Fast Credit Card Application

You get sticker shock every time you fill up your car. Your home’s value, on the other hand, has been falling ever since you signed your closing papers. Your boss threatens to fire you every time you ask for a raise. And you’ve busted your monthly budget steadily for the last two years.

You, like so many other consumers, are struggling through the country’s challenging economic times.

If you happen to own an American Express card, though, you might have the opportunity to boost your savings through the company’s Membership Rewards program.

Maximizing Bonus Points with Membership Rewards

The Membership Rewards program is built into most American Express credit cards. Basically, you’ll one rewards point for every dollar that you charge. There is no limit to the number of points you can earn, and these points have no expiration date.

You can then turn these points into free airfare, hotel stays, car rentals, restaurant gift cards and store gift certificates. In other words, it’s a good way to earn free stuff, and in today’s challenging economy, “free” is more important than ever.

You can earn more points when you log onto MembershipRewards.com to do your shopping. This Web site, ru

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For the novice or aspiring cardholder, credit card applications and offers can be quite confusing, considering all of the seemingly esoteric terminology used by financial institutions. Without the proper understanding of the terminology, cardholders can be persuaded into applying for credit cards that charge unfair fees and interest rates. Before applying for a card, applicants should understand the following important credit card terminology:

Balance

Since credit cards are actually ongoing loans, the term “balance” can be somewhat confusing, as the money within the credit card account does not technically belong to the cardholder. The credit card balance is defined as the total sum of all purchases, cash advances, card fees and finance charges. In basic terms, the balance is the amount of credit that has been used. Higher account balances lead to higher credit utilization rates, which eventually lowers the credit score.

Grace Period

The grace period is the time given to the cardholder in which they can repay their card balance in full before interest is charged. If

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Tags: Card, Credit Card

If you’re really curious about how often your credit report changes and what changes are being made, you might sign up for a credit monitoring service. These services often brag that they aid in identity theft prevention, but that benefit could be overstated since credit monitoring alerts you to changes that have already happened. Take a closer look at what credit monitoring really does and learn whether it will really prevent identity theft. Current credit monitoring subscribers may be surprised at the answer.

Tags: Credit Monitoring, Monitoring

As credit card companies compete heavily to solicit new customers by offering lower interest rates they have to find creative ways to recuperate some of the profits that they lose due to these lower interest charges. There are a plethora of different types of credit card fees that cardholders are subject to.

The following paragraphs outline five of the more common credit card fees which are likely to be encountered.

Late Payment Fees

Late payment penalties account for millions of dollars in charges, and no credit card is immune to them. These fees usually range from $15-$40 per billing cycle and are incurred every time a payment is missed or less than the minimum amount due is paid. These fees can easily be avoided by scheduling automated online bill payments or by contacting the card issuer with at least a one-week notice to arrange a payment extension.

Cash Advance Fees

Some credit cards allow the cardholder to withdraw a cash advance for a fee of 1 to 3% of the total cash value.

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Tags: Card, Credit Card

Today FICO® revealed the results of a new study profiling the “strategic defaulter.”  A strategic default is the process whereby a homeowner walks away from his home despite being able to afford the payments.  The results indicated that the likely strategic defaulter looks very much like a low risk borrower.

Executive Summary

Consumers with higher FICO scores are MORE likely to walk away from their homes despite being able to continue making payments

Normally, you’d expect more of your defaults toe from consumers who fall into lower FICO score ranges.  And, normally you’d be right.  But strategic defaulters are consumers who are more savy and focused on getting out of a bad financial situation.  According to the chart below from the FICO study it appears that ~46% of strategic defaulters score above 660.  It also suggests that strategic defaulters are willing to sacrifice their good/great FICO scores in exchange for getting out of a bad mortgage loan.

Consumers with higher revolving utilization percentages are LESS likely to walk away from their homes

Again, normally you’d expect more of your defaults toe from consumers who have very highly utilized credit cards, thus having a hard time making payments on expensive credit card debt.  Again, normally you’d be right.  In fact, according to the chart below ~40% of strategic defaulters have a utilization percentage below 30%.  Conversely, only~18% have utilization greater than 90%.

Consumers with lower retail balances and more newly opened credit in the past 6 months are MORE likely to walk away from their homes

The FICO results just keep getting more and more bizarre.  Their study showed that consumers who actually have lower retail balances, often THE most expensive kind of debt, characterize the strategic defaulter.  And, they’ve opened more new credit in the recent months.  This makes perfect sense as strategic default is a premeditated act.  Having new credit (opened well in advance of the negative credit reporting caused by strategic default) to ride out the storm isn’t a bad idea.  You won’t be able to get new credit for a few years, or longer, after you’ve walked away from your mortgage. 

Consumers who have been in their homes a shorter period of time are MORE likely to walk away

Finally, an intuitive finding.  Consumers who have lived in their homes for a short period of time likely have little or no skin in the mortgage game.  In fact, they’re more likely to OWE the lender some skin in the form of negative equity (upside down).  You’re also less attached to the neighborhood and surrounding areas.

To review the full FICO study please go here.

John Ulzheimer is the President of Consumer Education at SmartCredit, the credit blogger for Mint, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit, John

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Tags: Defaulter, Defaulter Apparently…mine