10 Things to Know Before Getting a Credit Card

10ThingstoKnow

If you’re thinking of getting one of the zillions of credit cards out there, make sure you know these 10 nuggets of credit card wisdom before signing up.

A credit card is not a debit card

If someone asked you to explain the difference between a credit card and a debit card, what would you say? We hope you’d tell that someone that using a credit card is like taking out a short-term loan for a purchase. Also, despite appearances, a credit card doesn’t work like a debit card, which takes money directly from your checking account.

You get extra points if you mention that a credit card carries interest, which you can avoid if you pay your credit card bill in full before the end of the billing cycle.

The real reason to get a credit card

People will say you need a credit card to build credit, but “need” is too strong a word. A credit card can help you build credit, and a good credit score can help you save money on loans down the road (mortgages, auto loans, etc.).

Some might argue that cash back rewards are the real reason to get a card, but that’s not nearly as important as maintaining and building your credit score.

The two types of credit cards

Credit cards come in two types: secured and unsecured. Secured means you’ll have to put down a cash deposit. A secured credit card is a good type of credit card for those with low or no credit. The downside is your card limit is likely the same amount as your cash deposit. An unsecured credit card also has a card limit, but instead it’s determined by your credit history and income.

All about that APR

The APR you see thrown around in commercials and ads refers to an annual percentage rate. It’s okay if you don’t remember what APR stands for, but you’ll always want to check the actual percentage of an APR before applying for a credit card. After all, the APR is what you’ll be charged if you don’t pay off your full balance when payment is due, and some APRs can be as high as 30%.

Watch out for nonstandard fees

Some credit cards have nonstandard fees—which, as you may have guessed by the name, are atypical. Good credit cards don’t deal with nonstandard fees, such as an audit fee, conversion fee, quarterly technology fee, and security fee.

Plan on paying more than the minimum payment

If you were to pay only the minimum required payment on your credit bill each month, you just might never pay off your credit card. As a best practice, try to pay off your credit card in full each month—in other words, don’t spend money you don’t have.

Watch out for an annual fee

If you’re not going to use a credit card frequently, you’re likely better off getting a credit card without an annual fee. These fees can cost as much as $100 to $300 per year. However, not all credit cards with annual fees are bad, and there are plenty of cards without them.

Understand credit card benefits

Credit card benefits come with their own terms and conditions. For example, you may be enticed by cash back rewards only to find that said rewards are limited to qualified purchases or change from quarter to quarter. If you don’t understand the ins and outs of a credit card’s benefits, you likely won’t get the most out of your credit card.

A credit card agreement is binding

Signing up for a credit card means you’re entering a legal contract. Make sure you’re comfortable with the terms and conditions set forth by the issuer, such as APR, fees, and credit limits.

Be sure to shop around

There are countless credit cards out there, so do some comparison shopping before you sign up. Don’t let yourself feel pressured to sign up for a store credit card when you’re at checkout. Taking a few minutes to look at what other credit cards are out there can save you some serious dough in the future.

 

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The post 10 Things to Know Before Getting a Credit Card appeared first on Credit.com.

The Target Data Breach Changed Nothing About How We Use Credit & Debit Cards

Remember a couple of years ago when the Target data breach was in the news? Here’s a refresher if you don’t. In December 2013, Target announced that hackers may have accessed 40 million credit and debit accounts used in their stores late that year.

With so many people affected, it would seem logical that consumer behaviors around card usage might have changed. Turns out, that isn’t the case, according to a recent report by Claire Greene and Joanna Stavins of the Federal Reserve Bank of Boston.

Greene and Stavins looked at survey data collected by the Survey of Consumer Payment Choice (SCPC) before the breach and then after consumers were made aware of the hack. In the survey, consumers were asked about the security of their personal information tied to debit cards and, on average, they saw it as 11.3% less safe after the Target breach.

Based on this information, the authors expected to see a decline in debit card usage. However, the authors reported “no statistically significant change in the adoption or shares of payment instrument use of debit cards in the long run.” Meaning, they don’t believe the Target breach announcement caused any long-term affects on how people use their plastic.

What to Do If Your Information Is Stolen

It’s generally a good idea to keep a close eye on your credit card statements for any suspicious activity. (Tip: make sure you’re doing this through a secure Internet connection so you don’t open yourself up to any additional threats.) If you spot fraud, report it to your issuer right away and, if your card gets lost or stolen, it’s in your best interest to call up your issuer and have the card replaced with new account numbers.

If your personal information gets compromised during a data breach (or otherwise), it’s a good idea to check your credit scores for sudden changes, like a sudden score drop or unfamiliar accounts in your name, as these are signs of identity theft. You can see two of your credit scores for free, updated each month, on Credit.com.

[Offer: If you need help fixing your credit, Lexington Law can help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

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The post The Target Data Breach Changed Nothing About How We Use Credit & Debit Cards appeared first on Credit.com.

Lose Your Debit Card? You Can Just Print a New One

If you’ve ever lost your debit card, you know the hassle of getting it replaced: You have to call (or go to the bank if you need a temporary card), pay a small fee for replacing the card, and then wait as much as two weeks before your new card arrives.

PNC Bank is trying to take the hassle and the wait out of that process by printing new chip cards instantly for new checking accounts or to replace lost, stolen or damaged cards.

The “instant card issuance” printers are in about two-thirds of PNC branches currently, according to a prepared announcement issued by the bank, and will be in 85% of branches by the end of the year.

“In an on-demand economy, great customer service equals timely customer service,” Todd Barnhart, retail distribution executive, said in the announcement. “Our customers tell us that the new account opening experience is significantly enhanced when they walk out of a branch with a debit card in hand. By expanding this service, we are able to better serve our customers and help resolve problems within minutes.”

PNC customers needing a new debit card must be present in a printer-equipped branch. Otherwise, a card will be mailed to the customer, which can take up to seven days. A $7.50 fee is charged for all replacement cards. The bank also will perform real-time fraud checks for new account openings, according to the bank’s announcement.

The bank began a pilot for the instant-print cards in 2014 and continued a phased rollout. Barnhart said PNC’s future plans include issuing instant personal, business and affinity credit cards.

PNC Bank is not the only financial institution to offer instant debit card services. Chase issues personalized debit cards to new and existing accountholders in select branches. TD Bank, too, offers instant issue debit cards to new and old customers in-stores. You contact your financial institution to see if they have a similar service available and what fees may be associated with replacing cards in-stores or by mail.

If your debit card is lost or stolen (or your credit card, for that matter), it’s a good idea to contact the issuer immediately to cancel it and avoid any issues arising from possible identity theft. Of course, an identity thief doesn’t need your physical card to fraudulently access financial accounts, which is why it’s a good idea to check your credit scores routinely. An unexpected change in your credit scores could mean an identity thief has gotten a hold of your Social Security number and opened an account in your name, for instance. You can get your credit reports for free each year at AnnualCreditReport.com and see your free credit scores, updated monthly, on Credit.com. You can also learn the steps to take if your identity has been stolen here.

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