MyCardBlog

Although using a credit card is an easy job for us, it’s not easy to finish the transaction. Use a credit card involves a lot of parties. And usually, it takes several days to settle down the transaction until it finally appear on your account.

Parties involved
Cardholder: The owner of the card used to make a purchase; the consumer.
Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case.
Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder.
Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant.
Independent sales organization: Resellers (to merchants) of the services of the acquiring bank.
Merchant account provider: This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with.
Credit Card association: An association of card-issuing banks such as Visa, MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.
Transaction network: The system that implements the mechanics of the electronic transactions. May be operated by an independent company, and one company may operate multiple networks. Transaction processing networks include: Cardnet, Nabanco, Omaha, Paymentech, NDC Atlanta, Nova, Vital, Concord EFSnet, and VisaNet.
Affinity partner: Some institutions lend their name to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams, universities and charities.
The flow of information and money between these parties — always through the card associations — is known as the interchange, and it consists of a few steps.
Transaction steps
Authorization: When the cardholder pays for the purchase, the merchant performs some risk assessment and may submit the transaction to the acquirer for authorization. The acquirer verifies with the issuer—almost instantly—that the card number and transaction amount are both valid, and informs the merchant on how to proceed. The issuer may provisionally debit the funds from the cardholder’s credit account at this stage.
Batching: After the transaction is authorized it is then stored in a batch, which the merchant sends to the acquiring bank later to receive payment (usually at the end of the day).
Clearing and settlement: The acquiring bank sends the transactions in the batch through the card association, which debits the card-issuing bank for the transaction amount, and credits the acquirer for the transaction amount minus the interchange fee.
Funding: The acquiring bank pays the merchant. The amount the merchant receives is equal to the transaction amount minus the discount rate charged by the acquiring bank to the merchant for the service.
The entire process, from authorization to funding, usually takes about 2-7 business days. However, many merchant card processors offer next-day deposits to customers subject to type of banking account.
In the event of a chargeback (when there’s an error in processing the transaction or the cardholder disputes the transaction), the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it.
Ok. Next time, let’s see how can a credit card issuer can make profits from this process.

Used wisely, credit cards can help you make the most of your financial resources. You can use cards to make some purchases more easily and securely — like travel reservations or concert tickets — and they can even help you budget and save. But to enjoy these benefits, you need to choose a card that’s right for you, and use it carefully.

The right credit card
To find the best card for you at the lowest cost, you need to consider these three major factors: Interest rate, Grace period and Annual fee. But for most of us, I think the top factor is sign-up bonus and other 0% APR on purchase and BT offers.
Not all cards charge an annual fee, so you may be able to avoid that cost entirely. But be sure to read the fine print: Some no-fee cards start charging a fee after the first few months. (Of course, you can choose to cancel it.)

A card’s grace period and interest rate probably have the greatest effect on the cost of credit. A grace period is the number of days before a company starts charging interest on new purchases. If there’s no balance due on your card, no interest will be charged from the statement closing date through the day payment is due. But if there’s a balance, the grace period is eliminated. And some cards have no grace period, which means interest starts being charged on that purchase immediately. (You should also be aware that some cards may charge interest on new purchases.)
If you pay your bill in full every month, having a grace period may mean you never pay interest. And the longer that period is, the easier it may be to pay in full each time. But if you regularly carry a balance, finding a card with a lower interest rate will be more important to you than finding one with a long grace period.
Affinity cards
You might also be tempted by affinity cards: cards that give you travel miles, cash back, discounts or make charitable donations to a favorite cause. Before signing up for one, be sure it fits your credit needs first-and that the interest and fees won’t outweigh the potential benefits. You might also want to calculate how much you’ll have to spend to actually qualify for a free airline ticket or other reward.
Using a credit card wisely
The freedom a credit card offers may be exciting at first, but it’s important to take the responsibility of credit seriously. Using your card wisely may help you stay out of credit trouble and avoid getting into debt. The first step is matching your spending style to what you can afford to repay when the bill arrives or within a few months.
To avoid overspending, it’s always recommended that you create a budget for your household, and keep your spending in those guidelines. If you’re unsure if or when you’ll have the money to pay off a purchase you need to put on a credit card, it’s probably safest not to make that purchase.
Write it down
You should save your credit card receipts and write down how much you’ve spent, so that your monthly bill isn’t a big surprise. Tracking your spending will also help prevent you from going over your credit limit, which can incur hefty fees.
Billing mistakes
If you notice a mistake on your bill, by law you have 60 days to notify the lender about the error-whether it’s an unauthorized charge, an incorrect payment, or a computer mistake. Your lender must acknowledge your notification in 30 days, and must resolve your issue within up to two billing cycles, but not more than 90 days. (I doubt about this. You’d better continue to pay the disputed charges and then wait for refund as Linglin said.)
You can still use your card while you’re disputing a charge, as long as you pay the rest of your bill. You will not have to pay for those purchases or charges you are disputing, but you will have to continue to pay undisputed charges or new charges made after your dispute is filed. The law that protects your rights when it comes to billing mistakes is the Fair Credit Billing Act.
I remember someone was charged late fee by AMEX and did nothing but waited. Then AMEX transferred the finance charge to a collection agency. There is a collection on his credit report. Following is what I wrote to him: “But you should learn a lesson from this case, when you owe some money (actually not) on your credit card. You should pay it before due date. At the same time, you should try your best to dispute with Credit Card Company. Then they will refund credit to your account after they finish the dispute. Don’t leave it away and do nothing. All the credit card companies have well-developed rules. You might not understand, but it a rule. Be careful next time and good luck this time.”
Limit your credit
You may find it easier to control your spending if you limit yourself to having just a few credit cards, and don’t carry them with you all the time. The fewer cards you have in your pocket, the less likely you may be to buy something on impulse.

In the following days, I will post some basic knowledge about credit card. Most of the materials are from HSBC. They really have done a good job on introducing basics about credit card. I hope this will be helpful for you all.

Credit Cards
The money you spend when you use a credit card isn’t really yours — you’re actually borrowing it from the bank or other financial institution that issues the credit card, in an arrangement called revolving credit. (Revolving credit-A credit arrangement that lets you borrow up to a certain credit limit for a defined period of time. The balance may fluctuate from zero up to the maximum amount.) You have access to a fixed amount of money, called your credit limit. (Credit limit-The maximum amount you can borrow in a revolving credit arrangement.) Once you repay any of the money you have spent, you can borrow that amount all over again.
What you borrow, or what you spend, is called principal. (Principal-For a mortgage or other loan, the amount you borrow. When investing, principal is the amount of your initial investment. If you buy a bond, the principal is the amount you invest and the face value of the bond.) For the privilege of using the principal, you pay the credit card issuer a finance charge, (Finance charge-The total dollar amount your loan will cost you, including interest, points and fees.) which is the interest (Interest-In a credit arrangement, the amount, figured as a percentage of your unpaid balance, you pay the lender. With a savings account, the amount a bank pays you for keeping your money on deposit. Interest is usually figured as a percentage of your total deposit. Simple interest is calculated only on the principal. Compound interest is calculated on the principal and any earnings or interest that accumulates.) that accumulates on any unpaid balance. For example, if you have a balance of $600 on a card with an annual interest rate of 18%, your monthly finance charge will be $9. It’s calculated by multiplying a month’s worth of interest — 1.5% — times the balance.

Every credit card company has to disclose the interest rate it charges on the balance you carry, and different cards charge different rates so it’s worth shopping around. Some list their monthly or daily interest rates, but you can compare different cards by looking for the annual percentage rate (APR), ( The APR represents the cost of credit on a yearly basis represented as a percentage. It includes interest and other costs as amortized over the life of the loan.) which all card issuers are required to disclose. A card’s APR doesn’t include any late fees, annual fees or other charges, so if you’re comparing rates, be sure to take into account all additional fees.

Secured Credit Cards
Another option you can consider is a secured credit card, which means that your card is attached to a savings account that is pledged to the bank that issues the card. You deposit a sum of money that you won’t be able to touch, but you can charge up to that amount on your card. The deposit account is in your name, but if you don’t pay your bills, the card’s issuer can take what you owe out of your account. Secured cards may be a good choice if you’ve had credit problems, and are having trouble being approved for a credit card. If you regularly pay what’s due on a secured card, you may be able to qualify for a regular, unsecured card after a certain period of time. (If you have a secured card and believe you’ve demonstrated your creditworthiness, don’t hesitate to ask for a regular card. Even if you have to wait a bit longer, you may help speed up the process by indicating to the lender that you’re interested in receiving a regular bankcard, and may be shopping for such a card with other lenders.)

Charge Cards
Charge cards let you make purchases as you would with a credit card, and usually don’t impose a credit limit or state an APR. But you have to pay off the entire amount you’ve charged each month, rather than carrying a balance as you can with a credit card. Some well-known charge cards are issued by American Express, Diner’s Club and Carte Blanche.

There are many reasons to increase your credit limits. Basically we can boost our credit scores by lower the usage of your line of credit. We can get more free money from banks and earn more interests. Sometimes the credit card issuers will increase your limits without a request. However, you may want to increase you limits for some reason. And you can’t wait to get an automatic increase. Here, I summarized the process on how to increase your credit limit with different banks.

Citi Cards
1) Log in your citi account.
2) Go to the menu bar, go to Manage My Account>Credit line Increase Request.
3) After clicking that button, you will get two results: Instant Approved with a specific amount. This will not get a hard pull on your credit report, since Citi review your credit report monthly. And the decision is based on the last soft pull. I got $800 increase from $2,000 to $2,800 after 6 months. Another result is you have to put some information and go to manual review process. Usually a hard pull will reflect on your credit report. So please be careful to full in the form.

Chase
Usually they will pull a credit report every time you ask for increasing your credit limit except for the automatic increase. You can submit the request online (similar to Citi) or call chase customer service. When the CSR asks your annual income, they will pull your credit report. So be careful about that. Ask them whether or not to pull your credit report before give them the authorization.

American Express
There is no hard pulls for increasing credit limit from American Express. There will be a soft pull on your credit report although they ask for your annual income. This is the most friendly credit card issuer for credit limit increase. Log in you AMEX account, go to account services, and then click “credit management”. You will see “Increase Your Line of Credit”. They will ask for your annual income and you have to fill in the amount you want. Fill in the form and then there will be a decision for you. You can get instant approval. Sometimes the amount will be smaller than you requested. Sometimes, you can get the amount you requested. Usually a high household income will help you to get higher limit. If you see a notice for 7-10 days, it doesn’t mean they deny your request. At this time, you can call in and talk to a credit analyst directly. Usually the increased amount will appear in less than 15 min. Again, no hard pulls. Generally, the credit line under $24,900 is safe.

Bank of America
You can ask for a credit limit increase online. (Just on the left side of your account information.) You have to fill in some information like occupation, income and housing payment. They will not pull your credit report. If they want to access your credit report, they will notify you. SO there is a soft pull on your credit report. The process is similar to that of American Express. Someone indicated that there’s a trick on how to increase credit limit if you have two credit cards from BOA. Can you figure out it?

Discover
Call customer service 1-800-347-2683 and they will ask you some questions. From my understanding, they will also increase your credit limit automatically. When you call them up for increase your credit limit, please ask them not pull your credit report. To my knowledge, there will be a soft pull but you have to require them to do so.

HSBC
They will pull your credit report if you can’t get automatic increase. Somebody said the HSBC was operated by a bunch of “Space Monkeys.” Even though you can get $10,000 from other credit card issuers, you might get $500/$750 from HSBC. No matter how high your credit score and how long your credit history is they just give you what they think should be.

Capital One
I believe they will pull (soft) your credit report from 3 credit bureaus and they will increase your limit automatically. However, please don’t expect too much from it. When you apply for their card, they will also pull your credit report from 3 bureaus. That’s why I don’t suggest my readers use their cards. Their credit limit usually sucks. For your credit score’s sake, please don’t touch Capital One!

WaMu
They claim they will periodically review your account. If you maintain a good standing with your account with them, they will increase for you automatically. Some report a huge increase while others report tiny increase. I hope I can get a huge jump on my account.

Right now, Bank of America is offering $75 for its customers for opening a new MyAccess checking account. (the preliminary requirement is you should have a credit card account with them) The offer code is CH750LB. This time you have to fund this account with only $25. However, the $100 bonus offer is still available. To get the $100 bonus you should use offer code AOU2610. For both accounts, there is no monthly maintenance fee and no minimum balance requirement. You don’t have to set up direct deposit for this account. It’s really a good deal. Your lost is a hard pull on your credit report. Hurry up! Click here to apply for $100 offer and click here to see the $75 offer. I have no idea why they offer the similar offers. Both indicate that the offer expire on 12/31/2007. I applied for the MyAccess checking account on Aug 1st and got $200 ($100 each) on Sep 7th. I don’t know why they gave me $200. But it’s not bad!

These days, I am always thinking which credit card company is the best from our customers’ eyes. This morning I was trying to find out the answer by using Google. It seems I have luck with me. Yesterday, JD Power and Associates just released the “2007 Credit Card Satisfaction Study”. And the final winner is American Express!

I’m not surprised about the fact. Honestly speaking, American Express provides the best customer services compared to other companies. You can always find an American customer service representative even in the late night. I was very surprised to talk to a balance transfer specialist at 10:30 pm when a general customer service representative couldn’t solve my problem about balance transfer, although I was held for about 15 min. If I call Citi in the late night, I should be prepared to hear Indian English and accept the fact that I can’t get what I want. I don’t know the operation system in a bank but I would say Citi is not so good. For example, they claim that they are offering $200 sign-up bonus for a new checking account. However, when you read carefully, there are some fine prints say the offer expires on 08/31/2007. Then the problem is they still put it online. I called them up and ask them for reasons. They couldn’t find the answer until now. I dare not to open a new account with Citi. At the same time, I should mention that the “Financial Review” process is also a problem for American Express. They should try to fix the drawback in the future. From what I know, the business card may be the major source of a “Financial Review”. If they couldn’t confirm your business, they will be worried that you can’t afford the expense. Not to mention that there are always no pre-set spending limits for business cards. Another point is not carrying high balance. Generally, lower than 70% of credit limit is acceptable.

Ok. Here is the story about Credit Card Satisfaction Study.
Customer Satisfaction Score>—Customer satisfaction, based on 1,000-point scale
American Express 735
Discover 728
Citi Cards 652
Chase 651
US Bank 646
Washington Mutual 638
Wells Fargo 636
Capital One 617
Bank of America 607
HSBC 571
Based on online survey of 7,812 credit card customers in June and July.

(Click to see large image)
American Express and Discover showed the highest satisfaction levels in the J.D. Power and Associates study, reflecting that an estimated 90 percent of their customers aren’t charged interest because they pay off balances in full every month. Conversely, the companies with the lowest satisfaction ratings, including HSBC and Bank of America, tended to be those with higher percentages of customers who carry balances.
Power divided card customers into “transactors” – those who, like most credit card holders, pay off balances and use the products as charge cards – and “revolvers” – those who don’t pay their balances in full and must pay finance charges. Transactors had an average satisfaction rating of 681 on a 1,000 point scale, compared with 613 for revolvers.
A credit card issuer’s “percentage of transactors pretty much drives the rankings,” said Jeff Taylor, senior director for banking at Power.
Similarly, among card networks, American Express and Discover outscored MasterCard and Visa. That was because banks that issue MasterCard and Visa had greater proportions of customers with outstanding balances.
The lower satisfaction of those who carried balances stemmed from customer unhappiness with interest rates, as well as other financial factors such as low credit limits. (HSBC has the problem. I’m complaining here!)
HSBC, the issuer that scored lowest in the survey, said it had not seen the report.
For those who don’t carry balances, card benefits, features and rewards, such as airline miles, were most important. American Express and Discover scored well in part because almost all their customers are enrolled in rewards programs. (Personally, I don’t think the rewards programs from Discover is very good. HSBC 2% cash back card is really good!)
Customers reported wide differences in problems with their card issuers. On the high end, 11 percent of Bank of America and Citi Cards customers said they had experienced a problem such as a billing mistake in the past 12 months. Only 5 percent of Washington Mutual and Discover customers said they had had a problem.
In part adapted from San Francisco Chronicle by the author Sam.

PNC bank is offering sign-up bonus for new customers opening a personal checking account with direct deposit between October 7 and November 17, 2007. They will give you $101 for opening a personal checking acount with direct deposit.

There are three checking accounts from which you can choose. For Free Checking account, you have to maintain $2,000 minimum balance to avoid ATM transaction fees outside PNC ATMs. For Performance Checking account, you have to maintain $2,500 minimum balance to avoid service fees. And you can earn interest for balance higher than $2,000. For Performance Select Checking account, $10,000 minimum balance required to avoid monthly fees.

Here are several important points about the sign-up bonus:
1). The payout of $101 will be credited to the qualifying account within 7 days of the first Direct Deposit, which must occur before 1/31/08.
2). A qualifying Direct Deposit is defined as a recurring Direct Deposit of a paycheck, pension, Social Security or other regular monthly income electronically deposited into a Free, Performance or Performance Select Checking account each statement cycle. The minimum amount of any single Direct Deposit must be at least $500. The Direct Deposits must be made by an employer or an outside agency.
3). You should maintain balance to avoid related fees.
It seems a really difficult deal to jump. I’m thinking of using ING Direct account or Paypal (they count Paypal and ACH push as DD) to put $600 in this account and then close it. Or maybe I will stay for 6 months as Chase. Of course I will open free checking, and get the money back to ING every month. My (or maybe all of you) concern is whether they will take the $101 back. Click here to application page.

PNC Financial Services is a U.S.-based financial services corporation, with assets of $92.0 billion. PNC operations include a regional banking franchise operating primarily in eight states and the District of Columbia, specialized financial businesses serving companies and government entities, and leading asset management and processing businesses. PNC is America’s 11th largest bank by deposits and is the third largest bank off-premise ATM provider in the country.

I think this is really an interesting idea to rent your credit score to those who in need of good credit score.

When I read the articles about renting credit score, I think I should write something about it for my readers. However, I am not encouraging you guys to rent your credit score. It seems unethical for me and you should also consider the risk of losing your personal information to others.

These days, having a good credit score means everything. It will make a lot of things easier for you if your credit history is clean, including renting out an apartment. The credit score is extremely important for those who want to buy a house. But in fact, lots of people might have insufficient credit score when they file an application. How could they do? There is a fast-growing business on the Internet: companies that claim to boost credit scores by transplanting the credit DNA of people with excellent payment histories into the credit files of people with sub-par histories. Most companies claim that they can increase the credit score by about 20 to 250 points, or more, by adding those with low credit score as authorized users onto the credit card accounts of people with excellent FICO scores.

In this way, the positive payment information of those with excellent credit score will flow into those with low credit score. Actually, our parents are always adding their sons or daughters as authorized users into their accounts. Obviously, it’s legal to add someone as your authorized users. And that’s why this kind of business is boosting on the Internet. Someone can rent their credit score for about $1,500 to $2,000 for 180 days or more. Some companies claim that they can increase their clients’ credit score by 150 to 250 points for just months with a price of $750! For those who want to boost their credit scores, they don’t have physical credit cards. So they can’t use the credit account. However, they may see the new account appear on their credit report which is the cause of the increase of credit score.

How much can you get paid for renting your credit scores? The amount you can get varies. It depends on the age of the credit card and the credit limit. There used to be a website named rentyourcreditcards.com is no longer. However, it’s no longer available now, in part I think due to the questionnaire from credit card companies and credit report agencies.

Anyway, I think this is an interesting idea to rent your credit score to others and that why some companies can make money from it. This post is just an introduction, and I’m not encouraging you to do this business. Again, it doesn’t seem a good idea to me. But I think you can learn something from it.