credit score: If you have poor credit or none at all, you’ll need to start somewhere, and a bad credit credit card can be a great place to begin.

With poor or no credit, you’ll likely have a tough time getting approved for regular credit cards, car loans or a mortgage, since lenders see you as a higher-risk borrower. Signing up for a credit card for people with bad credit, paying it off on time each month and keeping a low balance proves you are a responsible borrower, which can lead to a FICO score boost in no time.

What is a FICO score and how will a credit card for bad credit increase it?

Your FICO score determines your creditworthiness, which affects whether you’ll get approved for a loan and the interest rate you’ll pay on that loan. Scores range from 300 to 850, and the higher your score, the more trustworthy you are in the eyes of the lender.

The best way to improve and maximize your FICO score is to first know exactly what it’s composed of.

Payment history: This is FICO’s most heavily weighted category, making up 35% of your score. Late or missed payments will negatively affect your score, whereas consistent on-time payments will improve it.

Remember that you don’t have to wait until the credit card bill is actually due to make a payment. Instead, it could be wise to make multiple payments throughout the month, which lowers the amount you owe and ensures you never miss a minimum monthly payment.

If you fear you may forget when a payment is due, you can always set up automatic online bill payments, or email or text message reminders.

Credit utilization: The percentage of available credit that has been borrowed makes up 30% of your FICO score.

It’s generally a good idea to keep credit usage on all credit accounts below 20%. So, if you have a bad credit credit card with a $1,000 limit and it’s your only card, try not to hold a balance higher than $200. This shows lenders that you don’t max out your accounts and you can handle debt responsibly.

Length of credit history and new credit: The length of credit history (15%) and new credit (10%) make up a combined 25% of your FICO score.

Opening too many new accounts in a short period of time will negatively affect your score, as it could suggest that you are in financial trouble and need to take on new debt just to keep up with the bills.

For this reason, signing up for one bad credit credit card is likely a better idea than signing up for several. Also, try to keep old credit accounts open instead of closing them, since the length of credit history makes up 10% of your score.

Types of credit used: Your credit mix makes up 10% of your FICO score. Lenders generally want to see that you’ve handled different types of accounts responsibly, so it’s great if you’ve had positive experiences with both revolving credit lines (credit cards) and installment type accounts (home and auto loans), instead of just one type of credit.

If you have poor credit or none at all, a bad credit credit card can support you in your effort to improve up your FICO score — but results will ultimately depend on the borrower’s individual actions, not the plastic.

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How to Use a Bad Credit Credit Card to Boost Your FICO Score

Have you ever heard the phrase, “Rome wasn’t built in a day?” This adage can certainly be applied to a FICO credit score: If you have poor credit or none at all, you’ll need to start somewhere, and a bad credit credit card can be a great place to begin.

With poor or no credit, you’ll likely have a tough time getting approved for regular credit cards, car loans or a mortgage, since lenders see you as a higher-risk borrower. Signing up for a credit card for people with bad credit, paying it off on time each month and keeping a low balance proves you are a responsible borrower, which can lead to a FICO score boost in no time.

What is a FICO score and how will a credit card for bad credit increase it?

Your FICO score determines your creditworthiness, which affects whether you’ll get approved for a loan and the interest rate you’ll pay on that loan. Scores range from 300 to 850, and the higher your score, the more trustworthy you are in the eyes of the lender.

The best way to improve and maximize your FICO score is to first know exactly what it’s composed of.

Payment history: This is FICO’s most heavily weighted category, making up 35% of your score. Late or missed payments will negatively affect your score, whereas consistent on-time payments will improve it.

Remember that you don’t have to wait until the credit card bill is actually due to make a payment. Instead, it could be wise to make multiple payments throughout the month, which lowers the amount you owe and ensures you never miss a minimum monthly payment.

If you fear you may forget when a payment is due, you can always set up automatic online bill payments, or email or text message reminders.

Credit utilization: The percentage of available credit that has been borrowed makes up 30% of your FICO score.

It’s generally a good idea to keep credit usage on all credit accounts below 20%. So, if you have a bad credit credit card with a $1,000 limit and it’s your only card, try not to hold a balance higher than $200. This shows lenders that you don’t max out your accounts and you can handle debt responsibly.

Length of credit history and new credit: The length of credit history (15%) and new credit (10%) make up a combined 25% of your FICO score.

Opening too many new accounts in a short period of time will negatively affect your score, as it could suggest that you are in financial trouble and need to take on new debt just to keep up with the bills.

For this reason, signing up for one bad credit credit card is likely a better idea than signing up for several. Also, try to keep old credit accounts open instead of closing them, since the length of credit history makes up 10% of your score.

Types of credit used: Your credit mix makes up 10% of your FICO score. Lenders generally want to see that you’ve handled different types of accounts responsibly, so it’s great if you’ve had positive experiences with both revolving credit lines (credit cards) and installment type accounts (home and auto loans), instead of just one type of credit.

If you have poor credit or none at all, a bad credit credit card can support you in your effort to improve up your FICO score — but results will ultimately depend on the borrower’s individual actions, not the plastic.

---

Male high jumper image via Shutterstock.

The post How to Use a Bad Credit Credit Card to Boost Your FICO Score appeared first on NerdWallet Credit Card Blog.

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4 Signs You May Need a Credit Card for Bad Credit

It’s hard to miss the credit card offers on television advertising flashy rewards, fancy perks and celebrity endorsements. While these cards do feature great benefits, the hard truth is they are generally only available to those with excellent credit.

Those with bad credit are limited to credit cards for people with poor credit. These may not have bells and whistles you want, and interest rates will be higher, but they do offer the opportunity to build better credit and can serve as a backup in emergencies.

Here are four signs you may need a credit card for bad credit:

1. You don’t have much in savings.

Life always throws emergencies our way. Having an emergency savings fund you can pull from is always the best strategy, but if your savings are low, it’s smart to have a credit card to fall back on rather than having to take out a loan. Just remember that if you can’t pay it off quickly and are forced to carry a balance, you will have to pay interest — and interest fees are high on credit cards for bad credit. So only borrow what you absolutely have to, and pay it back as soon as possible to make this card a true benefit.

2. You can’t qualify for a regular credit card.

If you have tried to apply for a credit card for fair credit or good credit and were rejected, that’s a sign you may need to apply for a bad credit credit card instead. They are geared toward people with low credit scores, so it’s easier to be approved for them. If you aren’t able to qualify for this type of card, you may need to try for a secured credit card instead.

3. You have had debt in collections or bankruptcy.

These types of problems can damage your credit for years to come. If you have had to file for bankruptcy or deal with a collections agency in the past few years, chances are you won’t qualify for a regular credit card. A credit card for bad credit is likely the best option for you until marks from collections or bankruptcy are no longer on your credit report.

4. You need to build better credit.

Whether you have bad credit from some financial blunders, or no credit at all, using a credit card for people with poor credit is the ideal way to start building positive credit history. Your activity is sent to the three credit bureaus that create credit reports, so when you make a smart move like pay a bill on time, it helps boost your credit score. With time, your credit will improve and you may be able to qualify for a credit card with rewards or other perks.

The post 4 Signs You May Need a Credit Card for Bad Credit appeared first on NerdWallet Credit Card Blog.

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4 Signs You May Need a Credit Card for Bad Credit

It’s hard to miss the credit card offers on television advertising flashy rewards, fancy perks and celebrity endorsements. While these cards do feature great benefits, the hard truth is they are generally only available to those with excellent credit.

Those with bad credit are limited to credit cards for people with poor credit. These may not have bells and whistles you want, and interest rates will be higher, but they do offer the opportunity to build better credit and can serve as a backup in emergencies.

Here are four signs you may need a credit card for bad credit:

1. You don’t have much in savings.

Life always throws emergencies our way. Having an emergency savings fund you can pull from is always the best strategy, but if your savings are low, it’s smart to have a credit card to fall back on rather than having to take out a loan. Just remember that if you can’t pay it off quickly and are forced to carry a balance, you will have to pay interest — and interest fees are high on credit cards for bad credit. So only borrow what you absolutely have to, and pay it back as soon as possible to make this card a true benefit.

2. You can’t qualify for a regular credit card.

If you have tried to apply for a credit card for fair credit or good credit and were rejected, that’s a sign you may need to apply for a bad credit credit card instead. They are geared toward people with low credit scores, so it’s easier to be approved for them. If you aren’t able to qualify for this type of card, you may need to try for a secured credit card instead.

3. You have had debt in collections or bankruptcy.

These types of problems can damage your credit for years to come. If you have had to file for bankruptcy or deal with a collections agency in the past few years, chances are you won’t qualify for a regular credit card. A credit card for bad credit is likely the best option for you until marks from collections or bankruptcy are no longer on your credit report.

4. You need to build better credit.

Whether you have bad credit from some financial blunders, or no credit at all, using a credit card for people with poor credit is the ideal way to start building positive credit history. Your activity is sent to the three credit bureaus that create credit reports, so when you make a smart move like pay a bill on time, it helps boost your credit score. With time, your credit will improve and you may be able to qualify for a credit card with rewards or other perks.

The post 4 Signs You May Need a Credit Card for Bad Credit appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1wDaI0C

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