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[C1210]Credit Card First Time

by James Exum, Jam

With that in mind, it's interesting to look back at regulations that did and didn't exist in the early days of the credit card industry.

For instance, until the mid-70's there were virtually no regulations other than those imposed upon members by the industry itself.

Banks eager to cash in on the interest paid on revolving credit card accounts were aggressive in gathering new customers - so aggressive that they mailed active credit cards to consumers who had not asked for them.

Some of those consumers were income-earning adults, but some were not. In fact, it was not unusual during the late 1960's for college students living away from home to find a shiny new credit card in their mailboxes - just begging to be used.

This practice was banned when the U.S. Congress began regulating the credit card industry in the 70's. Interestingly, while card issuers are right now scaling back on issuing credit, reports are that they are still recruiting new card members on college campuses.

Because merchants pay the credit card companies for the use of the cards, some merchants wanted to reduce the impact on their profits by either imposing a surcharge on customers for use of the credit cards, or raising prices overall and giving a cash discount to those who did not use them. The credit card issuers said NO.

Consumer groups sued and the card issuers relented. But then consumers asked Congress to step in, which it did. The 1968 Truth in Lending Act (TILA) was amended in 1974 to prohibit customer surcharges, but allow cash discounts. That ban lapsed in 1984 and has not been reinstated.

Meanwhile, until 1996, laws existed that capped the amount of interest and fees that credit cards could charge. Then, in a case entitled Smiley vs. Citibank, the U.S. Supreme Court lifted those restrictions. That's why late penalties that once were $5 - $15 are now $29 - $39 and even higher. That's also why you might see an interest rate hovering at 30% if you're late with a credit card payment.

Another practice that helped consumers become buried in debt was the low minimum payment requirement. Many card issuers required such a low minimum that consumers didn't pay the monthly interest - causing their balances to grow even with no new purchases added. Guidelines laid out in 2003 now require banks to require a monthly payment that covers the current month's interest plus at least 1% of the principal due.

Do not think that we are trying to get you involved in any criminal activities here, we're not and the whole process is legal and above board and will give you the chance to get one over on the credit card companies, who have been relieving us of our cash for many years now.

First of all you will be itching to know what “stoozing” is, well the way that it works may sound a little complicated, but when put into practice it is a lot easier than trying to explain.

Step 1

This is how it works, what you have to do is to apply for two separate credit cards that are giving you a introductory deal with a 0% interest free period and make sure that one of your new credit cards will let you transfer your credit limit into a bank account. So make sure that you have opened a high savings account at your bank, if not then putting the money into your current account will be fine, until you can open up a savings account afterwards.

Step 2

Then you come to the second of the two credit cards and this where you may find that things become a little confusing. If the second credit card does not have the facility that lets you transfer the cash from the credit card straight into the bank account, then here is what to do, ask the issuer of the second credit card to balance transfer from the first card onto the second credit card, this is a back to front way of doing things but this will move money from the second credit card to the first one. This transaction is regarded as moving a negative balance on to the other credit card, so will work in reverse. Once completed all you have to do is ask the lender of the first credit card to transfer this balance to your high interest savings account.

After you have navigated all of this, you will now be in possession of a bank balance that is gathering interest, with the satisfaction of knowing that the money that is making you money, has come from a couple of credit card companies, who have given you an interest free loan.

Remember to pay the minimum payments!

All of this doesn't come without a couple of problems that may trip you up. Firstly always and I will stress ALWAYS make sure that you meet the minimum payment and the minimum payment only and make sure that it is paid on time.

Plan ahead…

Secondly make sure that you have your next set of two 0% interest credit cards applied for 5 to 6 weeks before the original two cards are coming to the end of the 0% introductory period. Remembering that one must have the facility to transfer the cash straight into your savings account)

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As soon as these new credit cards have arrived transfer what you owe over to the first two cards to clear them and then cancel the original two credit cards, making sure that you tell the issuer to let their credit agency's know.

If for some reason that your next two credit cards are not in place, then you will have to withdraw the cash that you owe to the cards from your account and pay them off in full, because remember you are doing this to make money on the interest, not to pay it.

This can be carried on again and again, as long as you can get the 0% interest free period and you are willing to let the cash lie in the bank without touching it.

Article Source : How Do Credit Cards Work

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Both James Exum & Peter Kenny are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

James Exum has sinced written about articles on various topics from Credit Cards, Gas Prices and Credit Cards. BestRateForCreditCards.com is your on-line resource for comparsions. James Exum's top article generates over 8100 views. to your Favourites.

Peter Kenny has sinced written about articles on various topics from Credit Cards, Finances and Best Money Market. . Peter Kenny's top article generates over 368000 views. to your Favourites.