Month: October 2017

What You Need To Know About Virtual Credit Cards

rebuilding credit

Guest article by Alayna Pehrson – Digital Marketing Strategist at

Credit cards have been an increasingly popular form of payment for years. The amount of online shopping purchases has also continued to rise. According to a 2016 survey conducted by the Pew Research Center, 79 percent of Americans have made at least one online purchase and 8 out of every 10 Americans are now considered online shoppers. With this high amount of online shopping activity, it’s no wonder that more and more credit card numbers each year are being compromised. Although credit card theft is becoming more of a concerning issue, it seems that a large portion of people still use credit cards for online purchases. This continual use of credit cards is why some card providers are now offering the virtual credit card option.

What are virtual credit cards?

virtual credit card is a randomly generated 16-digit temporary number that can be used for online purchases. These card numbers are typically meant for one-time use and expire in a relatively short amount of time. Often, those who use virtual credit cards can set a minimum and maximum charge amount as well as when the card will expire. These card numbers were designed to enhance online shopper safety by reducing the risk of credit card and identity theft.

Benefits of using a virtual credit card

There are a few benefits of using a virtual credit card number over a physical credit card number for online purchases. These benefits include:

  1. Preset card expiration: Customers can set a time limit on when the virtual credit card will expire/when the credit card number will no longer exist. This ensures that the card will expire on that date which means that no one will be able to use the card after the preset date.
  2. Only primary card holder gets the virtual card option: No secondary card holders can get access to a virtual credit card, which enhances the primary card holder’s security as they will be the only one to make purchases using virtual cards.
  3. Cannot be traced back to physical card: It is incredibly difficult to clone or copy a virtual credit card because they are non-physical, the 16-digit number is temporary, and does not have any affiliation with the physical card number.
  4. Maximum spending limit: Those who use virtual credit cards can set a maximum spending limit. This ensures that if someone does get a hold of the virtual credit card, then they will only have so much to spend.

The downside of virtual credit cards

Although there are many benefits to using a virtual credit card over a physical number, there are still some negative aspects that accompany this innovation.

  1. Virtual cards are limited to online purchases: Virtual cards will not work if a purchase requires the showing of a physical card.
  2. Obtaining refunds may prove difficult: If a purchase is made using a temporary card number, then it is incredibly difficult to trace the purchase back to the physical card. Some stores provide a store credit option in this case.
  3. Often requires online accounts: A person often has to have an online account created with the provider before they can get access to a virtual credit card.
  4. Select providers offer virtual cards: Not every provider offers the virtual credit card option. There are third-party providers, however their service quality may not be the best and they may charge extra fees.
  5. Not 100 percent fraud preventative: Although virtual credit card numbers are typically more secure, they still fail to provide complete protection from cyber/identity theft criminals.

The importance of staying aware

Virtual cards are an innovative tool designed to reduce theft, however, as mentioned above, using virtual cards doesn’t completely ensure personal security. Therefore, it is important to continually check all credit card accounts as well as credit reports on a regular basis. This will not only help you keep track of your security, but will also encourage you to maintain a good credit score as virtual cards are not exempt from lowering your credit score.

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What Determines Your Credit Card Limit?

credit card limit

When you apply for a credit card, it can feel insulting to be offered only a low limit, which won’t be of much use to you. But too much credit can be dangerous, too. A high credit limit can encourage overuse and make it easy to rack up too much debt. Unfortunately, you won’t know exactly how much credit will be extended to you until you’re approved for the card.

If you’ve been surprised by the credit limit a lender has offered you, you’re not alone. It can seem like a mysterious process that happens behind closed doors — but there are specific methods lenders use to determine your credit limit.

So, how do credit card lenders figure out how much credit to give you? Different cards use different methods. Here’s a brief overview of each of some of the determining factors.

Preset Card Limits

Some credit cards come with preset limits. For example, a blue card might offer a $500 limit, a gold card might offer $1,000, and a platinum card may offer a $2,500 limit. With these types of lower-risk cards, limits are generally lower and you get the amount of the card you applied for upon approval, or you’re declined, based on your credit score.

Credit Score-Based Card Limits

For other types of credit cards, lenders will look more closely at your credit report and credit score to determine how much credit they’re willing to offer you. For example, a credit card might be available with a credit line of $1,000 to $5,000 or more. The better your score, the higher the credit limit you’ll be awarded.

Your credit score is a three-digit number, between 300 and 850, that’s based on five factors:

  • Payment history
  • Amount of debt owed
  • Length of credit history
  • New credit
  • Credit mix

These factors are used to help determine how much of a risk you will be to a lender.

Custom Scoring

Some credit card companies take several other factors into account, besides just your credit score. They may consider things like:

  • Personal income – Do you have the income to support a credit card without getting into debt trouble?
  • Debt-to-income ratio – What percentage of your income is already dedicated to paying down debt? A high percentage indicated that you’re a higher risk.
  • Repayment history – Have you made timely payments in the past? If so, you’ll probably be dependable in the future.
  • Limits on other credit cards – What have other lenders been willing to give you? If your other cards have a low credit limit, subsequent cards for which you apply may not be much higher.
  • Co-applicant income and credit information – If you’re applying for credit jointly, what is your co-applicant’s financial and credit health?

History with the Lender

Most credit card lenders will adjust your credit limits based on your track record with the lender. Maintaining good standing with the credit card company typically results in limit increases over time. If you exhibit trouble making your payments, however, they will likely lower your credit limit. You can also request a credit limit increase by logging into your account online or calling the customer service department. To request increases you’ll need to make sure the lender has your current income and other relevant information, and that it warrants an increase.

Want to extend your credit limits but need help cleaning up your credit report? Contact our credit repair experts for advice you can trust.

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3 Facts About Credit Card APRs

credit card APR

Guest article from

Whether you blame text messaging, millennials, or simply busier lives, our modern society has developed a dependence on acronyms that can make it difficult to communicate unless you’re firmly in the know. At the same time, some of these acronyms have been around long enough that we really ought to know them — especially those that directly impact our finances.

One of the most important acronyms in the consumer credit world (and the business credit world, at that) is APR, which is short for annual percentage rate. In essence, APR refers to the interest rate you pay for a particular credit product — be it a loan, a credit card, or some other type of credit line.

For the most part, the details and specific applications of an APR, including the relationship between the APR and the actual interest you pay, will vary by the type of credit product. For example, the ins and outs of your credit card APR will be different than those for a loan APR in several key areas.

  1. Your Card Likely Has Multiple APRs

The fact that a single credit card may have multiple APRs can be a source of much confusion for the credit card novice, but it’s pretty straightforward once you know what to look for — and where to look for it.

In general, your average credit card will have as many as three different transactional APRs, with the exact APR you’re charged dependent upon the type of transaction responsible for that portion of the balance. The typical transactions with their own APR include new purchases, cash advances, and balance transfers.

As an example, consider a hypothetical shopper, Shonda, whose total $850 credit card balance includes: $500 in new purchases, $100 in cash advances, and $250 from a transferred balance. If Shonda’s credit card charges 15% APR for new purchases, 20% APR on cash advances, and 10% APR for balance transfers, then she’ll be charged three separate APRs on her balance: 15% on the $500 in new purchases, 20% on the $100 in cash advances, and 10% on the $250 transferred balance.

Aside from promotional balance transfer APRs, most credit cards will have the same rate for both balance transfers and new purchases, but don’t let this fool you into thinking the two transactions will be treated the same way. Specifically, the interest fee grace period that applies to new credit card purchases doesn’t apply to other transaction types, meaning you’ll likely be charged interest on balances from balance transfers and cash advances as soon as the transaction is complete.

The details of your card’s APRs can be found in your cardholder agreement, which was part of your welcome kit and can also be downloaded from your issuer’s website. If your cardholder agreement doesn’t specify an APR for a certain transaction type, chances are good that the card doesn’t support that type of transaction. For instance, store cards and other easy credit cards to get for rebuilding credit may not allow balance transfers to the card.

  1. Late Payments Can Increase Your APR

Another hugely important APR fact to remember is that making late credit card payments can actually increase your APR. Specifically, many credit cards will instigate a penalty APR if you make a late payment, and that penalty can be huge — 30%-APR-or-higher huge.

Penalty rates aren’t strictly limited to issuers providing credit cards for bad credit, either; even prime credit cards may charge you a penalty APR after missing a payment. This can be particularly painful for cardholders who are enjoying a 0% APR from an introductory offer, as you could go from zero to 30% in the blink of an eye.

Even worse, penalty APRs won’t apply solely to the balance you had when you made the late payment. Many credit cards will require you to meet certain conditions, such as making six months or more of on-time payments, to return to your normal purchase APR. And some cards will actually charge you the penalty APR indefinitely.

The easiest way to avoid falling victim to a penalty APR is to avoid late payments entirely by automating your credit card payments. This will ensure your bill is always paid by the correct date, regardless of whether you actually remember the date.

  1. Credit Card Interest Rates Are Variable

Something that can be confusing for even seasoned credit card veterans is that the APRs charged by your credit cards are often variable, meaning they can change as the market changes throughout the year. The most common type of variable APR is based on the Wall Street Journal Prime Rate (WSJ Prime Rate), which is a measure of the US Prime Rate determined by the interest rates being charged by the 30 largest US banks.

Despite popular assumption, the Prime Rate isn’t set by a specific government body, though it is heavily influenced by the federal funds rate overseen by the Federal Reserve’s Federal Open Market Committee (FOMC). Historically, the Prime Rate tends to remain three percentage points above the federal funds rate.

Changes in the federal funds rate will occur as deemed necessary based on the current economy, with rates generally decreasing in flagging economies and increasing as the economy improves. There are no limits on how often a rate change can occur. The rate may change multiple times in one year, for instance, or go several years without changing at all.

As the federal funds rate changes, so, too does the WSJ Prime Rate. And since your credit card’s APR most likely is based on the WSJ Prime Rate, changes in the federal funds rate can mean changes in your APR. Each change in the federal funds rate is typically made in quarter-point increments, meaning a single rate change could see your credit card APR increase by 0.25%.

Save a Lot of Cash with a Little APR Knowledge

Whether we like it or not, we live in a fast-paced, acronym-rich society — even in the often-behind-the-times financial industry. As such, it’s up to us to stay informed on the important terms impacting our lives (and pocketbooks).

While hardly the only acronym that will crop up along your personal finance journey, APR is definitely one of the most common in the credit world. It can also be one of the most expensive, especially if you don’t know the important facts, such as the painful truth of penalty APRs.

On the other hand, armed with the right knowledge, you can go forth and do battle against high APRs, excessive interest fees, and dreaded penalty APRs like a financial pro, potentially saving yourself money — and a headache.

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Four Personal Finance Tools You Need and Why

personal financial tools

Most high school educations do not require learning real-world skills like balancing a checkbook, keeping track of earnings, or paying bills on time — all cornerstones of building and maintaining credit.

Luckily, a perk of living in the age of technology is the fact that we have instantaneous access to an assortment of personal finance tools that are critical in managing finances and staying on top of our credit. Here are four of the best tools available today.

1. Online budgeting tools

Spending money you don’t have — and using credit cards to stay afloat — is one of the fastest routes to credit trouble. This is where an online budgeting tool like You Need a Budget comes in. YNAB is a basic tool used to strike the delicate balance between your income and costs of living. It will help you plan for expenses, cut entertainment or lifestyle costs when needed and most of all, stick to your financial goals. YNAB and other online budgeting tools can help keep some of your hard-earned money in your pocket.

2. Financial mobile apps

The iTunes and Android app stores are full of free financial mobile apps to help you stay on top of your money. They are a great way to be accountable while on the go and make personal finance part of your daily routine. For example, Pocket Guard gives users a snapshot of how much they can spend at any given moment. It crunches the numbers and spits out an estimate for how much can be spent in a given day, week or month. Taking a moment to find a financial mobile app that can help you stay on top of your money is well worth the time investment.

3. Bank resources

If you have an account with any reasonably sized bank, chances are there will be a mobile banking app for instant information and access to your money. Some bank apps allow you to take a photo to deposit a check, which certainly beats standing in line for a teller. Most banks also offer online banking, which may give you the ability to review account balances, transfer funds, pay bills and manage investments, loans, credit and more. Depending on your banking institution, many personal finance tools could already be right at your fingertips.

4. Personal finance subscription service

For a more thorough dive into personal finance you might consider a professional subscription service. Lexington Law Firm’s Premier Plus membership is the leading financial solution for credit repair, score coaching, identity theft protection and managing personal finances. The Personal Finance Manager included in the membership is all of the services mentioned above rolled into one — and then some. Features include:

  • Budgeting — A budget can be auto-generated based on previous spending patterns. Your budget is then graphically represented, making for an easy and intuitive guide for spending.
  • Account management — Monitor all your financial accounts from one spot by syncing to the central Accounts tab.
  • Goals and trends — Spending trends are automatically identified as you make purchases. From there you can set goals to improve your finances long term.
  • Credit insight — Review your credit reports and the items that are affecting it. Receive your FICO Score and an analysis on how to improve it.

If it’s time for you start the journey to better personal finance and credit repair, the Lexington Law approach is the most holistic option on the market. Users receive detailed understanding of every factor affecting their wallet and credit in order to improve their finances long term.

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How Will Student Loan Forgiveness Affect Your Credit?

Student loan forgiveness

If you’re struggling to repay your student loans, you might qualify for student loan forgiveness. The Federal Student Loan Forgiveness Program is an option for individuals who meet certain qualifications. Forgiveness may be possible if you are:

  • A full-time teacher
  • A public service or non-profit employee
  • A student or recent student of a school that has closed
  • Totally and permanently disabled

But if you’re trying to repair bad credit, you should be aware of the impact student loan forgiveness could have on your credit. Read on to find out how student loan forgiveness works, and how it could impact your credit score.

How Does Student Loan Forgiveness Work?

If you’re having difficulty repaying a Federal student loan, the Federal government may be willing to forgive some or all of your student loan debt. That means you will not be required to make any more payments on your student loans.

There are four basic types of student loan forgiveness, although there are several other less common types as well. The basic types include:

  • Teacher Loan Forgiveness—For people teaching full-time for five years in a low-income school district.
  • Public Service Loan Forgiveness—For non-profit or government employees who are repaying their Federal student loans based on income.
  • Closed School Discharge—For current students or recent students of a school that has closed. Most applicants were students at ITT or Corinthian College.
  • Total and Permanent Disability Discharge—For those with total and permanent disabilities.

How Does Student Loan Forgiveness Affect My Credit Score?

If your loan is in good standing, loan forgiveness won’t affect your credit at all. But if you’re working to repair bad credit, you should know that student loan forgiveness could negatively impact your credit score. If you fall behind in your payments, it will be reported to the credit bureaus. But when your loan is forgiven, the lender isn’t required to remove the previous negative credit history. So, even though your debt is canceled, your credit score is still impacted.

How Can I Fix My Credit Score if My Loan Is Forgiven?

If you receive forgiveness on a loan that isn’t in good standing, you can submit a credit dispute for anything in your credit report that is inaccurate. Disputing a credit report involves writing a letter to the credit bureaus that explains the error and requests the error be removed.

You can find credit dispute letters online, or talk to one of our credit repair experts to get professional help to repair bad credit and dispute the error.

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