How a Secured Credit Card Works

A secured credit card requires you to give the card issuer a cash deposit as collateral in exchange for opening the account. Depending on the card, the initial deposit may be as little as $50 or as much as $500. Typically, your credit line will be the same or a little less than your deposit. Often the credit limit is 50% to 100% of the security deposit, though some card providers will offer credit limits of more than 100% of the security deposit as a promotional incentive. You may be able to increase your limit by giving the credit card company more cash or you could be rewarded with an increase for having a good payment history. An unsecured credit card requires no cash deposit and they generally offer much higher credit limits.

Secured Credit Card Fees

With some exceptions, most credit cards charge members some kind of fee and they tend to be higher for secured credit cards. When you’re comparing secured credit cards, one of the most important things you should pay attention to is the fee structure. Some of the fees you may be charged include an application fee, an annual fee, a monthly service fee, deposit fees, or transaction fees on purchases and late fees. Before you sign up for a particular card, you should ask for a complete fee schedule so you know exactly how much the card will cost. You also need to read the fine print carefully to make sure you’re not being charged for any unnecessary services, such as an insurance plan or a fee for increasing your credit limit.

Understanding Your Rate

Since secured credit cards are targeted at people with either no credit or bad credit, the interest rates tend to be much higher than you would get with an unsecured card. You may not think that having a high interest rate matters if you have a low credit limit, but if you’re carrying a balance from month to month, your purchases become much more expensive.

For example, if you owe $300 on a secured card with an APR of 29.99% and the minimum payment is $15, it’ll take you over two years to pay off the balance and you’ll pay more than $100 in interest in the process. Look for a card that offers you the lowest rate possible and pay extra attention if you’re signing up for a card with an introductory rate. With this type of deal, you get a low rate for a set amount of time, but it can increase significantly when the promo period ends.

Choosing the Right Card

When you’re looking at secured credit cards, it’s important to take in the big picture. The right secured credit cards can offer some of the best savings in terms of interest and fees. They report regularly to the 3 major credit bureaus, and you will be able to monitor your credit with access to your credit score and additional tools.

The Bottom Line

Not all secured credit cards are alike so it’s essential that you take the time to research your options to make sure you’re saving the most money possible. Once you get a secured card, make sure you’re paying on time and staying within your credit limit, which can help boost your credit. Over time, your credit should improve enough to qualify you for an unsecured credit card.

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A Credit Card is a Contract

One of the most important things teens need to know about credit cards is that they create a contract between themselves and the card issuer. When you sign up for a credit card, you’re agreeing to repay the money that you spend, along with any interest, fees or penalties the card issuer may charge. If you fail to hold up your end of the bargain, it could have negative consequences for your credit score, not to mention your card issuer could sue you in order to get you to pay.

Credit Cards Are Tied to Your Credit Score

A credit card is more than just a piece of plastic. Every time you swipe your card to buy something, make a payment or apply for a new credit card, you’re potentially impacting your credit score. A credit score is a three-digit number that tells lenders how responsible you are when it comes to managing your finances. A high credit score generally indicates that you pay your bills on time, you know how to keep your spending in check and you’re not taking out too many credit cards or loans at once. A low score tells lenders that you’re a bigger risk financially, which can make it harder to get approved for new lines of credit or get the best interest rates.

Paying With Credit Can Cost You

Using a credit card is similar to taking out a loan. The card issuer agrees to lend you the money in the form of a line of a credit and you agree to pay the money back. As a condition of this agreement, the card issuer will charge you interest on what you spend. The higher your interest rate, the more money you’ll end up paying for the things you buy, especially if you don’t pay the balance in full each month. For example, if you charge a $100 pair of jeans on a card with an 18% interest rate and just pay the minimum of $15 per month, it’ll take you eight months to pay them off and cost you an extra $20 in interest and finance charges. If you’re not paying your balance in full each month and you’re continuing to add to your balances, the amount of interest that’s accruing can quickly inflate your overall debt.

Credit Cards Are Not a License to Spend

Just because you have a credit card in your wallet, doesn’t mean you should use it for regular shopping sprees. Credit cards are convenient when you’re short on cash or if you run into an emergency but they’re not that great for everyday spending, unless you’re paying your balance in full each month. In fact, using a credit card versus cash to pay can actually lead to overspending, since you’re not feeling the financial pinch right away. While it may be tempting to whip out your credit card to buy the latest gadget or that new pair of shoes, unnecessary spending can hurt your overall financial health.

Not All Credit Cards Are Alike

On the surface, all credit cards look alike but some may be better than others. For example, certain credit cards may charge a high annual fee or carry higher interest rates than others. Other credit cards may offer a rewards system that lets you earn points or cash back on your purchases. When comparing credit cards, it’s important to read the fine print carefully before you sign up. This ensures that you know exactly what the card will cost you, what benefits the card offers and how to make the most of its rewards program.

Final Word

Under the new CARD Act, you have to be at least 21 years old to get a credit card in your name unless someone co-signs for you or you can prove that you have enough income to make the monthly payments. Parents who are thinking of co-signing on a card for their teen should keep in mind that they’ll still be liable for the debt, even if they’re not the one who did the spending. It may be wiser to add your teen to your credit card account, which allows you to monitor your child’s spending. By taking an active role in teaching your teenager about how credit cards work, you’re helping build a solid financial foundation that will benefit them as adults.

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New Member Bonus

New members can start racking up bonus points as soon as they begun using their card. Just spend $3,500 or more with your U.S. Bank FlexPerks^® Business Travel Rewards in the first 4 months and you’ll automatically earn 20,000 bonus FlexPoints. By spending as little as $500 per month you’ll be well on your way to earning free flights, cash back and more.

Earning Additional FlexPoints

Card members can earn even more FlexPoints on every purchase. If you use your card to make charitable donations, you’ll get three points for every dollar you spend. You’ll get two points per dollar on most cell phone purchases, including your monthly bill, accessories and Internet charges, plus double points on the category where you spend this most. This means you’ll always earn the most points possible, whether you use your card for gas, office supplies or travel. For everything else, you’ll still earn one point per dollar. Refer a friend and you’ll get an extra 5,000 points once they make their first purchase with the card. There’s no limit on the number of points you can earn; however, your points expire within five years from the date they’re earned so you’ll need to plan your redemptions accordingly.

Using Your FlexPoint Rewards

U.S. Bank gives card members multiple options for redeeming their FlexPoints. For example, you can convert your points to free flights aboard more than 150 airlines, hotel stays, car rentals and cruises. Redemption for flights begins with as little as 20,000 points and point values are doubled which means you can get the equivalent of a $400 ticket for free. You can use your rewards for other travel expenses beginning at 5,000 points, which is good for a $50 gift certificate. Participating travel partners currently include Hyatt Hotels & Resorts, Marriott Hotels, Ritz-Carlton, Avis, Budget, Hertz, Carnival Cruise Lines and Royal Caribbean International.

In addition to using your FlexPoints for travel, you can also convert them to cash back beginning with as little as 5,000 points. Members also have the option of redeeming points for gift cards and merchandise from participating merchants, including Apple, Amazon.com, Best Buy, GAP, The Home Depot, Sony and Macy’s.

Card Member Benefits

The U.S. Bank FlexPerks Business Travel Rewards Visa offers some added benefits, including a $25 airline allowance with every award travel ticket. The allowance can be used towards your baggage fees, in-flight food or drinks and more. You’ll pay no interest on purchases or balance transfers for the first twelve months and the $55 annual fee is waived for the first year. The fee is also waived for any year when you charge $24,000 or more to the card.

The Bottom Line

If you want a credit card that offers big rewards, flexible redemption options and a low annual fee, the FlexPerks Business Travel Rewards Visa features all of the benefits you’re looking for. With no interest and no annual fee for the first year, you’ll have plenty of time to decide if the card fits your business needs.

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What’s Zombie Debt?

Zombie Debt is a credit card bill or other debt that’s past the statute of limitations. The statute of limitations establishes the guidelines for how long a creditor or collection agency has to sue you for an unpaid debt. When the statute of limitations expires, you technically still owe the debt but you’re no longer subject to legal action. Each state has different guidelines on how long a creditor can sue for specific types of debt.

When a debt collector buys an old debt, their primary goal is usually to pressure you into paying up. Typically, they buy the debt for pennies on the dollar so the more they can get you to pay, the more profit they end up making. Some of the tactics that zombie debt collectors may use include harassing you, threatening you with legal action or attempting to trick you into restarting the statute of limitations. If the statute of limitations hasn’t expired, you can inadvertently restart the clock by acknowledging that you owe the debt, making a payment or agreeing to a payment plan. This gives the debt collector more time to seek a judgment, which can lead to wage garnishment or a bank account levy.

Validating the Debt

If you’re contacted by a debt collector about a credit card account that you either don’t think you owe or you believe is outside the statute of limitations, you should immediately ask them to validate the debt. Under the Fair Debt Collection Practices Act, debt collectors are required to provide you written proof that they have legal standing to collect a debt and that the debt is still within the statute of limitations. They must provide proof within 30 days of receiving your request and during that time, all debt collection actions must cease. During this time, you can do your own research to determine whether the debt belongs to you and whether or not it’s time-barred by the statute of limitations.

If You’re Sued

Even when a debt is time-barred, it may not be enough to prevent a debt collector from taking you to court anyway in the hopes that you won’t appear to defend yourself. When a debtor is sued and doesn’t show up in court, the creditor automatically wins a default judgment. If the debt collector fails to serve you with proper notice of the lawsuit, you may not even know there’s a judgment against you until your wages are garnished or your bank account is frozen. If you’re sued by a debt collector after asking for validation of a zombie debt, it’s vital that you appear in court. You should bring along copies of any written communications you’ve had with the debt collector as well as any evidence you have to support your claim that the debt is time-barred. If you can prove that the debt collector sued you or violated your rights in any way, you may be able to file a counterclaim for damages. Even if you don’t sue, you can potentially prevent further instances of abuse by reporting the debt collector to the Federal Trade Commission.

Final Word

It’s a good idea to review your credit report regularly to make sure that all of your accounts are being reported accurately. If you find inaccurate or erroneous information, you can initiate a dispute with the credit reporting bureau. The best way to deal with zombie debt is to understand what your rights are and how to exercise them effectively.

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How PayPass Works

PayPass is a method of payment that doesn’t involve swiping your credit card or providing your signature. If you have a PayPass MasterCard, you can use it at participating merchants just by tapping it against the card reader when you check out. With PayPass, your card stays with you at all times and you don’t have to worry about getting double-billed for any transaction, even if you accidentally tap it twice. The cards feature encrypted security technology, plus you enjoy the MasterCard $0 liability guarantee for unauthorized purchases, which make using PayPass just as safe as using your credit or debit card.

Where Can I Use PayPass?

PayPass is currently accepted at hundreds of thousands of locations around the world, including convenience stores, stadiums, gas stations, restaurants, movie theaters, pharmacies and selected retailers like the Home Depot and Best Buy. PayPass is even accepted by certain taxicab companies so you’ll never have to worry about getting stranded if you’re short on cash. MasterCard makes it easy to find participating locations wherever you go when you download the free PayPass Locator app for Android. You can also access the PayPass Merchant locator tool online when you visit the MasterCard website.

Getting a PayPass Card

PayPass credit and debit cards are currently offered by a handful of banks, including Bank of America and Citibank as well as some smaller banks and credit unions. To apply for a card with PayPass, you can visit the MasterCard website to view a list of available cards. The application process is the same for any other type of credit card. You’ll need to provide your personal information, including your name, date of birth, address, and Social Security number, as well as information about your income and assets.

Conclusion

If you want to make paying for the things you buy even easier, a PayPass MasterCard is an excellent financial tool to have in your wallet. You’ll enjoy the convenience of Tap & Go payment along with the peace of mind of knowing that your transaction is secure.

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Household Employees

If you have a housekeeper, nanny, personal assistant, health care aide or other individual that works in your home on a daily basis, they should be at the top of your holiday tipping list. Generally, the amount you should tip depends on how long they’ve worked for you, the type of work they do and what kind of relationship you have. If you’ve had the same housekeeper for years or your children are especially close to a nanny or other caregiver, then you may want to tip more. As a general guideline, you should expect to give them one to two weeks pay as a tip/bonus. If the work they do is especially important or you consider them to be more like family than an employee, you may want to consider giving them a month’s wages as a bonus.

Neighborhood Workers

Another group of people you may want to include on your holiday tip list are the ones who perform services in your neighborhood on a regular basis. These may include your mailman, newspaper carrier, sanitation workers, gardeners, or dog walkers. For these types of services, a tip ranging from $10 to $50 per person is generally acceptable, depending on the type of services they perform and how well you know them.

Personal Service Providers

If you regularly visit the salon, spa, or gym, there are a number of people you may want to tip, including your hairdresser, colorist, manicurist or personal trainer. Ideally, you should tip each person an amount that equals the cost of one to two visits, depending on how often you use their services. If you’ve been going to the same salon or gym for years and you’ve developed a close relationship with your trainer or stylist, you can certainly give more. On the other hand, you may only want to give half the amount of a regular visit as a tip if you use their services infrequently.

Restaurant Staff

The generally accepted rule for tipping in restaurants is 15% of the bill, but it can be difficult to know how much to give during the holiday season. If you’ve been going to the same restaurant for years and you know all the staff, you may want to leave a little more. Leaving double your usual tip is certainly acceptable, especially if you’re already a generous tipper. If there’s a particular waiter or bartender who always takes extra special care of you and your family, you may want to give them an extra cash gift or a gift card on top of you regular tip.

Giving Gift Cards

Everybody loves cash, but there are certain situations where a gift card may be more appropriate. For example, you may feel more comfortable giving your child’s teacher or bus driver a gift instead of money. If you don’t want to give cash and you don’t know what to buy, you may consider purchasing a gift card instead. Gift cards in the $20 to $50 range are a great way to say thank you without breaking the bank. Just about every retailer and restaurant offers some type of gift card or gift certificate, which gives you plenty of options to choose from.

Final Word

Ultimately, the most important thing to remember when it comes to holiday tipping is to do what works best for your budget. It really is the thought that counts, whether you can afford to give a little or a lot.

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