The History of Credit and Credit Cards
Credit cards are something that almost every person has in the world today. If you look at the rich and famous you might think that they have so much money they probably walk into a shop and buy whatever they want with a suitcase full of money.
This is not the case though as many of these guys use credit cards to do their shopping and pay the bills at the end of the month, pretty much like everyone else in the world. The idea of credit dates back to many years ago and it’s fascinating to see how it has grown from 3000BC to 2012.
First Use of Credit in History
The first use of credit was in the year 3000BC when there was no such thing as gold, platinum or black credit cards. In the 1300s the bill of exchange was introduced where people could settle their debt with 1/3 cash and 2/3 bill of exchange.
The bill of exchange was a document that specified an amount of money that would be paid by a certain time. Bill of exchange is in many ways similar to a cheque that is more commonly used nowadays. It worked with the same three-person process where you give somebody a cheque and that person must go cash it themselves at the bank.
Christopher Thornton was the first person to publicly advertise credit. He was selling furniture and had an option for people to pay him off weekly. This of course was seen as a good idea by many and the whole credit idea took off.
In the 1800s people discovered a way to keep track of what people bought on credit. Although not a very efficient option, people called Tallymen used to keep a tally of what people bought by writing information on wooden sticks. In 1890 there was a buzz in Europe about credit cards.
First Bank Card Was Introduced in 1946
1946 was the year that the 1st bank card was introduced. John Biggins was a Brooklyn banker that introduced this revolutionary piece of plastic to the world and now 66 years later it is probably one of the most important things in everybody’s life.
The first credit card was later introduced in 1951 by the Diners Club. This card only gave users a list of 27 restaurants to purchase from. There were only 200 people to get this card initially but now there are probably millions of people using it.
In today’s day and age there are plenty of different credit cards available to those heavy, buy now pay later spenders. Visa, Maestro, RCS and more all have their own line of credit cards. They have a range of different colors based on how much your monthly salary is.
Of course, that’s why you see celebrities walking around with a black card which is a top of the line credit card. This credit card has no limit hence the fact you see them buying cars and expensive houses like its pocket change they are using. For some of us, this will be merely a dream to one day be able to swipe our credit cards like there is no tomorrow.
Looking for A Credit Card?
If you’re in the market for a new credit card it is vitally important that you take a look at your own borrowing needs and spending requirements before choosing a provider. Not all credit cards are equal and how you use them depends a great deal upon how you live your life. Here are some top tips on how you can choose the best credit card for your own unique circumstances.
Are You a Regular Shopper?
If you do a lot of spending every month, the best card for you is likely to be a reward credit card. You can take out cards which allow you to earn points, rewards and even cash every time you use them.
Your card provider may enable you to build up your rewards in addition to providing money-off deals and additional promotions in certain stores. Some cards may even reward you with air miles, which is ideal if you are a regular traveler.
Or you may choose other points to spend in certain stores this is typical of cards provided by supermarkets and department stores. The best cards will also provide a period of zero percent interest, usually for between six and 12 months on purchases.
For the business owner, credits cards are the ideal way to access a little extra cash in addition to monitoring any expenses your company incurs. In addition, a business credit card will help you build the credit score of your company (providing, of course, that you don’t get into arrears on your card).
Boosting Your Credit Score
If you have never taken out any credit, you might be surprised to hear that your credit score could be negatively affected. This is because lenders haven’t had the chance to see how good you are at repaying borrowed money on time.
If you are trying to boost your credit score, try taking out a card and making sure you have the means to pay it off in full every month and you will soon see your rating go up. Just don’t spend more than you can afford to pay back, as this will have a negative effect.
0% on Balance Transfers
If you have a large amount outstanding on a credit card and you don’t currently have the means to pay it off in full, try switching to a card provider who will allow you 12-18 months interest-free on your balance transfer, which could save you hundreds of pounds.
If you are searching for the best card for your circumstances, why not compare credit cards on a price comparison website for a range of different options?
Advice For Your First Credit Card
If you are applying for your first credit card, it can be somewhat of an exciting experience. The banks have declared you responsible enough to pay back money the loan you. To some, the first credit card may be a passage to adulthood and the real world.
However, getting a credit card means taking on extra responsibility—you are responsible for any debt incurred with the credit card. With that said, below are three things you should definitely watch for when going after your very first credit card.
If you do not have established credit, it might take some time and shopping around to get your first credit card approved. Banks have gotten a little bit stricter on approval standards since The Great Recession and there have been new laws passed that prevents credit card companies from signing up new customers on campus.
For getting that first credit card is not as easy as it used to be. The key is to find credit cards geared towards people with no credit. A good place to start is your local bank. If you have a good relationship with your bank (read, you do not constantly overdraft) chances are they will approve you for an introductory card.
The credit limit might not be all that high but it will go up as you use the card—and pay it back in a timely manner. After several months of using your card and paying it on time, your credit score will improve and you can get some of the better credit cards out there—the ones with points.
Watch Out For Introductory Rates
A lot of cards will have teaser rates, but what you really need to focus on is what the rate is after the initial teaser period. Get the rate information when you apply for credit cards—the rate information will be clearly shown but many people just don’t bother to read it.
However, do realize that the rates do not matter if you always pay off your balance on time—before they are able to charge interest. If you pay off your balance every month, you won’t have to worry about the rate information because they will never get a chance to charge you interest.
Don’t Go On A Binge
This seems to be a prevalent problem with those who get their first credit card. The problem seems to have two main causes. The first issue seems to be a maturity issue. Most first-time credit card holders are college students.
College students have very little experience managing their finances as college is the first time they are away from their parents and without supervision. The second issue seems to be an economic one. College students usually do not have full-time jobs nor do they have jobs that pay well.
Most jobs available to college students only pay enough for students to pay their living expenses. They don’t have very much money left over. Once the bill comes, they may not have enough to pay off the balance. once the balance is not paid off, interest starts accruing.
There are several ways to combat this. First, you have to cognizant of the fact that it is actually credit and it is not your money. It is the bank’s money and they are lending it to you.
It will have to be paid back. Secondly, you should set a monthly limit on the amount you can charge on the card. The limit should be the amount you feel completely comfortable paying off at the end of the month.
Remember credit cards are not inherently bad. Actually, credit cards are great for your finances and can help you build excellent credit if you know how to use it correctly. You have to remember that it is debt and it is not free money.
13 Great Tips on Choosing the Right Credit Card
Chances are you can open your mailbox at least two times a week and find a credit card offer. While you may be “pre-approved” for all of them, that doesn’t mean they’re all good offers. In fact, some offers should have you running in the other direction. So, how do you know which offer to accept?
It seems easier than ever to apply for a new credit card these days. But that’s just one more reason to make sure that some careful thought goes into it before signing off on the dotted line.
There are a lot of factors to take into account when applying for a new credit card, and it’s easy to get overwhelmed by the small details. But to help you along, here are some great tips to make sure you choose the right card.
1. Don’t Simply Sign-up for the First One That’s Handed to You.
Picking a credit card can often feel like a bigger hassle than it’s worth, especially if banks are throwing endless amounts of credit card promos your way.
If you don’t want to get stuck with high interest rates and sneaky hidden charges, you have to make sure you’ve done your research. Don’t simply sign-up for the first credit card that’s shoved into your mailbox.
2. Review the Interest Rate
One way banks make money from credit cards is from the card’s interest rate. For the credit card holder, the lower that rate, the better. However, some cards have a “promotional interest rate” that’s significantly lower than its actual interest rate. These are often valid for a limited time only, so it’s important you know how long these last.
A lot of companies will try to lure you in with a reduced interest rate. Some offers may even promise 0% interest for a number of months. While these interest rates can seem enticing, you need to read the fine print.
Once the promotion is over, you may be hit with rates as high at 24.99%. A good credit card should have interest rates of 10% or lower. If you have blemished credit, you should at least aim for 18% or lower.
3. Evaluate the Terms of the Card
Some cards bill you at the end of the month, while others bill you twice in a month. In some cases, credit cards penalize you for not even using the card. Like any service, it’s important to know what you’re signing up for before you actually do. Find out if what hidden kind of charges you can expect from your card.
4. Weigh the Benefits of the Credit Cards You’re Considering
Credit cards come with their own range of perks. And depending on what your needs are it’s best to go with a card that allows you some leeway on the things you plan to spend your credit card on. Some credit cards give you shopping rebates, while others give you discounts on gas and airfares. Pick the one who’s selling point you know you can maximize.
5. Make Sure the Card is Accessible and Convenient For You
Credit cards come with a lot of “associated” services that come with their respective bank. While most credit cards have fundamental services (like online payment and cash withdrawals), it’s important.
Is the card honored at the places you most frequently shop in? Is it easy to conduct business with your card online, via phone or through ATM? Convenience and accessibility are key points in selecting a card, and making sure it
Finding the right card is easier said than done; but when done right, it can pay off in hundreds of dollars of savings. Keep in mind these five easy great tips when on the lookout for your next (or first) credit card, and it definitely won’t be a decision you’re likely to regret.
6. Features You Will Use
It is not necessary to have a credit card with features that you will not use. For example, the credit card might offer free travel miles for purchases, but what if you never travel? Pay close attention to the features of the card and this will allow you to get the best return. Perhaps you would prefer a credit card that gives you cash rewards.
7. Annual Fee
There are credit cards out there that offer you a zero dollar annual fee. That means you do not pay to have your credit card in your wallet. Makes sense to most people. However, there are credit cards out there that are completely worth paying an annual fee on. This is one of those situations you will have to weigh out according to your credit card wants and needs.
You shouldn’t have to pay a yearly, or monthly, fee just to be able to use a credit card. Yet, some companies charge hundreds of dollars per year in annual fees. A good credit card offer will not have any fees, especially fees for opening the account. Read the fine print and shred the offers that require outrageous fees.
8. Amount Needed
What are you using your credit card for? If you need a larger credit limit, then that will play a huge factor into which credit card you choose. You want to keep in mind that your credit score will determine the credit line you are approved for. With that being said, a great credit score allows you to have more control over the amount of credit you are approved for. Keep control of your spending on a personal level by having the credit card at a reasonable limit.
9. The simplicity of the Credit Card
Finding the right credit card should not mean jumping through hoops. Most credit card companies make the process as easy as possible. Keep in mind that you do not have to keep every card that you qualify for. If you have power at your fingertips, then why not utilize it? Finding that ideal credit card is a lot simpler than it sounds.
10. Customer Service
Many people rule this out, but customer service is extremely important. What if you accidentally pay your bill late? You want to have an understanding credit card company that will not raise your APR to 29% right away. Everyone needs a little leniency.
You can always tell how a credit card company will treat its customers by looking at online customer service reports. You can even check their BBB rating. Ask around and see what others have to say about the experience with the credit card company.
11. Look for Cash Back Programs
One of the best credit card offers you can look for is an offer that has a good cash back program. While many credit cards offer this type of program, they also offer several hoops to jump through to get your cash back. A good program will either allow you to easily cash in points or automatically apply your cash back to your monthly bill.
12. Select Offers With Interest-Free Promotions
No, this doesn’t mean those offers with a reduced interest rate for the first few months. What these means are credit cards that offer a 0% interest period for purchases over a certain amount. For example, Amazon offers 0% interest on purchases of over $149 if the purchase is paid off in six months.
13. Opt for a Visa or MasterCard
A credit card is mostly used for emergency purchases, which means it needs to be accepted in most locations. Almost every company that accepts credit cards, accepts Visa and MasterCard. While American Express and Discover are also taken in many locations, there are also just as many locations that don’t accept them.
It’s not that hard to choose the best credit card offer. All it really takes is reading the fine print and not jumping at the first offer that comes along. Do your research and shop for the best offer the same way you would anything else. Read the fine print, look for offers with a good cash back and interest-free programs and select a card that will be accepted at most locations.
Which is the best credit card for me? Not everyone will find a 100% match for the credit card they are after. However, these tips will help you find a credit card that you can live with and are in more control of.
Finding Your Credit Card Type
Finding the right credit card for your needs is like navigating a quagmire of interest rates and reward perks. There are so many credit cards out there that offer so many different options to consumers that many people are left with their head spinning. The good thing is that with the number of credit card options nearly anyone is able to find the right card for their needs.
How Do You Find the Right Card?
The options out there are numerous. There are credit cards that offer perks and benefits with each use, credit cards that promise to give you money with purchases, and cards tailored for students or business executives. With so many different types of credit cards, anyone is sure to find one that is suited to their needs and their life.
The first thing you should do is sit down and figure out why you want a credit card in the first place. Do you want to buy a home or car and need a card to help with the initial down payment? Are you hoping to rebuild your credit score or do you hope to gain some extra perks?
Once you figure out why you even need the credit card you can go out and find the one that best suits your needs.
Cards to Repair Credit Scores
Repairing a damaged credit score takes time even though it took no time at all to completely wreck it. Secured credit cards are probably the best way to help you improve the score. These types of cards work by requiring a security deposit in the amount of the credit card limit. By having this money in the bank you are assured that you will be able to pay the amount you used on the card. This is why this type of credit card is considered secured.
The beginning credit limit is often low but with continued use, you will find that your score will improve and your credit limit will increase.
Making that Big Purchase
If you plan to buy a car, house, or new home theater that will make the most avid of audiophiles salivate a low interest credit card may be right for you. These credit cards offer either no interest or an extremely low APR for a period of time usually up to a year. This way you can make the purchase and pay the amount off in that period of time before the interest rate jumps up.
There are a whole series of credit cards that offer perks, benefits, rebates, and even free gas in exchange for using the card. These cards are usually designed for consumers with good or excellent credit scores. With every purchase made with the card, you accumulate points that you can then exchange for rewards and perks. There are several different types of reward programs offering gas, air miles, and even cash.
Before You Swipe that Card
Credit cards, if used properly, do not have to be the burden that many consumers are carrying. If you know what to look for and how to use the card to your advantage credit cards can actually be a great asset. Finding the right credit card for you can decrease the chances of you destroying your credit score.
Credit Cards Practices That Yuppies Must Avoid
Today, a lot of young people, particularly young professionals, are finding themselves in deep financial trouble simply because of foolish credit card practices. These practices were not only unwise, but they were also irresponsible in the sense that they could have been “done without”; meaning, many of these expenses were really not necessary.
Here are some of these unnecessary expenses that usually causes young people to spend more than what they can afford:
Eating meals in fast food chains, restaurants, and cafés can be very expensive. This normally happens when one hangs out with an influential group of friends.
For instance, when an average-in-terms-of-finances young professional hangs out with financially-well-off peers, friends, or even officemates, he will always find himself at risk where he will need to spend more than he can afford.
Either he leaves the group during meal times and rejoins them later, or he joins them but faces the consequence of spending more than what he can actually afford.
This is also true when one is in an expensive relationship with the opposite sex. Paying for someone’s meal once or twice is okay. But to do it regularly can be a heavy burden, just because of “love”.
In this scenario, the credit card becomes the immediate answer to the problem at hand. Unfortunately, the problem compounds two or three folds because sooner or later, he or she will have to pay for everything he or she charges in his or her account, plus the interest.
This is also true when going out to party on Friday nights is a regular thing. Drinks can be very expensive, and a lot of things can get out of control when one is already under the influence of alcohol, or worst, drugs.
There’s one common factor among the things mentioned above: these expenses are all not necessary. This means the person can do without them, and he or she will still live comfortably, debt-free.
Young professionals, especially those who are still struggling to make ends meet, can learn so much about this adage: To live simply for a better future, in relation to everything that you own materially: “use it up, wear it out, and make it do, or do without”.
Debts should be avoided as much as possible. But since there are things that can only be accessed and realized with the help and use of credit, then the best advice is for them to use credit wisely and responsibly.
Learning about financial literacy has to start somewhere, and learning about it while one is young is very ideal. To have a credit card is not a bad thing.
It only becomes bad when it is used irresponsibly. To avoid the irresponsible use of credit cards, young people should educate themselves as much as possible about how to manage their finances well, and apply what they’ve learned. It’s not enough to just know them, they have to do them!
What You Did Not Know About The Credit Card
Credit cards — What is in it for them?
If you thought cards were invented to make life easier for the customer, think again. The acquiring bank that handles the merchant’s account charges a small percentage of the transaction amount as ‘discount’ for handling the card transaction.
This the merchant conveniently passes on to the customer. It pays a part of this amount to the issuing bank as ‘interchange fee’ for the transactions between the 2 banks. The issuing bank, on the other hand, earns from the interests and fees collected from the cardholder.
And if the customer defaults, the bank’s prayers are answered since it means more interest and additional late fee. The network charges these banks annual fees and dues for using the services of the network. Now you know why you are hounded by so many card sales calls.
A Close look at the Card
On the top left corner of your card, you will find the name and logo of the issuing bike. On the right bottom corner is the logo of the network to which it is affiliated. Stacked above this is a hologram.
In the center of the card, a number runs across the card from left to right, which is the card number. Below this, you would find the expiry date and the cardholder’s name. If it is a smart card, an EMV chip may be embedded in the card.
On the flip side of the card is the magnetic strip that holds the account information of the card, the signature strip where the customer is supposed to sign and a 3-digit card security code. This is as specified in the ISO/IEC 7810 standard.
What is in a number?
The credit card numbers follow the international standard format specified in ANSI standard X4.13 — 1983. It is a fifteen or sixteen digit number, where the first digit signifies the system and while the last digit is a check digit. The rest of the digits in between are decided based on the system.
If the first digit is 3, it is a TEC or travel/ entertainment card such as Diner’s Club or American Express. If it starts with a 4, it means a Visa system. 5 would stand for the Master card system.
The other numbers generally hold the Bank code, Account number, type of card etc. Therefore, one number can provide all the information required to identify an individual’s account.
Understanding the Magnetic Stripe
The magnetic stripe was invented by Ron Klien in the 1960s. Those were days when tape recorders were gaining popularity and Klien saw that the same thing could be used in cards to reduce the manual labor that merchants had to put in to check the credentials of the customers.
The magnetic stripe, or ‘magstripe’ as it is called, has three tracks that store information. It is made of a thin film with a coating of iron particles that act like bar magnets. The binary data is stored using the orientation of the magnetic iron particles.
Track one and two are most commonly used, of which track one is read-only. The third track may be used to store additional information like the encrypted PIN, country code etc. Exposure to magnets may erase the data on this stripe.