Credit Cards: What Banks Won't Tell You

What you should know about credit cards that the banks won't tell you.

As a former bank employee for a major financial institution, I would like to share with you some inside secrets on credit cards and loans that the banks will not tell you.

First, did you know that many people have a credit card who do not even have a job? If you are a student, widow, or self-employed do not let the banks intimidate you from applying. If you have a good credit history or even no history you are entitled to a fair chance to prove your credit worthiness. You may want to consider a secured line of credit. This is a major credit card backed by your own savings or checking account. It does not draw from the accounts (you still earn interest on them), but the savings acts as collateral against the credit card debt.

Second, you have a right to shop around for the best interest or added perks on your card. Do not hesitate to ask your bank to match what you have been offered - many times they will. You may be asked to pay an annual fee, this should only be done if you have a card which is earning you flyer miles or cash-back to recoup the costs. Do not however jump back and forth between banks to get those low introductory APRs, you can lose your credit history and low interest rate with the original bank.

Third, do not hesitate to ask to have bank fees removed. They can do anything they want to, if you make a good case. If you make the best attempt to bring an account current, or can explain why it was their interest charges that took you over your credit limit, they will often reverse the bank fees - so ask. I have found making payments over the phone directly with the customer service agent help facilitate this process.

Fourth, get a credit card that gives flyer miles, cash-back and has insurance benefits attached to it if possible. Most Gold and Platinum cards already do. Many have credit life (disability), car rental insurance and property coverage for purchases you buy included with the use of the card. Then, use the card for everything even school tuition and groceries to earn credits.

Fifth, try to pay your balance off each month, then the interest is never an issue. If not, set aside tax refund or other income to pay them off annually. The saddest thing I saw were widows with $10,000 balances paying $120 a month in interest alone and never getting ahead. Pay them down.

Sixth, get familiar with the bank that will fit your needs. If you are applying for a school loan, go to a Teachers Credit Union. If you want a car loan, go to General Motors Acceptance Corp, well - you get the idea. If you use your credit card to make a school or car purchase be sure it is treated as a "retail" purchase and not a "cash advance" which has extra fees. Check with the bank, do not take the dealer's word for this, and never EVER let a merchant charge you extra for the use of your credit card - it may be illegal and not condoned by VISA or MASTERCARD.

Seventh, gas pumps which accept credit cards usually pre-authorize just one dollar not the whole purchase price. However, make sure the funds are there when the price "posts" to your bankcard.

Eighth, magnetic strips do wear out. Keep your cards separated and with card covers over them - some banks supply these free. You may be limited in how many purchases you can make with one card in one day - it is called fraud prevention - so have more than one card when traveling or during Holiday shopping. Also, know your PIN number when overseas because the ATMs and foreign banks need them. If you have a word code, know its numerical equivalent since man ATMs only have numbers. A be prepared to pay up to $1.50 or more when using an ATM which is not your bank's machine. You may also be on camera at the ATM area.

Ninth, always get a receipt for payments and check them. Banks do make mistakes and half my day was spent correcting posting errors by bank tellers or mostly bad telephone transfers - so if you move money by phone, write the transaction number down.

Last, get a picture ID if possible. Report any missing card. Close accounts in writing. Do not add co-signers (ex's, children, live-ins) and then ignore the activity on the card. Call the bank before your card expires (2 weeks) to update address and give any name change, deceased spouse, job or income change - they will find out eventually. Also, under the new laws you may be contacted by insurance companies doing business with the bank, ditto financial counselors. Do not give out any personal information like medical history unless you feel confortable. You are entitled to a credit report in writing explaining why you have been denied credit.

Also, most theives we dealt with fell into three categories 1) internet, 2) long distance phone calls, and 3) catalog sales. Check your statement carefully, contest in writing to the bank and write or email the merchant you have done so. The bank can reverse the change temporarily while the dispute is pending sometimes.

Thank you for letting me share this information with you. Remember, don't be intimidated by the banks, they are there to serve you.

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