Credit Column

Whether you love it, hate it, or love hating it, credit is a part of our capitalist experience and one that is a double edged sword. Use it responsibly and you’ll discover that the leverage it provides can enrich your life considerably. Use it irresponsibly and you’ll discover that the leverage it provides can put you in a deep hole of debt that can take years to recover from.


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The Difference Between Visa and MasterCard

Visa and MasterCardWhen we think of credit cards, often we think of the logos that accompany the most commonly used credit cards: Visa and MasterCard. These two companies are often said in the same sentence, and many people think that they are essentially the same company.

However, this isn’t the case. Visa and MasterCard are two distinct companies, even though they are in the same business, and do a lot of the same things. Understanding this can help you make a more informed decision when trying to figure out which credit cards are the best for your situation.

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Credit Card Issuers Raising Rates on New Customers

Interest rate vs money balanceOne of the considerations that many consumers worry about when signing up for a new credit card is the interest rate. The interest rate you end up with can have a great deal of influence on how much you pay over time. The higher the interest rate, the more you pay when you carry a balance. If you are a new customer, though, you can expect to see higher interest rates as you apply for new cards.

According to CNN Money, interest rates are on the rise for new customers. Apparently, interest rates are up three percentage points over the past three years. A lot of the blame is being placed on the Credit CARD Act of 2009. With restrictions that come on raising rates for current consumers, credit card issuers are looking for ways to raise revenue, and new customers can provide a way to start out with a higher interest rate.

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Best Cash Back Credit Cards for April 2012

One of the ways that you can maximize your finances is to make use of cash back credit cards. These are credit cards that provide you with the ability to earn cash back on your purchases. Hundreds of these cash back cards exist, and many of them stop at providing you with 1% cash back on all your purchases. However, there are cards out there that offer better cash back deals — even promotional sign up bonuses.

As you consider which card might be best for your lifestyle, here are a few cash back credit cards offering great deals this month:

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My Citi mtvU Card Was Compromised

Maybe I was tempting fate when I listed the virtual account number on my post about one time use credit card numbers or perhaps my credit card was caught up in the Global Payments breach (which prompted that post) but my Citi mtvU Card, which is slated to be replaced anyway, was compromised this week. I received a text message from Citi about a $10 charge late Tuesday night from nimbuzz.com, a mobile company. If I authorized the charge, I was to text back 1. If I didn’t, text back 2.

I texted back 2 and within seconds (it really was within seconds, I was kind of amazed) I got a phone call. Now, I’m not one to be suckered into a phishing scam but the representative identified themselves as being part of the fraud department, tried to confirm other transactions, and ultimately reissued a card with next day shipping (for free, waiving their usual $15 charge). Normally, I will call the credit card company but in this case they didn’t ask for any identifying information, so I figured I’d save myself some time.

Who knows if this is part of the Global Payments breach, but it seem unlikely since “only” 1.5 million numbers were stolen, but ultimately you can’t really do much. Liability for unauthorized purchases is capped at $50 by federal law and most credit card companies offer zero liability, so no sense losing sleep over it.

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How to Generate One Time Use Disposable Credit Card Numbers

Cutting Up Credit CardsThe recent breach of Global Payments has once again brought the issue of credit card security back into the limelight. While most, if not all, affected cardholders won’t feel any financial repercussions, they might have to deal with a little hassle as cards and card numbers are replaced. This rekindled my interest in a technology, one time use credit card numbers, that gained a lot of popularity the last time we had a huge data breach, when Heartland Payment Systems was hacked in 2009.

I was surprised to find out that so few issuers are offering one time use disposable credit card numbers. From what I could find, only Citi, Discover, and Bank of America offered something like this. They all use technology from the same company, Orbiscom, which was acquired by MasterCard in 2009. American Express used to offer a service like this but discontinued it years ago.

I’ll look at the Citi version of the disposable account number generator in greater detail and then link to the other two.

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Citi mtvU Card Ending, Convert to Citi Forward Card

Citi Forward® CardRIP Citi mtvU card. :(

If you’ve read Bargaineering for a while, you’ve probably read that I carry two credit cards – an American Express Costco TrueEarnings card and a Citi mtvU card. I loved the Citi mtvU card because it offered 5% in ThankYou Rewards, which is slightly worse than cash, at restaurants and bookstores, which includes Amazon.com. It’s a card I’ve had for many years and, despite slightly better alternatives on the market, I’ve stuck with it because it was pretty good.

According to a letter I received from Citi, the Citi mtvU card will be retired effective April 13, 2012. It will be replaced with a Citi Forward Card with a similar set of features and bonuses, though the biggest ones are most beneficial to people carrying a balance. Here is what they said about what’s new and what will remain the same.

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Who Else Looks At Your Credit Score?

We all know that our credit score is the primary source of information used by a perspective lender as they’re making the decision to approve or deny our credit application. What we don’t know is that with increasing frequency, our credit or FICO score is being used in places other than banks and mortgage lenders. In an economy where it is proving more difficult to get any type of loan or contract where you get the goods now and pay for it later, keeping our credit score as high as possible is even more important. Beside the mortgage lender, who else is looking at our credit score?

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NetSpend & Prepaid Debit Cards You Didn’t Apply For

Debit CardsThe other day an old college friend of mine emailed me about a strange thing he received in the mail. One of those prepaid debit card companies apparently sent him a debit card that he never remembered applying for. When he called the company up, they said that the card wasn’t activated and wouldn’t be activated until he called in and deposited money on the card. It was a prepaid debit card so you can’t even use it until you deposit money. This reminded me of a story I read on Wise Bread a long long time ago in which Xin Lu received an unsolicited prepaid debit card from NetSpend, one of many prepaid debit card companies. I don’t know if my friend got one from them or someone else (there are plenty of companies in this space), I didn’t ask, but here’s what I told him.

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