My granddaughter just got a secured credit card with a $200 limit. She wants to finance a new car for $19,000 in a year or earlier. What does she have to do to obtain this? – Harry
Dear Harry,
You are kind to ask on your granddaughter’s behalf. The short answer is yes, she can get a car loan of that size, but only after she builds a reputation of being a responsible borrower. That takes time and effort. She also must prove to a lender that she can afford the monthly payments, which means she needs an income that is enough to cover all her expenses as well as a hefty car payment.
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Here is the strategy for your granddaughter. As a (presumably) young adult, she needs to take control over her own financial life, starting today.
1. Charge in small, steady increments
It’s great that your granddaughter has a secured credit card because I would have recommended it! Now what she needs to do is use the card in a very specific way.
Credit reports need to list a steady stream of positive activity, so on a monthly basis, she needs to keep her credit utilization ratio as low as possible. For a credit line of $200, I’d recommend she spend a maximum of $60. That will prevent her score from getting dinged for using too much of her credit line.
A credit score can be calculated at any point of a billing cycle. If you owe too much, even if you plan on paying it off completely, points will be shaved off your scores. (FICO and VantageScore are the two most common scoring companies, and their scores range from 300 to 850.)
2. Pay on time
No matter what, get payments in by or before the due date.
The credit card issuer will then send that information to the credit reporting agencies, and it will be factored into her scores favorably. Consecutive on-time payments will result in a higher credit score, so as each month passes without a break in that payment history, her scores are sure to increase.
3. Delete the debt every month
With a credit card, you do have the option to pay partially – but don’t. Instead, your granddaughter should send the credit card issuer every penny of the balance.
Remember, she’s proving to a future car lender (as well as any other creditor, such as a landlord or business) that she’s financially smart and stable. By never carrying over a balance, she’s showing exactly that.
4. Keep a sharp eye on all credit activity and progress
Your granddaughter should check her online credit card statement at least weekly. Her credit card statement will indicate where she charged and how much she currently owes, and checking her statement gives her the opportunity to scale back charging if she’s close to the 30% credit utilization mark.
After using the secured card for about six months, your granddaughter can pull her credit reports from AnnualCreditReport.com. There are three credit reporting agencies (TransUnion, Equifax and Experian) and she’s entitled by law to get all three reports from those bureaus for free once per year. The bureaus are also offering free credit reports every week through April 2022 due to the COVID-19 pandemic.
She should read her credit reports to make sure they’re correct, and if she sees anything wrong, she should dispute it. She does not want to be turned down for her dream car over a mistake on her credit report.
5. Get a second credit card
After a year of following this credit-building plan, her scores should be on an upward trajectory. To really hike the numbers, though, your granddaughter should consider applying for an unsecured credit card and using it in the same fashion.
Your granddaughter should seek a credit card that fits her credit rating, so she won’t get denied. Applying for a credit card or loan will result in a hard inquiry on her credit reports, which will lower her credit score a bit temporarily, so she should only seek credit when she needs it. When your granddaughter has two credit accounts, she should use both as she has been using the one.
Eventually, your granddaughter’s credit scores should be in the mid-700s, and at that point, most lenders will consider her to be an appealing borrower. As long as her income is sufficient and secure, she is free to go vehicle shopping.
Just be aware that it’s also easy to bite off more car loan than you can handle financially. To reduce the amount borrowed as well as the monthly payments, make a large down payment. If she hasn’t yet started saving for that, she should do it now.
As your granddaughter’s credit stands now, she most likely won’t qualify for the best car loan rates if she can qualify for a loan at all. I would encourage her to follow the steps outlined above that will help her get the car she wants but know that it will take some time and patience to build a decent credit profile for her to qualify for a substantial car loan.
See related: Buying a car with no credit: 6 things to know
American Express cardholders are loyal customers. Not only do they recognize the value offered by the American Express name, cardholders enjoy tremendous perks like extended warranties, travel protections and access to presale tickets to sporting events and concerts. These card benefits can justify a pricier annual fee.
American Express strives to be competitive in the credit card marketplace and continues to look for ways to add value for their cardholders. Although American Express is widely known for its traditional charge card model – which is to pay in full when you receive a monthly statement – American Express also provides solutions for consumer and business card customers who need more flexibility, particularly as their financial needs shift during the COVID-19 pandemic.
Amex Pay Over Time: Things to know
What is Pay Over Time and how does it work?
Which American Express cards offer Pay Over Time?
How to take advantage of Pay Over Time
Understanding when interest is charged
How Pay Over Time affects your credit score
Pay Over Time vs. traditional revolving credit
Pay Over Time vs. Pay it Plan it
What is Pay Over Time and how does it work?
For cardholders who want or need a bit more flexibility when structuring payments, Pay Over Time is a feature that lets eligible American Express cardholders carry a balance on eligible purchases of $100 or more.
There are specific purchases that are not eligible for Pay Over Time. These transactions include traveler’s checks, cash advances, fees owed to American Express and gambling-related transactions like casino charges.
For those who choose the Pay Over Time feature, applicable revolving balances are subject to accrued interest. In addition to more flexible payment terms, cardholders will continue to earn rewards on all eligible purchases; it does not matter whether the Pay Over Time feature is utilized.
Pay Over Time is a feature of American Express U.S. consumer and business Green, Gold and Platinum cards, and the feature allows eligible charges to be automatically added to a balance that a cardholder can opt to revolve with interest month-to-month, until that amount reaches their Pay Over Time limit.
In short, it’s an extended payment option for cardholders who may not want to pay a balance in full.
Which American Express cards offer Pay Over Time?
The program is offered for both consumer and business Green, Gold and Platinum cards. Here’s a quick look at what the consumer cards have to offer.
American Express® Green Card*
Annual fee: $150
Rewards rate: Cardholders earn 3X points at restaurants worldwide, including takeout and food delivery and 1X points on all other eligible purchases.
American Express® Gold Card
Annual fee: $250
Rewards rate: Earn 4X points on restaurants, including takeout and delivery, and on U.S. Uber Eats purchases (learn more). Earn 4X points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X). Earn 3X points on flights booked directly with airlines or on American Express Travel. Earn 1X points on all other purchases.
The Platinum Card® from American Express
Annual fee: $695
Rewards rate: Earn 10X points on eligible purchases at restaurants worldwide and when you shop small in the U.S, on up to $25,000 in combined purchases, during the first six months of card membership. Earn 5X points on airfare booked directly with airlines or through American Express Travel. Starting January 1, 2021, earn 5X points on up to $500,000 on these purchases per calendar year. Earn 5X points on prepaid hotel bookings through American Express Travel and 1X points on all other purchases.
How to take advantage of Pay Over Time
For consumer cards, when Pay Over Time is set to “on” (cardholders can turn this feature on and off in the mobile app or via their online account), purchases $100 or more ($0 on Green) are automatically added to their Pay Over Time balance that revolves with interest month-to-month, up to their Pay Over Time limit.
For Business cardholders, Pay Over Time will be added at the start of the November billing cycle – there is nothing these users need to do to activate the feature. Pay Over Time provides business owners the option to carry a balance with interest on eligible purchases of $100 or more or to pay the balance in full.
It’s also important to note that both business and consumer cardholders will be unable to add a charge to a Pay Over Time balance if the transaction will exceed their set Pay Over Time limit. Cardholders can find their Pay Over Time limit in their app or cardholder dashboard.
Understanding when interest is charged
When using the Pay Over Time feature, cardholders use their American Express cards as they normally would. If the cardholder pays the entire balance in full at the end of the billing cycle, no interest is charged, and the card continues to function similarly to a charge card.
If you do carry a balance, however, your payments and interest charges will be dependent on your Pay Over Time terms.
Payment deadlines are outlined on your American Express dashboard, found on both the mobile app or online portal. (Note, if you need some flexibility on your monthly due date, American Express might allow you to change it.)
Your interest rate is determined by your creditworthiness. Current rates range from 15.99% to 22.99% variable.
Like a traditional credit card, Pay Over Time allows cardholders to pay just a monthly minimum and carry the rest of their balance (up to their Pay Over Time limit), the full balance or anything in between.
How Pay Over Time affects your credit score
Pay Over Time won’t affect your credit – and more particularly your credit utilization ratio – the way a traditional credit card does. Your credit utilization ratio is the amount you currently owe divided by your credit limit, but this is dependent on your card
issuer reporting your available credit limit to major credit bureaus. Since Pay Over Time isn’t technically a credit limit, it does not show up on your credit report.
Pay Over Time vs. traditional revolving credit
The Pay Over Time feature can make your charge card function more like a traditional credit. With charge cards, consumers or businesses are not able to carry a balance; your amount due on your monthly statement must be paid in full.
The difference with Pay Over Time is that it permits cardholders to finance eligible purchases beyond the month with interest.
Yet, Pay Over Time differs from a typical credit card you may have in your wallet. Notably, Pay Over Time enables you to toggle the feature on and off.
Additionally, your qualifying American Express card has no preset spending limit, while your Pay Over Time limit does resemble a traditional revolving credit limit. In effect, you can charge what you want on your American Express card and decide when and how to pay off the amount you owe. (Note, though you don’t have a hard credit limit, American Express won’t approve unlimited spending.)
Pay Over Time vs. Pay It Plan It
Beyond Pay Over Time, there are other features that American Express offers to help customers manage their finances. The Pay It Plan It feature, for instance, can be used in tandem with Pay Over Time.
Pay It Plan It helps cardholders pay off qualifying purchases over time with fixed monthly payments, for a fixed fee. No enrollment is required, although account history and credit history are evaluated. If there’s a history of missed or late payments, American Express might not grant this feature.
The “Pay it” portion of Pay It Plan It lets cardholders tap the American Express app to quickly pay for small purchase amounts, under $100, throughout the month.
”Plan it,” on the other hand, lets consumer cardholders split up qualifying large purchases of $100 or more into equal monthly payments for a fixed fee.
Bottom line
American Express offers cardholders the flexibility to decide how to pay their bill. If you are cash-strapped during a particular month, the Pay Over Time feature allows you to carry a balance on purchases.
Regardless of the flexibility, American Express offers, though, it’s important to continue your diligent payment habits, especially making minimum payments on time.
*All information about the American Express Green Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. This offer is no longer available on our site.
Can you transfer your credit limit from one Capital One card to another? Unfortunately, the answer is no. While Capital One credit limit transfers were possible a few years ago, Capital One no longer lets you combine credit limits.
This means that if you were thinking about combining Capital One credit card accounts in order to take advantage of a higher credit limit – or close an old Capital One account without hurting your credit score – you’re going to have to come up with another way to solve your problem.
If you were considering a credit limit transfer in order to give yourself a higher credit limit on one of your Capital One credit cards, you might want to request a credit card limit increase instead. If you have a history of responsible credit use, your request might be granted right away.
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If you want to combine Capital One cards before closing out an old credit account, look for ways to keep the old account active instead, such as using your old Capital One credit card for a single recurring monthly payment (like Netflix or your gym membership) and setting up autopay to ensure that the credit card bill always gets paid on time.
You can also apply for a new Capital One credit card. This way, you’ll get a new line of credit and the opportunity to earn some of Capital One’s best rewards and sign-up bonuses. It won’t be the same thing as transferring a credit limit to another card on Capital One, but it will get you a new card with a fresh credit limit.
What is a credit limit transfer?
A credit limit transfer is exactly what it sounds like: Taking some (or all) of the credit limit allocated to one credit card and transferring it to another credit card.
If you have a card with a $3,000 credit limit and another card with a $5,000 credit limit, for example, you could combine those two credit limits onto a single card, giving you a credit account with an $8,000 credit limit. Then, you could close the other account without worrying about losing the available credit associated with that account. Since you transferred that line of credit to another card, your total credit limit will remain unchanged, and you won’t have to worry about the loss of available credit hurting your credit score.
You could also transfer a portion of one credit limit to another credit card. If you had a credit card with a $3,000 credit limit and a card with a $5,000 credit limit, you could transfer $2,000 of credit from the card with the $3,000 limit, giving you a card with a $1,000 credit limit and a card with a $7,000 credit limit. Some people choose to request this kind of credit limit transfer in order to take advantage of a top rewards credit card. Others transfer a portion of their credit limit so they can increase the purchasing power of their primary spending card.
It’s important to note that a credit card limit transfer is not the same thing as a balance transfer. When you transfer a balance from one card to another, you transfer the amount of money you owe – not the credit limit associated with the card. Balance transfer credit cards are designed to help you pay down old debt, and the best balance transfer credit cards offer at least a year of 0% intro APR to help you pay off your balances before they start to accrue interest.
(If you want to transfer a balance to a Capital One credit card, we’ve got a guide to help you get started.)
Why should I transfer a credit limit to another card?
Here are some of the reasons why people choose to transfer a credit limit to another credit card:
To increase the purchasing power of their everyday spending card
To transfer more credit to a card that earns better rewards
To combine two lines of credit before canceling a credit card
It’s worth noting that there are other ways to achieve these goals that don’t involve transferring a credit limit from one card to another. If you want to increase the purchasing power of your favorite credit card, you can always request a higher credit limit directly from your card issuer. If you want to earn more credit card rewards, you can request a higher credit limit or use the right credit cards for the right purchases (travel rewards cards for travel expenses, grocery rewards cards for grocery shopping and so on). If you want to cancel a credit card, consider the pros and cons of closing your credit account and decide whether you’re better off closing the old card or keeping it active.
How do I combine Capital One credit limits?
Capital One no longer lets you combine credit limits. However, just because you can’t combine credit limits doesn’t mean you can’t increase your Capital One credit limit. If you want to request a higher credit limit with Capital One, all you have to do is log in to your online account or open the Capital One mobile app.
If you’re using the mobile app, the option to increase your credit limit is listed in the “Profile” section, under “Account and Feature Settings.” If you’re visiting your online Capital One account in a web browser, look for the option “I Want To” and then select “Request Credit Line Increase.”
Requesting a higher credit limit online is fairly simple – all you have to do is provide some basic personal information, including your income and your monthly mortgage or rent payment. From there, Capital One will use your credit card payment and balance history to determine whether you’re eligible for a credit line increase. Requesting a higher credit limit won’t have any effect on your credit score, and, in many cases, you’ll get your answer immediately.
You can also request a credit line increase over the phone. Simply contact Capital One customer service at 1-800-227-4825 or call the number on the back of your credit card.
Bottom line
While Capital One previously allowed cardholders to combine credit limits on Capital One cards, current cardholders are not able to combine or transfer their credit limits.
Want to increase your credit limit on a Capital One credit card? It’s easy to request a credit line increase online or through the Capital One app – just log into your Capital One account and fill out a quick form or call customer service.
Credit union cards might not get as much attention as popular cards from big issuers, like Chase or American Express. That doesn’t mean they’re not worth looking into. A card from a credit union can be not only an excellent option for those with lower credit scores, but also a finishing touch to a card enthusiast’s strategy.
I got a credit union card last month with good credit and some of the best credit cards already in my wallet. Now, it has potential to become one of the most valuable cards I have because of how well it matches my spending.
Read on to learn about credit union credit cards and their pros and cons and to see if this type of card could be a good choice for you.
Credit union card pros
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The list of pros regarding credit union credit cards is long – see if any or all are appealing to you.
The fees and interest rates tend to be lower
Credit unions are member-owned nonprofit organizations, and the entire system works slightly differently from banks. Because of that, you may get lower interest rates as well as lower fees.
Annual fees, foreign transaction fees and late fees are also lower at a credit union versus a traditional bank. In fact, although 45% of traditional bank credit cards come with annual fees, only 10% of credit union credit cards do.
You may get great value from the card
It’s a misconception that only banks with large resources can offer generous credit card rewards and that credit unions can’t compete.
Of course, a credit union card isn’t likely to offer you premium benefits like airport lounge access or hundreds of dollars in statement credits. Still, if you like to earn cash back as much as I do, you may be surprised how much value credit union cards can provide.
Take the Affinity Cash Rewards Visa Signature® Credit Card that I have. I came across it while shopping for a credit card that would reward me for spending in bookstores (since being a bookworm can be an expensive hobby). What I got was more than just a great card for bookstores – it was the perfect finishing touch to my credit card strategy.
The Affinity Cash Rewards earns 5% back at bookstores, including Amazon.com (on up to $3,500 per month in purchases made at Amazon). Except for books, I do virtually all my shopping on Amazon. Imagine how excited I was when I got this card. This is an outrageously generous cash back rate, there’s no annual fee and no Prime membership is required.
Last year, I spent $2,168 on Amazon (I’m excluding grocery orders since I use the American Express® Gold Card for that). I also spend about $2,000 on books annually. If my spending stays the same, I’ll have earned over $200 in cash back with the Affinity Cash Rewards by my first-year card anniversary just in these two categories. But besides rewarding you for Amazon and book shopping, the card also offers 2% back at supermarkets, restaurants, gas stations and for eligible streaming and ride-sharing services, as well as 1% back on everything else. These cash back rates can put some popular rewards cards from major banks to shame.
Customer service will likely be excellent
One of the biggest advantages of credit unions is their focus on customers’ experiences.
This means you will typically receive excellent customer service and much more flexibility in terms of payments, because credit unions aim to support their customers and help them maintain financial stability.
Credit unions are local institutions that try to connect with a community, those who work for certain companies or have some specific mutual connection. As such, they focus on building trust and a brand within a community.
This, too, often translates to better, local customer service.
I was pleasantly surprised when I got my union credit card and received a call from the union’s customer service. It was a representative who had emailed me earlier letting me know she would be my point of contact in case of any questions. When she called, she asked me how my experience with the card was and whether I needed any help setting things up.
I have cards from some major issuers known for their great customer service, yet none of them were able to offer me this level of attention or a designated person I could contact.
You might find it easier to get credit
It’s usually easier for members to get credit at a credit union if their credit isn’t perfect.
This allows consumers with less-than-perfect credit an opportunity to get a quality credit card product even when more well-known cards might not be available to them.
Additionally, credit unions are more flexible with small businesses and their unique needs, such as gas cards for employees or multiple users on an account.
You may get a second chance if you get denied
Consumers with lower credit scores or even an average credit history can find it difficult to get a credit card from a bank. But if a credit union declines your application for a credit card, you can ask it to reconsider the decision.
Sometimes credit unions will grant your request and require you to enroll in financial education classes to make sure you learn to use it responsibly.
See related: How credit scores affect interest rates
Credit union cons
Most financial products come with some downsides, and credit union credit cards are no exception. Here are some things to consider before you apply for a card from a credit union.
Your other accounts are used as collateral
Perhaps one of the biggest downsides of using a credit union for a card is sometimes they may use a cross-collateralization system, which ties all your credit union accounts together.
For instance, if you have multiple loans at the same credit union and for some reason you can’t make a payment on one of them, it automatically gets secured by the other loans you have. Say someone put up a used car as collateral for a personal loan and they default on a credit card payment – that car could be repossessed to satisfy the credit card debt.
Luckily, that’s not always the case. It’s possible to get a credit union card without securing it with any collateral. Make sure to research various options and pay attention to terms to avoid getting a card on conditions you’re not comfortable with.
You must meet specific membership criteria
To get a credit card from a credit union, a customer must meet membership criteria. This can be a restriction on location, employment or a variety of membership eligibility requirements. For example, I was once rejected by a credit union in Dallas when refinancing my car loan because the union only serves U.S. citizens – no permanent residents (rude).
When you apply for a credit card at a bank, you usually don’t need more than the legal requirements, and your application depends only on your credit history and income.
On the other hand, many credit unions provide an option to become a member by paying a small fee if you don’t meet the membership criteria.
The application process may be lengthy
In my experience, getting approved by a credit union can be a bit stressful. I’ve dealt with this process three times – twice when trying to refinance my car loan and once when applying for a credit card – and each time has been a pain.
What takes five minutes when you’re applying for a card from a major issuer can take days and even weeks with a credit union. You can be asked to send your paystubs to prove your income and your utility bills to prove you live where you say you live, among other things. This slows things down considerably.
Customer service may not be available 24/7
Although a credit union may provide outstanding customer service, it might not be available 24/7.
For example, if you’re traveling and have a problem with your card, you might not be able to get in touch with the credit union’s customer service department right away.
See related: How long does it take to get a credit card?
Decision time
While there are advantages to credit union credit cards, there are some downsides, too.
Membership can be exclusive, you’re not guaranteed card approval just because you’re a member, and the application process can be stressful.
On the upside, because credit unions don’t offer credit cards for a profit, members indirectly benefit from those credit cards – when credit unions make money, they can offer better interest rates, reduced fees and even valuable rewards.
Otherwise, credit union credit cards are just like big-bank credit cards.
You can use them for purchases, balance transfers and cash advances, and you must make at least the minimum monthly payment to keep your account in good standing.
In addition, most credit unions report your account history to Experian, TransUnion and Equifax, which is an extra incentive for making your payments on time as it can help you build credit.
The pandemic has hastened the online move of services as well as goods.
Healthcare, therapy sessions and education are some of the services that have migrated online, voluntarily or involuntarily, due to the pandemic. What if you paid for an online service and either didn’t receive it or are not satisfied?
Reader Wanda finds herself in such a situation. She writes, “I have a pending charge of $200 on my credit card for a video consultation with a nurse practitioner who runs a medical marijuana spa and the fee is for a prescription for a medical marijuana card plus the video visit.
“I waited for over an hour online for the video visit, which I did not receive. The person finally called me and explained the process telling me an email would be sent to me that night with a link to get my medical marijuana card. I texted her the next day saying I received nothing and she texted back and said ‘give me about an hour’ and she would contact me. As of 9:30 p.m. today, no email or text from her. Can I get a reversal of that charge?”
See related: Filing credit card disputes in the coronavirus crisis
Chargeback for services
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It seems the situation involves getting a chargeback for a service that is not provided. If the chargeback involves merchandise that you didn’t receive, the situation is clearer; either you received the merchandise, or you didn’t. In case of services not received, there is more scope for ambiguity.
Chargebacks 911, a website that helps merchants deal with chargebacks, explains how a chargeback situation could come about for services that a consumer says they didn’t receive:
“The merchant failed to do something as promised. Or, the merchant’s policies and procedures weren’t clear, and there was confusion regarding what the consumer would actually receive. It’s also common that marketing causes chargebacks; unrealistic promises might be made.”
The firm advises merchants to adhere to the following procedures to avoid these situations:
Make sure that the way they describe the services is accurate. The description should provide detailed information but should also be easy to understand. Supplementary videos and images could help explain any confusing aspects.
Get consumers to sign off on the terms for providing the service and make sure they know what they will receive in return.
Provide excellent service, responding to all customer questions and grievances quickly. Give customers various ways to get in touch, such as live chat, phone and email. And check social media accounts regularly to respond to comments.
If it comes to that, Chargebacks 911 also advises merchants to issue credits promptly. If they sense that their relationship with the customer is strained and a chargeback situation could ensue, it advises them to cancel the service and issue a refund.
See related: What to do if your online order never arrives
Disputing a charge with a credit card company
It seems a service provider would be wise enough to recognize a potential chargeback situation and promptly take steps to issue a refund if that’s called for. However, that’s not always the case, and you could also take recourse to the Fair Credit Billing Act to dispute a charge with a credit card issuer if that becomes necessary.
You should put in a billing error dispute in writing with the credit card company within 60 days of receiving the bill with the charge for the service that was not provided. You could also call the company, but you should send something in writing first, the California Attorney General’s office advises. Send this letter to the company’s address for billing inquiries or errors, not to its address for payments.
The letter should provide all your details, an account of the dispute and any evidence you have about the matter. The card issuer should acknowledge receipt of your letter within 30 days. And it has 90 days to look into the matter.
Also, you should inform the credit card issuer if you are holding back on paying the disputed amount, which you can legally do while it investigates the matter without triggering a report to the credit bureaus. However, you should continue to pay the rest of your credit card bill. If the credit card company rules in your favor, it will credit you for the disputed charge and any interest associated with it.
See related: Can I get a chargeback credit on a canceled card?
What if a chargeback is not provided?
If the card issuer rules against you, it will provide you a written explanation of its findings, and you will have to pay the disputed amount and any interest charges on it.
If you disagree with the card issuer’s findings, you can get back to it within 10 days to present any other evidence you might have. You could also ask to see any input it used to reach its decision.
Another recourse is to put in a complaint with the Consumer Financial Protection Bureau. You could even sue the card issuer if you believe the investigation was not conducted fairly.
See related: What to do when your bank won’t refund fraudulent changes
Bottom line
Wanda, if you never received the services you ordered from the medical marijuana spa, after first making your best efforts to sort out the matter with the nurse practitioner, you should initiate a dispute with your card issuer, asking for a chargeback. Since this is all online, you should have a digital trail for evidence.
Good luck getting your money back!
Contact me at pthangavelu@redventures.com with your credit card-related questions.
You probably know what a good credit score is – it’s a straightforward number that reflects how well you manage your credit.
But do you know what a good credit limit is?
According to Experian, Americans had an average of $30,365 in credit available to them across all their credit cards in 2020.
But the question of whether your credit limit is good is a bit more nuanced.
Read on to learn what experts have to say about what a good credit limit is and see how yours stacks up.
See related: My credit limit was (almost) cut without warning
What is a credit limit?
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Your credit card limit is simply the amount of credit a lender has extended to you, based on your credit scores and other barometers of your creditworthiness and ability to pay, such as your income.
Think of it as your total spending limit – and don’t exceed it or you might face a penalty.
Your credit score could take a hit and your issuer could close your account. Additionally, your transaction might be declined, your interest rates could rise, your credit limit could go down and you might have to pay a fee.
Stay within your credit card limits to avoid these headaches.
See related: Can I request a specific credit line when I apply for a card?
What is considered a good credit limit?
Paul Sundin. CPA and tax strategist at Emparion, said the answer depends on the credit card user.
The American Banking Association reported in May that super-prime consumers (with credit scores of 759 and above) are given an average of $9,329, while prime consumers (with credit scores between 680 and 759) are given $5,109 and subprime consumers (with credit scores of 680 and below) are given $2,541.
And some high-net-worth consumers are given even higher credit limits or don’t even have preset spending limits at all because of their exceptional credit history, Sundin said.
Ben Reynolds, CEO and founder of Sure Dividend, said a reasonable credit limit might mean a specific number to each person, so you shouldn’t base your credit limit on what’s considered “good.”
“People need to judge a good credit limit based on their income, spending habits and repayment strategies,” Reynolds said.
See related: Card issuers slashed billions in credit limits amid COVID
Credit utilization tops credit limit
Imani Francies, a finance expert at USInsuranceAgents, said your credit utilization is always more important than your credit limit.
And no credit limit, she said, measures up to the significance of keeping your utilization rate below 30%.
So, Francies said, if someone has a higher credit limit than you but they maxed out their $10,000 limit, you would be seen as more creditworthy if you pay off your $500 credit limit every month on time and never have your utilization rate exceed 30%.
How to get a credit limit increase
There are many ways to improve your odds of getting your credit limit raised – one good way is to raise your credit score since lenders usually give cardholders with great scores higher spending limits.
And once you improve your credit score – by paying on time, paying your balance in full and not opening a bunch of accounts at one time – you’ll get the added benefits of qualifying to the best interest rates and credit cards with the best rewards.
And keep in mind you can also use a secured credit card to build credit.
In addition, you can always ask for more credit after you get your card. As the economy improves and uncertainty fades, it should be easier to get.
But before you ask your lender for an increased credit limit, ask yourself if you’re doing it to lower your credit utilization ratio or if you’re just doing it so you have more money to spend. The latter would not make sense unless you have a plan to pay your balance in full every month.
Bottom line
The question, “What is a good credit limit?” varies among consumers and is based on your personal finance profile.
If you’re thinking about asking your issuer for a credit limit increase, make sure you have a compelling reason, such as your income has increased. And note that the issuer will also want to see your employment status and proof of your mortgage or rent payment.
If you decide to ask for an increase, make sure you’re asking for the right reason and consider how it will affect your credit utilization and your credit score.
And always keep in mind that using your card responsibly is key to your financial well-being.
You’ve been running a credit card balance for a few months, but finally, you have enough cash on hand to zero out the statement balance.
With great relief – and not a little pride – you pay it off. Thank goodness you’re done with that debt.
But wait: did you also pay the residual interest?
What is residual interest?
Residual interest is the interest that’s accrued on the unpaid credit card balance all this time that you’ve not been paying it. It’s also called trailing interest – because it trails into the next month.
The federal Consumer Financial Protection Bureau investigated residual interest charges on credit cards in 2015 as part of its biennial credit card report to Congress.
“We recognized, based on our research, that there is some confusion about this so-called ‘ghost charge,’ said Wei Zhang, the bureau’s credit card program manager. “People wanted to know, ‘What is this? Why is it happening?’”
The bureau did not find issuers doing anything illegal; however, they did discover that many details were buried in the fine print of credit card agreements. Card owners often were unaware of or did not fully understand what happened if they failed to pay their bill in full or how interest on the balance was calculated.
Before we get into those details any further, though, let’s start by explaining some terms:
Billing cycle – That’s the time between two bills. Many billing cycles are about a month long.
Closing date – That’s the date on which the billing cycle ends. When the closing date occurs, the card will post a statement balance. That’s the amount of purchases you charged during this billing cycle.
Grace period – This is the period of time between when the billing cycle closes and your payment is due. This can be a few weeks, or even up to a month.
Due date – This is the last possible day to make your payment without penalty. After this day, interest will start to accrue on the balance.
That interest that accrues? That’s residual interest.
See related: How to lower your credit card interest rate
How does residual interest work?
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Here’s an example of how residual interest comes into play:
You have a credit card with a billing cycle that closes on the 15th of every month. On March 15, your statement balance is $1,200.
Your due date on the bill is April 14th. But when the date arrives, you can only afford to pay $900 – meaning you leave a balance of $300 on the credit card.
That $300 starts accruing interest the very next day. How much interest? Depends on your particular credit card. Let’s say, for this example, your card charges an APR of 22%.
To figure out how much that will be, divide the APR by the number of days in the year. So 22 divided by 365 – 0.0602%.
Multiply this by your current $300 balance, and you get 18.06 cents. That’s the amount of residual interest you will get charged on the balance each day.
By the time the next month’s due date rolls around, 30 days later, you will owe $5.41 in residual interest.
This is where things get tricky. Maybe you decided to clean up your financial act. You’ve only charged $200 this month, and now you can afford to pay off both the new balance and the $300 from last month. Everything’s squared away, right? Nope, not so fast. You still owe that $5.41. And if you don’t notice it and neglect to pay it, it will continue to accrue interest.
Or, you do pay the entire bill by sending a check in the mail. Interest may continue to accrue on the balance between the time you mail the check and the time the bank receives it and cashes it. Remember, once you enter the land of accruing interest, there is no more grace period.
“Because it accrues after the billing period closes, [residual interest] won’t appear on your current statement – meaning that this could be a surprise amount you discover in your next statement,” said Megumi Smisson, who discusses personal finance on her podcast Ms. Money Moves and her website, Money With Megumi. “Or, worst case, you think you’ve paid off your card, don’t check your next statement to make a payment, and incur a late fee and potentially damage your credit.”
See related: What happens when you miss a credit card payment?
Do all cards charge residual interest?
Residual interest is a common credit card feature. Supposedly, there are banks that don’t charge it, though those are increasingly hard to find.
“I’m not saying it’s impossible, but … [scoring a credit card that doesn’t charge residual interest] is kind of like finding the pot of gold at the end of the rainbow with a unicorn standing next to it,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling in Washington, D.C.
There are many credit cards that offer 0% APR on new and transferred balances for a number of months. To find out how your card deals with leftover balances, look at the back of the statement. It probably won’t say “residual interest” in those words.
Scan instead for writing like “finance charges may be assessed even if we receive payment in full in the current billing cycle.” Other ways to get this information, and discover what the APR is for your card, are to look at your card’s terms and conditions, go to the card issuer’s website or call the issuer.
How to avoid residual interest
There’s no reason you should have to pay months’ worth of residual interest on your credit card for a balance that’s quickly resolved. Here’s how to make sure this isn’t a problem for you.
Pay your card in full each month. “The No. 1 rule, the best advice for avoiding residual interest altogether, is to pay off your purchases immediately,” McClary said.
First timer? See if you can get a break. There’s no harm in calling your credit card issuer and asking if you can get an extension on your payment deadline, so you can avoid late fees, finance charges and any residual interest on this one cycle. “You never know what you’ll get until you ask,” McClary said.
If that’s not possible, check your balance and pay it online. The credit card issuer should post real-time information about your leftover balance and any accruing interest.
Get confirmation from the card issuer. This is particularly important if you are paying your balance by mail, either from a paper statement or from what you see online. Interest on the balance continues to accrue until the moment the bank cashes your check. If the check is insufficient because it doesn’t include those extra few days of interest, interest will accrue on the unpaid balance. Instead, before you write the check, pick up the phone and ask the credit card issuer for the payoff balance. “That is the best, the most foolproof way to accurately know the balance that would pay off the account,” McClary said. He advises overestimating the day the payment will arrive by a day or two; the company will repay you any overpayment but will charge more interest if you fall short again.
See related: Should I pay off my credit card all at once?
Bottom line
Remember, if you’ve let a balance carry from one statement to the next, you don’t just have to pay off the balance on your statement. You may also owe residual interest that is not included in your current statement. Check your total online. Call the card issuer to double-check. You can also check your credit card agreement to find out about residual interest or minimum finance charges.
And after you’ve paid what you believe you owe, check again, to be sure.
“Don’t just anticipate ‘I’m off the hook’ next month,” Zhang said. “In many cases, you are probably not off the hook. Make sure there are not any residual balances next month.”
Qualifying for a credit card can be a challenge if you have damaged credit. It can be difficult, too, if you have a short history of using credit or you haven’t established any credit history at all.
But there is an option if you can’t qualify for a traditional credit card: secured credit cards. These cards, which typically come with lower credit limits and few frills, can help you quickly build a credit history or steadily repair bad credit.
Amy Maliga, a financial educator at Take Charge America, a nonprofit credit counseling and debt management agency based in Phoenix, said secured cards are one of the most important tools for consumers who need to build or rebuild their credit.
“Secured credit cards can be a lifeline for consumers who may have a hard time obtaining credit through other channels,” Maliga said.
But what are secured cards, and how do they compare to unsecured credit cards?
How do secured credit cards work?
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There are some important similarities between unsecured and secured credit cards: You can use both types of credit cards to make purchases. You pay back these purchases each month. And if you don’t pay off everything you owe by your due date, you’ll be charged interest on your unpaid balance.
But there’s one big difference between secured and unsecured credit cards, and it has to do with your credit limit.
With a secured credit card, you first make a deposit with the bank or financial institution issuing the card. That deposit becomes your credit limit. If you deposit $500, you can charge up to $500 on your secured card. If you deposit $1,000, your card’s credit limit is $1,000.
Traditional credit cards – which are also known as unsecured cards – don’t require any deposit from borrowers. These are the cards you are probably most familiar with: They’re the standard Visa, American Express, Discover and Mastercard credit cards issued by banks and credit unions.
Your past credit history determines your credit limit on an unsecured credit card. If you have a history of paying your bills on time and a strong credit score, your credit limit will be higher.
The pros of secured credit cards
There are several benefits to secured credit cards for consumers with weak or bad credit.
They’re easier to get
The deposit arrangement is what makes secured cards attractive to borrowers with little or bad credit. If you fail to make your card payments on time, the bank or financial institution issuing your card can take what it is owed from your deposit. Because you can’t charge more than you deposited, you can never owe more than what your bank can take.
This offers financial protection to banks and makes it less risky for them to pass out secured credit cards to consumers with a short credit history or ones with blemishes on their credit reports. It’s easier, then, for consumers to qualify for secured cards than it is for them to nab unsecured credit cards.
“Think of the monetary deposit with a secured credit card like the deposit for a rented property,” said Jim Pendergast, senior vice president of AltLINE Sobanco, a company partnered with Alabama’s Southern Bank Company. “It acts as an assurance that you’ll pay your balances. Just like for a renter’s deposit, you can earn your deposit back by using the card responsibly.”
To qualify for a traditional credit card, especially one with a strong rewards program and a lower interest rate, you’ll need a stronger credit score. With a secured card, though, your credit score isn’t as important because of that initial deposit.
You can use them to build better credit
Every time you make an on-time payment on your secured credit card, it is reported to the three national credit bureaus – Experian, Equifax and TransUnion. As these payments are recorded, your credit score will gradually build if you haven’t had enough credit to generate one or will slowly improve if you have a score that late or missed payments have damaged.
Once your credit score improves, you can then apply for a traditional credit card. At first, you might qualify only for basic credit cards with no rewards programs. But if you make your payments on these cards on time each month, too, your credit score will continue to improve until you can qualify for cards that offer cash back bonuses, miles or rewards points.
The cons of secured credit cards
Secured credit cards also have their drawbacks.
Limited spending power
Your credit limit will usually be lower if you’re using a secured card. That’s because this limit is typically based on your deposit. If your deposit is a low one – say $300 – your credit limit will be low, too.
No perks
Secured cards rarely come with rewards programs. You typically won’t qualify for cash back bonuses or free miles when using a secured card.
How long before a secured card becomes an unsecured one?
The good news? You can transition from a secured credit card to a traditional card if you make your payments on time each month. Doing this will boost your credit score over time. And soon, you’ll have a strong enough credit score to ditch your secured card and apply for an unsecured credit card. The provider that issued your unsecured card might even upgrade you automatically after, say, six months to a year of on-time payments with your secured credit card.
Wendy Terrill, a retirement counselor in Burlington, North Carolina, understands this. She had cancer in 1999, and the financial struggles brought about by this caused her FICO credit score to fall below 400. Terrill rebuilt her credit by taking out a secured card, putting down a security deposit of $200. She used that $200 of credit to slowly rebuild her credit score, making small purchases and paying them off on time.
In fewer than six months, Terrill had improved her score enough to qualify for a traditional unsecured card.
“Some don’t understand why you’d pay someone $200 to get $200 of credit,” Terrill said. “You want to build your credit, that’s why.”
Best secured credit cards
Ready to build your credit and looking for the right secured card? Maliga recommends that consumers look carefully at the fine print when choosing a secured credit card. Some secured cards come with annual fees or monthly maintenance fees.
Here is a look at three secured cards that might meet your needs.
Secured Mastercard® from Capital One
One of the benefits of this card is that it comes with no annual fee, so you won’t have to pay to use it. Capital One requires a security deposit of $49, $99 or $200. Once you make your deposit, you’ll get a credit line of $200. Capital One will automatically consider you for a higher credit line in as few as six months.
Discover it® Secured Credit Card
This is a rare secured card that offers a rewards program. You’ll earn 2% cash back at gas stations and restaurants on up to $1,000 in purchases each quarter. You’ll earn 1% cash back on all other purchases. There’s also no annual fee with this card.
Citi® Secured Mastercard®
Looking for a higher credit limit? The Citi Secured Mastercard might be a good option. You can get a credit limit of up to $2,500, with a deposit of that same amount. This card also charges no annual fee.
Best unsecured cards for people with limited credit history
But what happens after you’ve properly used your secured card, making charges and paying them off in full? Doing this will help you build a credit history, and your credit score should steadily grow stronger.
Eventually – it might take about six months of on-time payments with your secured card – you’ll be ready to apply for an unsecured credit card. You might not have enough credit to qualify for the top credit cards, the ones offering valuable rewards and cash back bonuses. But you might qualify for one of the cards listed below, all available to consumers with shorter credit histories or average to good credit scores.
Capital One Platinum Credit Card
This is a no-frills card – but it doesn’t charge an annual fee, which is always a positive. And Capital One will review your payment history regularly. You’ll be automatically considered for a higher credit line in as little as six months. You’ll also gain access to your free credit score and credit profile through CreditWise from Capital One.
Capital One Quicksilver Cash Rewards Credit Card
This card offers a basic rewards program. You’ll earn 1.5% cash back on every purchase you make with the card. You can also earn a $200 cash bonus if you spend $500 within three months of opening your account. This card also charges no annual fee.
Petal credit cards
The Petal credit card pitches itself to applicants with little to no credit. Instead of relying on a traditional credit score, Petal creates what it calls a Cash Score based on your income, spending and savings. Petal says this score could help you qualify for a better Petal card.
There are two versions – the Petal® 1 “No Annual Fee” Visa® Credit Card and the Petal® 2 “Cash Back, No Fees” Visa® Credit Card – that come with credit limits ranging from $500 to $10,000, depending on the card. You might also qualify for cash back bonuses of 1% to 1.5% of the purchases you make or 2% to 10% at select merchants.
Bottom line
Secured cards are an easy and accessible way to start building or rebuild your credit – and start earning cash back along the way, in some cases. Use them diligently, making sure to pay them in full, and in a few months, your credit will be strong enough to qualify for an unsecured credit card.
Credit card balances edged down in December, even as consumers engaged in holiday shopping, as uncertainty about a second round of stimulus checks extended to the latter part of the month.
Consumer revolving debt â which is mostly based on credit card balances â was down $3 billion on a seasonally adjusted basis in December to $975.9 billion, according to the Fedâs G. 19 consumer credit report released Feb. 5.
In December, credit card balances were off 3.6% on an annualized basis, following Novemberâs revised 0.8% dip and Octoberâs 6.7% drop, which came on the heels of Septemberâs 3.2% annualized gain.
The Fed also reported that student loan debt outstanding for the fourth quarter rose to $1.707 trillion, from the third quarterâs $1.704 trillion. And auto loan debt outstanding gained to $1.228 trillion, from the third quarterâs $1.219 trillion.
Total consumer debt outstanding â which includes student loans and auto loans, as well as revolving debt â continued to grow and rose $9.7 billion to $4.184 trillion in December, a 2.8% annualized gain.
For the entire year, credit card balances were down 11.2%.
Card balances had been growing before the coronavirus impacted consumer spending and bank lending in 2020. They dipped below the $1 trillion mark last May, for the first time since September 2017.
See related: 51% of consumers accrued more debt during the pandemic
ABA sees brighter days ahead for credit availability
The American Bankers Association reports, based on input provided by chief economists of large North American banks to its credit conditions index for the first quarter of 2021, that credit conditions (both credit quality and availability) have rebounded from their lows of last summer.
However, all three components of the index (the headline credit index, the consumer credit index and the business credit index) remain below 50, which is not a robust index reading. It indicates that while bank economists expect credit conditions to remain âsoftâ in the coming six months, they are less pessimistic than they were in September 2020 when the ABAÂ conducted its last credit conditions survey.
The consumer credit index component of the survey gained to 45.3, its highest level since mid-2019. Economists are optimistic about both the availability and quality of consumer credit compared to September. They expect credit to be more available to consumers in the coming six months, although a small majority expects credit quality to decline.
âAlthough credit quality is still expected to worsen over the first half of the year for both consumers and businesses, the overall outlook for credit markets has improved significantly since the summer and fall,â said Rob Strand, ABA senior economist. âAs widespread inoculations against the virus and new fiscal stimulus measures help heal the economy, banks will continue to work closely with policymakers, consumers and businesses to ensure that affordable credit remains available and recovery strengthens.”
Fed reports easing of credit card lending standards in fourth quarter
According to the Fedâs senior loan officer opinion survey on bank lending practices for January 2021 (which is based on input related to the fourth quarter of 2020), a âmoderate net share of banksâ reported that they had eased up on credit card loans.
As a result, a âmodest net share of banksâ also hiked up their credit limits on credit card accounts. And a âmoderate net share of banksâ reported that there was higher demand for credit card loans during the fourth quarter.
As for the outlook, a âsignificant net share of banksâ is expected to ease up on their standards for credit card loans. They are doing so in anticipation of an improvement in their loan portfoliosâ credit quality, as well as a hike in their tolerance for risk.
Also, the New York Fedâs survey of consumer expectations for December 2020 finds that consumers are less concerned about the possibility of missing a minimum debt payment in the coming three months. The average perceived probability of this occurrence dipped to 10.5% for December, from Novemberâs 10.9%.
See related: What happens when you miss a credit card payment?
Jobs edge up in January
The New York Fed survey also finds that on average fewer consumers expect the unemployment rate to be higher a year from now, with this probability declining to 38.9%, from Novemberâs 40.1%.
While the average perceived probability of losing a job in the coming 12 months rose up a bit to 15% (mainly on account of those without a college degree), respondents were also more likely to leave their job voluntarily. However, they were less optimistic about landing a new job if they lost their current ones.
The U.S employment situation was about stable in January, with the economy adding 49,000 jobs, the government reported Feb. 5. âThe labor market continued to reflect the impact of the coronavirus pandemic and efforts to contain it,â according to the Department of Laborâs employment report media release. The unemployment rate dipped 0.4 percentage points to 6.3% and average hourly earnings were up $0.06 to $29.96. Also, the job numbers for both November and December were revised down, with November down 77,000 jobs (to 264,000) and December losing an additional 87,000 jobs (to minus 227,000).
In his daily email commentary, Ian Shepherdson, chief economist at Pantheon Macroeconomics, noted, âCoupled with the -159K net revision, this is a significantly softer report than expected, at least in terms of payrolls. Bulls will cite the large and unexpected drop in the unemployment rate, but two-third(s) of the decline was due to a 405K drop in the size of the labor force â a sign of discouragement â while household employment rose 201K.â
He added that âthe labor market was frozen at the start of the year, and is completely dependent on the pace of reopening, which in turn is contingent on the speed and sustainability of the fall in hospitalizations.â
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In response to the coronavirus pandemic, major credit card issuers are offering relief to their customers.
Even though many places around the country are open, the pandemic continues to impact the U.S. economy. Workers are still at risk of being laid off or facing reduced hours or pay.
“This is a rapidly evolving situation and we want our customers to know we are here to provide assistance should they need it,” Anand Selva, chief executive officer of Citi’s consumer bank, said in a statement in Spring 2020.
At the same time, scammers are now trying to take advantage of coronavirus concerns by sending out fake emails about the virus that are designed to steal consumers’ personal and financial information or to infect their computers with malware.
Financial strategies if you’re self-employed
How to manage your credit cards during the coronavirus outbreak
Coronavirus: What to do if you’re unemployed and have credit card debt
What to do if you’re struggling to pay your credit card bills
Many credit card issuers are allowing customers to opt into financial relief programs online. These programs are a convenient way to access short-term relief. But it could come with a long-term cost as many cardholders will continue to see interest accrue. With the average credit card interest rate sitting at 16.05%, cardholders might find more cost-effective relief through other options.
Here’s what issuers are currently offering:
American Express
Cardholders who are having difficulties can get assistance through American Express’s financial hardship program. Eligible cardholders have the option to enroll in a short-term payment plan, which provides relief for 12 months, or a long-term plan, which can provide relief for either 36 or 60 months.
Under both options, you will receive lower interest rates, plus waived late payment fees and annual fees. But you might not have access to certain card benefits and features.
If you enroll in the short-term plan, you might be able to continue putting new purchases on the card but with a reduced spending limit. If you are participating in the long-term plan, you will not be able to use the card.
Amex will report participating cardholders to the credit bureaus as current, assuming they comply with the program’s rules. But the program’s terms do offer some important caveats: Amex will inform the credit bureaus that you are enrolled in a payment assistance program (if you’re in the long-term plan). And under both plans, Amex will report that you have a lower credit limit.
While these factors do not have as much of an impact on your credit score as a delinquent account does, it could still signal to other lenders that you might be having some financial hardship.
Bank of America
Bank of America cardholders who have trouble paying credit card bills can request a credit card payment deferral by calling the number on the back of their card.
To qualify for payment assistance, cardholders must be carrying a balance, according to the website.
Bank of America sent an email to Preferred Rewards members in May 2020 stating that the company had temporarily suspended the annual program review process. Members whose assets dropped below the regular threshold to keep their status would continue to qualify for program benefits. It is unclear if Bank of America is still suspending this program.
Barclays
Barclays urges credit card account holders to request payment relief online. As of May 4, 2020, the bank is granting payment relief for two statements, but interest will continue to accrue.
Capital One
“We understand that this is a time of uncertainty for many people, and we know that there may be instances where customers find themselves facing financial difficulties. Capital One is here to help and we encourage customers who may be impacted to reach out to discuss how we might be of assistance,” the bank said in a statement.
In a March 26, 2020 update, Chairman and CEO Rich Fairbank confirmed that they are offering waived fees and deferred payments on credit cards for some cardholders.
Because each customer’s situation is different, the bank encourages customers to contact it directly. To contact Capital One customer service about an existing account, call (800) 227-4825.
See related: How to clean your credit card
Chase
Previously, Chase Bank stated that customers will be able to “delay up to three payments on your personal or business credit card” if needed, with interest continuing to accrue. The website currently does not specify how many payments cardholders can defer.
It also stated that active duty military members who are responding to a disaster might have access to additional benefits. Servicemembers can call the bank for more information.
In a letter to shareholders, the company’s CEO, Jamie Dimon, also promised to not report late payments to the credit bureaus for “up-to-date clients.”
See related: Chase offering limited-time bonus on food delivery for some cardholders
Citi
Citi customers who have been impacted by the coronavirus pandemic might be eligible for assistance. Previously, the bank was waiving payments and late fees for two consecutive billing cycles. However, Citi has ended its pandemic assistance program.
“Due to a significant and steady decline in enrollments, our formal COVID-19 assistance program has concluded and we will focus on providing assistance options to those customers financially affected by COVID-19 on a case-by-case basis. We continue to closely monitor the situation and will evaluate additional actions to support our customers and communities as needs arise,” a spokesperson for Citi said in an email.
During the bank’s pandemic assistance program, interest continued to accrue, but accounts that were current at the time of enrollment were not be reported as delinquent.
Discover
Discover will be extending relief to qualified customers who are experiencing financial difficulty caused by the spread of COVID-19.
“We encourage them to contact us by calling and are directing them to www.discover.com/coronavirus for phone numbers for each product line and other FAQs,” Discover said in a statement earlier this year. “We also can provide relief through our mobile text app, which connects a customer directly with an agent.”
Discover it Miles cardmembers can also put their miles towards their bill – including their minimum payment.
See related: What to do if you can’t pay your business credit card bill
Goldman Sachs
Apple Card customers can enroll in an assistance program. Previously, cardholders could waive payments without accruing any interest. The website currently doesn’t specify if this is still the case.
Key Bank
Cardholders can defer payments for three billing cycles. Though interest will continue to accrue, enrolled cardholders will not receive late fees, and their accounts will be reported as current, as long as accounts were not delinquent at the time of enrollment.
Synchrony
Synchrony is extending relief to customers experiencing financial hardship. The company’s website previously stated that this could include payment relief for up to three statement cycles, while interest would continue to accrue. The website currently offers no specifics about what the issuer is prepared to offer.
Truist (formerly SunTrust and BB&T)
Previously, Truist offered payment relief assistance to customers with personal and business credit cards, among other products. As of April 14, it was willing to delay payments for up to 90 days. The website currently offers no specifics about what the issuer is prepared to offer.
Wells Fargo
Previously, impacted cardholders could defer monthly payments for two consecutive billing cycles. The company’s website currently does not specify what assistance cardholders can expect to receive.
See related: Coronavirus stimulus legislation doesn’t suspend negative credit reporting
ultimate guide to coronavirus limited-time promotions for more offers designed to help cardholders maximize rewards amid the coronavirus pandemic.
Business credit cards
If you are a small-business owner and cash is not flowing and bills are piling up, the most important thing to do is contact your card issuer.
Some banks are also providing assistance in case you can’t pay your business credit card bill.
Another coronavirus complication: Scams
As consumers wrestle with the impact of the coronavirus, scammers are trying to take advantage of the situation.
In a June 2020 public service announcement, the FBI warned that the increasing use of banking apps could open doors to exploitation.
“With city, state and local governments urging or mandating social distancing, Americans have become more willing to use mobile banking as an alternative to physically visiting branch locations. The FBI expects cyber actors to attempt to exploit new mobile banking customers using a variety of techniques, including app-based banking trojans and fake banking apps,” the PSA warns.
Scammers might also be capitalizing on health and economic uncertainties during this time. In one such scam, cybercriminals are sending emails claiming to contain updates about the coronavirus. But if a consumer clicks on the links, they are redirected to a website that steals their personal information, according to the Identity Theft Resource Center (ITRC).
Identity theft in 2020: What you need to know about common techniques
Bottom line
The outbreak of a disease can upset daily life in many ways, and the ripple effects go beyond our physical health. Thankfully, many card issuers are offering relief. If you’re feeling financially vulnerable, contact your credit card issuer and find out what assistance is available. And while data security may seem like a secondary consideration, it’s still important to be vigilant when conducting business or seeking information about the coronavirus online.