New credit card act called CARD (Credit card Accountability, Responsibility and Disclosure) Act had been approved and signed by President Obama in year 2009. The purpose of this credit card act is to protect consumers by avoiding them to swiping the card worry-free. However, as a consumer, you still need to watch some potential credit card traps to may badly hurt you in term of new fees and high interest rates. Moreover, the new act tries to reduce the usage of credit cards; therefore, there will be less generous reward and fewer promotions that you can get when you want to apply for a new credit card.

Here's what you need to know and watch out for when using a credit card:

1. Elimination of grace periods

Most people don't aware the different between the credit card payment due date and the grace period. When we talk about payment due date, it is the date you need to make payment in order to avoid late payment fee. Whereas, the grace period is the time during which you will not be charged for the interest. The new credit card act requires the banks to allow at least 21 days for consumers to pay their bill. However, a grace period is not a compulsory term under the new act. The banks may get rid of this benefit and you need to start paying the interest once you make a purchase with your credit card. In other means, you will pay more interest on credit card usage compares to old day.

2. New kind of fees

As the new act prohibits the over-limit fees, which will cut down banks' profit significantly. In order to continue their business and mark up the lost of revenue, banks may introduce new kind of fees. Such fees may include fees for rewards programs, and you may need to pay a service charge in order to review your balance.

In the effort of promoting credit cards and due to market competition, banks have eliminated annually fees for most of their cards. The annual fees may be re-activated to cover some of their revenue losses in over-limit fees.

In order to avoid and protect yourself against unpleasant surprises, you should always examine your credit card statements to see if there are new fees being introduced for your cards. You may also want to reduce the number of credit cards and limit the cards to one or two for convenient usage.

3. Higher interest rates

Prior to the new credit card act, banks can charge their card holders with higher interest rate if their credit rating decrease or they make late payments. Once the new act being in force, the credit card companies do not have the power to hike the rate due to any reason. This is to protect the consumers from the need to pay higher interest rate when they have financial hardship to repay their credit card balances and avoid their debt to snowball faster with higher interest rate. In other means, the risk has been transferred to the issuers. They have no choice, but introduce the credit card with higher interest rates across the board. Therefore, you will start to see most credit card rates will go back to the level of 80s when rates are somewhere between 19% to 20% range for most consumers.

Summary

The new credit card act is approved with the purpose of protecting the consumers. However, it may create more credit card traps that you need to watch out for.

"I don't need a credit now, why should I care about my credit score?" Many people tend to have this thinking, and they don't care if they are having bad rating until the day they really need to apply for a credit but find their options for good deals are limited. At this moment, they start to realize the important of having good credit rating, but it might be too late as rebuilding it needs time & efforts. That's why you should always maintain it at good level and if you have damaged it, you should take actions to restore it, starts from today, not the day you need it.

The credit score is a number that measures your credit worthiness, it determines whether or not you will be able to get a new credit card, a mortgage to buy your dream house, or in many cases, whether you will be able to rent an apartment or sometimes it becomes a determination factor on whether you can get a job. So, the number has a lot of bearing in your life, you should take your own responsibility to make sure that your score is where it should be. At any time, once you realize you have bad score, you should take immediate action to restore it.

How good is a good credit score? The average American has a number around 680, which is considered averagely good. However, you should try to maintain it at 720 and above, a score that enables you to enjoy better options when you need for a credit. If you found your rating is below 620, your options to get loans are very limited; the situation gets worse if it is below 600. However, don't despair because of the bad rating; instead, you should try to restore it and there are plenty of ways to do it, what is needed is your action to get started to work toward restoring a good credit.

Lenders heavily factor your credit rating into their approval decision for a loan application. The higher score you have, the easier it is for you to get credit with the desirable terms that can save you a significant amount on interest. For example, the monthly payment for a 30-year $200,000 mortgage could vary based on your credit score. If you have a score below average, you may only get a home loan with an interest rate at 10%, so your monthly payment would be $1755; but if you have good rating, you may find a better deal with interest rate at 7.5%, making your monthly payment to be $1398. You may be offered with the best interest rate, as low as 5% by the lenders if they find you have excellent credit score, making your monthly payment to be $1074. Do see a high score can mean big savings? You can save thousands annually by qualifying for low interest rate mortgage and loans. That's why you should restore a good credit.

Summary

The credit score has a lot of bearing in your life. Hence, if you have made mistakes that damage your credit score, you should always take immediate action to restore it.

You have seen a lot of credit card promotions offering you with very attractive low interest rate which is quite tempting. Unless you have read through the fine print before you sign up the offers, you could be hit by hidden fees or unexpected interest rate increases after the promotion period. Hence, there are a few thing to look out when you apply a credit card and watch out for potential hidden fees.

1. Teaser Rates

One of the major costs that surprises the card holders come in the form of teaser rates. Most people are accepting the credit card offers due to the attractive low or zero interest rate and they did not read the fine print when signing the credit card agreement. It comes to their surprise when they found the good deal in the form of low or zero interest never last. Typically, you will only enjoy the teaser rate for a few month or up to a year, then the interest rate will go back to the standard rate.

So, before you accept the offer of any credit card, make sure you have read the fine print, and understand how long will be the teaser rate period and what the standard interest rate will be. Keep in mind that credit card businesses are very competitive and the credit card companies are trying their best to attract customers with very attractive low interest rate and keep the standard rate only printed in the agreement; so, you need to read through the full term to find out.

2. Late Charges and Rate Increases

It is very important to make your monthly credit card payment on time, else you will need to pay the late charges which may cost as much as $39 per miss or late payment. Other than the late charges, your current interest rate may skyrocket to over 30%, meaning that you need to pay more interest for the future credit card balances. Other than that, the late payment will hurt your credit score and make future credit harder to obtain and cost more.

3. Balance Transfer Fees

One of the services used by credit card companies to earn more money from their consumers is by offering balance transfer service with very low or 0% interest rate. If you are not paying your credit card in full each month, the balances do carry interest that will keep snowballing every month. It will be good to be able to transfer the balances to a card with low or zero interest rate so that you can save money. However, before you decide to do balance transfer, you need to watch out for potential hidden costs and other fees. Such fees may involve an upfront processing fee ( may cost up to 3% of the balance you transfer) and the interest rate after the offer period (the low or 0% rate will normally end in a few months), it may be higher than your current rate.

The bottom line is credit card promotions that offer you low or zero interest rate, normally come with terms and conditions. You should always understand the details including the potential hidden costs before you accept any of the offers.

Good credit score is important to secure the best deal when you apply for credit. If you have damaged it due to any reason, it is important for you to rebuild it for future uses. There are a few ways to rebuild your bad credit, one of them is using secured credit card to create a clean history and regain a good score.

What is a secured credit card?

When you have bad credit, most probably you will not be approved with a regular credit card. However, you can go for a secured credit card, the one that requires the cardholder to deposit a certain amount to secure a credit limit. Normally, the limit may up to the deposit amount, but some lenders will limit it to as low as 50% of the amount you deposited. The creditors will use the deposit as security in case you default the payment. For example, you have deposited $1,000 to secured the card and your approved credit limit is 50% of the amount deposited, then you can spend up to $500 using this card.

Unlike the regular credit cards which may have zero fee, secured cards are usually have various fees which includes application & processing fees and annual fees. So, when you search for a secured credit card to rebuild your bad credit, beware of cards with high fees because they can greatly reduce your credit limit because the fees normally are deducted directly from your deposit amount which will reduce the deposit amount and leads to a lower allowable spending limit.

Take advantages of secured credit card

If you have damaged your credit, one way to rebuild it is through the demonstration of your improved payment habits. However, you can't show that you are able to make timely payments if you are not approved with a card. Hence, your first to rebuild your bad credit is getting a new card and secured credit is a way to go since you may hardly get approved for a regular credit card.

Since your purpose of getting a secured credit card is to get your payment activities to be reported in your credit report. Hence, you should always make sure the creditor reports to all three major credit bureaus before you apply for the card. If not, you won't be able to take advantage of the card to re-establishing your credit.

After you have been approved with a secured credit card, use the card the build a positive credit history by using it to make small purchases which you afford to pay in full when the monthly statement arrive. Make sure you pay it on time and in full so that your good payment habits can be recorded into your credit history.

After you have used the secured credit card for some times, say about 1 to 2 years and make timely payment all the time, you may want to try to apply for unsecured credit card. If your still being rejected, don't repeatedly apply for it because this will make you look desperate for credit. Instead, continue to use the secured credit card to make small purchases and make timely payment for another six months before applying again. Keep repeating the process until you are being approved with unsecured credit.

Summary

It is important to have good credit score to secure the best deals when you need it. If you have damaged it, it is important to rebuild it again and you can take advantage of secured credit card to rebuild it.