Credit Card Debt Management

When it comes to credit cards and fine print, there is usually plenty of room for confusion. It’s been seen in the fact that few cardholders really know what their card’s interest rate is. The majority of cardholders aren’t even aware of the Universal Default Policy, and what it means to their financial health.

Well, chances are good that few cardholders really understand their highly-touted credit card rewards as well. It would take a very savvy cardholder to understand the fine print on these rewards and learn how to play the system. There are often very specific restrictions on these, like spending levels that must be reached before rewards begin to accrue at the advertised level. There might also be expiration dates on the points, or specifications on how the points can be accrued and used. There might also be annual fees, negating any rewards benefits except for really big spenders. Furthermore, rewards payouts may not be automatic, but only available upon request.

Another thing that consumers might not recognize is that rewards programs are changing, and not for the better. Companies are cutting back and becoming much less generous (not that credit card rewards were all that special to begin with), largely because of the current economic times. According to the Associated Press, CardRatings.com data shows that the best cashback rewards card are American Express Blue Cash, Chase Freedom Visa, and Discover More. The best gas cards: Cash PerfectCard MasterCard, Discover Open Road, and Shell Platinum Select MasterCard.

Ultimately, as the Associated Press reports, the final conclusion is that credit card benefits like rewards programs may not outweigh negatives like unpredictable policies that are subject to change at any time and have the power to majorly mess up your FICO score. Namely, the fact that companies fluctuate interest rates and spending limits at will. And, as aforementioned, rewards programs are becoming even less enticing now. It’s something to think about next time you get that uber-tempting credit card offer in the mail. And if you do move forward with choosing a rewards card, choose carefully and consider all the variables.

Did you know there are different types of credit cards? Secured credit cards are quite a bit different from unsecured credit cards. They are also sometimes the only option for those with tarnished credit or no credit at all.

Secured credit cards have an annual fee, whereas such is not always the case with unsecured cards. The biggest difference, however, lies in the fact that secured credit cards are backed up with “collateral” — property that can be confiscated if the loan goes into default. Essentially, a secured credit card is typically issued by a bank, with which a cash deposit must be made as collateral. The credit card is then set up with a limit typically equal to the amount of cash deposited.

In the event that cardholders quit paying their bill, the bank keeps the deposit. Once deposited, the money attached to a secured credit card can usually not be tampered with as long as the credit card is open and active. The money can, however, draw interest, which is a good feature to look for in a secured credit card offer.

Another important feature to look for is whether the card issuer reports to all three credit bureaus. Even though a secured credit card functions differently from an unsecured card, it still impacts your credit report and credit score the same way. Responsible credit card management reaps big rewards, while irresponsible management dings up the credit history. The good news is that secured credit cards can provide a direct path, over time, to easier approval for unsecured credit cards with no annual fee. So if your credit is dinged up from bad choices made in the past, or maybe you’ve just weathered a divorce or bankruptcy, you may be a prime candidate for a secured credit card. And with a little patience and perseverance, you can rebuild your good credit.

The committee of they says there’s no such thing as bad press, and they may just be right, given the fact that MasterCard was picked Thursday to join the S&P 500 and S&P 100 indexes starting July 17. The news comes on the heels of reports that MasterCard will pay a $1.8 billion settlement after American Express accused the company of engaging in unfair competitive practices. And the day that bombshell news broke in late June, MasterCard shares rose while AmEx shares dropped. Go figure.

Seemingly unstoppable, MasterCard shares are still going strong. Apparently, much stronger than General Motors Co., which MasterCard is replacing on the S&P 100 (thus far, no reason given for the GM snub). MasterCard’s sudden elevation to the Big Boys Club is hardly a surprise. It’s stock is like the Google of the financial services sector, hovering around $250-$300 over the past couple months while Visa, American Express and Discover shares stand at only $75, $50 and $14, respectively. And to think that MasterCard’s May 2006 IPO debuted just under $40, amidst widespread skepticism.

So what does all this S&P hype mean for the already-stable MasterCard stock? More than likely, it means really, really good things. According to The Economic Times:

Shares of companies joining the S&P 500 often rise because many portfolio managers try to track the index, and are required to buy shares of companies that enter it.

It also means it’s probably a really, really good time to jump on board before the MasterCard madness peaks, even if you weren’t lucky enough to get in on the ground floor.