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The Latest You Can Pay a Credit Card Bill Without It Going on Your Record

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Credit bureaus follow this standard reporting guideline

It’s irritating to run across a bill and to realize it was due yesterday… or last week. If it’s a credit card bill, you may also have to pay a fee (sometimes, if it’s a rare slip-up, you can get it waived), and it can be especially scary to find an overdue bill if you have applied for credit or plan to in order to make a big purchase, like a house or vehicle. Readers often ask us how late a payment has to be before their creditors report it to the credit bureaus:

  • From Ig08: Hi, I have my credit card since last 6 years and have never missed any payments, but my last payment was due on 4th may and I paid it on 6th. … Does being one/two days late affect credit score?
  • From INVNOONE: Today [my bill] is 30 days late. When I called my bank they stated, “we cannot tell if it has been reported to the credit bureau.” Should I pay the loan today not knowing if they already reported it late to the credit bureau? This will leave me with very little money but I do care about my credit report.
  • From Stephen: I have perfect credit and a small business and my credit is very important to me. I had a credit card … I thought it was completely paid off there was a $6 remaining balance I paid it in full and it was 31 days late and they put it on my report what kind of options do I have?

First, know that even if a late payment does make its way onto your credit report, it’s not necessarily the end of the world. There are many, many worse things, and there are degrees of lateness. Ninety days late is worse than 60 days, and 60 is worse than 30, for example. One late payment among years of on-time payments is far less serious than a late payment and limited credit history. (Of course, if you are in the middle of applying for a mortgage, one late payment could be a serious setback.)

Chi Chi Wu, a staff attorney with the National Consumer Law Center, said 30 days is the magic number. “Late payments generally don’t show up until the payment is 30 days ​past due,” she said in an email. “This is the standard reporting guideline for the credit bureaus.”

But one of our readers who goes by the screen name AJ says she was just 14 days late on a car payment, and it showed up on her credit reports. She hasn’t been able to get it removed. Rod Griffin, director of public education for Experian, said that because it was a car payment (rather than a revolving account, like a credit card), “the ’30-day grace period’ doesn’t necessarily apply.” He added that the payment was late as of the due date, “so the lender may have reported it immediately. You should always be sure to understand the lender’s policy for reporting late payments for the account.” he said. “The commenter should review their contract with the lender to determine what it says regarding when late payments will be reported, or contact the lender. The lender should be able to explain its policy. The 30-day period is specific to revolving accounts, not installment loans.”

If a credit card payment arrives before it is 30 days late, it generally should not be reported negatively or have any effect on your credit score. Beyond that time, however, it’s a distinct possibility that it will. You can get a free annual credit report from each of the three major credit reporting agencies. That can show you whether you have had late payments reported. (This guide can help you interpret those reports.)

If it turns out your late payment has been reported, know that its impact on your score will diminish with time (especially if it’s an isolated event), and that other on-time payments can help counter the effects of a slip-up. And, as with almost any other mistake, the sooner you realize you’ve made it and try to fix it, the less likely it is to turn into a big problem.

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More Help Is on the Way for Fixing Credit Report Errors

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Medical billing errors in particular will be easier to keep off your record

Attorneys general in 30 states have reached a $6 million settlement with the major credit reporting agencies Equifax, Experian and TransUnion to make changes in the way they address errors in consumer reports and how some negative information is added to credit reports. The agreement is very similar to one announced March 9 by the attorney general of New York. The Consumer Data Industry Association, which represents the bureaus, says the new settlement is just more states joining the initiative announced in New York in March.

The main changes the bureaus will be required to make as part of the settlement center around disputes — when consumers say they have found inaccuracies in their credit reports as a result of identity theft, mixed files or other errors. Some consumers have found that it is sometimes extremely difficult to get credit report errors corrected, which is why states pushed for a better dispute process.

“Most credit report disputes get resolved quickly and without problems, but for some consumers, trying to fix credit report errors becomes a nightmare,” said Gerri Detweiler, Credit.com’s director of consumer education.

Credit bureaus will be required to share with the data furnishers (creditors, debt collectors, etc.) the documents consumers supply in support of their dispute. Bureaus must also monitor furnishers that supply frequently disputed information.

Without admitting any wrongdoing, the credit reporting agencies agreed to make the following changes, among others:

  • Each agency must notify the other credit bureaus if it finds a mixed file.
  • The credit reporting agencies and data furnishers must use a more detailed system for sharing information.
  • Data furnishers cannot add information about fines or tickets to credit reports.
  • Credit bureaus must wait 180 days from the time medical debt is reported to add the account to a credit report, allowing consumers time to address the bill with their insurance and care provider.
  • Debt collectors must provide the original creditor’s name and details of the debt before an account can appear on a credit report.
  • Consumers who succeeded in disputing an item on their credit reports can get an additional free credit reports from the bureaus.
  • The bureaus must also increase their efforts to educate consumers about their access to free credit reports, while also minimizing marketing of paid products to consumers trying to access free information.

According to settlement documents, the bureaus are required to complete these changes 3 years and 90 days from the effective date of the settlement.

“This settlement should help three sets of consumers in particular: those who have medical bills and are waiting for insurance to process them, consumers who may not even realize they have unpaid fines or tickets until their credit reports have been damaged by collection accounts, and consumers with collection accounts and don’t know why,” Detweiler wrote. “But it won’t solve every consumer problem. And, of course, consumers can’t dispute a mistake if they don’t know about it. So it’s still crucial that everyone reviews their credit reports at least once a year for accuracy.”

These 30 states will receive $6 million among them to cover the investigation they launched into the credit reporting agencies in 2012: Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont and Wisconsin.

Consumers should regularly review their credit, because errors can cause huge problems, like credit damage and subsequent difficulty accessing credit or other services that use credit history as part of the decision to do business with a consumer. You can access your free annual credit reports through AnnualCreditReport.com.

“Your credit profile can be a tool for upward mobility — helping build wealth and financial security — or it can be a weapon of individual destruction,” said Adam Levin, chairman of Credit.com. “The more you know, the more open and efficient the process to help you efficiently correct errors or remove fraudulent information, the more you are empowered to be an effective manager of your credit rather than a victim.”

Poor credit can make it challenging to get an apartment, a job or even a cell phone. Keeping on top of it and quickly addressing any problems is crucial to maintaining as strong a credit history as you can.

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5 Credit Cards That Won’t Hike Your Interest Rate If You Pay Late

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Forgiveness is divine

When children misbehave, their parents may resort to punishments like putting them in “time out” by having them stand in the corner. And that’s how many credit card users feel when they suddenly have a much higher penalty interest rate imposed due to failing to make a payment on time, slightly exceeding their credit limit or having a check returned.

But now, a major credit card issuer is ending penalty interest rates on one its most popular cards, joining a small but growing number of products that no longer seek to punish customers for what may just have been a single small mistake. Chase has just announced that its Slate cardholders will no longer be subject to penalty interest rates if they pay late.

Chase’s Slate card has always been especially useful for cardholders who are trying to pay off debt, as it offers 15 months of 0% APR financing on both new purchases and balance transfers, and has been the only such offer for several years with no balance transfer fee (on transfers completed within 60 days of account opening). Slate cardholders receive a standard interest rate of 12.99% to 22.99% depending on their creditworthiness when they applied, which is a variable rate that can change with the prime rate. But starting immediately, for all new and existing cardholders, there will not be a penalty interest rate imposed.

So why the change to drop penalty interest rates? According to Rob Tacey, Chase’s vice president for public relations, “As with the recent addition of the credit score dashboard, we have made enhancements to Slate designed to help cardholders best manage their overall credit health.” Further, Chase cardholders can utilize its Blueprint program, which allows them to avoid interest on some charges by paying them in full, while carrying a balance on others. Blueprint also offers budgeting and goal-setting tools. There is no charge to use Blueprint, and no annual fee for this card.

1. Discover it. This card has never had a penalty interest rate. Currently, the Discover it card is offered in several versions including the it Chrome, it Miles and the new Discover it NHL card which features the logo of your favorite National Hockey League team. Other features common to all Discover it cards include a free monthly FICO score, 100% US based customer service, and cardholders first late payment fee waived. There are no annual fees for these cards.

2. PenFed Promise. PenFed stands for the Pentagon Federal Credit Union, which was created to provide financial services for members of several military, defense, and government organizations, as well as their families and household members. The PenFed Promise card offers a standard interest rate of 7.99% to 16.99% (variable), depending on the applicant’s creditworthiness, and no penalty interest rate. In addition, this card boasts having no annual fees, foreign transaction fees, cash advance fees or late fees.This card was even named the Best Simple Credit Card in America for its easy-to-understand fee structure. To apply, you must be a member of the credit union, which you can be eligible to join on the basis of your affiliation with one of many qualifying organizations, including some military support charities that require just a small fee to join.

3. Barclaycard Ring. This card allows customers to interact with the card issuer and help shape its terms and conditions. Community members propose new ideas and vote for ways to make the card better. In addition, cardholders can ask questions online directly to the three community managers. So not coincidentally, it also has a very simplified structure for its rates and fees. All cardholders receive a standard interest rate of 8% (not 7.99%), which applies to new purchases, balance transfers, and even cash advances, with no penalty interest rate. There is no annual fee for this card.

4. Citi Simplicity. Simplicity lives up to its name by offering no late fees and no penalty interest rates. But in addition, it also offers the longest promotional financing offer available — 21 months of 0% APR financing on both new purchases and balance transfers, with a 3% balance transfer fee. There is no annual fee for this card.

Whenever you plan to apply for a credit card, it’s good to know where your credit stands, since your credit score is a major factor in determining your interest rate. You can get copies of your free annual credit reports at AnnualCreditReport.com.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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5 Terrifying Facts About Identity Theft

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Nearly one billion records were leaked in 2014 alone

Identity theft was the number one consumer complaint at the Federal Trade Commission last year. So far in 2015, the data breach problem that drives so many identity-related crimes has gotten worse. The massive compromises at Anthem and Premera alone put a combined 91 million records in harm’s way.

With more information “out there” than we can possibly know, identity theft has become the third certainty in life, right behind death and taxes. And because so many major compromises include Social Security numbers — the skeleton key to not only your financial life, but also your health care and many other aspects of daily life—the damage can be life-changing.

The bottom line: Be afraid, be very afraid.

1. A Billion Records Leaked

According to IBM, more than one billion records containing personally identifiable information were leaked in 2014 alone. An identity thief only needs a few data points like the kind found in many data breaches to tap into your financial life.

2. There Is No Anonymity

Science Magazine reported that “anonymized meta data sets” containing product purchase information were re-identified with the people who made the purchases by looking at Instagram posts and tweets that matched the purchases.

You can do everything right and still get “got.” The fraudsters out there mining the veins of personal data for financial gain are good at what they do. However, if you assume you are going to get got and take some proactive steps – including monitoring your bank and credit accounts regularly for signs of fraud – in many cases you can have a head start when it actually happens. (Keeping a tight rein on your social media posts and making them private can also help give fraudsters less access to you.)

3. Your Medical History Can Be Compromised

With more than 2.32 million victims thus far — 500,000 last year alone — medical identity theft is a crime on the rise. It can cause medical histories to get changed, and benefits fraudulently used by others can bar a victim from getting medical treatments – making it a dangerous crime.

Unlike credit card fraud where liability is often zero, a recent study by the Medical Identity Theft Alliance found that more than 60% of medical fraud victims had to pay an average of $13,500 to resolve the crime.

Your best bet is to check every statement that comes in, and make sure the treatments listed on your Explanation of Benefits summaries sent out by your insurer match the care you’ve received.

4. Your Tax Refund Is Under Attack

Early in the 2015, Intuit, the company behind TurboTax, had to shut down e-filing in several states after the company noticed an uptick in what appeared to be fraudulent tax returns.

Tax-related identity theft is a big-money crime, and the statistics prove it. The IRS stopped 19 million suspicious tax returns last year, and stopped more than $63 billion in fraudulent refunds. A whopping $5.8 billion in tax refunds were paid out to fraudsters. In 2012, the Treasury Inspector General for Tax Administration projected that fraudsters would net $26 billion into 2017.

For now, your best defense is to file your taxes as early as possible to avoid falling victim to tax-related fraud.

5. Even Kids Are at Risk

It’s long been known that children in the foster care system were more likely to become the target of identity-related crimes. This was due to the fact that when children move in with a new foster family, their personally identifiable information moves with them.

A less well known fact is that more than 30% of identity theft victims are scammed by family and close friends of the family. The key in these crimes is of course access to the necessary data. No one knows this better than Axton Betz-Hamilton, whose mother defrauded the entire family — father, grandfather and herself — for almost 20 years.

There are services available that protect a child’s credit. It’s also a very nice graduation present to check your child’s credit, and make sure there isn’t a history there.

While it is impossible to avoid some of the fallout from identity theft after it’s detected, it’s not possible to prevent these crimes. If you detect fraud early, it can be contained. And if you follow the three Ms of identity theft management (note that I didn’t say prevention), you can at least have a little piece of mind during this historic crime spree. Minimize, Monitor and Manage. Check your bank and credit card statements every day online to look for fraudulent transactions. You can sign up for free transactional monitoring alerts from your bank, credit union or credit card company for help in this. Check your credit reports regularly – you can get them for free annually on AnnualCreditReport.com – to look for unauthorized accounts or changes in existing account balances. File your taxes early, and keep an eagle eye on your medical insurance benefits. Report any suspicious activity immediately to the respective institution so that you can try to minimize the damage.

Make yourself a harder target and know what to do when you become one anyway.

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A Good Credit Score Isn’t Enough to Get You a Loan

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Not even a stellar credit rating can make up for these big no-nos

When it comes to getting loans, having good credit is crucial. A good credit score shows potential lenders that you’re a reliable consumer who pays bills on time and keeps your debt balances at a reasonably low level, so they have good reason to believe you’ll do the same if they extend you credit.

While a great credit score will carry you far in a loan or credit card application, you can’t rely on good credit alone. There are a few situations in which you still might not get a loan or credit card you apply for, even though you have good or excellent credit.

1. If You Don’t Have Enough Income

You don’t necessarily need to have a job to get a loan or credit card, but you generally have to show some sort of ability to repay, whether that’s claiming household income, getting a co-signer or something else. Even if you have income, the lender may determine it isn’t enough to grant you approval for the loan you’re requesting.

The more you’re requesting to borrow, the more your income matters. With credit cards, that information is factored into how high your credit limit will be. If you’re applying for a mortgage, you have to meticulously document your income and get transcripts from the IRS backing that up as part of the loan-application process. Even if you have a good credit history, the main thing that may hold you back from getting a loan is your income.

2. If You Have Too Much Debt

Having too much debt can negatively affect your chances at getting a loan, particularly if you’re applying for a mortgage. When calculating your ability to repay, mortgage lenders look at your debt obligations, including child support, alimony and tax debt, and they subtract that from your income. In some cases, you may have great credit and a high income level, but you have too many debt obligations to take on another loan.

3. If You Already Have a Lot of Unused Credit

Having a lot of unused available credit is good for your credit utilization rate, which has a large impact on your credit score, but in some cases, that’s not something lenders like to see. If a lender sees you have a large amount of available credit when he or she reviews your credit report, it may be cause for rejecting your request for a loan.

Before applying for any new credit, you need to have a good understanding of your finances and what makes up your credit standing. You can do that by regularly reviewing your free annual credit reports, but you can also do more frequent credit checkups.

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Why You Can’t Erase Your Credit History

Don't fall for credit repair scams that promise otherwise

Sometimes, the best way to fix a problem is to start over. It’s probably the most common troubleshooting technique out there, especially when you’re dealing with technology — the power button is a wonderful thing.

Unfortunately, there is no restart option when it comes to your credit history. Declaring bankruptcy is the closest thing there is to a credit do-over, but just because you’ve wiped out all or most of your debt doesn’t mean you have a clean slate. Bankruptcy can remain on your credit report for 10 years, and the accounts included in the bankruptcy will be deleted after 7 years — while you’re waiting for that to happen, you have to deal with the negative impact those items on your credit report have on your overall credit standing.

The whole point of the credit reporting system is to help lenders make decisions about potential borrowers based on their credit history. If people could get new credit reports, that would negate the value of the system.

Of course, that doesn’t keep people from trying.

Credit repair scams attempt to create new reports using altered identities,” wrote Rod Griffin, director of public education for the credit bureau Experian, in an email to Credit.com. “Doing so is fraud and can result in legal action against the credit repair firm and the consumer.”

What If I Change My Name?

Name changes happen all the time, most often when people get married. That doesn’t generate a new report, rather, the new information is added to the existing report, Griffin said.

“Because we match to all identification information, changing one or even several elements would not create a new credit report.,” Griffin said. “The new information would simply be matched to the existing credit history.
That’s why we list all of the identity reported as belonging to the individual on their report.”

That’s not to say your credit report is a perfect record of your identity’s history — your credit report can have errors and missing information (here’s how to correct them), but theoretically it’s all collected there as a record of any changes.

What If I Get a New Social Security Number?

The Social Security Administration rarely issues new numbers. According to its website, you can apply for a new Social Security number only in specific circumstances, including incessant identity theft, duplicate numbers or harassment situations. A complete list of reasons you could get a new number are listed on the SSA website.

Keep in mind this just means you can apply for a new number — whether or not you’ll get one is a different matter. It’s not something the SSA does frequently, but even if you do get a new number, it’s merely added to your credit report, not the start of a new one.

“When we assign a different Social Security number, we do not destroy the original number,” the SSA website reads. “We cross-refer the new number with the original number to make sure the person receives credit for all earnings under both numbers.”

The credit reporting agencies do pretty much the same thing.

“Even if a consumer were to get a new social security number, we would combine both their old and new credit history,” wrote David Blumberg, director of public relations at TransUnion, in an email to Credit.com.

To move on from negative information on your credit report, you have to be patient. The sooner you develop good credit habits, like making payments on time and keeping your debt balances low, the sooner your credit will recover, but it always takes time. The more negative information there is, the longer it takes, so if you want to make progress, start by seeing where you stand now and identifying your areas for improvement.

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The Ingenious Way Starbucks Gift Cards Are Getting Hacked

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Crooks are exploiting the auto-reload feature

Credit card hackers are targeting Starbucks gift card and mobile payment users around the country — and stealing from consumers’ credit cards — with a new scam so ingenious they don’t even need to know the account number of the card they are hacking.

Criminals are using Starbucks accounts to access consumers’ linked credit cards. Taking advantage of the Starbucks auto-reload function, they can steal hundreds of dollars in a matter of minutes. Because the crime is so simple, can escalate quickly, and the consumer protections controlling the transaction are unclear, Starbucks customers should consider disabling auto-reload on the Starbucks mobile payments and gift cards.

The fraud is a big deal because Starbucks mobile payments are a big deal. Last year, Starbucks said it processed $2 billion in mobile payment transactions, and about 1 in 6 transactions at Starbucks are conducted with the Starbucks app.

Maria Nistri, 48, was a victim last week. Criminals stole the Orlando women’s $34.77 in value she had loaded onto her Starbucks app, then another $25 after it was auto-loaded into her card because her balance hit 0. Then, the criminals upped the ante, changing her auto reload amount to $75, and stealing that amount, too. All within seven minutes.

“I don’t know why Starbucks would recommend people do auto-reload when this crime is so easy,” she said.

The trouble started at 7:11 a.m. on Wednesday when she received an automated email saying her username and password had been changed, and if she hadn’t authorized the change, she should call customer service. She tried, but the number she called notified her an operator couldn’t answer until 8 a.m.

“Whoever did this knew the right time to do it,” she said.

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Everything You Need to Know About Closing a Credit Card

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Closing a credit card can hurt your credit score, but there are times when it's the right move

The logistics of closing a credit card are actually quite simple: Call your card issuer’s customer service phone number and request an account closure.

Whether you should be closing that account is a more complicated matter, and it’s a decision during which a lot of consumers make choices based on misconceptions that could damage their credit standings. Here are a couple things you need to know before deactivating a credit card account.

Will It Stay on Your Credit Report?

Credit card history, whether the account is open or closed, will remain on your credit report for many years. Positive history from an open account can be reported indefinitely, but negative information, like a late payment, can be reported for seven years. After you close the account, the good information will age off after about 10 years.

Sometimes, people check their credit scores and see a message saying they have too many revolving credit accounts (as opposed to a good mix of installment loans and revolving credit), which prompts people to close cards to maintain a better balance. (You can check your credit scores for free on Credit.com to see how your accounts are impacting your credit.)

“It doesn’t care how many open cards as opposed to closed cards, if a score says you have too many accounts” said Barry Paperno, a veteran of the credit reporting and credit scoring industry. “If it doesn’t tell you you have too many ‘open’ accounts, then closing isn’t going to help.”

Will Closing a Credit Card Hurt Your Credit?

One of the things that most influences your credit scores is how much you use your available credit (aka credit utilization). This is an overall look at your credit limits in relation to the balances on your credit cards — ideally, your balances take up less than 30% of your available credit.

If you close a card with no balance but are using other credit cards, you’ve lowered your overall credit limit without lowering your balances, and that will increase your credit utilization, which could hurt your scores. If you close a card that still has a balance, you won’t hurt your credit utilization until after you’ve paid off the card, Paperno said. The issuer will continue to report your credit limit as it was at the time you closed your card until the debt has been repaid.

Closing a credit card you’ve had for a long time could hurt you, too. Your average age of credit has a significant impact on your credit score (not as much as utilization or on-time payments), so closing a card means you’ll eventually lose any positive history associated with it. It won’t happen immediately — good information on a closed account can be reported for 10 years after the account has been closed — but if you’re thinking of closing one of your oldest cards, consider how it will affect you eventually.

“Utilization is always the biggest reason not to close cards in the short run,” Paperno said. “And in the long run, it means the card will be removed from your credit report.”

This isn’t to say there aren’t good reasons for closing a credit card — there are. For example, if you have a joint card with someone you no longer want to share an account with (if you’re going through a divorce, for example), or if a card you don’t use anymore carries an annual fee that just isn’t worth it, it’s very practical to close the card. Additionally, if you’re constantly falling into credit card debt, it might be time to take drastic measures to make sure it doesn’t happen anymore. You know yourself: If you can’t resist the temptation to use your credit card even when you’re not sure you can afford the purchase, the negative consequences of closing credit cards may be worth staying out of debt.

If you’ve taken into account the impact closing a card will have on your credit, as well as all the reasons you want to close the account, you should feel confident in whatever choice you make.

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The Trouble With Using Your Charge Card Like a Credit Card

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One lets you carry a balance -- for a price -- while the other must be paid in full each month

Have you ever noticed that some cards offered by major banks are not actually credit cards, but are in fact charge cards? These products look just like credit cards, and are in many ways similar, but there some important differences.

With a credit card, account holders can choose to avoid interest by paying their entire month’s statement balance in full, or they may carry a balance and incur interest charges. But with a charge card, each month’s statement balance must be paid in full and on time, or the cardholder will be considered in default.

Most credit cards are issued with a preset credit limit. Cardholders can charge up to that limit, and if they need to charge more, they must first call to have a larger line of credit extended. Typically with a charge card, there is no predefined credit limit. Cardholders who are concerned that a large charge might not be approved can contact the card issuer and get a charge pre-approved, but otherwise they may not have an indication of their charging ability until a purchase is denied.

A credit card will also have a different structure of rates and fees. For example, since credit card issuers can make a profit on interest charges, they have the ability to offer cards with no annual fee. On the other hand, charge card issuers will almost always have to charge an annual fee to recover their cost of doing business. And by its nature, a charge card will tend to lack features such as promotional financing, balance transfers and cash advances. In addition, there are dozens of banks and credit unions that issue credit cards, but there are very few companies that issue charge cards, such American Express and Diner’s Club. Finally, charge cards are generally offered to applicants with an excellent credit history, while there are a variety of different credit cards that are marketed to people with varying credit profiles.

What These Types of Cards Have in Common

Both credit cards and charge cards are considered forms of credit, so a cardholder’s payment history will be reported to the three major consumer credit reporting agencies. Cardholders with both types of cards can improve their credit by making their payments on-time, but they can also hurt their credit if they fail to make their minimum payment on time. The difference is that with a charge card, the minimum payment is always equal to the last statement’s entire balance.

Otherwise, both types of cards can offer valuable rewards in the form of cash back, points or miles. Furthermore, both these types of cards can offer cardholder benefits such as travel insurance, purchase protection and concierge services. Nevertheless, charge cards tend to be more feature-filled than many credit cards, as they appeal to a higher end of the marketplace that is willing to pay annual fees.

Having It Both Ways

American Express, which is a major issuer of charge cards, offers a feature to cardholders that allows them to extend payment in some cases. Its Pay Over Time program allows its charge card customers to finance charges in one of three ways:

  1. Extended Payment can be applied to charges of $100 or more.
  2. Select & Pay Later allows cardholders to manually select individual charges on which to extend payment.
  3. Sign & Travel lets cardholders automatically extend payment on eligible travel expenses.

In each case, the purchases move from the charge card balance to the Pay Over Time balance, and are subject to standard interest rates based on the cardholder’s credit-worthiness.

Which Should You Choose?

A credit card can be the better option for anyone who needs to regularly carry a balance on their purchases. However, those who may need to carry a balance occasionally may find a charge card with an extended payment option to be sufficient. Those who are confident that they will always pay each month’s balance in full can feel free to choose from either credit or charge cards, depending on which one offers them the most desirable features and benefits.

When you examine both the similarities and differences between credit and charge cards, the right product for your needs will become clear.

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The Scary Link Between Credit Card Debt and Depression

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There's a significant relationship between depressive symptoms and short-term debt, according to a new study of 8500 consumers

A recently released study shows that people with credit card debt and overdue bills are much more likely to experience symptoms of depression than those who don’t have such debts, particularly if they are near retirement, unmarried or less educated. The more short-term debt a person had, the more frequently they reported feeling those symptoms.

The research, published May 1, comes from the Institute for Research on Poverty and the Center for Financial Security at the University of Wisconsin-Madison. It is based on interviews with 8,500 people between 1987 and 1989 and again between 1992 and 1994 — periods during which unsecured debt grew quickly in the U.S. — through the National Survey of Families and Households. NSFH survey respondents were asked to say how many days of the week they felt each of the 12 depressive symptoms used in the Center for Epidemiologic Studies Depression Scale. Researchers analyzed those responses and how they related to the responders’ self-reported debt profiles.

With that information (and some complex algorithms), the researchers found a significant relationship between depressive symptoms and short-term debt, defined as credit card debt and overdue bills (bills on which someone has owed a sum for more than two months). However, mid-term debt (like personal loans or auto loans) and long-term debt (mortgages and education debt) didn’t translate into frequent experiences with depressive symptoms among people who held it.

A few things to note about these findings: “Depressive symptoms” is not synonymous with clinical depression. Additionally, the data was collected well before the mortgage crisis and following recession, when long-term debt was the cause of many people’s financial hardships. Student loan debt has also grown significantly in the past 20 years. Since the financial crisis, lenders have restricted credit access, though credit is beginning to open up again.

Still, the implication that credit card debt and overdue bills correlate to depressive symptoms is something many people today can probably relate to. Not only can such debt be extremely expensive, by way of high interest rates and fees, but it can also seriously damage your credit standing, adding to the stress of the situation. Getting in control of your debt is crucial to improving your financial well-being, and it can be an emotionally rewarding accomplishment, too. You can use a free credit card payoff calculator to help you plan your way out of the dumps, and it helps to see how your credit fares along the way. You can get a free credit report summary every 30 days on Credit.com to track your progress.

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