Credit Creator’s Blog

We all know there are many good reasons to open a credit card account. It can be for the free travel rewards air miles you will receive, for the added line of credit you may need or for the security you feel from owning a large number of credit cards.

But did you know there may be many reason why NOT to CLOSE a credit card account? The majority of these reasons have to do with maintaining or increasing your credit score. When you close a credit card you reduce your debt to available credit ratio. This will reduce your credit score. Your credit score is made up of a number of factors including:

1. how many accounts you have,
2. how long you’ve had them,
3. the level of your balances,
4. your payment history and
5. the number of credit lines you have.

Rather than closing your credit card accounts negotiate with your credit card companies to remove all annual fees, ask for lower interest rates and other benefits. Keeping credit cards active even if you don’t keep much of a balance on the card helps your credit score. The fewer lines of credit you have in relation to your debt, the lower your credit score rating will be. So maintaining several credit card accounts is good for your credit score.

When you close a credit card with a balance or a credit card with available credit on it, your total available credit is lowered to $0.

In the case of the card with a balance on it then it, this looks like you’ve maxed the card out. The amount of debt you have accounts for 30% of your overall credit score; so a maxed out credit card, or one that appears to be maxed out, can have a negative impact on your credit score.

If you close out your oldest credit card it will shorten your credit history. Lenders like to see that you have a very old credit card and that you have made timely payments on it over a long period of time.

To summarize the main ideas:

• It is good to have several credit cards accounts.
• Don’t close out your oldest credit card accounts, renegotiate for lower interest rates, no annual fees and other benefits on these old cards.
• Don’t close a credit card with a balance on it.

So rather than closing a credit card you may even wish to open a few more credit  card accounts and thereby increase your credit score. CreditCreator.com has many  of the best credit card offers available and can help you apply for a credit card safely and securely online. We offer credit card rating information which will help you in your credit card selection.

In the fourth quarter of 2009 the Federal Reserve’s short term interest rates were 2.0%. Then in the month of October there were 2 separate ½ of 1% (one percentage) rate cuts.

In mid December the Federal Reserve cut interest rates to a record low of zero percent (0%) to .25 percent. These are the lowest rates since 1954 and the Federal Reserve stated that it would keep interest rates at these low levels for some time to come.

The Fed said: “The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability.”

Reducing interest rates to 0% marks the end of conventional monetary policy because the Fed cannot reduce interest rates beyond 0%. So it has essentially no further to go to jump start the economy.

In addition to conventional monetary policy the Fed is also employing unconventional measures. The new Fed leader Ben Bernacke is using new monetary “quantitative easing” measures to increase the money supply to ease deflation and deflationary expectations.

Some of these “extraordinary measures” include:

1. expand large purchases of debt issued by government-sponsored mortgage agencies to support the US housing market crisis.
2. the central bank is considering buying long-term Treasury securities to lower borrowing costs by going around commercial banks.
3. the Fed’s balance sheet has expanded from $900 billion to $2.2 trillion since September to increase the money  supply.

Please note the reduction of interest rates to zero (0%) refers to the Federal Reserve base rates and not bank rates or savings rates. Bank lending and savings interest rates are likely to remain above 0% in order to continue to encourage investors to save.

If the inflation rate continues to rise at about 2% a year then 0% bank interest rates will be bad for savers. If we have deflation then this will be helpful to savers. But deflation will hurt the economy as a whole. This is why these extraordinary monetary measures of increasing the money supply are aimed at easing deflation.

It is possible to borrow at 0% with an introductory credit card offer which may last up to 15 months. The zero percent interest rates (0% APR) can be for both balance transfers and for ongoing new purchases or just for one or the other. In some cases it will be possible to get a 0% interest rate credit card for 12 months on balance transfers and 6 months on new purchases. The complete information is found in the terms and conditions section of the credit card offer.

In May 2008 the Credit Card holder’s Bill of Rights was proposed by the National Credit Union Administration, Office of Thrift Supervision, and the Federal Reserve Board. On September 23, 2008 this bill was passed in the House. Although there are still some obstacles to overcome it appears that this bill is well on its way. If it makes its way through the Senate and gains the approval of the President, the Credit Card Bill of Rights will become a law soon enough.

What can the Credit Card Bill of Rights do for you? Generally speaking, with this bill in place credit card companies will no longer be able to take aggressive actions against card holders. As you can imagine, this will bring many benefits to everybody who carries a credit card. To go along with this, the Credit Card Bill of Rights will also feature many important amendments to credit laws based around important issues such as the Truth in Lending Act and the FTC Act. Although you may never realize what the Credit Card Bill of Rights is doing for you, it will help in many ways.

Some of the more important amendments within the Truth in Lending Act include: if a creditor receives payment by 5 pm on the due date it is considered on time; if payment is received on the business day immediately following a holiday or weekend it should be considered on time.

Amendments in the FTC Act include: the double billing cycle method will no longer be allowed; billing statements must be sent 21 days before the due date; requirements for promotional offers must be disclosed. These are only a few of the amendments that the Credit Card Bill of Rights would bring to the FTC Act.

As a consumer you should be interested in making sure that the Credit Card Bill of Rights passes through the Senate. Although you may never notice many of the changes that are made under this Bill of Rights it is safe to say that it will make your life easier as a credit card holder. The many amendments to current credit laws will offer many benefits for consumers. Keep an eye out over the next few months to see if this bill becomes reality.

For more information on your rights when using credit cards visit www.creditcreator.com. We provide you many of the best credit card offers online with support material to help you make your choice.

The October 2008 Issue of Consumer Reports has made their selection of the best credit cards currently available. It is an interesting selection and the reasons for their choices are also very educational.

You may easily view our website www.creditcreator.com for the latest updates on credit card rates and offers. We offer all the credit cards suggested by Consumer Reports. Credit card interest rates are constantly changing and so this is dated material.  It is important to always view the terms and conditions section of the online credit card application of your choice to find the most up-to-date offers and credit card information.

Consumer Report’s Best Low Interest Rate Credit Cards - These are considered “the best” because they offer no fees on balance transfers and in addition they generally offer lower fees on late payments. The interest rates of most credit card offers will jump up considerably higher when a late payment is made, but in the case of these cards there are liberal allowances for late payments. For example, the Capital One Platinum Prestige credit card will not raise the APR interest rate to the higher default interest rate unless you have made a late payment (3 days beyond the due date) two times in a year.

• Capital One Platinum Prestige - 7.9 % APR* on both balance transfers and on-going purchases
• Iberiabank Visa Classic — 0 % APR* on balance transfers for 6 months, 4 to 6 % APR* on balances there after, 5% to 7% APR* on cash advances.
• Clear from American Express - 0 % APR* for 12 months, 10.99 to 14.99 % APR* for ongoing purchases, 5.99 % APR* fixed rate for the life of the transfer
• Simmons First Visa Platinum — 0 % APR* on balance transfers for 6 months, 8.95 % APR* for balance transfers, 7.25% APR* on purchases

*All of these rates are subject to change.

A low interest credit card or balance transfer credit card is the type of card you will need if you plan to carry a balance on your credit card from month to month.  But if you pay your credit card balance at the end of each month, then you a  rewards credit card may be a good choice for you.  Rewards credit cards include cash back credit cards with cash back rewards of up to 5% as well as air miles rewards credit cards that reward your purchases by offering you free air miles on purchases. In addition, gas cards offer very good opportunity to get a reduction on your gasoline purchases of up to 6%.

Consumer Reports has reviewed the best cash back rewards credit cards and the best gas cards for those who pay off their balance at the end of each month.

Consumer Report’s Best Cash Back Credit Cards - The interest rates on all of these cards are moderate to high, but these cards are chosen for those is who pay off their credit card balances each month.

• Capital One No Hassle Cash Rewards* - This is one of the most straightforward cash back rewards programs. There is no ceiling on the card so you can spend as much as you want and receive rewards of 2% on gas and groceries and 1% on all your other purchases.
• Chase Freedom Visa* - 3% on three categories where you spend the most but only up to $600 a month in purchases, 1% after that and 1% in all other categories.
• Discover More* - 5% in various categories up to $400 per quarter and .25% to 1% on other purchases. Discover offers double points if you purchase gift cards from their partners.
• Blue Cash from American Express* - 5% cash back on purchases at supermarkets, gas stations and drug stores (and 1.5% on other purchases) but you have to spend $6500 within a year to qualify. Otherwise if you spend less, your cash back rewards is .5% to 1.5%.

* All of these percentage rates are subject to change. Please be sure to read the terms and conditions when you apply for a credit card.

Consumer Report’s Best Gas Cards - The interest rates on all these gas cards are moderate to high, because these cash back gas cards have also been chosen for those who plan to pay off their credit cards at the end of each month. Again, you need to read the terms and conditions of the credit card you choose because the percentages may vary depending on the gas station you use.

• Discover Open Road - 5% gas purchases and auto maintenance purchases for a maximum of $100 a month in purchases. .25% cash back on other purchases for spending up to $1500, then the percentage goes to .5%. Once you have spent $3000 in a year the percentage goes to 1%.
• Chase PerfectCard MasterCard - 6% cash back on gas for up to the first 90 days and 3% thereafter on spending for gas up to $500 per month.
• Chase BP Visa - This is a gas card cash back program that was selected by Consumer Reports in this credit card review as one of the best gas credit cards but is no longer available from Chase.

In addition to the best credit card options Consumer Reports also reported on some of the worst credit card options which included:

• New Millennium Visa or MasterCard
• HSBC American DreamCard
• First Premier Bank

See the full story on the Best Credit Cards from Consumer Reports here.  We at www.CreditCreator.com offer a variety of other options which are some of the best credit cards for business, students, retired people, consumers etc.

3 links
1.    home page
2.    consumer reports page on this topic
3.    best credit cards page

How are investors coping these days? The following is an article from the Toronto Star from 25 October, 2008 on how investors are coping with chaos states:

Retiree Murray Soupcoff used to be an active investor, checking stock markets all day and making frequent changes to his portfolio.

Today, he’s weaning himself from the business news and trying to relieve the stress of an evaporating retirement fund.

Yesterday morning, he woke up to hear that the Asian and European stock markets had plunged.

He didn’t look at the Toronto Stock Exchange until noon, when he found it was down only 200 points. This was good news, in his view. (The index closed down 37 points after dropping almost 700 points at the opening.)

“It’s hard not to pay attention,” he says.

Twice a day, he practises transcendental meditation for 20 to 25 minutes at a time.

“Meditating keeps me calm,” he says.

“When you’re feeling fear, the primitive side of the brain – the fight-or-flight reflex – is activated. I’m trying to get back to the rational side.”

Whether doing yoga, taking walks or tuning out the media, investors have different ways of staying composed during one of the worst weeks ever for stock market volatility.

I talked to a few people who are living on their investments after leaving the world of work. They say it can be hard to watch the market turmoil.

Soupcoff was ahead of the curve. He sold many profitable investments last spring and put the money into a high-interest savings account.

“I was worried, but I never imagined things would be this bad. I made the mistake of going back into the market from time to time, so I didn’t do as well as I should have.”

He now holds mainly dividend-paying blue-chip stocks and income trusts. These are a consolation in a terrible market.

“At least, you’re being paid to wait,” he tells me.

But income trusts, which distribute high yields to investors without paying tax, are a temporary haven. By January 2011, they will be taxed as if they were corporations.

Soupcoff owns income trusts that have cut distributions (such as Arc Energy Trust) or have announced plans to cut distributions (such as CI Financial Income Fund).

He’s not checking his portfolio value until markets improve.

“If I looked, I’d probably panic and sell it all out,” he says. “I’m 65 and there’s only so long I can wait.”

For the complete story of the how the credit crisis is affecting lives go to the business section of the Toronto Star.

How are you coping with the credit crisis? Are you just about to retire and have to postpone it now? Please comment.

Credit Cards for all: retired, small businesses owners, students, consumers, and executives.

Cash back credit cards are a fantastic way to get more for your money. Each time you use your credit card on daily purchases, you could be earning as much as 5% back. Here we take a look at four of the best cash back credit cards on the market to see how they compare.

How to Get the Best from Cash Back
Some of the things to look for when considering the best cash back deal for you are:

• What you use your credit card for – go for cards that offer cash back on your regular spends.
• What are the additional bank charges and regular APR?
• Are there limits to the amount of cash back you can claim?
• Is there a minimum amount you have to spend before you can start earning cash back?
• Are there any other perks to the card such as air miles or online banking facilities?

To help choose the best cash back card for you, here’s how four of the leading market brands rate on these points.

The Best of the Best: Four Leading Cash Back Cards
Our top selection for cash back are:

• Capital One No Hassle CashSM Rewards Card
• Blue Cash from American Express
• Discover Motiva Card
• IberiaBank VISA Gold Cash Back Rewards Card

These cards have all been chosen for their popularity and all-round customer value. You will need an excellent credit rating to apply.

Cash Back Comparison
Here’s how they rate. We’ve ranked them in order of best cash back deals for each category:

What You Can Earn Cash Back On

→ Capital One: Offers 2% cash back on all products bought at gas stations and leading grocery stores and 1% cash back on all other purchases.

Blue Cash: gives up to 5% cash back on daily purchases, favourite shops, groceries, gas, selected online shopping, vacations and bill payments. However the cash back reward system is tiered, so you need to spend more to earn more. Spending up to $6,500 on daily purchases will only earn you 1% cash back and 0.5% on non-standard purchases. Above that you move to the best cash back rate of 5% general and 1% non-standard.

IberiaBank: 1% on every purchase made, credited annually.

Discover Motiva: 0.25-1% on everyday purchases (see limits) with an additional 5-20% when you purchase from their online shopping website. In addition, if you make your payments on time for six months in a row they will give you your next month’s interest back as a reward.

APR and Balance Transfers

→ IberiaBank: 5.99-7.99% APR average daily variable depending on your credit rating. 6.99-8.99% variable on balance transfers, 22% default. Six-month 0% introductory rate on balance transfers.

Blue Cash: Ranging between 9.99-14.99% variable depending on your credit rating, calculated monthly. Balance transfers based on your APR. Default between 12.99-31.98%. Introductory 0% APR on spending and balance transfers for the first six months.

Capital One: 14.9% based on daily rate, balance transfers can be made at this rate without further charges. Default APR of 24.9%.

Discover Motiva: 3.99% introductory APR on spending for the first six months then between 10.99-18.99% variable after that, default of 28.99%. Introductory APR applies to balance transfers for the first year.

Additional Fees

→ IberiaBank: Late payment charges range between $15 on balances below $100 and $35 over $1,000. $35 on excess spending. No annual fees.

→ Blue Cash: Late payment fees range from $15 on balances under $100 to $35 over $1,000. Excess spending fee is $35. No annual fees.

Discover Motiva: Late payment $19 below $250, $39 thereafter. $15 on excess spending up to $500, $39 after that. No annual fees.

Capital One: Late payments are between $15 below $100 to $39 above $250. Excess spending fee is $39. No annual fees.

Limits to Cash Back Earning

→ Capital One: No limits and points won’t expire for the duration of the account. You can claim cash back at any time.

IberiaBank: No limits or minimum but credited annually.

Blue Cash: Unlimited cash back earnings but a tiered system means you won’t earn the best cash back rate of 5% until you spend over $6,500 on everyday items. Until then you’re on 1% for general purchases.

Discover Motiva: Unlimited cash back earnings but to earn the 1% best cash back rate you need to spend a minimum of $3,000. Before that threshold you’re only earning 0.25%.

Best Cash Back Perks

→ Blue Cash: 0% introductory offer for the first six months on APR and balance transfers. Also a long list of additional perks including 90 day purchase protection, cash back on selected vacations, online shopping at shopamex.com and selected bill payments.

Discover Motiva: On-time payment bonus of one month’s interest back each time you make six consecutive monthly payments on time. Fraud protection, free phone and online banking and payment system

IberiaBank: $500,000 accident travel insurance

Capital One: $100,000 worldwide accident travel insurance and 24 hour travel and emergency support.

Best Cash Back Pick

All of these cards have advantages and disadvantages so it’s important to read the small print before picking a cash back credit card to suit your needs. In addition, all of these percentages and APR rates change on a regular basis. So you will need to read the latest updates on each card offer. These can be found on our website www.creditcreator.com and also in the “terms and conditions” of the credit card.

What we have presented here is a blueprint of how to compare the best cash back credit card rewards programs and what are the kinds of things to look for.

Our best cash back pick from this comparison is the VISA Gold Cash Back Rewards Card from IberiaBank. It may not offer as many perks and frills as Blue Cash or Motiva, but the APR on spending and balance transfers is by far the lowest and you earn 1% on every purchase you make with no minimum spending threshold or complicated tiered points system.  The down side is that this is credited annually, but for the long-term prudent shopper it offers a straight-forward cash back reward.

As of October 2008, Consumer Reports feels that the following are the best cash back credit cards: Discover More, Chase Freedom Visa and Capital One No Hassle Cash Rewards card.

Ever thought that your credit card could make you money? With cash back credit card rewards you can earn whilst you’re spending – or at least that’s the theory. But do they deliver all that they promise and which one is best for you?

In order to evaluate which are the best cash back credit card rewards programs, you need to first understand how cash back rewards programs work.  A cash back credit card rewards spending on your credit card by offering money back on purchases. Purchases that you receive cash back on may include daily items such as gas and groceries, as well as specialist items from selected brand name stores.

The cash back rewards varies and can be as little as 1% up to around 5% of the total purchase price. The method of payment also varies; it may come in the form of gift vouchers, direct cash back into the credit card account or into a savings account.

The best cash back credit card offers are usually available to those with a good credit rating.

Some cards will give you a higher cash back return on standard items and a lower return on non-standard items, but you will need to check the fine print to know exactly what classifies as an ‘everyday purchase’. Most cards advertise the areas they offer the reward, such as the Discover More Card, which offers a 5% cash back reward “in categories like travel, home, gas, restaurants, movies and more”.

All cash back card offers vary tremendously, so it is important to compare them carefully.

Earning rewards on spending is always an advantage. If you’re spending on your credit card anyway, you might as well get something back. But it’s important to remember that cash back is a percentage of what you are spending – you have to spend more to gain more cash back - so spend strategically. If you frequently eat out or entertain then cards offering cash back on restaurants would be ideal for you. The Capital One® Card Lab allows you to choose the best cash back plan to suite your spending habits.

To get the most out of cash back rewards cards, it is ideal if you pay off your balance in full each month. If you carry a monthly debt you will probably find that the amount you pay in interest each month could cancel out any cash back benefits you will earn.  For instance, your minimum monthly repayment may be as low as $5 but even if you spend $50 on your card that month, you have still only earned $2.50 in cash back. If you pay off your balance that’s $2.50 straight into your account, but otherwise it just reduces your monthly pay out by half.

However, most cash back credit cards do come with a 0% APR introductory offer which means that you will be able to earn cash back without accruing interest on spending during that period.

Major criteria to watch out for….

As with any credit card, always read the fine print before you sign. There are one or two specific things to watch out for with cash back cards:

• Make sure you know which purchases offer cash back rewards. And in addition what is the percentage offered on each type of purchase.
• Is the payout method acceptable to you: would you be happy with gift certificates and savings or would you prefer direct account balance repayments?
• Do you have to spend a specific amount before you start earning cash back?
• Is the high cash back reward only an introductory offer; is it reduced after the initial introductory period is over?
• Are there maximum cash back rewards that can be earned in a year, for example a ceiling on all rewards beyond spending of $10,000 in a year?

Essentially the best cash back credit card is the actually an individual choice depending on your spending habits and whether or not the cash back rewards program rewards the type of purchases you make frequently.  If you keep all these principles in mind and read the terms and conditions of the credit card carefully then you will find the card that is best for you.

Consumer Reports recently evaluated (October Issue 2008) 100’s of credit cards and has found these to be the best cash back credit card rewards programs:

Capital One No Hassle Cash Rewards
Chase Freedom Visa
Discover More

In addition, if you are looking for gas rewards credit cards, Consumer Reports has found these to be some of the best cash back gas cards:

Chase PerfectCard MasterCard
Discover Open Road

We offer all these cash back cards and many more.

The world is facing a growing credit crisis. How has it come to this? When did it start and where is it going? Generally speaking, the subprime mortgage crisis is associated with the reduced liquidity in the credit market in correspondence with troubles pertaining to the banking system. To go along with this, a struggling real estate market with  decreasing values of property in combination with bad lending practices, among other downfalls, has compounded the credit crisis.

Although the credit crisis has been brewing for quite some time, it started to rear its head during the latter part of 2007 and throughout 2008.

When did the actual credit crisis begin? While it is difficult to pinpoint an exact date, most experts agree that the start was the bursting of the housing bubble in 2005 and 2006. In years prior, mainly from 2000 to 2005, lenders lowered their lending standards and the housing market boomed. But once interest rates began to climb and the value of homes took a turn for the worse, the bubble burst and the credit crisis began.

To go along with problems within the real estate market, there are many other issues that have led to the credit crisis. Some of them include high risk loans, inaccurate credit ratings, fraud within the mortgage industry, bad government policy and the difficulty of banks in putting a value on the rising debt on their books.

Currently the liquidity of cash is based on global investment banking principles which allow banks to borrow inexpensively. They turn their debts into securities which they then sell on. But it has become increasingly difficult to put a value on that debt. Banks currently need a way of continuing to keep their doors open and do business, though they have large quantities of debt on their books, which they cannot value. The difficulty in valuing the debt is the root of the current banking crisis.  For this reason the United States government is providing some liquidity for the markets by creating government backed vehicles to acquire the bad debt from these financial institutions.

As you can imagine, these are not all problems which can be addressed and fixed in a short period of time.

Take for example the government policies that were and still are in place. Many experts feel that they are outdated, and simply not able to handle the current economy. In September 2008, President George Bush said, “Once this crisis is resolved, there will be time to update our financial regulatory structures. Our 21st century global economy remains regulated largely by outdated 20th century laws. Recently, we’ve seen how one company can grow so large that its failure jeopardizes the entire financial system.”

It is no secret that government policies and related structures are outdated and in dire need of change. But as President Bush stated, it is difficult to move forward with these changes in the midst of a credit crisis.

The current credit crisis has been a long time coming and it will be a long time fixing. For more information on the crisis and related details, take a closer look at the subprime mortgage crisis article at Wikipedia.  This article gives a detailed account of all the major events and issues that have given rise to the current financial state of affairs. In addition the article is always being updated with the latest financial events and policy adjustments.

If you are interested in finding the best low interest credit cards go to our site www.credit creator.com and take a look. The interest rate details are constantly being updated with the newest information and the current prime interest rates.

As you probably know, the economy is struggling and the side effects of this are many. One subject that is being discussed is whether or not credit is becoming tight in the United States. In other words, are consumers going to find it more difficult to obtain a loan? Has the United States become a nation dependant on credit? The answers to these questions will determine the way that consumers live in the years to come.

Compared to last year at this time, credit card debt among American consumers has increased by eight percent. Additionally, of the tens of thousands of people who claim bankruptcy last year, their average credit card debt was approximately $61k.

Many experts strongly believe that a long period of tight credit is on the way. If this happens, here is what you may have to look forward to:

1. It will become more difficult to maintain a large balance on a credit card.

2. Late fees will be more strictly enforced and more costly than in the past.

3. Credit card companies will not offer high credit limits to anybody and everybody. You will truly need an excellent credit score.

4. Annual fees for credit cards will increase.

5. Interest rates will continue to rise.

6. Zero percent introductory credit card offers will all but disappear. Companies that continue to offer these deals will cut back the amount of time tied to the introductory rate.

7. The amount of down payment needed for a car or a home will increase.

As you can see, tight credit could lead to many changes. To go along with the above, you should also realize that this could affect the way you live. For instance, you will no longer be able to use several credit cards to rotate debt by making a balance transfer from one credit card to another. To go along with this, tight credit will affect the real estate industry. It will become much more difficult to obtain a home equity loan or second mortgage.  It may become more difficult for a business to find a short term loan to finance a payroll when the profits fall short for a quarter. You may also need to postpone your plans for a new business if you cant find the venture capital funds.

Executive editor of Consumer Reports, Greg Daugherty, has as interesting take on the credit situation. When asked if it is becoming increasingly more difficult to obtain a credit card he answered:

“Depends. It is tougher than it has been. We have seen instances where   they are extending credit to people who are in deep credit trouble. So it is not always tough. It can be tough to get a good one, like one of these low interest rate credit cards we are talking about. Even people with good credit scores are running into some of these problems: their interest rates are being jacked for no reason they can determine. Their credit limits are being reduced. And this can effect you in a couple of ways. You can go over the limit or it can effect your credit score by changing by the amount of credit you have, you know that ratio they have. So even it you are a good customer you have to be really careful these days.”

Credit may be getting tight, but it is not yet as bad as it could be. As a consumer, you should begin to think twice about every financial move you make.

Did you know: credit card companies lost approximately 500 million dollars abroad last year? As you can imagine, this is a problem that needs to be addressed by the banks as well as consumers. For this reason, more and more credit card companies are blocking many legitimate transaction attempts overseas. While this is seen as a safety precaution by the credit card company, consumers see it as an inconvenience.

If you are traveling abroad with credit cards keep the following information in mind:

1. Let your credit card company know that you are traveling abroad. This includes information on your destination, dates, and contact number. While not full proof, this will help to ensure that your card is not unnecessarily blocked for security reasons.

2. Carry several credit cards and ideally they should all be from different banks or lending institutions. This way, if one credit card company blocks your card then another can be used.  In addition, bring the 24 hour assistance phone number of each card company with you on your trip in case your card is lost or stolen.

3. Keep in mind that most credit card companies will charge you an extra percentage  exchange fee when exchanging US dollars to foreign currency. In most cases, this ranges from two to four percent. Check on this before you leave on your trip.

4. A prepaid card full of foreign currency can be useful. This is a great way to avoid your credit card company causing you issues. But remember, your prepaid card will not be blocked or made inactive unless you call the issuer to report it stolen. Also there will be no exchange rate charges. Some of the most common foreign currency prepaid cards include FairFX and Travelex.

5. Unfortunately, it has become more and more common for foreign ATM’s to “swallow” cards. You should not expect the card to be returned if an ATM takes your credit card when you are traveling. Instead, your best bet is to call your credit card company and let them know what happened. American Express travel services will arrange for a new card to be issued within 24 hours. Other credit card companies and banks also offer 24 hour replacement services to ensure that your travel spending is not disrupted by a lost credit card.

The benefits of traveling abroad with credit cards far out weight the drawbacks. If you take precautions and utilize these tips you should be able to avoid any unwanted security issues. And if you are faced with a difficult situation, such as a blocked card, you now know what you can do to get back on track.

You may also want to consider applying for a credit card with a travel rewards airmiles program.  This means for every dollar spent on your everyday purchases, as well as on your trip, you are earning travel rewards points. This may also include free yearly companion tickets for domestic flights. American Express even offers free international companion tickets. So whether you are traveling internationally abroad or domestically a credit card will be of great value.