How To Get The Most Out Of Your Credit Card Brian McCaul

How To Get The Most
Out Of Your Credit Card
Brian McCaul
Vice President – Bankcard Sales Manager
May 2010
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How To Get The Most Out Of Your Credit Card.
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Topics To Be Covered
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Credit scores and what do they mean?
When to use credit or debit?
Changes in credit card laws
Finding the right card for you
Getting the most out of your card
Additional Resources
Q&A
What’s in your FICO® score
• A credit score is a number that helps lenders predict
how likely you are to make your credit payments on
time.
What’s NOT in your score
By law, credit scores my not consider your race, color,
religion, national origin, gender and/or marital status, and
whether you receive public assistance or exercise any
consumer right under the federal Equal Credit Opportunity
Act or the Fair Credit Reporting Act.
Source: MyFICO.com
How To Improve Your Score
 Make sure your credit report is accurate
 Pay your bills on time (payment history)
 Keep balances low - don’t max out your card(s)
(amounts owed)
 Pay off debt rather than moving it between cards
 Keep cards open if possible (length of credit history)
 Apply for new cards/loans sparingly (new credit, types
of credit)
What is a good score?
750 and Above – Excellent
Around 700 – Good
Around 650 – Fair
Below 600 – Poor
Super-Prime
Prime
Sub-Prime
Debit or Credit?
Credit
Debit
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Similar to checks in that it debits
your checking account immediately
Also allows you to receive cash from
an ATM or at point-of-sale
Safer than carrying blank checks or
cash
Choose how transaction is
processed – “Signature” debit vs.
“Pin” debit
Some protection against fraud
Rewards not as rich and usually only
when used as “Signature” debit
Beware of “holds” put on these
transactions/reservations:
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Hotels
Gas - $75
Rental Cars
May overdraft your account but new
Regulations (July 1) will protect you
– Opt in
Paying with your money
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Option to Pay in full (charge card –
no interest) or Pay over time (credit
w/ interest)
Grace Period (no interest period)
Protection on purchase disputes
May get increased warranty
protection
Zero Liability fraud protection
Better Rewards
Cash Advances (fee)
Paying with the bank/card issuer’s
money – just have to pay it back
CARD Act of 2009 – New Rules
• Designed to address unfair and deceptive card
practices signed into law on Feb 22, 2009
• What your card company has to tell you
– When they plan to increase your rate or other fees
– How long it will take you to pay off your balance *
• New rules regarding rates, fees, and limits
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No interest rate increase for the first year
Increased rates apply only to new charges
Restrictions on over-the-limit transactions
Caps on high-fee cards
Protections for underage consumers
Source: The Federal Reserve Board
CARD Act of 2009 – New Rules (cont.)
• Changes to billing and payments
– Standard payment dates and times
– Payments directed to the highest interest balances first
– No two-cycle billing
Finding the Right Card for You
• Network Preference – Visa, MasterCard, American
Express, Discover
• Credit Score?
– Poor: consider a Secured Card
• How do you intend to use the card?
– Will you carry a balance or pay in full each month?
• What’s important to you?
– Interest Rate/Fees or Rewards
• Rate – do the math on carrying balances and keep an
eye on your monthly statements
• Many card issuers will offer lower rates for those with higher
scores (lower risk to the lenders)
• Teaser Rates  What’s the “go to” rate?
• Do they have a Penalty Rate (Default Rate)?
Finding the Right Card for You (cont.)
• Rewards – Generally, the better the rewards offered,
the higher the fees/interest rate charged
– Earn Points (miles) or Cash Back?
– Make sure to understand the terms of the rewards program
• How do you redeem points? Do points expire? What is a point
worth?
• How do I get my cash back and when? Is it automatic or do I
have to request it? Is there a cap or special criteria on earning
cash back?
• Comparison Shop
How to Get the Most From Your Credit Cards
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Pay on time – consider setting up auto-pay
Stay below your credit limit
Avoid unnecessary fees
If you can’t pay it off in full, pay more than the
minimum payment
 Watch out for changes in the terms of your account
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Inactivity Fees or new Annual Fees
Lowering of your available credit line – may impact your score
 Understand and take advantage of all the features
and benefits that come with your card
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Travel Benefits (auto-insurance)
Extended Warranty Services
Additional Resources
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www.federalreserve.gov/creditcard
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www.ftc.gov
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www.annualcreditreport.com – one free credit report from each
credit reporting agency. $7.95 to get your actual score.
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www.nerdwallet.com
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www.bankrate.com/credit-cards.aspx
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www.zionsbank.com
Q&A
Question 1:
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I have 4 credit cards close to their maximum limit that I need to pay off. What is the
best way to pay my credit cards off?
Answer:
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Understand all of the interest rates on all of your cards. Consider paying down the
credit card with the highest interest rate first. Many people choose to pay off their
lowest first, but it may not be the best decision financially to do so.
Question 2:
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I have a daughter going away to college in the fall. What type of card should I get
her?
Answer:
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Determine how you want the card will be used:
For emergency purposes, consider adding your child as an authorized user on your
account
Build credit history. If you want him or her to establish a credit history, consider being
a co-signer on the account.
Everyday expenses. I would recommend getting a debit card if this is your child’s first
card over a credit card. By giving your child a debit card, it teaches responsible
spending because they cannot get into the habit of just charging everything.
Q&A
Question 3:
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If I choose to change my balance using credit cards offering a zero percent interest
rate each year or so, how does it affect me?
Answer:
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Be careful. Once the introductory rate expires, you may end up paying extremely high
interest rates.
It could negatively impact your credit score if you constantly open too many card.
Question 4:
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How do I choose to do a signature debit? Is that where you simply say that you want
to do it as credit?
Answer:
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When you are doing a transaction, the cashier may ask if you want credit or debit.
They are asking how you want your card run. To run a signature debit, you can
choose the credit option.
If you are prompted to enter your pin, select cancel to sign or simply tell the cashier
that you would like to sign.
Q&A
Question 5:
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I have two American Express cards in addition to a Zions Bank Visa Card. Will it
negatively affect my credit rating if I close one of the American Express cards?
Answer:
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Your credit history is based on a variety of different areas, so it may only affect your
credit rating for a short period of time.
Question 6:
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Does holding a credit card and making timely payments improve your credit score or
history, or is your credit only adversely affected by missing or making late payments?
Answer:
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Your credit score will be more affected by missing a payment or making a late
payment.
Q&A
Question 7:
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What is the age on the "Underage Protections" cards? And, is there a minimum age
to have a card?
Answer:
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The minimum age is 18 years-old. With the new Card Acts, it is extremely hard for
students to get their own credit card because you need to show a tax return and pay
stub.
Question 8:
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What is the best way for a 24 year-old to qualify for a credit card? Will having used a
debit card help ones credit score?
Answer:
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Generally the answer is no. The best way is to consider getting a secured card or
getting a co-signer.
Q&A
Question 9:
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American Express raised our rate after the law passed, but before it took effect. Was
that right?
Answer:
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Most financial institutions raised their rates. Zions Bank has not since 2006 because
we follow the Prime Rate.
Question 10:
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In my divorce, my ex-husband was appointed all of the debt including the credit
cards. However, he is not paying them and is has really damaged my credit score. Is
there any way to get me off this debt to correct my credit report?
Answer:
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It is always hard when you are a joint-signer on an account. The best way to resolve
this issue is to send a letter to the credit bureaus explaining the situation. Make sure
to contact all of the credit cards that you are on and ask to be removed as a jointsigner on the account.
Thank You!