Found 6 posts tagged as "Credit Cards"
 Most of us are guilty of a few financial bad habits. There's neglecting the family budget you've started, not tracking your spending or expenses, and ignoring your Tax-Free Savings Account. These are common errors that can easily be fixed with a little attention, and making these mistakes shouldn't harm your credit score.
But there are some costly bad habits you may not be aware of that can negatively impact your credit score -- a three-digit number that lenders and insurers use to gauge your credit behaviour to determine if you're a good candidate for a mortgage or other credit. Read the 5 Minute Guide to Your Credit Report and Credit Score to find our more about your score.
If you're looking to buy a home, purchase a vehicle, or qualify for a loan then it pays to avoid these five bad habits. 1. Carrying a big balance.
Are you close to your credit card limit? Spending up to the max may seem like an OK idea -- you were given this much credit after all -- but the closer you are to your limit the more likely it is that credit reporting agencies will see you as a risk of going over the top. If the total amount you owe on all your credit cards and loans is over 80% of your total available credit, then your credit score could take a hit. To avoid this drop, try to stay well below half of your available credit limit.
 There was something strange about the $597 in gasoline charges put on my credit card while visiting friends in Vancouver, B.C. First of all, I didn't own a car. And second, I never lost sight of my credit card.
According to an RCMP report, counterfeiting represents 48% of all credit card fraud involving Canadian issued cards, with charges adding up to $1,241 per account. Stolen or lost cards represent 12% of card losses with $700 in fraudulent charges per account.
Since my card was still in my wallet, I was most likely a victim of a credit card counterfeiting scheme called skimming -- a practice where the magnetic strip on the back of a credit card is copied by a device piggy-backed onto a tampered terminal. Retailers don't often realize their checkout terminals have been altered. The skimmed data is then used by criminals to manufacture phony cards. If your credit card has a PIN, be sure to shield the keypad before entering that data and follow these 5 Ways to protect your PIN -- criminals often need both your PIN and the magnetic strip information to commit fraud.
When I received my bill and noticed the unauthorized charges, I quickly checked with the Financial Consumer Agency of Canada (FCAC) to see how to minimize my losses and protect my credit history. Here are five steps to take if you suspect your credit card has been lost, stolen, or scammed.
If you're in the market for a mortgage, a car loan, or looking to rent an apartment, it may be time to check your credit score.
A credit score is an ever changing three-digit number between 300 and 900. The higher your number, the more likely you are to be approved for a loan or to negotiate a preferred interest rate. If your credit score is low, you may pay higher rates or be denied credit based on the lender's criteria.
Your credit score is an important piece of financial information. It's used by lenders, insurers, and landlords to gauge your credit behaviour and determine if you're a good candidate for credit. If you've lost out on an apartment or been denied a loan recently, it may be your credit score that's holding you back.
But don't worry if your score is low, there are ways to improve it. Since your credit score is recalculated continuously to reflect your recent bill payments and debt levels, your score from a month ago is probably not the same score today. Here are seven ways to raise your credit score:
1. Check your credit score at BOTH credit reporting agencies.
Your credit score can vary between Canada's two major credit reporting agencies, Equifax and TransUnion. Each agency uses different credit data as well as a slightly different credit scoring model to tally your number. If you're being denied credit, it may be that one agency is reporting differently. Checking your credit report and score at both agencies can also help you detect any fraudulent activity or possible instances of identity theft.
2. Report and correct any inaccuracies.
Don't let your credit score suffer due to inaccurate information on your file. Be proactive and protect yourself by reviewing your credit files. If you find an inaccuracy, contact the creditor or the credit reporting agency to correct it immediately.
3. Pay all your bills on time.
Lenders look for patterns and love to see a solid history of paying every bill on time. Any late credit card payments, collections, or bankruptcies can significantly lower your credit score -- so be punctual with each bill payment to raise your score.
4. Watch your debt.
Don't run your credit balances close to your limit! Staying below half your available credit limit can help to improve your score sooner. For example, if you have a credit card with a $5,000 limit, try to keep the balance owed below $2,500.
5. Avoid applying for credit.
When you apply for credit, a "hard query" may be made to your report by the lender to check your creditworthiness. Too many "hard queries" in a short period of time can lower your score, so stick to applying for credit only when you need it. Checking your own score won't lower your score since this is a "soft query". Applying for a lot of credit may be interpreted as a sign of financial difficulty, which can impact your score as well.
6. Give yourself some time.
Time can improve your credit score, especially if you can establish a long history of paying bills on time and being responsible with credit. Negative factors such as bankruptcies, collections, or foreclosures drop off your report after a number of years, depending on your home province or territory.
7. Don't close old accounts.
It may seem counterintuitive to us, but unused credit is a good thing in the eyes of a credit reporting agency and lowering the amount of money you can borrow relative to your debt can impact your score.
Your Turn: Got any tips on how to raise a low credit score?
Do you know your score? When you're looking for a loan do you know how well you'll score with lenders before setting foot in a bank?
If you're like many Canadians, chances are you've never requested a credit report or seen your credit score. In a recent survey, the Financial Consumer Agency of Canada found that only 15 percent of Canadians have requested a credit report, while only 24 percent know their credit rating. Startling numbers when you consider the vital importance of this information to your financial health. Here's a quick guide to your credit report and credit score.
What is a Credit Report?
A credit report is a "snapshot" or profile of your credit history. It shows how often you pay your financial obligations, if you miss credit card payments, or if you've gone over your credit limit. Your credit report contains these details about you:
- Personal: Your name, current and previous address(es), Social Insurance Number (SIN), current and past employer(s), date of birth.
- Credit: Any credit you have -- such as a credit card, line of credit, a loan, or a mortgage.
- Banking: Any accounts you have, history of non-sufficient funds (NSF).
- And more: Any bankruptcies, collection agency interactions, or credit report inquiries made by yourself or a lender.
A credit report is created when you first borrow money or apply for any form of credit. Over time, your banks, credit unions, and retailers send updates to credit reporting agencies about your payment habits. This information is documented in your credit report and can be made available to lenders, landlords, and employers when you're applying for credit, housing, or a job.
What is a Credit Score?
Your credit score is a number between 300 and 900. Higher numbers show you're very credit worthy while lower numbers indicate a credit risk to lenders. Most Canadians don't know their credit scores, but finding out this information can help you significantly. If you have a high score, you can use it to negotiate lower interest rates on loans. On the other hand, finding out you have a low score gives you the opportunity to improve it before dealing with lenders.
Check out this handy Loan Calculator so see how higher interest rates can cost you! So what's a good credit score? The majority of Canadians score between 700 and 850 which is considered to be a very good credit risk.
Checking Your Credit Report and Credit Score
It's a good idea to request a copy of your credit report once a year to verify the correctness of your personal and financial information. Checking your credit report can also help protect you against identify fraud since you'll see any unusual credit activity on your report.
In Canada there are two major credit reporting agencies, they are: Equifax (www.equifax.ca) and TransUnion (www.transunion.ca). Both agencies will mail you your credit report for free, or you can request to see it online for a fee. Obtaining your credit score from either agency costs around $25 and must be done online. Doing this also gives you access to your credit report.
Your Turn: Have you ever checked your credit report or found out your credit score? Were you surprised?
Does paying off your credit card ever feel like a losing battle? It's no wonder when you consider all the sneaky tricks, hidden fees, and inventive ways credit card companies ding your hard-earned dollars when you purchase with plastic.
Sure, the new credit card rules may help protect Canadian consumers against some gouging practices, but these five tricks are probably here to stay.
1. Paying only the Minimum
Credit card companies love to highlight the Minimum Payment Due on your monthly bills. It's a trick they use to stretch out your payments for years, costing you hundreds and even thousands of dollars in interest. Under the new rules coming in January, lenders must show you how long it will take to pay off your full balance with minimum payments. But why wait?
Check out this Credit Card Calculator to get a head start today and see the real cost of paying only the minimum. Results may shock you.
2. Low Introductory and "Teaser" Rates
Credit card companies like to offer introductory low interest rates on newly issued cards, or on balance transfers to your existing card. If you tend to carry a balance, this kind of offer may save you money. But if you're not careful, these low "teaser rates" may come with unexpected surprises, says the Financial Consumer Agency of Canada:
- You can lose the interest-free period on new purchases: Skip paying off the whole balance and you'll end up paying the credit card's regular, higher rate.
- Your payments will be applied to the lower-interest-rate balance first: Most issuers apply your payments to balance transfers and cash advances before they apply them to purchases.
Before applying for an introductory offer, make sure you understand all terms and conditions. Ask the issuer what types of transactions the introductory rate applies to, when the introductory period ends, and how your payments will be applied.
3. Credit Cards on Campus
If you're a student heading off to campus, then be aware that credit card companies will have a welcoming booth waiting for your arrival. These companies like to offer free swag -- like a Frisbee, T-shirt, or even a sandwich -- in exchange for your signature on a shiny new credit card application. Don't fall for this trick that could trap you into years of debt. If you need a credit card, plan ahead by shopping for better rates, and get a lesson in paying off the balance from your folks. If you need a Frisbee, then just bring one with you.
4. Paying an Annual Fee
If you're paying an annual fee for the privilege of charging in plastic, then maybe it's time to reconsider your credit card. Many gold and platinum credit cards charge a sizable annual fee billed directly to your statement, money that could otherwise be used to pay down debt or saved for something fun. Since there are several credit cards with no annual fees on the market, pass on the prestige cards by making the switch to save some cash.
5. Staying loyal to "Loyalty Programs"
The cost of a "free" reward ticket may be costing you a small fortune in fees and a higher interest rate. Do yourself a favour by doing the math -- if the fees paid for your card add up to more than the free reward, then find yourself another card with more attainable perks. It makes little sense to stay loyal to a credit card program that just doesn't fly for you.
The FCAC has a long list of Service Fees on Credit Card Transactions to help you navigate the expense of paying with plastic.
Your Turn: Is there a credit card trick that has cost you?
Paying off your credit card bill just got a little bit easier. Maybe.
On January 1, 2010 a series of new rules will take effect that force banks to clarify payment details on your credit card statement and provide a standard grace period to pay off your plastic.
Under these rules, credit card companies must also give you advance notice of interest rate increases, stop credit limit increases without your consent, and limit debt collection practices.
But you'll have to wait until next September before the biggest change kicks in, when banks must give you a mandatory minimum 21-day interest-free grace period on all new credit card purchases when the outstanding balance is paid in full.
Interest rates and fees still high
Critics of the credit card regulations say the changes do little to help consumers.
"Skyrocketing high interest rates and the growing number of superfluous fees are the biggest hindrances for consumers," said New Democrat MP and consumer protection critic Glenn Thibeault in a statement. "If the government wants to protect Canadian credit card users, it must go all the way and implement substantial regulations that would put a cap on interest rates and eliminate many of the excessive fees that consumers are being charged."
Thibeault proposes that capping credit card rates at five per cent above prime would help "Canadians who are stuck paying interest rates as high as 25%" and would provide better protection from gouging, giving real relief.
Your new statement
Expect your credit card statement to look different in the new year when lenders must add a summary box that describes all fees and shows you how long it would take to fully repay the balance if you only make a minimum payment every month.
For example, under the new rules a summary box may show that a $5,000 credit card balance at an 18% interest rate would take 11 years and two months to pay off if you only make minimum payments. The total interest paid is about $2,873 and the total tab is $7,873.
But you don't have to wait for these new changes to see how interest rates and minimum payments bust your budget. Check out this Credit Card Calculator to get the facts today and see how many years it will take to payoff your balance. Results may shock you.
For more information on the changes coming to your credit card, see the regulations in the Canada Gazette.
Your thoughts
Do you think the new credit card rules go far enough? What would you like to see done differently by lenders?
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