Archive for January, 2010

1. What are the breakdown in percent? Let say I bought $100 using my credit card.
2. Also,why do some small store require a minimum amount of purchase, otherwise a minimum fee is charged, is the minimum fee charged ended up to the credit card company?

This fee is called "interchange", and it was meant to be a fee to the merchant in return for the convenience of customers to pay (i.e. sales will theoretically go up if you make it easier for customers to spend their money - imagine how much less consumers would spend if they had to predict how much cash they needed every time they went to the grocery store or the mall).

The average interchange fee is 3%, but it varies based on the bank (the issuer of your card, i.e. Chase, Capital One, Citi, etc) and the brand (i.e Visa, Mastercard). Quick note: two major institutions that are both bank and brand are American Express and Discover.

The 3% in this example, would be split between the bank, the brand, and the company that makes the machines that allow the transaction to go through. The bank tends to get the largest percentage, since they are taking on the risk (say, 1.5%). The brand gets another 1% because they opened the door for the merchant to accept their form of payment. The transaction machine company then gets the remaining .5%. Another quick note - the 1.5% that the bank takes as its fee is the source of any rewards the cardholder may receive, which is why most rewards amount to approximately 1%. If the bank takes a higher fee, they can pay a higher reward level.

The 3% may vary - and it is up to the contract between the brand and the merchant as to whether or not merchants are allowed to charge a fee to customers using credit - it is not necessarily illegal. This is just another way that the merchant passes the cost of doing business on to the customer (which is exactly what all merchants do - the price of a purchase is directly related to what it costs the merchant to do business - this is not unethical).

Some merchants may require a minimum purchase because sometimes instead of a % interchange, there is a flat (say $0.50) fee every time a card is swiped. In this instance it is advantageous to the merchant to only accept purchases that keep the interchange fee below a certain % of the total - this allows them to maintain their profit margin.

This is pretty complex stuff, and can vary a lot, but these are the general guidelines.

I am 19 and i just got approved for my first credit card about 5 months ago. I use my card alot and always pay it off in full. I was just wondering how good my credit needs to be, and how long it takes to get good enough credit, to get an airmiles card?

Good enough that you can buy airline tickets and pay your bills on time every month.

I have an unsecured $250 limit card that I got to re-establish my credit after my discharge. Problem is these cards are full of fees and monthly dues but they do report to all 3 bureaus which is good. Am I going to be on the same situation no matter who gives me a credit card as far as fees and high interests? I wonder if a secured credit card would help me better? Any suggestions?

Going with such cards is a necessary evil, I’m afraid. Oftentimes, these types of cards are the only ones who will extend credit to those who have recently filed for bankruptcy. You can always check bankrate.com to shop around for cards who might have an annual fee (instead of monthly!) and lower interest rates.
Secured credit cards can be just as taxing on your money, so shop around. Make sure you pay on time 100% of the time - that will help your scores bounce back. Do this for at least 24 months.
Also, watch your balances. Don’t borrow anywhere near your total available limit. Only borrow 30% or less than your total line of credit.
I would definitely start off with a credit card first. Try to avoid a car loan - wait at least until you have your 24 months of a good track record behind you. You will see a better interest rate that way.

I’m going round Europe from May to July this year with a friend and we were wondering what would be the better way to finance ourselves as we travel round, a credit card or a debit card?

Also, what would be the best credit / debit card to get when we do so?

Thanks.

Both work just fine. I take both when I go. However, I use a visa prepaid travel card. I get that from my credit union. I would be willing to bet most banks have them now instead of Travelers Checks. Hope you enjoy your trip. Have a nice day!

My credit history is a little sketchy with a few bad months of late credit card payments. I am afraid my potential having bad credit will keep myself and roommates from renting.

If I have bad recent credit history but my 3 roommates have good credit, will I ruin our chances?

Your credit shouldn’t prevent everyone from getting the apartment because there are a lot of people with less than ideal credit that can rent. However, if there is a problem, you could always have their names on the apartment, and you just pay your portion to them every month.

Leasing offices check a variety of factors, including employment and income, having a lower credit score shouldn’t prevent you from renting.

I got a letter from a credit card company saying that they have reduced my credit limit without any previous warning. Is there a limit to how often can they do this? Can they do it how ever many times they wish? For example, once every six months/year?

Also, Is there any way to see it coming?
The letter is not the warning because when i get the letter, the limit change is already in effect.

They can increase or decrease your credit limit at any time and for any reason….as often as they wish.

I have been reviewing different websites for help with my credit card debt. Because of religious beliefs I am hoping to find someone that can offer Christian debt consolidation. Does anyone know who are the best Christan debt consolidators?

I have been a reporter and author on the debt industry for over 4 years. I have reviewed several companies in regards to Christian debt consolidation as several of my readers have asked this exact question. The main thing to look for is a company that offers several options, a free consultation, and has an excellent BBB rating. I have tried over 35 different services and this one has been the best above all others:

http://www.ChristianDebtConsolidation.com

You will notice that it has a legitimate website URL and is not being used for marketing purposes like the other answers submitted to this question.