Financial Blog

Many financial institutions offer different ways to save some money while paying for gas. Most famous are gas discount cards and gas credit cards. But how to determine which card will serve you best? First of all it is important to understand your needs and expectations from gas saving. Gas discount cards as well as some gas credit cards offer discounts at some particular stations. That is not very convenient for a driver. First of all you may burn more fuel than you save trying to find the necessary gas station. Another minus is that the prices at such pumps are usually higher. One of the best way to save money is to get a low interest credit card that also provide a gas discount or 3-5% cashback spend on gas. With such cards you may fill up at any station you like and still get a reward or cashback.

Usually such gas credit cards offer savings on other goods and services too, such as car insurance or repairs. Specific credit cards (you may fill up only at particular stations) are also not recommended. Universal cards give you the flexibility of your route and freedom of driving. No need to drive miles in the search of the next particular gas station wondering if you can make it on your rest gas drops. Just choose any pump you like and save money. Some gas credit cards offer low % APR and bring a very good economy for an active drivers. If you spend more than $70-100 per car each month then gas credit card is a good choice for you. Pre-paid debit cards are also available. You may use this option if it is more comfortable for you to pay once and then spend the sum slowly. Consider your needs and make the right choice.

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As if the high cost of gas wasn’t enough, credit and debit card users who pay at the pump have to face a new way to be gouged at the pump: skimmers.

Skimmers are inconspicuous electronic devices that thieves install either inside or outside a gas pump. These small and inexpensive devices record card numbers as you pay for your petrol. Free-roaming fraudsters and gas station insiders then help themselves to the card information in the skimming devices, then go out and use the stolen card numbers to make fraudulent purchases.

According to electronic payments expert Richard Crone, of the 1.36 million gas pumps in the United States, an estimated 700,000 gas pumps accept pay-at-the-pump — and not one of those pumps is secure against skimming.

Some skimmers also incorporate the use of tiny remote cameras to capture PIN numbers of debit card users who enter them at pump-side.

More technologically advanced skimmers are turning to wireless technology, to intercept signals some gas stations use to transmit card data from the pumps to their central computers. Instead of manually installing the equipment on the pumps, they can lurk in their cars nearby while downloading your card information to a laptop, says Jeff Wakefield, a vice president with VeriFone, the largest secure payment terminal vendor.

But the basic technique for getting credit and debit card data from gas pumps is not rocket science: Crooks simply attach card-skimming devices to exposed wiring inside the pump to collect card data before it is secured, according to Wakefield.

Other skimming technology attaches outside the pump. The devices can cost anywhere from $50-$600 and can be as small as a pager. The card swipe is essentially captured twice: once for the gas purchase and then again for the crooks. The devices are then removed from the pump at a later date or time.

Point of sale’ a weak link
Visa first noted a rise in credit and debit card skimming at the pump in its November 2006 data security alert. According to the alert, skimming operations have been targeting gas pumps at increasing rates. At least 60 percent of people buy gas using pay-at-the-pump, says Jeff Lenard, vice president of communications of the National Association of Convenience Stores (NACS).

Gartner, a leading global technology analyst firm, predicts that in 2008, most attacks against retailers will target their point-of-sale hardware, which includes pay-at-pump terminals. Its prediction is based in part on its 2007 study of 160 cases of credit card data being compromised. Of those, 128 took place at a brick-and-mortar retailer’s point of sale. Crooks have found a weak spot in point-of-sale terminals and are exploiting it, according to Avivah Litan, a vice president and analyst with Gartner.

Skimming occurs in bursts, says Mike Urban, senior director of fraud solutions at Fair Isaac Corp., the company behind the FICO credit score. “There are periods of time during which criminals try to compromise several terminals, then they start using the card information,” says Urban. Skimming operations by insiders (those who contract with or work for the gas stations) compromise as many as 2,000 cards at a time, while outside operations compromise a few hundred cards at a time, he says.

Consider these stories:

• In March 2007, an Orange County man plead guilty to skimming credit and debit cards at pumps at Arco/AM-PM gas stations, according to the U.S. Attorney’s office. The man stole information from 90 cards, using it to create phony cards. He then withdrew $186,000 from the victim’s accounts at ATMs.
• In August 2007, the Los Angeles County Sheriff’s Department reported that someone had installed a skimming device at a USA Gas Station in Agoura Hills. The same gas station had fallen victim to skimming a few months prior, costing victims thousands of dollars.
• In January 2008, crooks skimmed credit and debit card information from at least nine customers at a Newport Beach Exxon station.

Fraud graduates to wireless
Some retail outlets connect their gas pump hardware to their main computers wirelessly, creating a new weak spot. Crooks who can identify such a station can bypass the risk of installing skimming machines. Instead, they hack in via a wireless connection and download credit and debit card information directly from retailer computers, according to Gartner’s Litan. Once they’re “in,” they can simply sit somewhere in signal range, stealing via a wireless-connected a laptop.

According to a Visa USA Inc. Data Security Alert, Visa is addressing this by urging retailers to comply with the Payment Card Industry (PCI) standard, which requires retailers to separate wireless networks from those that carry sensitive cardholder information.

While shoring up weak points with standards is possible, stamping out the crime is a different matter. “It’s hard for the credit card companies to mandate to the fuel industry what they need to do when there hasn’t been any solution that stops skimming,” says Wakefield.

How to protect yourself
To prevent your credit or debit card from being skimmed at a gas station:

• Go in the store to process transactions and sign all credit card receipts, recommends Jean Ann Fox, director of financial services of Consumer Federation of America.
• Check your statement as soon as it arrives or online and report inconsistencies quickly, adds Fox. “This is especially true with debit cards. If you don’t report it fast enough, you can lose the opportunity to get your money back,” Fox says.
• If you do suspect skimming, call law enforcement immediately. “Let the station attendant know, but don’t rely on them to call the police,” says IDTheftSecurity.com CEO Robert Siciliano. Until the industry has answers, consumers are their own best protection.

Source: CreditCards.com

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An MBNA credit card customer recently expressed his concern after he was charged a small fortune by the credit card company for a small oversight. Paul Williams, aged 39, said he took out the 0% balance transfer credit card to try and sort his finances out, and he set up a direct debit for the £5 minimum monthly repayment right away.

However, MBNA then increased the minimum repayment to £10 per month, but Mr Williams did not realise and therefore did not increase the direct debit. As a result of this Mr Williams paid less than the minimum required repayments, and was hit with a £12 charge.

However, it did not end their. As a result of this oversight the credit card provider also decided to withdraw the 0% balance transfer facility from Mr Williams, and told him that he would have to pay £170 more in interest on his credit card balance. However, after some discussion the card company agreed to reinstate the offer and refund the charges.
Mr Williams said: ‘I was shocked and stunned when this happened. ‘I put my hands up that I made a mistake, but to ruthlessly withdraw my 0% credit card rate and charge me interest at the full rate because of one basic error is harsh.’

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An impending stock sale from Visa could amount to the largest initial public offering in U.S. history.

The credit-card network giant announced the proposed terms of its long-anticipated IPO�today, saying it intends to sell up to $17 billion in stock. Visa said it plans to sell 406 million shares, priced between $37 and $42 a share. An additional 40.6 million shares will be available for purchase by underwriters to cover any excess demand. Visa said it plans to offer the stock “as soon as practicable” after the registration statement takes effect.

Even if its shares price at the low end of its estimated range, Visa’s IPO would far surpass the $10.6 billion AT&T Wireless raised when its stock debuted in 2000.

“Visa operates the world’s largest retail electronic payments network and manages the world’s most recognized global financial services brand,” the company said in its prospectus filed with the Securities and Exchange Commission. “Based on the size of our network, the strength of the Visa brand and the breadth and depth of our products and services, we believe we are the leading electronic payments company in the world.” Visa’s transactions by both number and dollar amount exceeded those of rivals MasterCard and American Express in 2006.

While credit card issuing banks have been impacted by consumer credit woes, as a card processor, Visa’s revenues are tied to the use of plastic payments, which continue to gain ground against more traditional payment methods involving cash and checks.

Visa plans to follow in the footsteps of rival MasterCard in going public. MasterCard raised $2.39 billion in May 2006 with its IPO, and its stock has surged in value since that time. Meanwhile, credit card issuer Discover Financial Services went public with its stock in July 2007.

In June 2007, Visa had outlined its “restructuring” plan to establish a new corporation known as Visa Inc. via mergers involving Visa USA, Visa Canada and Visa International.

Visa said it has applied to list its shares on the New York Stock Exchange under the symbol “V.”

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Now that presidential candidates, senators and the Federal Reserve have all weighed in with their thoughts on credit card reform, it looks like the House of Representatives has decided to have its turn.

House Financial Institutions and Consumer Credit Subcommittee Chairwoman Carolyn B. Maloney today introduced the “Credit Cardholders’ Bill of Rights Act of 2008” (H.R. 5244), “comprehensive credit card reform legislation aimed at leveling the playing field between credit card companies and consumers.”

The bill is aimed at “major industry abuses that unfairly hurt consumers while fostering fair competition and free market values,” A summary of the bill provides the highlights:

• Requires card companies give cardholders 45 days notice of any interest rate increases.

• Prevents the so-called “universal default” rate increase.
• Prevents the so-called “double-cycle billing” practice.
• Gives cardholders time to pay their bills by requiring card companies to mail billing statements 25 calendar days before the due date (14 days is the current minimum).
• Requires that payments made before 5 p.m. EST on the due date are considered timely.
• Prohibits card companies from charging late fees when a cardholder presents proof of mailing his/her bill within 7 days of the due date.
• Prevents card companies from charging over-the-limit fees on a cardholder with a fixed credit limit.

“A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees,” said Maloney, a Democrat who represents Manhattan and Queens. “This balanced, moderate bill simply levels the playing field between card companies and cardholders while fostering fair competition and free market values. It sets no rate caps, fees, or price controls, nor does it dictate any business models to card companies.”

The bill has broad Democratic support, with the release naming House Financial Services Committee Chairman Barney Frank and 40 representatives as original co-sponsors.

A spokeswoman for Maloney’s office said hearings are likely to begin in early spring.

Source: CreditCards.com

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Americans love the convenience of shopping online, but many still get a twinge of nervousness when typing that credit card number into the computer, and those who have the least harbor the most fear.

That’s the major finding of research released this month by the Pew Internet & American Life Project.

Americans have largely gotten over their initial resistance to using their credit cards online, with 66 percent of those who have online access saying they have purchased a product online. But ambivalence remains: Three out of four Internet users either agree or strongly agree that they don’t like giving out their card numbers or personal information online.

“Our analysis suggests that if concerns about the safety of the online shopping environment were eased and if shoppers felt that online shopping saved them time and was convenient, the number of online shoppers would be higher,” concludes John Horrigan, associate director at the nonprofit research firm.

There are billions of dollars at stake in easing those doubts. If retailers and the card industry can allay the lingering fears — something that the steady drumbeat of identity theft reports makes unlikely soon — the number of Americans willing to shop online would rise from 66 to 73 percent, the study estimates. The amount of money spent online, which stood at $34.7 billion in the third quarter of 2007, would rise accordingly.

Gender and race have little to do with people’s attitudes toward shopping online, but income is a very large factor.

If you compare people in households with less than $25,000 in income and compare them to those in households with annual incomes of $100,000 or more, those with less are far more nervous about using credit cards, and far less likely to describe the online shopping experience as convenient.

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Whether your credit’s good or bad, avoid these common blunders

Whether you’re in a financial crunch or just lack a second Ferrari, credit card offers landing in your mailbox might look like an answer to prayer.

Don’t succumb to temptation, says Cate Williams, vice president of financial literacy for Money Management International in Chicago.

“The first thing consumers need to do is walk from their mailbox to their shredder,” says Williams. “A new credit card might give you that sparkling feeling for about 24 hours, but as a way to clean up your finances, borrowing money to pay back other money is not a solution.”

Experts’ advice can steer you away from the top 10 credit card mistakes.

1. Getting too many

Bypass the shredder and you could make one of the most common credit card blunders by collecting too many credit cards.

“Ask yourself,” says Williams, “ ‘Do I need another credit card?’ Probably 95 percent of us don’t need another one to keep in the sock drawer or in the little metal box in the kitchen.”

Howard S. Dvorkin, founder and president of Consolidated Credit Counseling Services, a nonprofit debt management company in Fort Lauderdale, Fla., agrees. “The worst mistake is that people don’t know when to stop. Too many credit cards is not a good thing.”

Even if the cards have zero balances, multiple open accounts could cause a lender to question what could happen if the account holder gives in to temptation and maxes out on all that plastic.

2. Misunderstanding introductory rates

But, you argue, that new card will help you manage your money better because you can transfer other balances to a no-interest account. Welcome to credit card mistake No. 2: being misled by introductory rates.

“People don’t look at what the rate’s going to be once the teaser is over,” says Daniel Wishnatsky, certified financial planner and owner of Special Kids Financial in Phoenix “The assumption is that it’s going to be a reasonable rate. But with these particular loans, it’s not unusual for it to go up to 18 to 20 percent. They’re surprised six months later when it expires. But if they’d done their homework, they wouldn’t be.”

3. Not reading the fine print

That homework is reading the offer’s fine print. Not doing so is credit card blunder No. 3.

That tiny text insert is where you’ll discover when the zero-percent or very low interest rate expires. It’s also how you can find out about any balance transfer fees, as well as any offer limitations. In most cases, the introductory rate applies only to balance transfer amounts or new purchases for a certain period of time, says June A. Schroeder, a CFP with Liberty Financial Group, Inc. in Elm Grove, Wisc., a private financial planning and advisory firm.

4. Choosing a card for the wrong reasons

You might be tempted to ignore the fine print because the card has other attractions, such as a rebate or rewards program. Don’t, or you’ll make credit card mistake No. 4: choosing a card for the wrong reasons.

“Credit card granters are not a consumer’s’ friend. It is a business,” says Dvorkin. “They don’t know what’s right for you. Their job is to extract as much money from you as they can. Your job is to not let that happen. People need to go through and find a card that’s right for them. There’s every sort of card out there — points, cash back, donations to your college.”

5. Not rate shopping

Look for the best possible interest rate. Not shopping around is credit card mistake No. 5.

It’s especially important to note the rate on unsolicited offers. If you’re struggling financially, you’re not likely to get the most favorable rates or terms. You’ll be paying higher interest rates.” So comparison shop for a credit card.

6. Making minimum payments

OK. You do need another card. You read the fine print, you completely understand the terms and you got a competitive rate. But even after choosing the perfect credit card, people still make mistakes, such as No. 6 on our list, making minimum-only payments.

“Credit cards are not a form of supplemental income,” says Dvorkin. “They’re for convenience, and should be paid off at the end of every month. Paying the minimum is not going to get you anywhere. It’s going to get you in trouble, that’s where it’s going to get you.”

And it’s going to get you into trouble for a long, long time. “People don’t realize how difficult it is to pay off loans at a high rate,” says Wishnatsky. “You’re going to be paying it for your next three lifetimes.”

7. Paying your bill late

Making late payments, blunder No. 7, is better than not paying at all, but not by much.Not only will you face a late-payment charge, which could be higher than your minimum payment, your tardiness will show up on your credit report, making it harder to get better terms for future loans and accounts.

Check your account statement for the due date and make sure you send your check in plenty of time. But the date alone isn’t enough, says Liberty Financial’s Schroeder. Some companies have cutoff times. If your check arrives on the 22nd as required, but in the afternoon mail, your payment is counted as late because your account terms called for payment by 9 a.m. that day.

If you’ve set up an automatic payment via your bank, make sure the time and date are taken into account, says Schroeder. And find out your bank’s payment policy when the due date falls on a weekend or holiday.

8. Ignoring your monthly statement

You can avoid late payments by checking your credit card statement. Not doing so is mistake number 8. Checking your statement will help you pay your bill promptly, as well as allow you to make sure that the charges on it are correct. “In these days of ID theft, you need to check your bills religiously,” says Schroeder. And you need to do so as soon as the statement arrives. If you wait too long to dispute a charge, says Schroeder, “you’re essentially accepting it.”

9. Exceeding your credit limit

Checking your statements also can keep you from exceeding your credit limit, mistake No. 9. “If you’re near the top of your credit limit, try really hard to pay in cash for subsequent purchases or get an increased credit line,” says Schroeder. “If you don’t, you’ll get over-the-limit charges, which are costly and look bad on your credit report.”

10. Buying things you don’t need

Careful statement examination also could prevent the 10th credit card blunder, using plastic to purchase things you don’t need.”Go over your credit card bills every month and you’ll be amazed at the number of items that, upon reflection, you could have done without,” says Wishnatsky. “It’s surprising how many purchases we make that we think are needs, but are impulse buys.”

The Phoenix financial planner tells his clients who are considering a significant purchase to wait 48 hours, if at all possible. “If you still want it, wait another 48 hours,” Wishnatsky says. “Then if you have to get it, then get it.”

Also use your statements to help you create a budget. Wishnatsky realizes many people cringe at the “B” word, but he says control of your spending and your credit card usage doesn’t have to be a way to deprive yourself. Instead, it can be a way to make things happen in financially positive ways.

“Once you get control, even to a degree, it frees you from this constant money worry,” says Wishnatsky. “You might find there are things that you can actually end up having if you just have a plan, if you get your financial desires in tune with your financial resources.”

Source:

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Retirees relying more on credit cards.

The rocky years of the Depression shaped frugal and debt-shy consumers, but towering credit card balances now compel many seniors to seek help.

Their growing mortgage debt and credit card balances are of real concern, says George Gaberlavage, a director of policy research and development at AARP.

Some credit card holders older than 55 –already coping with fixed incomes and escalating medical expenses — court trouble with credit cards because they’re being “sandwiched.” A new survey by Ameriprise Financial Inc. shows seniors often assist parents and adult children with loans, health insurance, rent, utilities and other expenses.

“My experience is that credit card debt is one of the top reasons seniors seek bankruptcy protection,” says Barbara Whipple, a bankruptcy attorney in Latham, N.Y.

“Older consumers who turn to me for help are embarrassed, ashamed and often do not talk to their children about their financial problems. The biggest complaint I hear is,’I pay and pay every month, and my debt doesn’t go down, even when I don’t make purchases,’ ” Whipple says.

The availability of credit “has gone through the roof” over the past two decades, aided by the advent of credit scores and Wall Street’s buying and selling of credit card debt, says Liz Pulliam Weston, a personal finance author and columnist. Twenty years ago, older Americans were less susceptible to credit crises because lending standards were much more stringent, she says.

Cate Williams, vice president of finance at Money Management International, a nonprofit organization that offers financial guidance and debt management services, says she expects the percentage of older Americans seeking pre-bankruptcy counseling to climb.

They’re supposed to be in the best of their financial years, Williams says, but they’ve got “serious, serious debt” to get rid of.

Katie Porter, associate professor at the University of Iowa College of Law and project director of the 2001 Consumer Bankruptcy Project, says older Americans are especially vulnerable to the dangers of credit cards, because, among other things, they’re less likely to use debit cards as an alternative.

A report this year from the Institute for Financial Literacy indicated 14 percent of Americans seeking pre-bankruptcy counseling in 2006 were 55 to 64, yet that age group made up 10 percent of the U.S. population. Credit card bills often account for most of the debt.

The Administrative Office of U.S. Courts shows that seniors file for bankruptcy more often than young people.

Porter quotes a review of thousands of credit card accounts by the Massachusetts Institute of Technology Department of Economics which suggests that older Americans borrow at higher interest rates and cough up more late-payment, over-limit and cash-advance fees.

They try to pay their bills, only to be trapped by high interest rates and fees, Whipple says.

Facing rising costs for basic necessities, older consumers often are forced to make a choice to go without or borrow to pay,” says Bob O’Connell, a member of the AARP Executive Council. “Of course, many older people go without, often at serious expense to their own well-being. But for those who have chosen to rely on the plastic safety net, borrowing increasingly means sky-high costs and the very real prospect of endless … debt.”

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As technology advances in the banking and credit communities, you’d think something as simple as a credit rating should be readily available to banks, credit institutions and lenders outside of the United States.

When Jason Hinkley, 30, an American national and information technology specialist living in Germany, started shopping for a local mortgage lender outside the city of Wiesbaden, he found that it was not the case.

“Not many Americans have bought a home here,” says Hinkley. “The rules are really different.”

Lending agencies asked Hinkley for income verification and about any outstanding debts he might be carrying during the loan application process, but had no way to confirm his previous credit history from the United States.

Differing identifiers and consumer protection laws
James Jones, Consumer Education Manager at Experian in the United Kingdom, says the need to establish credit in a foreign country using your standing credit history is an issue for many people. But as it stands now, it simply cannot be done.

“Your credit record can’t actually be transferred between the United States and the United Kingdom, or vice versa,” Jones says. “Nor can it be done between the United Kingdom and Europe or the United States and Europe. There is just no facility to do so at the moment.”

That lack of communication goes both ways. Linda Sherry, director of national priorities at Consumer Action, a nonprofit consumer advocacy and education group based in San Francisco, says that foreigners coming to the United States will also have difficulty using their past history to apply for credit. “Even if a country has a viable credit reporting system — and many countries don’t — those systems won’t talk to the ones here in the United States.”

Each country has its own format for credit-related data as well as stringent laws to protect consumer data, Jones says. Those formats include the unique identifiers that allow agencies to track your credit use. “In the United States, your credit history is built around your Social Security number,” says Jones. “That’s not the case in the United Kingdom; we have a different system with different identifiers.”

As more legislation is passed to protect consumer data and reduce identity theft, varying national and international laws might make it illegal for one country to share an individual’s credit history with a foreign lender. “From a United Kingdom perspective, we have very strict consumer protection legislation that stops any credit information from being transferred out of the country,” says Jones.

As such, people who move abroad will not be able to provide foreign lenders with instant access to their hard-won credit histories. “They are, in effect, starting from scratch,” says Jones. “They have to earn and build the lender’s confidence.”

Using current credit products abroad
It’s possible to bypass applying for credit with international lenders by using existing bank accounts, credit cards or lines of credit. “If you have American cards already, they will still exist wherever you go. You can change the cards to an overseas address and they will still be viable,” says Sherry.

By doing so, consumers might be subject to extra costs and fees. “We know that credit bureaus don’t transfer credit history across countries,” says Rosa Alfonso, spokeswoman for American Express. “American Express card members can, of course, use their cards all over the world. But it is beneficial to have a card in the currency of the place in which you reside.”

Without that, says Alfonso, consumers might be subject to currency conversion fees when purchases are converted from the local currency to United States dollars. There could also be other fees, depending on purchase type and country.

Alfonso suggests that before an international move, you contact credit card companies to switch to the most appropriate product for your new residence. With the American Express card, you might have to apply for a different card. Alfonso reassures existing card members that American Express would do everything in its power to make the transition seamless. A new application doesn’t negate a previous relationship, she says.

You can take it with you
Alfonso says that at American Express, every application is evaluated case by case, even when an American credit report is not available. “We definitely want to be able to establish income verification from a reliable source,” she says. “But every application is evaluated on its own merits. It is not one size fits all.”

Sherry says that other credit card companies might also be willing to look beyond your credit report. “A thin credit history does preclude you from getting most types of credit in the United States. But credit reports are not the only criteria that creditors rely on.”

Though your credit report cannot be automatically transferred to lenders, Jones and Sherry suggest you provide it in the form of a hard copy or old-fashioned letter of credit from your bank back home.

“You can always print out a copy a copy of your credit report and provide that to lenders,” says Jones. “In the U.K., we also send out an explanatory guide with the report, so that would be useful to keep as well. It’s possible that with a paper copy to work from, a lender might try to verify the information.” In Hinkley’s case, an income verification statement from his employer satisfied the German banker who guaranteed the home loan.

Jones firmly recommends that any time you apply for credit with unusual circumstances, you speak with the lender about your situation before applying. This could prevent a large number of credit searches from creating a red flag on your budding local credit record.

If your history doesn’t transfer, Sherry and Jones suggest gradually building up your credit history in your new homeland. Sherry suggests looking into a secured credit card product where you can deposit money as the security for the credit line. Jones says it may be as simple as opening a bank account.

“Overdraft protection is a credit product,” Jones says. “If you open a bank account and they see your regular income and outgoings, the bank may be eventually inclined to offer overdraft. That can later help you apply for other credit products.”

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When you arrive at a retail store register with an armful of items, the clerk will probably ask if you’d like to save 10 percent and receive perks by simply signing up for their store credit card. This may sound too good to be true … and often it is.

Industry estimates show that the market for proprietary or private-label credit cards surpasses $100 billion annually, so many consumers are wooed by the initial discount. But these forms of plastic, offered by many major retailers to customers through their own financing arms or through third-party issuers, tend to carry high interest rates. While the average bank credit card charges a rate in the neighborhood of 13 percent or 14 percent, many store credit cards’ interest rates exceed 20 percent. If you revolve a balance on your credit card, that initial 10 percent savings on a purchase will be eaten up very quickly by the hefty interest you will end up paying.

Still, store credit card fans argue that since these credit cards carry higher minimum monthly payments than bank credit cards, balances decrease much more quickly. They add that retailers set the minimum payments at a higher level than what banks require, since they know a debt-free consumer is likely to do more shopping.

Michael McAuliffe, president of Family Credit Counseling Service in Rockford, Ill., says, “Every time you go into a store, they’re going to push their card. I discourage shoppers from accumulating retail credit cards because they tend to carry very high interest rates, and it’s an easy way to damage your credit score.” In the formulas credit bureaus use to calculate your credit score, store credit cards differ from bank issued credit cards. With the average U.S. consumer carrying four or five credit cards, additional store credit cards can make you look like a bigger risk to credit agencies, resulting in a lower credit score. A lower credit score, in turn, can raise the interest rates you pay for other borrowing.

Although having a diverse mix of credit within your credit history can potentially aid your score, too many lines of open credit can signal danger to a lender, which may worry about the consumer’s potential to incur additional debt.

Meanwhile, store credit cards are often forgotten by consumers who only complete applications in exchange for an initial burst of savings. Many of the 500 million or so store credit cards in circulation are taken out during the holidays. While the store credit card may not be used, the open account will still appear as a line of revolving credit on the consumer’s credit report.

Judd Rousseau, COO and director of fraud operations for Identity Theft 911 in Scottsdale, Ariz., says that signing up for a store credit card during the holidays can also put you at risk for identity theft.

“During the holidays, some stores will have tables set up trying to get people to sign up for store cards. They are gathering tons of peoples’ personal information in an unsecure area,” he says. “Often they have temporary or seasonal people doing that work, and they haven’t always had a thorough background check. We’re seeing more and more organized crime and street gangs getting into identity theft in that way; they’ll get their cleaner-cut girlfriend or younger sibling to get those kinds of jobs and steal the information.”

Consumers who sign up for store credit cards may also find that their personal information is shared with other companies or that they are placed on marketing mailing lists. Stores such as retailing giant Wal-Mart routinely provide data to third parties looking to offer you special promotions or services. While buyers’ personal information and buying habits represent another source of revenue to companies, it may be an annoyance to consumers who are already flooded with offers they don’t need or want.

In the end, consumers looking to get something back when they shop will likely get more out of a reward credit card. Experts say an instant 10 percent savings may not be worth the problems a store credit card might cause.

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