How To Prevent Merchants from Blocking Money On Your Credit Card

You can follow the following tips to stop hotels, car rentals and restaurants from blocking your credit card limit in advance.

  • When you check into a hotel or rent a car or if a restaurant or any other merchant asks for your credit card in advance, ask if an amount is being blocked, how the amount is determined and how long the block is meant to remain in place.
  • Try and pay for the hotel bill or the car rental bill with the same credit or debit card that you used at the beginning of transaction. This usually helps in clearing the prior block faster.
  • If you are going to pay them with a different method such as cash, check, remind the person processing of payment to notify the credit card company to remove the block immediately.
  • Speak to your bank or credit card company and find out how long do they maintain a block on your credit limit and from what type of merchants.
  • If you travel frequently or face this kind of a situation often, you may consider getting an overdraft line of credit from them. Inquire about a plan that automatically covers the overdraft. Although you are likely to pay some interest on the amount that you would draw, this amount will not be much if you pay it off quickly. Having an over draft facility is better than being penalized by additional charges for overdrawing on your debit card or going beyond your credit card limit. Get the details from your bank how the line of credit works and how much it costs.
  • Keeping the point of credit card blocking in mind is especially useful when shopping around for new credit or debit card. When comparing various credit card offers, ask the credit card company how they handle blocks. Do they permit it, for how long and from what type of merchants. If you find that this point is indeed important to your credit card usage, you may want to consider a credit card that uses shorter blocks for a less period of time.

What Is Credit Card and Debit Card Limit Blocking

How do hotels and car rentals block your credit card limit in advance.

The most common examples of credit and debit card blocking happen when you either check in at the hotel or rent a car. When you use a credit or debit card to check into a hotel or rent an automobile the person at the counter usually contacts the credit card company to which your credit card belongs and blocks a certain amount on it. In other words, a hold is placed on a certain amount of money. The amount of money that is blocked depends upon the kind of expenditure that you intend to make. For example, when you check into a hotel, the amount of money that is blocked or held on your credit card will depend upon your intended duration of stay. Similarly, for a car rental, the actual rent plus anticipated charges such as incidentals like food, gasoline can add to the blocked amount.

You should understand here that about amount is not exactly charged to your credit card. It is simply withheld from your overall credit limit. This means that if you have a credit card with a credit limit of $3000 and $1000 are blocked when you check into a hotel, your active credit limit from then on will only be $2000. For this reason, blocking a credit card can often surprise people when their credit cards are denied due to insufficient funds in the next transaction. People do not understand that their credit card limit or the balance in their bank account has been blocked for a certain amount previously.

When you finally pay the bill with the same credit card for your hotel bill or for the car rental, the final charge on your credit card or your debit card will replace the block in a day or two. However, if you pay the bill using a different credit card or using another method such as cash or travelers checks, your credit card company may take much longer to remove the block. It is not uncommon for funds to be blocked for up to 15 days after you have made the final payment. This happens because the credit card company does not get notified of the final payment and is not aware that you have paid the final build using other means.

Why credit and debit card blocking can be a problem

A block is put on the credit card in order to ensure that you have enough credits to match remaining on your card to meet the final bill. It is a way that the merchant uses to ensure that you will be able to meet the final expense by estimating the expense beforehand and blocking it. Otherwise, the hotel or rental agency might find that your credit is not sufficient to cover the bill leaving the merchant unpaid. Credit and debit card blocking can also be used sometimes for restaurants for anticipated sizable bills for large groups and dinner parties. Once again this is done to ensure that enough account money or credit will be available to to complete the payment at the end.

If you are not close to your credit limit, the amount being blocked but probably not cause a problem. However, if you have already utilized much of the credit limit on your card, you might have your card declined which can be embarrassing and inconvenient. Blocking off a certain amount can also lead to a shortage of available funds for an emergency purchase or need. The debit cards of course depend upon the balance in your bank account and a block on the debit card will result in the funds in your bank account being held. Blocking in this case could lead to charges for insufficient funds while the block remains in place.

 

What Are Guaranteed Credit Cards?

Credit cards have become an important and even preferred means payment with major businesses, retailers and service providers. They have gained an extreme significance in today’s financial world. Credit cards allow you to make larger purchases why providing you with large credit limits and stability to break down this large purchases in two installments. But as important and commonplace as it may be to own a credit card, choosing one initially can become confusing for consumer. There is a myriad of offers from different credit card companies that provide so many different options on the credit card that you can choose. One of such offers that you may come across is that of guaranteed credit cards. What are guaranteed credit cards? What benefit do these cards offer to the consumer and where can you find guaranteed credit cards?

Guaranteed credit cards are pretty much the same as instant approval credit cards. The terminology behind the statement guaranteed credit cards simply means that as long as you meet the credit requirements of the credit card provider will be given a credit card.

This terminology is confusing since many consumers are led to believe that guaranteed credit card means that you are guaranteed to be given a credit card no matter what. This is not really true. You can better understand this terminology if you read the fine print at the bottom which usually says “with approved credit”. This means that if you choose to accept the offer of a guaranteed credit card your credit will be checked and if it matches the qualification criteria of the credit card company then you are guaranteed to be provided with a credit card.

So what benefit is that guaranteed credit card to persons with a bad credit rating if there is no guarantee of approval at all? The fact of the matter is that offers of a guaranteed credit cards are often designed for people with bad and sub-prime credit rating. This means that person with a bad credit rating has a better chance of qualifying for guaranteed credit card offers time applying for a regular credit card. However, guaranteed credit cards also have a qualification criteria. If your credit score is damaged beyond the acceptable limits of the company offering a guaranteed credit cards and you are likely to be disapproved.

Featured off most guaranteed credit cards is that they have low to medium credit limits. This works both in the favor of the lender as well as the borrower because since the lender is lending to person with a sub-prime credit rating he is protecting its own interests by restricting the amount of money that you can spend on credit card. It may be a good thing for the consumer to not have the ability to get himself under a large amount of debt since the damaged credit rating are quite likely the result of bad spending habits in the past. Are guaranteed credit card can let you build your credit rating without the tension of overspending beyond your capabilities and getting yourself under a large amount of debt. A guaranteed credit cards can also offer a very low introductory interest rate, it rewards programs, fraud protection and more that will make it a good choice for a person who is already having credit problems.

Guaranteed credit cards or a good choice per person who is trying to rebuild his credit rating or does not have enough of a credit rating such as a student as they offer several benefits of a traditional credit card.

What Are Bad-Credit Credit Cards and Their Features?

It is difficult to qualify for a credit card from major credit card providers such as VISA, MasterCard and Discover when you have a bad credit rating. Many consumers will feel disheartened or think impossible to get a credit card when they have a bad credit rating. However, certain credit card companies have decided to relax their strict criteria for qualifying for a credit card owing to the increasing number of sub-prime borrowers. The number of people who have a suffering credit has increased owing to the worsening economic situation in the country. There are also those companies who have started providing credit cards to people with a sub-prime credit rating by specializing in bad credit cards.

Every credit card that is tailored to people with a bad credit rating can be expected to have certain features which are not wholly advantageous to the consumer.

Bad credit cards meant for people with a poor credit rating usually have:

Very High Rate of Interest

Lower spending limit and Credit Limit.

Strict monthly income requirements.

High processing fee and annual charges.

In spite of all these negative features attached to a bad credit card, using such a credit card can be made to work out to the advantage of the sub-prime borrower. The higher rate of interest will not affect you very much if you pay down your balance at the end of every month. A main benefit that you will gain of using a credit card is a chance to rebuild your credit rating. Even though it is a card meant for sub-prime borrowers the usage of the card is most likely to get reported to the three national bureaus Experian, Equifax and TransUnion. Once your regular payment history and transactions is reported you will start to build your credit history and increase your credit score gradually.

Another advantage of using a bad credit card is that you can qualify for it quickly. Most of these credit cards are offered as part of instant approval credit cards that you can apply for instantly by filing an online application. Instant approval credit cards for people with sub-prime credit rating present you with the approval results within 60 seconds of making the application. This removes the waiting period of days, weeks and even months when you are uncertain of whether or not you will qualify. People even tend to make several applications for a credit card during the time that are waiting for an answer from one credit card application. This result in a generation of lot of credit Inquiries into the credit report which further damages the credit rating.

Even bad credit cards have a limit on the credit score they will consider for approval. If your credit rating is so bad that you cannot qualify for bad edit card then you are better of trying to use a prepaid credit card or a secured credit card. Secured credit card is more advisable to use because it will get reported to the credit bureaus and will serve to improve your credit history as long as you use it well.

Having a credit card even when you have difficulty in qualifying for one is worth the effort because certain transaction in today’s time and date are not possible without a credit card such as reserving hotel rooms, renting cars and online purchases. A credit card is an important tool for building credit history as well as expanding the purchasing power of a person.

You should remember that since poor spending habits were most likely reason behind your current credit situation, you should exercise care and caution in using a credit card even if it is a credit card meant for sub-prime borrowers.

Choosing a Prepaid or Stored-Value Credit Cards For Teenagers

If this setup gives you nightmares of your teen debiting away his college funds, you (and he) might be better off with a prepaid card or stored-value card. Not linked to a bank account, this variation on the debit card — Visa Buxx is a well-known example — sets even firmer limitations on spending. Parents activate the card by loading it with an appropriate amount of money. Other authorized adults, such as Uncle Joe or Grandma, can also add funds for birthdays or Christmas or when they see fit. Then Mom, Dad and the teenager can keep an eye on expenditures via online statements. “Stored-value cards are basically cash,” says Mark, “so they’re easy for kids to understand.”
As a result, it’s no surprise that stored-value cards are marketed overwhelmingly toward the teen demographic, and each uses a slightly different marketing angle.
MasterCard’s affinity-based MYPlash features images of pop musicians, rockers and athletes, while hip-hop mogul Russell Simmons’ RushCard offers tie-ins with mobile phones and discounts on clothing from his Phat Farm line and his ex-wife’s Baby Phat label. Paychecks can also be deposited onto the RushCard.
The Allow Card, a MasterCard-branded prepaid card, aims to educate teen cardholders by e-mailing them a monthly “financial lesson.” It also offers parents 35 controls, including the ability to block certain types of merchants so that teens can’t shop at undesirable places.
MasterCard-branded PAYjr operates on the allowance principle: Parents deposit a teen’s allowance onto a PAYjr card, and both parent and teen can monitor use online. For kids 12 and younger, PAYjr has a savings program tied to chores: Parents set up a list of chores and due dates; once the chores are completed, the payment is automatically deposited into a savings account. UPside card, a Visa-allied card, is a prepaid card that can be used online, in stores and at ATMs. It also has a points program that allows users to get cash back.
All of these stored-value cards have one major drawback: Just about every action entails a fee. For example, U.S. Bank charges its Buxx customers for enrollment, balance inquiries, reloading or replacing the card and assistance from a bank teller. And here’s the one-two punch: If you don’t use your card for a few weeks or months, you’ll get socked with an “inactivity fee.”
Allow Card has a $19.95 activation and “lifetime membership” fee, and fees for ATM withdrawals ($1.50), monthly maintenance ($3.50), balance inquiry at point of sale ($0.25), and others. There are no fees for point-of-sale purchases.
With these examples in mind, be sure to check the terms of a card before you and your child sign up for one.

How to Start Your Children with Using a Debit Card

It is a good idea to start Your teenage children with a debit card specially if the youngster already has a checking or savings account. Giving him a standard credit card makes sense as they have already been made used to maintaining a bank account. Just as they would have kept track of the financial transactions into savings account, they are more likely to be responsible with the usage of a debit card.
The advantage of using a debit card is also that the youngster cannot go beyond the amount of money present it is account. Unlike a credit card the teenager can only use the amount of money that is present in his account and not take money on credit. However overdrafts can still happen which can result in extra fees. The fair credit billing act has slightly different rules for debit card fraud or theft. If the person reports the card missing before the thief is able to make any transactions then the debit card issuer can’t hold you liable for any charges. If you report the loss within two working days you’ll be responsible for only $50 of charges. If you do not report the loss within 60 days you can be held liable for $500 of the fraudulent transactions.
For this reason you should keep track of the debit card and parents should insist that the teenager check your account regularly to make sure that all transactions are in order. However, certain debit cards from major card issuers like Visa and MasterCard carried the same fraud protections as credit cards with zero liability.

Survival Guide for 3 Common Credit Card Problems

The credit crisis has over a period of time affected not only the existing consumers who use credit but also people who were shopping for fresh lines of credit. Earlier on during the credit crisis things ticking difficult for people who were looking to acquire credit either for the first time or additionally. But very soon the trickle effect caused things to get difficult for the existing credit card users as well. Here are some common scenarios that have resulted or credit cardholders owing to the meltdown in the economy.

Increase in the Interest Rate

Millions of credit card holders have experienced an increase in the credit card interest rate for as much as double or triple the original rate. This has resulted in the cost of carrying a balance on the credit card increasing astronomically. The increase in the credit card interest rate does not necessarily have to do with a bad payment history or a low credit score. Almost all lenders have typically become less tolerant to any discrepancy in the transactions. It is possible that a single late payment can trigger of an increase in the interest rate. When faced with an increase in the interest rate you have a few options has to how to deal with it. Closing down a credit card as soon as the interest rate increases may not be a good option in all cases. Closing down a credit card may hurt your credit score. Therefore it may be a good idea to pay off the balance at the higher interest rate if the other option is hurting your credit score which could do more long-term damage to your credit situation. You need to figure out how to respond to the interest rate increase and whether or not you should opt out of the increase which will probably result in the creditor closing down your credit card.

Credit Limit Cuts

Another percussion of the credit crisis has been that credit limit on the credit cards have been slashed by thousands of dollars for many consumers. Once again, this does not necessarily have anything to do with your payment history order your credit rating. It is possible for your bank to reduce your credit limit even though you have had a positive payment history with them. The credit limit on credit cards has been by up to 75% which means that the debt utilization ratio becomes high. You may not always received a notice before your credit limit decreases so it’s always a good idea to check your credit limit before making a purchase.

Difficulty in Getting New Credit

After major repercussions of the credit crisis is that banks and lenders are more stringent with whom they approve for credit. The lenders are unwilling to lend even to each other and even more so to consumer. People who do not have a crime credit score will find it more and more difficult to get approved for credit. The more serious the kind of credit such as an automobile loan or a mortgage loan, the more difficult it will be for the consumer to qualify.

How to Avoid Emotional and Impulsive Credit Card Spending

Emotional credit card spending is typically the habit of charging your credit card to make yourself better or the tendency to charge your credit card not because she needs to but as a result of some emotional need such as when you are out with your family and friends.

It is common that shopping makes people feel good. Emotional credit card spending happens when you see the thrill of using a credit card and buying something credit rather than buying something because you need it. It is a classic case of getting something for nothing because paying my credit card gets is something for which you have to worry about paying only days later. Emotional spending results in shopping without thinking about consequences and making yourself feel better through instant accreditation. The biggest realization that a person needs to have to avoid emotional spending is that even if you don’t have to pay now you will have to pay eventually.

Use These Following Simple Tips to Avoid Emotional Credit Card Spending.

Try and do something else that makes you feel good besides charging your credit card. There are surely has to be in other activities that you enjoy other than shopping and charging your credit cards to make you feel better. Go out, visit a friend, take a walk or go for a workout instead.

Don’t shop to compete. If you are out with friends or family and you feel the need to shop simply to compete and filling up just as many shopping bags as them, then the odds are that you are doing some very impulsive and emotional credit card shopping. Just because your friends are shopping does not mean that you have to keep up with them.

Don’t just buy because you’re there. Just because you are in a store doesn’t mean that you need to buy something. Sometimes you can pressurize yourself by making things a few interesting for yourself by buying something or the salesperson present in the store might tempt you to buying something. Do not succumb to temptation. There is still something called window shopping.

Do not under any circumstances shop when you’re stressed, sad, angry, bored, frustrated or having a bad day. Many people may take the easy way out and try making themselves feel good by throwing the consequences out of the window and doing some impulsive shopping on the credit card.

The first step in stopping impulsive credit card shopping is to recognize the symptoms. Only when you have been able to admit the problem to yourself will you be able to fix it.

One Dollar Credit Card Payment Is a Myth

You might have come across the advice that as long as you send at least one dollar to your credit card company they can’t sue you. Any and all logic fails to justify the statement. Until and unless you are meeting the minimum payment on your credit card Bill in violating the terms and conditions of your credit card. And is unlikely that the minimum payment on your credit card can ever be one dollar. Usually credit cards calculate the minimum payment as a percentage of your balance. Even if this percentage is low enough to be about one dollar most credit cards have a minimum payment clause that reads something like “the minimum payment is 2% of the balance or five dollars whichever is greater”. This means that even if 2% of your balance is one dollar you will have to pay at least five dollars towards the minimum payment.

Any time you make a payment that is less than the minimum you are violating the credit card agreement terms and your creditor can comes the you to be defaulting on your credit card payment. Not only can the creditor charge you a late fee on the payment but also increase your credit rate, charge of your account and cell your account to a collection agency. Needless to say this delinquency will also be reported to the credit bureau which will then have a negative impact on your credit score.

Even if one were to consider the possibility of sending one dollar payment with no penalty fee from your creditor, why would anybody want to do that? Sending one dollar will just have your current balance increasing with the interest rate and with the ever increasing balance and the mounting interest you may find yourself under a large debt which you may find increasingly difficult or impossible to pay off any time soon.

It is simply imperative that you should make at least the minimum payment on all your credit cards if you wish to keep your credit card account active and do not wish to be reported as delinquent to the credit bureaus.

What to Do When Credit Limit On Your Credit Card Gets Reduced

How to Respond to a Credit Limit Cut

having your credit limit slashed can be an inconvenience. It can put you in an uncomfortable situation when you need to use your credit card but cannot because you have already approached your credit limit without you being aware of it. This can happen when your credit limit has been used by the creditor and you are not aware of it. Reduction in the credit limit can also mess around with your credit utilisation which is an important factor used during the credit score calculation. Getting the credit limit cut on a credit card may result in you maxing out your credit card or even going over the limit which would further incur heavy monthly charges as high up to $40.

What to do when the credit limit on your credit card is slashed

You can do a few simple things in order to counter the negative effect of the reduction in the credit limit of your credit card.

 Pay down the Balance on Your Credit Card

You can pay the balance down so that your credit limit once again becomes available to you. It will also decrease the credit utilisation on the credit card which should ideally be around 30% of the total credit limit. This will not only help with the credit score but also safeguard your guests going over the limit and incurring extra over the limit credit card fees.

You can also transfer the balance to another credit card.

Ideally the new credit card should have a higher credit limit than your credit card because transferring additional balance on to it might take you very close to the credit limit of that credit card and once again have a negative impact on your credit utilisation ratio which would then go on to affect your credit score negatively. You should remember how however that transferring a balance to another card usually has a fee associated with it. It could be one to 3% of the balance being transferred along with other processing fee. This could make the balance transfer an expensive proposition and cost you more than you’re willing to spend.

Negotiate with your creditor.

You can speak to your creditor about bringing your higher credit limit back. You may or may not be aware of the reasons that your credit limit was cut and talking to your creditor may help you deal with the issue. However this is an unlikely situation as it is difficult to get your credit card limit up immediately once it has been slashed on. Creditors usually have reason why they would want to cut down on a credit limit of a particular consumer.

If the card in the credit limit is not affect you too much then you may continue to use the card as you have used before. Just make sure that the balance on your credit card stays around 30% of the credit limit available and repaid the balance at the end of every month so that you can enjoy the benefit of the credit card as will as a positive effect on your credit score.

You should not be too hasty in closing down a credit card as a way of getting back taking revenge on the creditor specially if the credit card still holds a balance. Whenever a credit card with a balance is close the credit limit on a credit card is brought down to 0. On the credit report it looks like you have maxed out your credit card because even though it is closed and has a credit limit of zero you still have a balance on it. This is not very good for the credit score. You should not close a card until you’ve completely paid it.