We receive emails each day, many with questions from consumers who want to know something about their credit cards, whether it’s the interest rates they’re paying or how to handle a late payment. We thought we’d put together some of the most commonly asked questions for our readers. Don’t see your questions here? Drop us line or visit us on Facebook. Your question might be in our next Ask Credit Dad installment.
Question: I’ve heard I can’t apply for a credit card if I’m in college. Is that true?
Yes and no. The new CARD Act of 2009 makes it illegal for credit card companies to market their products on college campuses. And, there were other rules, including making it illegal for these companies to offer food, T-shirts, hats and other freebies in exchange for signing up for a credit card on “or near” campus. They are not allowed to market their credit cards within 1,000 feet. What you can do, however, is get a co-signer. If you support yourself, you can apply as long as you provide “proof of an independent means of repaying” the debt.
Question: Will paying just the minimum amount drop my credit scores?
The only time paying the minimum amount due will affect your credit is if your cards are carrying balances 30% or more of your available credit limit. If you max your cards out, and then only pay the minimum amount, it can influence your credit scores.
Question: I was denied a credit card, but I don’t know why. What can I do to find out?
Your first step should be to request a copy of your credit reports from the three major bureaus. If you notice errors or fraudulent activity, you should take steps to get the errors removed. Don’t assume all of the information in your report is accurate. It’s why we encourage consumers to take advantage of their free annual credit report.
Question: Why are my funds frozen for awhile when I pay for gas at the pump or reserve a hotel room?
Hotels will request an authorization amount based on the length of your stay, applicable taxes, plus any additional expected dollar amount(s). That hold will remain in place even after you’ve settled your bill. It will “expire”, but often it takes days. If you swipe your card at the pump, it will pre-authorize a set amount, say, $50. If you only put $25 in your tank, that leaves the other $25 to sit there until it expires. If you want to avoid that, pay for your gas inside and as far as the hotels go, you can request they manually drop the authorization following your check out. Sometimes they will – but sometimes they won’t.
Question: I paid my credit card bill late one time and I got a letter saying my APR was going to increase. Is there anything I can do?
Sometimes. First you should know that a credit card company must give its card members 45 days warning before increasing the interest rate. Also, your terms and conditions spells out what late payments can result in, so be sure to read them carefully before you apply for any credit card. That said, you could contact your card company and if you’ve always paid your credit card bills on time, there’s a chance they might waive that interest increase. You can’t have had a less than perfect history with the company. If it does agree to give you a break, you can be sure it will be the only time a courtesy like that is extended.
Question: Can a credit card company raise my interest “just because”?
Yes. But you can also try to negotiate a lower rate anyway. If your credit scores are strong and if the card company refuses to budge, you might want to move your balance to a balance transfer card that touts a lower rate.
Question: I’ve hit on tough times and have been late with my payments. Now, debt collectors are calling me at work. Can I make them stop?
Yes. There are laws to protect consumers from these types of collection efforts. The next time a collector calls, tell them that you cannot receive personal calls at work. They are prohibited from call your employer again in an effort to collect a debt.
Question: I’m considering filing for bankruptcy and have heard about chapter 7 and chapter 13 filings. What’s the difference in them?
A chapter 7 bankruptcy erases all of your debt. A chapter 13 bankruptcy is also known as a debt restructure or debt repayment plan, and in that case, the judge reduces the balances and sets you up on a repayment plan.
Keep the questions coming. You’re not the only one who’s looking for answers. Subscribe to our newsletter, follow us on Twitter and friend us on Facebook so you’re always in the know. There’s a lot going on in the financial sector and most of it affects our wallets, our quality of life and our family’s futures.