“Lack of consumer knowledge about credit scores not only increases the costs of their credit and insurance but also reduces the availability of these and other services,” said CFA Executive Director Stephen Brobeck. “By taking a few simple steps, American consumers have the power to reduce their  credit costs by billions of dollars annually,” says Washington Mutual Card Services President Anthony Vuoto. Using data provided by Argus Information and Advisory Services, WaMu estimates that U.S. consumers could annually trim credit card finance charges by $105 by raising their credit score by 30 points.

“This lack of knowledge hurts consumers because credit scores strongly influence the availability and cost of not only mortgage, auto and revolving credit, but also other services such as utilities and insurance,” said Stephen Brobeck, executive director of the CFA (Consumer Federation of American).

Consumers with credit scores below 600 are almost always charged relatively high “subprime” loan rates, while those with scores above 700 are often charged relatively low “prime” rates, while those with scores above 760 are generally charged the lowest rates. With higher credit scores meaning lower interest rates, the estimated collective annual consumer savings would be approximately $28 billion, if every consumer raised their score by 30 points.

The survey revealed numerous gaps in consumers’ awareness of credit scores with 59% of respondants not understanding that maxing out their credit card will lower their score. While 78% of those surveyed understood that making a payment more than 30 days late will negatively effect their score. “Many Americans fail to understand that one’s credit score reflects only how they use credit, not factors such as income and age,” the press release says.

Learning what effects your credit score and applying that knowledge can have a significant impact. Here are some of the basics:

• Consistently pay your bills on time
• Never use more than 50% of your credit limit on a credit card
• Don’t open multiple or unnecessary accounts
• Regularly review your credit reports for errors

The profit margin on gasoline sales are now being eaten away by credit / debit card fees with many consumers now using credit for all their gasoline purchases. In fact, Calhoun said that Howdy’s is now losing money at its stores on fuel sales. “Transmountain paid $255,000 in credit and debit card fees in the first three months of this year, up 30% from the same period a year ago,” Calhoun said. “That’s tied to a 20 - 25% increase in credit card usage,” he said.

Ross Garrett, who owns a Chevron-branded gas station, said credit card fees are having a “devastating” effect on his business with credit cards fees reaching $65,000 so far this year. “For every $1 cash sale, I bring in $2 in credit sale. By the time I end up paying all the credit-card fees, I don’t have much left,” Garrett said. With inside sales not making up for the loss, his store is losing money.

Convenient stores, selling approximately 80% of the country’s gas, paid more than $1 billion in additional credit card fees since 2006 and have also seen profits drop by $1.4 billion in that same time period. Lenard, a spokesman for the National Association of Convenience Stores in the Washington, D.C., area, said, “The whole issue of rising credit-card fees” tied to increasing use of plastic for fuel purchases “is the biggest issue facing fuel retailers in years.” Credit-card fees average about 2.5% of the dollar amount of each purchase, Lenard said.

A growing number of stores are considering cash discounts but are concerned that customers may feel punished for using plastic. Many consumers would also require a discount of $.10 to make the switch from credit to cash.

Lower the cost of gasoline! See our gas reward credit cards.

Many of the better gas reward credit cards require you to purchase your gas from specific, eligible gas stations to earn the largest cash rebate. These are typically defined as stand-alone gas stations and not gas pumps at discount stores or warehouse clubs. Many of these cards allow you to earn a flat percentage of 1% on all other purchases as well.

When applying for a gas reward credit card, it is important that you read and understand all of the terms and conditions of the offer. Be on the lookout for offers that look too good to be true. For example, some offers with significant savings are actually ‘teaser’ offers that will expire after a short period of time. Others have a limitation on the amount of cash you can earn or require significant card usage before the higher rebate kicks in.

Examples of Possible Savings!

• According to AAA, a trip from Richmond, VA to Disney World in Orlando, FL would be a round trip of 1,478 miles. At an average of 20 MPG, the cost of gas at $4 per gallon would be $296 or 74 gallons. The cash rebate even at the lowest end at 1% would be $2.96, but at 5% the rebate would be $14.80.
• A weekly 20-gallon fill-up at $4 per gallon with a 1% rebate gas card would earn $.80 per week, which seems insignificant, but that would equate to $41.60 over the course of a year. At 5%, the savings would be $208 a year.

If you live in a multiple vehicle household, the savings will be substantially more. But keep in mind, using a gas reward card only makes sense if you pay the balance in full each month. The interest you pay to carry a balance month-to-month will easily eliminate any benefit that you can earn.

If you only have one negative report on an otherwise good credit history, simply contact the mortgage lender in writing to explain the circumstances. Many lenders will overlook an isolated incident, especially if it occurred some time ago. Lenders are most concerned about the two years prior to your application. According to guidelines established by the Federal National Mortgage Association (Fannie Mae), indicators of good credit do include some leeway for occasional late payments. Revolving credit like credit cards and installment credit like auto loans should show no late payments more than 60 days and less then tow payments 30 days late. Mortgage payments must never show late payments.

Other factors that are considered by lenders will be credit cards that are ‘maxed’ out and large lines of open credit. Both situations may indicate difficulties managing debt. Some lenders will also look at how many inquiries have been made into your credit report recently, showing a troublesome sign of large number of possible of credit applications. Applying for numerous lines of credit might indicate that you have been turned down by several other lenders or that you are in the process of accumulating new credit accounts which might leave you with too much credit available to be a good credit risk.

Fannie Mae suggests these factors may also make a difference in your mortgage:

• A large down payment
• An energy-efficient property such as up-to-date heating and power systems
• Previous large housing payments
• The likelihood of career advancement, strong education or job training
• A substantial net worth

Before applying for a mortgage be sure to thoroughly examine your credit report to optimize your borrowing ability. Insure that it’s accurate and dispute any errors so that your current credit situation is available to lenders.

Although cash back cards aren’t for everyone, people who are able to pay off their balance each month are sure to benefit. Because these offers tend to have higher interest rates, carrying a balance will negate the value of any cash back that’s earned - so it’s important to reduce interest charges as much as possible by paying off your credit card quickly. Most of these offers are targeted to consumers with a credit score above 720 with rebates ranging from 1% to 5% cash back.

While many cash back programs are simple, others can be quite complicated. For example, the Chase Freedom Credit Card rewards 3% cash back - but only if you spend in certain categories - then it reverts to 1% after reaching $600 monthly. The terms can also vary on how you can spend or redeem your rewards. Some will automatically credit your account; while others will issue a check quarterly or yearly. Be sure you understand any limitations on your cash rewards and make your claim before the expiration date (if applicable).

Consumers can earn substantial rewards if they use their credit cards wisely. Before you apply for a cash back credit card, examine each offer and look for terms that will benefit your personal spending habits. Once you’ve chosen an offer, the key is to payoff your new charges quickly and avoid carrying a balance.

The study also found that 16% of mobile phone subscribers are using online banking services and are increasingly comfortable with their mobile device. 60% of those surveryed use the services at least once a week. 35% of those who currently do not use mobile banking were open to checking balances and transferring funds using their mobile phone. 33% also said they would like to receive text message alerts from their financial institutions.

But another study by Javelin Strategy & Research showed a huge divide between age groups. The report showed that only 14% of 44-55 year olds would use mobile payment systems. The same is true for 55 to 64 year-olds, who care more about sending and receiving money quickly than any other age group (39%), but only 11% are likely to use mobile P2P payments. This group’s cautious behavior may be caused by a lack of familiarity or trust in mobile devices / new technology.

* See the Harris Interactive Study or Javelin Strategy & Research Report.

The Senate Action
The Credit Card Reform Act, S.2655,  sponsored by Sen. Robert Menendez (D), from New Jersey, would prohibit credit card issuers from making changes that abruptly affect credit terms. “Too many families feel like their credit card contracts are booby-trapped,” said Menendez. Penalty rate increases and the controversial practice of ‘universal default,’ in which a cardholder’s interest rate is increased based on unrelated activity on another loan, would be banned. One major difference from past legislation is the requirement to get ‘opt-in’ approval from consumers who are under the age of 21 before mailing solicitations that lure them into debt.

Action in the House
Legislation recently introduced in the House, H.R. 5244, the Credit Cardholders’ Bill of Rights, by New York Representative Carolyn Maloney (D), Chairwoman of the Financial Institutions and Consumer Credit Subcommittee and Massachusetts Representative Barney Frank (D), Chairman of the House Financial Services Committeee, addresses the manipulation of credit card statements mailed by card issuers that result in late payments. The legislation would require a 45 day notice on increases in interest rates and would also prohibit issuers from maximizing interest charges by applying payments to balances with the lowest interest rate first before applying it to the the higher rate balances.

Credit card companies point out that fees and variable interest rates allow them to provide credit to customers with shakier credit or those without a credit history. They also content that their practices also allow for lower interest rates for responsible customers. Edward L. Yingling, CEO of the American Bankers Association, fears the legislation “would have unintended consequences such as more expensive and less accessible credit.”

However, with the turbulance in the financial industry, large losses in the subprime market and an increasing number of cardholders struggling to pay their debt, credit card issuers are under pressure to actually raise rates. Despite the lowest federal fund rate in three years, the latest trend is to offer consumers ‘fixed rate’ credit cards to avoid further down trends.

Although most credit cards on our site include variable rates - which have continued to drop as interest rates go down - credit card issuers are increasing the amount of fixed APR offers sent by mail. Discover, in particular, has embraced this new strategy by sending offers that are now almost exclusively fixed. This is a complete reversal to the previous year when all Discover Card offers were variable. Discover recently started mailings on a 8.99% fixed rate offer while Chase and Bank of America mailings continued to promote fixed rates as low as 7.99%. Our best low APR credit card is currently the Pulaski Bank Visa at 6.50% fixed.

For most, rates are continuing to move down. If you find yourself with a rate that is increasing and have a good credit score and payment history, don’t sit back and accept the new rate quietly. Call your credit card company immediately and ask for a lower rate. If you don’t get a lower rate, it’s time to comparison shop to find lower rate credit card deals. Take time to comparison shop and look at the terms and conditions for each card; don’t just apply for the first offer you receive in the mail.

Credit card companies provide an interest free or zero percent loan from the end of the billing cycle until the payment due date - known as a grace period. “Most people don’t realize when they carry a balance from month-to-month, that they lose their grace period altogether,” said Linda Cherry of Consumer Action. If you’re able to pay off your credit card balance each month you essentially have used the banks money as an interest free loan.

But according to consumer advocates, grace periods are shrinking, from 25 days to as low as 17 days. Five of the top ten credit card issuers now offer an average of just 20 days. Watch for the disappearing grace period phenomenon! Credit card companies are required to send disclosure notices when changes are made to your interest rate, fees and grace period.

Here’s how it works: A small donation is made using the stolen card number which confirms the legitimacy of the card. The contribution falls under the radar of the credit card company who is on the lookout for suspicious activity that falls out of the normal pattern of individual card holders. Symantec speculates that credit card companies are less likely to contact consumers for verification of a small charitable contribution than one for an extravagant purchase.

Symantec exposed the new trend by sitting in on Internet chat rooms where credit card numbers are traded, says Zulfikar Ramzan, a senior principal researcher for the company. U.S. cards sell for $1 to $6 each and U.K. cards sell for $2 to $12.