Prepaid Credit Cards

If you are looking for a credit card that is easy to use, great for kids and teens and one with little or no interest and fees, a prepaid credit card is for you. Prepaid credit cards make great gifts, they are safe for almost anyone, and they are accepted just the same as regular credit cards. They are a great option for anyone who needs a credit card, but wants it without all the strings attached.

There are many different types of prepaid credit cards. Some prepaid cards are designed specifically for individuals with bad credit such as secured credit cards. Other cards are used in the place of checks, such as the popular debit card. Other cards are used like gift cards. Which card is for you?

Do you have a teen that prefers to use a credit card? If your child prefers shopping online or doesn't like to carry cash, there is a great prepaid credit card option for them-gift cards. These cards are purchased either online or from convenience and grocery stores for varying amounts. They are then used just like a credit card. These cards are available from almost any credit card company; look for those from mastercard and visa.

Perhaps you are a college student or are the parent of one. Students often need credit cards for a variety of reasons. They make it easier to purchase gas, let you buy your books online and are good to have on hand in case of an emergency. But maybe you're not quite ready for a credit card. A prepaid credit card is just what you need. How about a debit card? Debit cards are used in place of checks and draw money directly out of your checking or savings account. Best of all, they are usually issued and used without any fees!

Another situation where a prepaid credit card might be necessary is in business. If you have a small business or you want to give purchasing power to employees of your large business, prepaid cards are a great option. A small business owner with bad credit should consider applying for a secured credit card. And managers with employees who need to use company money should look into purchasing gift cards or setting up debit card accounts.

Customers, credit cards: A charged relationship

WASHINGTON – Call it a love affair with a dark side.

Consumers today can’t get enough of their credit cards, slapping them down with a passion to pay for everything from fast food to plane tickets at a rate of 10,000 transactions a second worldwide.

But while Americans love the convenience of plastic, they often hate the credit card issuer. Credit card complaints outstrip all other bank-related grievances filed with federal regulators in recent years.

The avalanche of gripes generally boils down to objections about a half-dozen practices, according to congressional staff and consumer groups. The complaints mostly center on what consumers see as unfairly high interest rates and penalty fees; confusing policies that constantly change, almost always in the lender’s favor; and near-insurmountable hurdles to getting help when a consumer falls into trouble or when a company makes a billing mistake.

Dave Sullivan, of Sacramento, Calif., said he had a credit card that ended up being bought by another company that then raised his rate for no reason to 19.99 percent from 10.99 percent.

“It irked me,” he says. “You can’t change the contract, but they can?” He paid it off and canceled it, switching to a Chase card, which he says he’s happy with.

Regulators are listening to the complaints and preparing to issue stronger consumer protection rules. The Federal Reserve proposed new, long-awaited regulations in late May that would require credit card companies to make disclosures clearer and easier to understand. But some lawmakers say they think that the Fed rules, which could become final by year’s end, may not be enough and that new law might be needed.

All of the major credit card companies – Chase, Bank of America, Citibank, Discover, Capital One, American Express and HSBC – have engaged in at least one of these practices.

The industry defends its policies as necessary so card issuers can adjust prices to reflect the risk that card holders might default on their debt. But as policymakers step up scrutiny of the industry, companies are being forced to re-examine long-standing practices.

The president of Chase’s credit card division, for example, apologized in March before a Senate subcommittee for charging a customer $7,500 on a $3,200 debt. He also promised that Chase will no longer charge additional over-limit fees after a customer is over his or her limit for more than 90 days.

About the same time, Citigroup announced it would end two policies that consumer groups and some members of Congress have criticized as unfair and abusive.

The first is “universal default,” under which a cardholder’s interest rate on a credit card automatically increases if the holder is late on a payment for a credit card from another company. In a second but related practice, companies reserve the right to raise a customer’s credit card interest rate at “any time for any reason.”

A few other credit card issuers have backed away from universal default, but nearly all reserve the right to practice what they call “risk-based pricing,” which is similar to universal default except that it doesn’t happen automatically. A new survey by Consumer Action, a non-profit group that focuses on credit cards, says many issuers have now tucked variations on universal default into “any time, any reason” clauses.

In the hope of heading off legislation banning some of these practices, the industry welcomed the Fed’s proposal for better disclosure. Consumer groups and some key members of Congress, including Senate Banking Committee Chairman Christopher Dodd, D-Conn., also praised the Fed action but say the industry has to voluntarily do more or face changes in the law.

A bill introduced about three weeks ago by Sens. Carl Levin, D-Mich., and Claire McCaskill, D-Mo., would ban interest charges on debt paid by the due date, cap penalty interest-rate increases and prohibit interest from being charged on late fees or over-the-limit fees. The measure would also ban late fees if a card issuer delays crediting a payment, require firms to offer the option of a fixed limit a customer would not be allowed to exceed and require companies to apply payments first to charges carrying the most expensive interest rate.

Californian motor club introduces new AAA credit card

By Julia Chan

The Automobile Club of Southern California is launching its AAA cash rewards credit card, which will allow cardholders to earn 1% cash back on all their purchases, with no annual limits on cash rebates and no annual fee./n

"Our members have overwhelmingly indicated to us that cash rebates are the preferred type of credit card reward," said Wendy Sabins, senior vice president for marketing products and services. "Cardholders will earn one point for every dollar spent on net retail purchases using the AAA cash rewards MasterCard credit card and will be eligible to redeem their first reward, after collecting 2,500 points."

The new credit card product will give card users cash back for their everyday purchases, including grocery store, restaurant and gasoline purchases. Applications for the card will be provided by Bank of America, in all 75 Auto Club offices throughout southern California.

The Auto Club will continue to offer its AAA gas rebate Visa credit card, which provides monthly cash rebates of up to 5% on all gasoline purchases made at the pump with the credit card. AAA gas rebate Visa cardholders have the option to keep their current credit card, request the cash rewards credit card and use both cards, or request the cash rewards credit card only.

The Automobile Club of Southern California, the largest member of the AAA federation of motor clubs, offers a variety of services and products, including roadside assistance, insurance products and services, AAA credit cards and automotive pricing and buying programs, among others.