The answer is (drum-roll please) maybe yes, maybe no? There are pros and cons, and if you are the type of person that will be subject to temptation to “shop till you drop” simply because you now proudly hold a Macy’s card, it’s probably not a wise move. On the other hand, if you have the cash to pay off the charge in full and have not overextended yourself with numerous card applications already this year, a one-time savings of 15% on a planned and necessary purchase can be dollars in your pocket.

Some additional potential pros associated with retail store cards are:

• Easier qualification for individuals with poor or minimal credit. This is beneficial for consumers who need to establish or improve their credit history.
• Special store perks may be included such as free shipping, delivery, layaway, etc.
• Store-specific rewards programs which may be exchanged for gift cards or direct store credit.
• “Members only” specials or promotions or additional discounts on particular items.

Sounds good so far, but naturally there has to be at least one “con”, right? There’s actually more than one. Here they are:

• Spending Too Much. We already mentioned the psychological issue that a department store card such as Macy’s might tempt you to make unnecessary (or unaffordable) impulse buys.
• High Interest Rates. These cards rarely have reasonable interest rates (they are frequently over 20%). All your “perks” will dissolve quickly if you aren’t planning to pay them off in full each month.
• Could Hurt Your Credit Score. Another con is that the FICO scoring model can actually ding you for having these cards. If you are just starting out trying to build your credit though, I still recommend these cards. Some credit lines on your report are better than none.

So the next time a store clerk hurls the temptation of instant savings gratification via a department store credit card, take a timeout and think through the pros and cons before making your decision. Or better yet, ask for the application and read it through before signing on; you’ll be glad you did.

Source:creditinfocenter.com

Of course, the banking industry is violently opposed to this bill, issuing dire warnings that it will make credit more expensive for everyone. Critics of the credit card industry say “fee harvesting” practices, which the bill should prevent are driving more Americans to the financial breaking point and our economy deeper in trouble.

Some of the features which the current bill proposes:

Prevents Unfair Increases in Interest Rates and Changes in Terms

• Prohibits arbitrary interest rate increases and universal default on existing balances;
• Requires a credit card issuer who increases a cardholder’s interest rate to periodically review and decrease the rate if indicated by the review;
• Prohibits credit card issuers from increasing rates on a cardholder in the first year after a credit card account is opened;
• Requires promotional rates to last at least 6 months.

Prohibits Exorbitant and Unnecessary Fees

• Prohibits issuers from charging a fee to pay a credit card debt, whether by mail, telephone, or electronic transfer, except for live services to make expedited payments;
• Prohibits issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions;
• Requires penalty fees to be reasonable and proportional to the omission or violation;
• Enhances protections against excessive fees on low-credit, high-fee credit cards.

Requires Fairness in Application and Timing of Card Payments

• Requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;
• Prohibits issuers from setting early morning deadlines for credit card payments;
• Requires credit card statements to be mailed 21 days before the bill is due rather than the current 14.

Protects the Rights of Financially Responsible Credit Card Users

• Prohibits interest charges on debt paid on time (double-cycle billing ban);
• Prohibits late fees if the card issuer delayed crediting the payment;
• Requires that payment at local branches be credited same-day.

Ensures Adequate Safeguards for Young People

• Requires issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended;
• Limits prescreened offers of credit to young consumers;
• Prohibits increases in the credit limit on accounts where a parent, legal guardian, spouse or other individual is jointly liable unless the individual who is jointly liable approves the increase in writing.

Gift Card Protections

• Protects recipients of gift cards by requiring all gift cards to have at least a fiveyear life span, and eliminates the practice of declining values and hidden fees for those cards not used within a reasonable period of time.

For more info on the bill and to track its progress, see this website, http://www.defendyourdollars.org.

Source:creditinfocenter.com