Are Cashiers Becoming Credit Card Pushers?

As if the average consumer doesn’t have enough credit card debt, store cashiers are now turning into credit card pushers. The other day I had to buy undergarments for the kids. Not the most glamorous task, but someone’s got to do it. After debating between Sponge Bob boxer briefs and Spiderman tidy whities and listening to my daughter lament about the woes of having to deal with butterfly undies instead of Bratz I didn’t expect to go to war with the cashier. Boy, was I in for a surprise.

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From Credit Card Tips, Etc.h - www.creditcardtipsetc.com

If you’re like a lot of parents, your first thought upon reading this title was, “Are you crazy? Why would a child need a credit card?” But believe it or not, the reasons extend well beyond the shopping mall. If you’re like a lot of parents, your first thought upon reading this title was, “Are you crazy? Why would a child need a credit card?” But believe it or not, the reasons extend well beyond the shopping mall.

Credit cards are handy for children traveling abroad or even locally with school or a youth group. They won’t be renting cars, but they will be eating and almost every fast food chain now accepts them. It’s also something your child can keep handy just for emergencies. There are plenty of other reasons why minors should have credit cards, including as a tool to teach financial responsibility.

Giving a credit card to a minor really is a decision only parents or guardians can make. If this is something you’ve been considering, here are some options to consider.

It’s important to realize first that minors cannot have their “own” credit cards. Issuance of a credit card is a contractual matter and because of their age, minors aren’t allowed to enter into legally-binding contracts. Therefore, a minor’s credit card has to be attached to a parent or guardian’s account.

Secondary cardholder

Listing a minor as a secondary cardholder is easy. Applications and credit history checks aren’t required because what matters is the creditworthiness of the primary account holder. A secondary card might have a different account number, making it easier to track expenditures or to cancel if it’s ever lost or stolen.

But on the downside, the primary account holder assumes full responsibility for making all payments. Should problems arise, it’s the primary account holder whose credit history is affected.

Debit cards

These look and feel just like credit cards but there’s one big difference: no credit’s involved. Debit cards are linked to bank accounts and as purchases are made, funds are immediately withdrawn. The downside of being linked to a parent’s checking account is immediately apparent when the minor doesn’t control its use and the parent suddenly finds a depleted bank account. So do yourself a favor and find a bank that offers youth accounts. That way, your child can only use the debit card as long as there is money in his/her account. If spending is managed, youth debit cards are great for teaching children that they have to earn money before they can spend it!

Charge cards

The difference between a charge card and a credit card is that at the end of each billing cycle, the balance must be paid in full; interest doesn’t accrue. It’s another situation in which the minor is considered a secondary card holder. Because you can’t carry a balance with a charge card, it is a good way to stress the importance of managing spending.

Prepaid cards

These are cards onto which you load money that can be used for making purchases anywhere the other major credit cards are accepted. As long as money’s available, they can also be used at ATMs for cash withdrawals. When funds run low, all mom or dad or the child has to do is reload!

Secured cards

This too looks and feels like a credit card, but it’s more like a debit card because the user can only make purchases as long as the card’s funded. The way this type of card is funded is by making deposits to the institution which issues the card. Secured cards are often used by minors trying to establish credit history. From a parent’s point of view, it’s a good alternative to co-signing.

To co-sign or not to co-sign

Most parents do whatever they can to help their children succeed. That’s admirable, but when it comes to co-signing for a credit card, they really need to think twice. Once they turn 18, young adults can apply for credit. If they’ve not established sufficient credit though, they won’t be approved without a co-signer.

And the co-signer assumes responsibility for making payments. If your adult child doesn’t have a job, you’ll be paying the bills. If you don’t your credit is affected. What’s worse, if your adult child hasn’t been taught good money management skills, you might end up paying down those cards you co-signed for a long time!

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for a credit card online. Read more…

Credit Card Articles from CreditorWeb.com - www.creditorweb.com

In a sting operation backed by the People (a British newspaper), reporters from the paper caught various retailers selling pre paid credit cards without ID checks. Kids are known to use these cards for purchasing alcohol, weapons and gambling online.

From it’s research, the People established that that UK youngsters can obtain pre-payment cards for as little as £3 from shops and newsagents with negligible checks on age, name or address.

These cards can then be used by youngsters to buy adult goods and services online.

The teenager used by the …

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From Credit Card Cool - www.creditcardcool.com

Paul Wenske writes for the Kansas CIty Star about a Capital One customer’s recent experience having the interest rate on her No Hassle Miles Card increased from 9.99% to 15.9%. Wenske concludes: “She plans to collect her awards and drop her Capital One card. Too much hassle.”

Paul Wenske writes for the Kansas CIty Star about a Capital One customer’s recent experience having the interest rate on her No Hassle Miles Card increased from 9.99% to 15.9%. Wenske concludes: “She plans to collect her awards and drop her Capital One card. Too much hassle.”

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Payments News from Glenbrook Partners - www.paymentsnews.com

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From Business Credit Cards Blog - www.businesscreditcards.cc/creditcards/bcc-blog.htm

Perhaps there’s a good reason why introductory balance transfer offers are so prevalent–and it’s not because credit card issuers are being charitable. Not only are they an easy way to attract new customers, but they also seem to be quite profitable for the issuers. In a working paper from the MIT Department of Economics called […]

Perhaps there’s a good reason why introductory balance transfer offers are so prevalent–and it’s not because credit card issuers are being charitable. Not only are they an easy way to attract new customers, but they also seem to be quite profitable for the issuers.

In a working paper from the MIT Department of Economics called “The Age of Reason: Financial Decisions Over the Lifecycle,” the researchers found that of the nearly 15,000 people surveyed, roughly two-thirds made new purchases after transferring a balance using the teaser rate.

Experienced credit card users know that this is one of the easiest credit card traps to fall into: any new purchases made on your card will accrue interest at the regular interest rate, but any payments that you make will first be made towards your balances held at the lowest interest rate. As a consequence, it’s a mistake to ever make new purchases with a higher APR while holding a low rate balance.

According to the study, however, more than one-third of customers continued to make new purchases every month, racking up interest at the higher rate. Another one-third made some purchases during the first six months, but must have noticed the higher interest charges and stopped.

As long as these trends continue, it seems there’s little chance that credit card companies will stop making these offers, which is good news for those who know how to play the game.

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From Credit Card Watcher - www.creditcardwatcher.com

Summary [Dave Birch] There was a story in the Wall Street Journal today (no link because registration is required) about money laundering, talking about how Columbian drug dealers employ “smurfs” to go round depositing small amounts (a few thousand here, a few thousand there) of dollars from drug sales into banks in the U.S. so that their Mr. Bigs can then withdraw cash in pesos in Columbia. By coincidence, I happened to be at a World Online Gambling Law seminar today — along with a couple of our clients — and learned a lot about the topic. Not from a “how to” perspective, of course, but more from a “this is why we’re imposing massive costs on the payments industry” point of view. One of the things that I learned was that the money-launderers best friend, the 500 euro note, is increasing in popularity as it strives to replace the $100 bill as the criminals’ store-of-value of choice. Apparently a substantial fraction of the 500 euro notes that have been printed are no longer in circulation in the eurozone, so Latin American drug barons are making substantial interest-free loans to European central banks, just as they have made interest-free loans to Uncle Sam for years. I’m sure that crime, drug dealing, corruption and terrorism have all fallen significantly since the introduction of more stringent anti-money laundering (AML) legislation, although I don’t have any figures to hand…

Technorati Tags: payments

My favourite new acronym is PEP: not the Personal Equity Plan familiar to the British middle classes but a Politically-Exposed Person. It turns out that banks have to screen for PEPs because such PEPs (eg, members of the European parliament and deposed African strongmen) after often involved in corruption. Anyway, the money laundering regulatory framework is very complicated. As a mere technologist, they look to me more like a backdoor full employment act for lawyers rather than a rational mechanism for reducing crime, but that’s a rant that doesn’t belong on this blog (I’m just jealous). One of the guys there did tell me that some piece of AML (I don’t remember which) cost more than $20 million for banks to implement and in it’s first two years in operation froze only half a million dollars in accounts. That doesn’t seem like a particularly good return.

Why do I keep going on about AML regulation? Because it raises costs. And the rate of increase shows no sign of slowing. The cost of banks has risen by almost two-thirds in the last three years. In addition to raising the cost of banking, it also raises the cost of electronic payments. If it is indeed European Commission policy to get customers to use other instruments (ie, cards) instead of cash — as was stated in the presentation about SEPA — then surely one obvious step toward this goal would be to lower the cost of the alternatives. You should be able to pick up a prepaid card with a maximum balance of, say, 500 euros with no form filling, passport photocopying or anything else.

As an aside, forum friend Dominic Peachey of the Financial Services Authority was at the seminar and he made a typically experienced and perceptive observation about the extent to which regulation in the pre-paid space is evidence-based. Quite. I’ve noted this before. There are many beneits to society that follow from increased commerce, and both physical commerce and retail e-commerce would be stimulated significantly if prepaid products were more widely available. But if the cost and complexity of prepaid products are inflated by overly broad AML, the surely the net welfare is a long way negative.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

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From Digital Money Blog - digitaldebateblogs.typepad.com

Are Cashiers Becoming Credit Card Pushers?

As if the average consumer doesn’t have enough credit card debt, store cashiers are now turning into credit card pushers. The other day I had to buy undergarments for the kids. Not the most glamorous task, but someone’s got to do it. After debating between Sponge Bob boxer briefs and Spiderman tidy whities and listening to my daughter lament about the woes of having to deal with butterfly undies instead of Bratz I didn’t expect to go to war with the cashier. Boy, was I in for a surprise.

Read more…

From Credit Card Tips, Etc.h - www.creditcardtipsetc.com

If you’re like a lot of parents, your first thought upon reading this title was, “Are you crazy? Why would a child need a credit card?” But believe it or not, the reasons extend well beyond the shopping mall. If you’re like a lot of parents, your first thought upon reading this title was, “Are you crazy? Why would a child need a credit card?” But believe it or not, the reasons extend well beyond the shopping mall.

Credit cards are handy for children traveling abroad or even locally with school or a youth group. They won’t be renting cars, but they will be eating and almost every fast food chain now accepts them. It’s also something your child can keep handy just for emergencies. There are plenty of other reasons why minors should have credit cards, including as a tool to teach financial responsibility.

Giving a credit card to a minor really is a decision only parents or guardians can make. If this is something you’ve been considering, here are some options to consider.

It’s important to realize first that minors cannot have their “own” credit cards. Issuance of a credit card is a contractual matter and because of their age, minors aren’t allowed to enter into legally-binding contracts. Therefore, a minor’s credit card has to be attached to a parent or guardian’s account.

Secondary cardholder

Listing a minor as a secondary cardholder is easy. Applications and credit history checks aren’t required because what matters is the creditworthiness of the primary account holder. A secondary card might have a different account number, making it easier to track expenditures or to cancel if it’s ever lost or stolen.

But on the downside, the primary account holder assumes full responsibility for making all payments. Should problems arise, it’s the primary account holder whose credit history is affected.

Debit cards

These look and feel just like credit cards but there’s one big difference: no credit’s involved. Debit cards are linked to bank accounts and as purchases are made, funds are immediately withdrawn. The downside of being linked to a parent’s checking account is immediately apparent when the minor doesn’t control its use and the parent suddenly finds a depleted bank account. So do yourself a favor and find a bank that offers youth accounts. That way, your child can only use the debit card as long as there is money in his/her account. If spending is managed, youth debit cards are great for teaching children that they have to earn money before they can spend it!

Charge cards

The difference between a charge card and a credit card is that at the end of each billing cycle, the balance must be paid in full; interest doesn’t accrue. It’s another situation in which the minor is considered a secondary card holder. Because you can’t carry a balance with a charge card, it is a good way to stress the importance of managing spending.

Prepaid cards

These are cards onto which you load money that can be used for making purchases anywhere the other major credit cards are accepted. As long as money’s available, they can also be used at ATMs for cash withdrawals. When funds run low, all mom or dad or the child has to do is reload!

Secured cards

This too looks and feels like a credit card, but it’s more like a debit card because the user can only make purchases as long as the card’s funded. The way this type of card is funded is by making deposits to the institution which issues the card. Secured cards are often used by minors trying to establish credit history. From a parent’s point of view, it’s a good alternative to co-signing.

To co-sign or not to co-sign

Most parents do whatever they can to help their children succeed. That’s admirable, but when it comes to co-signing for a credit card, they really need to think twice. Once they turn 18, young adults can apply for credit. If they’ve not established sufficient credit though, they won’t be approved without a co-signer.

And the co-signer assumes responsibility for making payments. If your adult child doesn’t have a job, you’ll be paying the bills. If you don’t your credit is affected. What’s worse, if your adult child hasn’t been taught good money management skills, you might end up paying down those cards you co-signed for a long time!

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for a credit card online. Read more…

Credit Card Articles from CreditorWeb.com - www.creditorweb.com

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From Business Credit Cards Blog - www.businesscreditcards.cc/creditcards/bcc-blog.htm