Although a debit card looks just like a credit card, it works quite differently from a credit card.

Difference Between Debit and Credit Cards

It is possible to use a debit card as a credit card in most of the cases such as in gas stations, restaurants, and many other merchants. But the difference between the both is that a debit card instantly withdraws

money from your bank or investment account to pay for any purchases made with the card, and thus, there is no credit involved.

In contrast, credit cards allow a customer to make purchases until a set spending limit is reached, after which a statement will be sent out with the balance and available payment options.

When using a debit card, the purchases are instantly deducted from the consumer’s account, and thus the consumer never spends more than what they have available in the associated account.

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By opting for a credit freeze, consumers can put a block on their credit file, in order to prevent identity theft. This is done if some of your vital information has leaked and you feel threatened. A credit freeze will prevent criminals and fraudsters from opening new lines of credit.

What will be the impact of a credit freeze?

Any new creditors, employers, and landlords will not have access to your credit report, if you put a credit freeze in place. They will simply receive a message or a code that indicates that the account has been frozen, when they try to access your file. This will stop most creditors to extend any new credit, as they won’t have access to your credit report, thereby protecting you from further identity theft.

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The number of homeowners falling behind on their mortgage payments has reached the highest level in 12 years. The banks have been accused of cashing in on struggling households as the number increases.

The charges imposed on home owners in arrears by Britain’s high street lenders have been described as unfair by politicians and economists.

According to The Treasury Select Committee the lenders are charging as much as £150 for a visit by a debt counselor and £35 for sending a letter or making a phone call. These are excessive charges that go beyond covering administrative costs and are used to boost profits which is intolerable.

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If you think like a lender, you can see which habits and traits you need to develop in order to be considered a good credit risk.  Thinking like a lender will help you understand how you must manage your money to be appealing to lenders.  There are few tips that can put you into the right mind set:

Know how money works

Reading books about money and understanding how your accounts and loans work can go a long way towards helping you keep your credit in good repair.  For example, if you know that some loans will charge you extra if you pay off your loan faster while others will not, you will be in a  batter position to make financial decisions.

Plus, the more you know about money in general, the more comfortable you will feel with it and the better decisions you will be able to make, which will help improve your overall financial state and will help you keep your credit in good shape.

You don’t need to do heavy-duty research to appreciate how money works.  One easy way to consider money is to think of it the way you think of time.  You likely hate to waste time and you want to make the best use of it possible.  Apply the same attitudes to your financial life and watch your finances soar!

If overspending has caused you to have a bad credit score, consider the following sneaky mind set trick: equate your money with your time.  For example, if you make twenty dollars an hour, then a magazine subscription of $20 will represent one hour of your work.

Imagine an hour of your work and ask yourself whether the subscription is worth the time you put into the twenty dollars.  Once you start seeing money as something that comes from your hard work rather than a general “thing” impulse spending will seem much less attractive, and it will be easier to keep your credit card limits low and you bank account stocked up with cash!

Take care of those things besides a credit score that affect how lenders view you

Lenders will often look at not only your credit score but at other financial indicators, such as your income, employment record, and savings.  Keeping these things in order can complement your credit score and can help you get good overall credit. Some lenders have their own ways of calculating credit scores, so keeping your overall financial system in good shape is one way to ensure that you are in good shape in all lenders’ eyes.

Be aware that when lender ask to see your credit score, the credit bureaus send not only your credit score, but also the top four reasons why your credit score is lowered.  The most common reasons for lowered credit scores are:

1. Serious delinquency in repaying accounts or bills.
2. Public record of bankruptcy, civil judgment, or report to a collection agency
3. Recent unpaid or late paid debts or accounts
4. Short-term credit record
5. Lots of new accounts
6. Many accounts have late payments, defaults, or non-payments
7. Large debts or amounts owed.

Knowing that your lender sees these possible problems can help you see the need to develop the best possible face to present to a lender.  Lenders who look at your entire credit report may get a more positive picture of you than lenders who see only a number and four reasons for a lower score.

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Be sure and cancel your credit cards before you die!!

A lady died this past January, and Citibank billed her for February and March for their annual service charges on her credit card, and added late fees and interest on the monthly charge. The balance had been $0.00, now somewhere around $60.00. A family member placed a call to Citibank.

Here is the exchange:

Family Member: “I am calling to tell you she died in January.”

Citibank: “The account was never closed and the late fees and charges still apply.”

Family Member: “Maybe, you should turn it over to collections.”

Citibank: “Since it is two months past due, it already has been.”

Family Member : So, what will they do when they find out she is dead?”

Citibank: “Either report her account to frauds division or report her to the credit bureau, maybe both!”

Family Member: “Do you think God will be mad at her?” (I really liked this part!!!!)

Citibank: “Excuse me?”

Family Member: “Did you just get what I was telling you – the part about her being dead?”

Citibank: “Sir, you’ll have to speak to my supervisor.” (Duh!)

Supervisor gets on the phone:

Family Member: “I’m calling to tell you, she died in January.”

Citibank: “The account was never closed and late fees and charges still apply.” (This must be a phrase taught by the bank!)

Family Member: “You mean you want to collect from her estate?” Read the full story