There are lots of credit card companies offering % interest rates. Zero percent cards are very lucrative nowadays and people think it as a very good deal. It is, indeed. But you should take time to think things over and know everything about the offer before signing up the contract.
Never forget to weigh things before making a decision because if you will choose in a hurry, you might get yourself in a whole lot of trouble in the end. Ask around or do research from the internet to find the right card.
Consider some of the aspects you should keep in mind prior to getting the opportunity to geta zero-interest credit card? Your credit card contract includes information about penalty charges, changes in your interest rates, your eligibility to enjoy the % interest, the "universal default" clause, and other specific conditions.
In this article, allow us to talk about the probable risks which you may come across once you have % interest credit card. Realizing these things provides you with a better idea on the best way to use credit cards to your benefit.
The "universal default" clause. What is universal default? It is a exercise in the financial services industry where a specific loan provider can change the terms of a loan in case the credit card holder misses a payment or does not pay timely. It is wise to take note if your credit card agreement has this clause because even a single late payment move your issuer to vary your interest rates with no notice.
Penalty for unused credit account. To continue enjoying the 0% interest rate for the balances you transferred and to prevent your account from closing, you may be required to use your 0% APR credit card to make new purchases. Take note that some 0% balance transfer cards impose a very high interest rates on purchases. But If you are not going to use your credit card for purchasing, you may be penalized and even get disqualified from enjoying the 0% APR on your balance transfers.
Changes of interest rates. It is best if you would ask the issuer or representative of the credit company these questions: - How long will be the introductory period lasts? - If the introductory period ends, how much will the interest rate be?
You should be well aware of these things because if not, you might end up with an even higher interest rate card than your previous one. Furthermore, watch out for possible changes in your interest rate once you missed a payment or failed to pay on time.
Penalty fees. A credit card holder is charged with penalty fees when he/she misses or fails to pay on time. Therefore, it is important to make sure that you have the capability of making payments on time to avoid penalties. See to it that you have a regular source of income to pay off your credit card balances. You can enjoy the perks of having a credit by being responsible in repayment obligations.
Author Resource:- New Horizon Business Services, Inc NHBS, Inc has been providing consumers and business owners with financing since 1989. Join our mailing list for Free Tips on Rebuilding and Repairing Credit. Click here for the list of credit cards for bad credit
Article From Article Intelligence
Thursday, May 20, 2010
Sunday, May 2, 2010
A Guide to Reading Your Credit Report
All consumers are being advised by the FTC to become aware of their credit reports to avoid identity theft and credit card fraud. The first step is to order a copy of your credit report from three credit report bureaus (Experian, Equifax and TransUnion).
In this post, let's discuss the key points on reading your credit report and the steps that you can do to fix possible errors.
What Your Credit Report Contains
The consumer credit report is categorized in four segments- your personal identity, payment history, public records and inquiries. When you receive a copy of your credit file, carefully review the details of your information. Consider these warning signs that of a possible fraud or identity theft.
Inquiries from creditors you did not apply to. Do you see credit report inquiries from loan companies or credit card issuers that you never send an application to? If yes, someone else might be trying to open an account using your identity. Call up each company to clarify these inquiries.
Change of your home address or employment address. Sometimes, there may be a misspelled word or missing digit in your residential or mailing address. You should ask such typographical errors to be corrected immediately.
Nevertheless, if your residential or mailing address has been changed without your knowledge, someone may have called up your bank or creditor and made the request using your identity. Identity thieves do this to keep the real account holder from receiving bills or mails from creditors. This way, the consumer will not be alerted about their illegal transactions.
Strange activities in your old accounts. Do you notice charges in your old accounts that you rarely use? If yes, someone else may be making those charges under your name. Call up the creditor involved right away to ask about those unfamiliar transactions.
Strange remarks in your public records section. This should remain entry unless you've had tax liens, foreclosure, bankruptcy or any court judgments in the last seven years. If there is a remark that should not be there, you must notify the credit bureau that issued your report immediately.
Past due charges. Are there charges in your credit card account that is not at all familiar to you? If you've been paying your credit card bills on time, someone may be making those purchases illegally. Write a dispute letter and send it both to the creditor involved and the credit reporting bureau. Enclose copies of documents that support your claim and wait for at least 10 days to get a response from your creditor and the credit reporting agency. If 10 days have passed and you haven't received any reply, it is now time to send a follow-up dispute letter.
As soon as the credit reporting agency have received your letter, their next step is to conduct an investigation regarding your complaint. It can take up to 30 days for the investigation to complete. Afterwards, the credit agency must send you a letter informing the result of the investigation along with the updated copy of your free credit report.
Author Resource:- For people who want to learn how to repair their own credit, Suzy Vanstrusen, a credit analyst and a writer of EzCreditRepairSolutions.com, has been providing consumers with tips and tricks in repairing your credit. Check the site for more free credit repair and credit report score.
In this post, let's discuss the key points on reading your credit report and the steps that you can do to fix possible errors.
What Your Credit Report Contains
The consumer credit report is categorized in four segments- your personal identity, payment history, public records and inquiries. When you receive a copy of your credit file, carefully review the details of your information. Consider these warning signs that of a possible fraud or identity theft.
Inquiries from creditors you did not apply to. Do you see credit report inquiries from loan companies or credit card issuers that you never send an application to? If yes, someone else might be trying to open an account using your identity. Call up each company to clarify these inquiries.
Change of your home address or employment address. Sometimes, there may be a misspelled word or missing digit in your residential or mailing address. You should ask such typographical errors to be corrected immediately.
Nevertheless, if your residential or mailing address has been changed without your knowledge, someone may have called up your bank or creditor and made the request using your identity. Identity thieves do this to keep the real account holder from receiving bills or mails from creditors. This way, the consumer will not be alerted about their illegal transactions.
Strange activities in your old accounts. Do you notice charges in your old accounts that you rarely use? If yes, someone else may be making those charges under your name. Call up the creditor involved right away to ask about those unfamiliar transactions.
Strange remarks in your public records section. This should remain entry unless you've had tax liens, foreclosure, bankruptcy or any court judgments in the last seven years. If there is a remark that should not be there, you must notify the credit bureau that issued your report immediately.
Past due charges. Are there charges in your credit card account that is not at all familiar to you? If you've been paying your credit card bills on time, someone may be making those purchases illegally. Write a dispute letter and send it both to the creditor involved and the credit reporting bureau. Enclose copies of documents that support your claim and wait for at least 10 days to get a response from your creditor and the credit reporting agency. If 10 days have passed and you haven't received any reply, it is now time to send a follow-up dispute letter.
As soon as the credit reporting agency have received your letter, their next step is to conduct an investigation regarding your complaint. It can take up to 30 days for the investigation to complete. Afterwards, the credit agency must send you a letter informing the result of the investigation along with the updated copy of your free credit report.
Author Resource:- For people who want to learn how to repair their own credit, Suzy Vanstrusen, a credit analyst and a writer of EzCreditRepairSolutions.com, has been providing consumers with tips and tricks in repairing your credit. Check the site for more free credit repair and credit report score.
Sunday, April 25, 2010
What Are the Benefits Of Low Interest Credit Cards?
Using your low interest credit card is a convenient way to shop and spend money. You don't have to worry about going to the bank to get cash to pay for your goods before you go shopping and the added advantage of using a low interest credit card is that you don't have to worry about carrying too much cash in your wallet or purse.
Low rate credit cards are best if you are looking to purchase items and only make the minimum repayment on the card. If you leave an outstanding balance that will incur interest each month, you want to ensure you have the lowest rate possible. Consider the difference between a card with 11% and 20% interest rates, with a £3000 outstanding balance, you will incur over £20 more interest per month on the high rate card. This is a popular option for people who will make regular repayments on a purchase, but can avoid applying for a personal loan often with a higher interest rate.
Rewards are a great way to earn bonuses and get some money back from the banks. Usually rewards cards have higher interest rates, higher annual fees, or reward program fees. You should only opt for a rewards card if you plan to spend a lot of money on the card, but pay the balance to zero each month (before incurring interest). If you know you can pay off your balance each month, then a rewards card could be right for you.
Make sure that the credit card you use is the most suitable for your spending patterns. If you are using a card for extended credit and don't pay off the balance in full each month, then choose a card with a lower rate. It may not offer any interest free period, but the lower interest rate should save you more in the long run. If you use your card for the convenience of paying for everyday purchases such as petrol or groceries, try a credit or charge card with maximum interest-free days, then make sure you pay it off in full each month. This way you get the benefit of up to 62 interest-free days on purchases, as well as rewards, discounts and frequent flyer points. But watch the annual fees on rewards cards.
Low interest credit cards typically come with high balance transfer rates and fees or interest rates higher than the prime rate after the introductory period. Cash withdrawals may also have higher fees. In short, you have to read the terms and conditions pretty carefully. Check for all the fees and future interest rates before signing up. To make the best use of a low interest credit card, you should make large purchases using it and pay off the balance during the introductory period. Yes, you might end up paying a small interest rate but it would be better than taking a store credit for a high interest rate. If you have a 0% interest offer, then you will paying nothing for the entire introductory period. Using your low interest credit card smartly during the introductory period can definitely help you to save some money on your large purchases.
Low rate credit cards are best if you are looking to purchase items and only make the minimum repayment on the card. If you leave an outstanding balance that will incur interest each month, you want to ensure you have the lowest rate possible. Consider the difference between a card with 11% and 20% interest rates, with a £3000 outstanding balance, you will incur over £20 more interest per month on the high rate card. This is a popular option for people who will make regular repayments on a purchase, but can avoid applying for a personal loan often with a higher interest rate.
Rewards are a great way to earn bonuses and get some money back from the banks. Usually rewards cards have higher interest rates, higher annual fees, or reward program fees. You should only opt for a rewards card if you plan to spend a lot of money on the card, but pay the balance to zero each month (before incurring interest). If you know you can pay off your balance each month, then a rewards card could be right for you.
Make sure that the credit card you use is the most suitable for your spending patterns. If you are using a card for extended credit and don't pay off the balance in full each month, then choose a card with a lower rate. It may not offer any interest free period, but the lower interest rate should save you more in the long run. If you use your card for the convenience of paying for everyday purchases such as petrol or groceries, try a credit or charge card with maximum interest-free days, then make sure you pay it off in full each month. This way you get the benefit of up to 62 interest-free days on purchases, as well as rewards, discounts and frequent flyer points. But watch the annual fees on rewards cards.
Low interest credit cards typically come with high balance transfer rates and fees or interest rates higher than the prime rate after the introductory period. Cash withdrawals may also have higher fees. In short, you have to read the terms and conditions pretty carefully. Check for all the fees and future interest rates before signing up. To make the best use of a low interest credit card, you should make large purchases using it and pay off the balance during the introductory period. Yes, you might end up paying a small interest rate but it would be better than taking a store credit for a high interest rate. If you have a 0% interest offer, then you will paying nothing for the entire introductory period. Using your low interest credit card smartly during the introductory period can definitely help you to save some money on your large purchases.
Tuesday, April 13, 2010
Are You Qualify for Low Interest Rate Card?
In this global economic crisis having a credit card debt might be a big problem for us. If you are a credit card holder and try to pay off the interest all the time but nothing change in your total credit card debt then you may seek a debt reduction method that can help you free your debt.
You can find information from any different resources. But, you must do it wisely. Some of them might be not solving your problem at all. What we need to do just extra effort and be cautious about their offer to us. We need to find well known resources to help us solving our financial condition.
It is much easier for you who have a good credit history to reduce your debt. You can transfer your outstanding balance to low interest credit card each time your introductory period runs out. You do it by transferring your outstanding balance to a new card about a month in advance. By doing so, you do not pay interest so that you can lower your credit card debt one time in a moment. This is a good way for you who carry large balances in account.
Discipline is the key factor to reduce your credit card debt. Well, it takes sometime to lower your balance depending on how much your balance carry on the card. Next thing you do is moving from one card onto another card which offering low introductory interest rate.
Well, some people might be saying that it is not easy to switch from one card to the other in this recession but at least give it a try, right? You must remember one thing, do not try to reapply once you have rejected by the lenders. It will lower your credit card score. You need to wait for months before you can apply it again.
Is it low interest credit cards only for people who have a good credit score? It is not. If your credit scores less than perfect, balance transfers still can help you saving your money. Whether you have excellent credit, fair credit or less than perfect credit, you still can benefit from transferring balances onto credit card with low interest credit cards.
What you need to do before applying one are; read carefully the fine prints, compare the offers to other card company, look for the introductory interest rate, end of introductory period, normal interest rate, annual fee, late payment and other possible charges.
When you done with your research pick the right one that fit your current financial condition. So now, you know what to do if you have large outstanding balance on your card. Switching one card to another low introductory interest credit cards will save you much money.
But, at the same time you should not try using your credit card for purchasing any goods or other unnecessary needs in order to get this plan working for you.
Good luck!
You can find information from any different resources. But, you must do it wisely. Some of them might be not solving your problem at all. What we need to do just extra effort and be cautious about their offer to us. We need to find well known resources to help us solving our financial condition.
It is much easier for you who have a good credit history to reduce your debt. You can transfer your outstanding balance to low interest credit card each time your introductory period runs out. You do it by transferring your outstanding balance to a new card about a month in advance. By doing so, you do not pay interest so that you can lower your credit card debt one time in a moment. This is a good way for you who carry large balances in account.
Discipline is the key factor to reduce your credit card debt. Well, it takes sometime to lower your balance depending on how much your balance carry on the card. Next thing you do is moving from one card onto another card which offering low introductory interest rate.
Well, some people might be saying that it is not easy to switch from one card to the other in this recession but at least give it a try, right? You must remember one thing, do not try to reapply once you have rejected by the lenders. It will lower your credit card score. You need to wait for months before you can apply it again.
Is it low interest credit cards only for people who have a good credit score? It is not. If your credit scores less than perfect, balance transfers still can help you saving your money. Whether you have excellent credit, fair credit or less than perfect credit, you still can benefit from transferring balances onto credit card with low interest credit cards.
What you need to do before applying one are; read carefully the fine prints, compare the offers to other card company, look for the introductory interest rate, end of introductory period, normal interest rate, annual fee, late payment and other possible charges.
When you done with your research pick the right one that fit your current financial condition. So now, you know what to do if you have large outstanding balance on your card. Switching one card to another low introductory interest credit cards will save you much money.
But, at the same time you should not try using your credit card for purchasing any goods or other unnecessary needs in order to get this plan working for you.
Good luck!
Friday, March 26, 2010
Want a Credit Limit Increase?
A credit card can take you nearly you anywhere; the only thing that may be holding you back is the credit limit. Maybe you are considering a large purchase that your credit limit won't cover. Maybe you want to be able to take only one credit card when you go on a vacation. Maybe you want to earn the most rewards possible, by using your credit card for everyday purchases. Consumers have a variety of reasons for wanting a credit limit increase. If you wish your credit card had a higher credit limit, proving your credit-worthiness to the card issuer will make a limit increase more likely.
Understanding the credit card issuer's point of view will help you succeed in getting a credit limit increase. To the card issuer, increasing a card user's credit limit will mean either increasing their profit or increasing their risk. They will profit more if the card holder uses the card, and pays back the debt, with interest. Higher risk, of course, comes with extending even more credit to someone who already may not have a good handle on their finances.
Keep your credit score in top shape. Check your credit report occasionally and clean up any negative marks. Check your report for fraudulent activity that can bring down your credit score. One negative mark due to an innocent oversight or a forgotten bill can bring your credit score down enough to prevent a limit increase. Keep your account balances well under 30% of the credit limits to keep a healthier credit score. A better credit score equals lower APRs and higher credit limits.
Abide by the card issuer's terms and conditions. Paying on time and staying within your credit limit is extremely important. Card issuers want to see that you take your contracts seriously, and that you make good on your promises. Missed or late payments, and charging more than the credit limit are warning signals that the card user is over-extended and already has more debt than they can handle.
Use your credit card regularly. Using your credit card only occasionally or just for emergencies makes it difficult for card issuers to read your spending and bill-payment habits. When you use your card every month, and then pay your bill every month, card issuers can more easily see a pattern of responsible credit card use. Using your card routinely demonstrates that you know how to balance your many obligations.
Keep your account balances low. Credit card issuers want to extend additional credit to someone who can put the higher limit to use, but doesn't need it. A person who calls the card issuer for an increase, when all their credit card balances are nearly at the limit, is telling the card issuer that they either can't control their spending, or that they need credit to maintain their lifestyle.
Your entire credit card balance should normally fit into your monthly budget. Card issuers like to see that the card holder can easily pay down their debts. Paying the full balance most months shows the card issuer that you can control your spending, you manage your finances responsibly, and that your good credit record is important to you. Someone who normally makes only the minimum payment is telling the card issuer that they can't afford to pay more than that, and is a poor candidate for a credit limit increase.
Let the card issuer profit from you, at least a little. Paying your entire balance every month can save huge interest charges, but it's not very profitable for the card issuer. If you always avoid interest fees by paying off your balance, it wouldn't benefit them to give you an even bigger free ride. Occasionally, pay only part of the balance, and let the card issuer earn a couple of bucks in interest fees. This shows them that you are a good investment, and that a credit limit increase can bring them more profit.
Make sure you have the income to support the credit increase. Credit card issuers want to know that you plan on paying them back and that you have the means to do so. Your employment stability and your income are considered by the card issuer. They may not ask much about your current income if they are only increasing your limit by a few hundred dollars, but they're likely to want income documentation if you are looking for an increase of many thousands.
Request a credit limit increase for accounts that you've had for at least six months. Credit card issuers want to see proof of your responsible credit use over a period of time. Most card issuers have their own minimum time-frame for limit increases, varying from six months to a year. Some card issuers may automatically increase your limit after you had your account for only a few months, but that's usually because they started you off pretty low to begin with. It won't hurt to try, but asking for a limit increase too soon will usually get you nowhere.
Be aware that some card issuers may charge a fee for a limit increase.This is much more common with sub-prime credit cards, but a few cards for people with good credit are doing it, too. This fee may be anywhere from $25 to 50% of the increase. This fee may make a card worth getting rid of, especially if you have better options. Credit card issuers generally make more money by increasing a credit limit, so this just seems like they're unfairly trying to get paid for the same thing twice.
A credit limit increase can open new doors, allowing you to purchase a big-ticket item, transfer credit card balances from several cards, or let you reduce the number of credit cards you carry. A credit card with a generous credit limit can offer you flexibility and convenience. For someone who's responsible with credit, a credit card with a big limit might even be like a trophy; you'll probably never use it for anything, but it's nice to know you've proved yourself to the card issuer and are highly respected.
However, if you want a credit limit increase because your current limits just aren't enough, you may want to re-think whether an increase is a good idea. Maxed out credit cards and minimum payments are a sure sign that someone is living beyond their means. A credit limit increase will only make it easy to overspend and dig deeper into debt. More credit is not the cure for too much debt. It may be time to bite the bullet and start living a lifestyle you can afford, without the over-use of credit.
Understanding the credit card issuer's point of view will help you succeed in getting a credit limit increase. To the card issuer, increasing a card user's credit limit will mean either increasing their profit or increasing their risk. They will profit more if the card holder uses the card, and pays back the debt, with interest. Higher risk, of course, comes with extending even more credit to someone who already may not have a good handle on their finances.
Keep your credit score in top shape. Check your credit report occasionally and clean up any negative marks. Check your report for fraudulent activity that can bring down your credit score. One negative mark due to an innocent oversight or a forgotten bill can bring your credit score down enough to prevent a limit increase. Keep your account balances well under 30% of the credit limits to keep a healthier credit score. A better credit score equals lower APRs and higher credit limits.
Abide by the card issuer's terms and conditions. Paying on time and staying within your credit limit is extremely important. Card issuers want to see that you take your contracts seriously, and that you make good on your promises. Missed or late payments, and charging more than the credit limit are warning signals that the card user is over-extended and already has more debt than they can handle.
Use your credit card regularly. Using your credit card only occasionally or just for emergencies makes it difficult for card issuers to read your spending and bill-payment habits. When you use your card every month, and then pay your bill every month, card issuers can more easily see a pattern of responsible credit card use. Using your card routinely demonstrates that you know how to balance your many obligations.
Keep your account balances low. Credit card issuers want to extend additional credit to someone who can put the higher limit to use, but doesn't need it. A person who calls the card issuer for an increase, when all their credit card balances are nearly at the limit, is telling the card issuer that they either can't control their spending, or that they need credit to maintain their lifestyle.
Your entire credit card balance should normally fit into your monthly budget. Card issuers like to see that the card holder can easily pay down their debts. Paying the full balance most months shows the card issuer that you can control your spending, you manage your finances responsibly, and that your good credit record is important to you. Someone who normally makes only the minimum payment is telling the card issuer that they can't afford to pay more than that, and is a poor candidate for a credit limit increase.
Let the card issuer profit from you, at least a little. Paying your entire balance every month can save huge interest charges, but it's not very profitable for the card issuer. If you always avoid interest fees by paying off your balance, it wouldn't benefit them to give you an even bigger free ride. Occasionally, pay only part of the balance, and let the card issuer earn a couple of bucks in interest fees. This shows them that you are a good investment, and that a credit limit increase can bring them more profit.
Make sure you have the income to support the credit increase. Credit card issuers want to know that you plan on paying them back and that you have the means to do so. Your employment stability and your income are considered by the card issuer. They may not ask much about your current income if they are only increasing your limit by a few hundred dollars, but they're likely to want income documentation if you are looking for an increase of many thousands.
Request a credit limit increase for accounts that you've had for at least six months. Credit card issuers want to see proof of your responsible credit use over a period of time. Most card issuers have their own minimum time-frame for limit increases, varying from six months to a year. Some card issuers may automatically increase your limit after you had your account for only a few months, but that's usually because they started you off pretty low to begin with. It won't hurt to try, but asking for a limit increase too soon will usually get you nowhere.
Be aware that some card issuers may charge a fee for a limit increase.This is much more common with sub-prime credit cards, but a few cards for people with good credit are doing it, too. This fee may be anywhere from $25 to 50% of the increase. This fee may make a card worth getting rid of, especially if you have better options. Credit card issuers generally make more money by increasing a credit limit, so this just seems like they're unfairly trying to get paid for the same thing twice.
A credit limit increase can open new doors, allowing you to purchase a big-ticket item, transfer credit card balances from several cards, or let you reduce the number of credit cards you carry. A credit card with a generous credit limit can offer you flexibility and convenience. For someone who's responsible with credit, a credit card with a big limit might even be like a trophy; you'll probably never use it for anything, but it's nice to know you've proved yourself to the card issuer and are highly respected.
However, if you want a credit limit increase because your current limits just aren't enough, you may want to re-think whether an increase is a good idea. Maxed out credit cards and minimum payments are a sure sign that someone is living beyond their means. A credit limit increase will only make it easy to overspend and dig deeper into debt. More credit is not the cure for too much debt. It may be time to bite the bullet and start living a lifestyle you can afford, without the over-use of credit.
Monday, March 22, 2010
Credit Card Providers Get Choosey About Who They Lend To
Although figures showing how much credit card providers have reined in their lending over the past few months are hard to come by, there is widespread acceptance that credit card providers are being more selective with the type of people they currently give credit too.
More Credit Card Applicants Get Turned Down
The UK Cards Association estimates that around two to three years ago, one third of credit card applicants were being turned down, but it now suggests this number has risen. In fact, it goes as far to say that since the second half of 2008, somewhere between 40 and 50 per cent of all credit card applications are being rejected.
Defaqto, a financial research service also agrees that credit card providers are becoming more "choosey" about who they lend to.
David Black, banking specialist at Defaqto explained: "It is generally acknowledged that credit card providers are becoming far more choosey about who they will lend to and how much they will lend.
"In the mortgage market, credit card providers are after quality rather than quantity. Credit card providers also monitor their existing customers to determine those in, or possibly likely to be in financial stress.
"As a result, it's not unusual to get a letter saying that your credit limit is being reduced or your account is being closed."
Providers Change Interest Terms and Close Credit Card Accounts
In fact, according to a recent Confused.com survey which questioned 2,000 people from across the UK during the month of October, 20.4 per cent of those polled have had their credit card account closed in the past 12 months.
Of these, 29.2 per cent had their card closed by the credit card company. According to the respondents, their credit card was closed by the issuer because of their failure to keep up with the repayments.
Interestingly, 26.3 per cent of respondents also revealed their credit card provider had made changes to the credit agreement they had in place within the past year, which includes instances of increasing the interest rate and changing the credit limit. (See: How The Government Credit and Store Card Proposals Will Affect you.')
Meanwhile, the survey also showed that 37.5 per cent of people are concerned about applying for a credit card for fear of being turned down and the subsequent black mark that could be left on their credit file as a result.
Don't Be Put off Shopping Around to Find the Best Deal
The government is aware that consumers may be being unfairly penalised by shopping around for the best credit card deals, so the Treasury Select Committee is now seeking to understand the affects multiple credit searches have on individual consumer credit ratings by launching an inquiry into the issue.
It may be harder to obtain credit in the current recessionary climate, but you needn't be put off applying for a credit card just because you think it will damage your credit profile. You can check how likely you are to be accepted for a specific credit card by employing the use of a credit profile tool.
More Credit Card Applicants Get Turned Down
The UK Cards Association estimates that around two to three years ago, one third of credit card applicants were being turned down, but it now suggests this number has risen. In fact, it goes as far to say that since the second half of 2008, somewhere between 40 and 50 per cent of all credit card applications are being rejected.
Defaqto, a financial research service also agrees that credit card providers are becoming more "choosey" about who they lend to.
David Black, banking specialist at Defaqto explained: "It is generally acknowledged that credit card providers are becoming far more choosey about who they will lend to and how much they will lend.
"In the mortgage market, credit card providers are after quality rather than quantity. Credit card providers also monitor their existing customers to determine those in, or possibly likely to be in financial stress.
"As a result, it's not unusual to get a letter saying that your credit limit is being reduced or your account is being closed."
Providers Change Interest Terms and Close Credit Card Accounts
In fact, according to a recent Confused.com survey which questioned 2,000 people from across the UK during the month of October, 20.4 per cent of those polled have had their credit card account closed in the past 12 months.
Of these, 29.2 per cent had their card closed by the credit card company. According to the respondents, their credit card was closed by the issuer because of their failure to keep up with the repayments.
Interestingly, 26.3 per cent of respondents also revealed their credit card provider had made changes to the credit agreement they had in place within the past year, which includes instances of increasing the interest rate and changing the credit limit. (See: How The Government Credit and Store Card Proposals Will Affect you.')
Meanwhile, the survey also showed that 37.5 per cent of people are concerned about applying for a credit card for fear of being turned down and the subsequent black mark that could be left on their credit file as a result.
Don't Be Put off Shopping Around to Find the Best Deal
The government is aware that consumers may be being unfairly penalised by shopping around for the best credit card deals, so the Treasury Select Committee is now seeking to understand the affects multiple credit searches have on individual consumer credit ratings by launching an inquiry into the issue.
It may be harder to obtain credit in the current recessionary climate, but you needn't be put off applying for a credit card just because you think it will damage your credit profile. You can check how likely you are to be accepted for a specific credit card by employing the use of a credit profile tool.
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