How To Get The Most Out Of Your Credit Card Brian McCaul Vice President – Bankcard Sales Manager May 2010 Thank You For Downloading Our Presentation We hope you were able to attend the webcast How To Get The Most Out Of Your Credit Card. If you didn’t get a chance to attend live, you can view a recorded version at ZionsBank.com. We also have an .mp3 version of the presentation for your convenience. We encourage you to pass this along to friends, family and colleagues who may find this presentation valuable. As you are reading this presentation and any questions or comments arise, please email us at [email protected]. Topics To Be Covered • • • • • • • 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 • • • • • • • 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: – – – • • Hotels Gas - $75 Rental Cars May overdraft your account but new Regulations (July 1) will protect you – Opt in Paying with your money • • • • • • • • 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 – – – – – 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     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 • • 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 • • Travel Benefits (auto-insurance) Extended Warranty Services Additional Resources • www.federalreserve.gov/creditcard • www.ftc.gov • www.annualcreditreport.com – one free credit report from each credit reporting agency. $7.95 to get your actual score. • www.nerdwallet.com • www.bankrate.com/credit-cards.aspx • www.zionsbank.com Q&A Question 1: • 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: • 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: • I have a daughter going away to college in the fall. What type of card should I get her? Answer: • • • • 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: • 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: • • 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: • How do I choose to do a signature debit? Is that where you simply say that you want to do it as credit? Answer: • • 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: • 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: • 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: • 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: • Your credit score will be more affected by missing a payment or making a late payment. Q&A Question 7: • What is the age on the "Underage Protections" cards? And, is there a minimum age to have a card? Answer: • 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: • 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: • Generally the answer is no. The best way is to consider getting a secured card or getting a co-signer. Q&A Question 9: • American Express raised our rate after the law passed, but before it took effect. Was that right? Answer: • Most financial institutions raised their rates. Zions Bank has not since 2006 because we follow the Prime Rate. Question 10: • 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: • 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!