Digital Currenceny-Will Catch On In The United States

Wednesday, December 19th, 2012

Many countries all over the world have adopted a new way to pay for goods or services and it is called, digital currency. So far the idea has not caught on in the US like it has in some countries like China and Belgium but I think it will become more and more popular in years to come.

When we talk about digital currency we refer to the cards that look like credit cards and can be used like credit cards but are really reloadable debit cards that can be used anywhere and for any purchase.

Years ago, one of them was called Green Dot, I believe, and Visa and Mastercard have a reloadable card on the market. There may be more out there but so far you just do not hear of them.

What you do see at many places are all the pre-paid cards for different establishments like restaurants and retail stores. You can get these cards in different amounts like, $25, $50 and $100 depending on what you want to pay. These are usually given as gifts for the holidays and other special occasions.

There have been many pilot programs performed throughout the world to see how consumers would respond to these “smart cards” and although some bugs may need to be worked out, consumer response was favorable.

Some companies actually did not prepare for how popular their cards would be and were caught off guard because they could not keep up with the demand for them.

Personally, I think this type of payment system would be a great idea here in the US. You fund the card with your own money and there is no worry about having to use credit.

Imagine though, what this would do to the credit card industry. If everyone started using this type of card there would be no need to use credit at all. Everyone would be paying for what they want and need with “real” money.

This could be the reason that this type of system has not been embraced as yet in the US. The credit card companies would be devastated and possibly ground into submission. This is all speculation but it could happen.

How many things can you think of that this type of payment system would work for? How about transportation? Taxis, buses, train fares. No more digging around in your pocket for that crumpled up cash that is way too easy to lose.

What else? Vending machines, gas stations, anywhere you can use a debit or credit card? Sure, why not.

People like using their plastic to make purchases. The best thing about these cards is that, if you can reload them, they have a finite amount that can be used so you cannot overspend and get into the same trouble as those who have overused their credit cards.

Digital currency is the wave of the future and whether or not it completely makes using cold, hard cash, or even credit, obsolete remains to be seen.

Credit Score Agencies- The Three That Will Make Or Break

Thursday, November 15th, 2012

Credit Score Agencies- The Three That Will Make Or Break You

In the United States, there are three major credit score agencies, or credit reporting agencies; they are TransUnion, Equifax, and Experian. The three credit score agencies are responsible for gathering and providing information on individual consumers. Banks and other financial institutions, as well as landlords, utility companies, and even insurance agents, have come to rely heavily on the information that credit score agencies provide as a means to determine the creditworthiness of individuals. If you intend to ever purchase with credit, the credit score agencies are likely to have a direct influence on your lenders decision about whether or not to extend you credit and how much it will cost you to borrow money, i.e., what your interest rate will be.

Since the credit score agencies have a direct bearing on your financial life, it is important to make sure that you are careful to avoid behavior that will negatively affect your credit history, and it is equally important that you check your credit report periodically to ensure that the information is timely and accurate.

What types of transactions and credit information decreases your score? Having too much debt. The credit score agencies look at your income and how much debt you have; this is called your debt-to-income ratio, and if it is too much, your credit score will be lowered. Generally speaking, the credit score agencies and lenders like your total debt-to income to be no more than about thirty-six to thirty-eight percent. Even if you have been able to keep up with your payments and have made your payments on time, it is still considered important that sixty-two to sixty-four percent of your income is not involved in paying off loans.

What else decreases your credit score? Having late payments. If you have late payments reported to the credit score agencies, the natural conclusion is that you have difficulty meeting our monthly obligations. If that is the case, it just makes sense that lenders should be cautious about lending your more money.

What other information do the credit score agencies consider bad? Having a lot of account activity over a short period of time. If a lot of different companies are accessing your credit score at around the same time, it indicates that you are shopping around for credit and that you may be taking on too much debt. It is a red flag and can lower your credit rating. However, accessing your own credit report has no effect whatsoever on your credit score, so do not worry about that.

Do all three credit score agencies give you the same score? Not necessarily. Lenders realize this, so they generally use the average of all three scores. They may only use one agency, also, but that is usually not in your best interest, because what happens if they just happen to use the one that has incorrect data about you? Ever heard of Murphys Law? Usually, the reason for the different score is that not all three credit score agencies have the same data. Not every creditor reports everything to each agency. Check your report regularly and correct errors in a timely fashion; keeping a good credit rating in a harsh economy is tough enough without having mistakes in your file.

Good And Bad Of A No Balance Transfer Fee Credit

Friday, March 30th, 2012

Good And Bad Of A No Balance Transfer Fee Credit Card

Credit card debt is out of control, and there are statistics to back that up. Getting out of debt is a goal that is shared by many people. There are several ways to get rid of debt, one of which is debt consolidation. This can be done by going through a debt consolidation company, getting a consumer loan or transferring balances to a single card. Not all offers are created the same. So what about a no balance transfer fee credit card?

Believe it or not, quite a few credit cards will charge you to transfer balances from other cards. Even if they are offering a very attractive interest rate, they may still add on fees. For example, they could charge $50 just to make the transfer, then a certain percentage of the total (this isn’t the same as the interest rate though, it just adds to your balance). Regardless of the additional fees they are charging, it still may be a better deal than what you are currently getting.

Generally speaking, a card that doesn’t charge balance transfer fees is better than one that does. However, credit card companies are very good at manipulating the numbers to make them look attractive to consumers, while earning more profits from hidden fees and the small print. But, all other things being equal, it makes sense that paying nothing to transfer money to a new card is a better than having to pay for the privilege.

The only way to know for sure whether the no balance transfer fee credit card is the better deal than one that charges fees is to read the terms of the offer. Once you understand how the fees and interest rates compare, then you can start making calculations to see which one is the better deal in the long run.

Another trick credit card companies use on no transfer fee offers is to have the lowest rate apply to only a portion of the transfer. A fairly typical offer is 0% interest for the first 6 months, but that only applies to the first $3,000. Anything above and beyond that amount will then fall under different terms.

You should also know that you can usually keep transferring balances (remember to check the terms of your agreement). So, as soon as the attractive introductory rate runs out, you can find another card that offers a similar rate and transfer your balance to that card.

There is one more thing to keep in mind when getting a no balance transfer fee credit card. What is it? Don’t rack up more charges on your cards that now have a zero balance. It can be really tempting to do this because you will be spending less each month, and you will now have credit cards that have no balance on them. Whatever it takes, avoid that temptation! Do it right, and your debt will be back under control in no time.