The Future of Credit Cards: Is Plastic Disappearing?

The Future of Credit Cards: Is Plastic Disappearing?

Reading Time: 4 minutes

Before plastic credit cards were invented, the concept of credit was around for centuries. With today’s modern society and technological advancements, credit cards have come a long way.

 

 

How Did the Credit Card Start?

Credit cards got their start way before you were born. In fact, they got their start before the internet, planes, automobiles, trains, and the lightbulb. They go back before the French Revolution, and Benjamin Franklin discovered the power of lightning. They even go back before the age of Victorian England, the printing press, and Shakespeare. So just when did this credit system start?

 

The Early Beginnings of Credit

Historic records provide evidence of a written credit system that goes back to the ancient Code of Hammurabi. Named after the ruler of Ancient Babylon from 1792 to 1750 B.C., this code provided an example of a written credit system. There were rules for lending and paying back a loan with interest. There were even rules for how interest rate worked. According to the code, a loan served as a financial agreement between one borrower and one creditor or merchant.

 

The Rise of Credit Cards

In the early days of the “Wild West,” owners of general goods stores often extended a line of credit to their customers who were farmers and cattle ranchers. Because these men only got paid after the harvest or when their herd sold at the market, the store owners allowed them to purchase on credit and pay their bill when profits came in.

 

Fast forward to the 1900s and the rise in travel, commerce, and an economic boom. Larger hotels and department stores started issuing paper cards to valued customers they could trust to pay them back. By 1950, Diners Club launched its first general merchandise charge card. They were issued to well-off customers and used it for travel and entertainment expenses. This credit card system created by Ralph Schneider and Frank McNamara required customers to pay off the balance each month in full, creating our modern-day credit card system.

 

In 1958, Bank of America launched its general credit card called the BankAmericard. It came with a whopping $300 credit limit and was the first of its kind of offer revolving credit, giving people the option to carry over a balance.

 

Credit Cards and Modern Technology

By the 1980s, cards transitioned from paper to plastic with a magnetic stripe on the back. This strip allowed the credit reading to be taken by special computer equipment. In the 1990s, they continued to evolve and were soon embedded with computer chips called EMV smart chips. These chips allowed for encrypted, two-way authentication between the merchant’s credit card terminal and a payment processing network.

 

history of credit cards

 

What is the Future of Credit Cards?

With the history of credit solidly in place, let’s turn our attention to the question of their role in the future economy. What will be their place? Will there be some other form of credit option, or are the plastic cards in our wallets here to stay?

 

Cashless Transaction

These days, everything we purchase from the grocery store to the movie theater is likely bought with a credit or debit card, or alternative mobile wallet, cash-sharing app, or cryptocurrency. There are plenty of alternative ways to pay for your purchases these days, including:

PayPal Credit: PayPal has a line of credit in addition to providing a platform to pay directly.

Cryptocurrency: The most well-known currency is Bitcoin, but there are others, including Litecoin and Ethereum.

Prepaid Cards: These function like debit cards but preloaded with cash.

Mobile Wallets: The most popular options are Apple Pay and Google Wallet. These link directly to your bank accounts, debit or credit cards, allowing you to access all financial resources without a card physically present.

 

More Security Features

Fraud prevention is one of the top concerns when it comes to credit and debit cards. As technology evolves, features are added to increase security and protect the purchaser. However, the security system in place is far from complete. In the future, you can expect credit card companies to incorporate AI to detect and fight fraud. 

 

Artificial Intelligence in Credit Cards

AI technology is exploding in its applications, uses, and intelligence. Expect that AI will soon be employed to detect and fight fraud, in addition to providing customer-focused services. Credit AI will likely resemble something close to Amazon’s Alexa and manage payments, identify spending patterns and trends, make suggestions for purchases, and remind you about upcoming payments.

 

Contactless Payments Through Smart Phones

Numerous banks are rapidly adding features to their apps that allow their customers to control credit and debit cards through their app. Consumers currently can lock their cards, control spending limits, report lost cards, and alert the company to potential fraud the minute it happens. Eventually, the use of smartphone apps for credit and debit cards could go the same way as Apple Pay or Google Wallet and become a completely contactless form of payment with no physical card required.

 

 

Will Plastic Credit Cards Disappear?

Technology is rapidly evolving, and both consumers and merchants alike are focusing more attention and energy into online, app, and contactless payment. However, with the advent of Google Wallet, PayPal, Square, and CashApp, major credit cards have received another platform to conduct business. Far from hurting credit card companies, apps, and online methods have made it easier to gain customers and provide credit to people in nearly any situation. Major credit card companies such as MasterCard, Visa, and American Express have all come up with a mobile payment platform for their customers.

 

Though consumers might start paying in varying ways beyond using the physical credit card, they’ll still be using credit extended to them by the companies that issue cards.

Credit cards have come a long way from being tied to a single merchant. Today, credit is extended from major companies to people of all ages and economic status. The future possibilities of credit cards are endless.

 

 

Does Unemployment Affect Your Credit Score?

Does Unemployment Affect Your Credit Score?

Reading Time: 4 minutes

Losing a job is difficult in the best of times. When the economy is down, however, the impact of job loss is felt even more. When you pair this with the fact that finances will need to be adjusted and your credit score could be damaged if you can’t pay, job loss becomes downright terrifying. Let’s take a look at how unemployment can impact your credit score and what you can do about it.

 

 

Does Unemployment Show in Your Credit Report?

This is one concern you don’t have to be worried about. The fact that you are unemployed will not become part of your credit history, and it won’t show up in your score. Filing for unemployment, likewise, will not show up in your credit history. The only private information contained in your credit report is records of your financial accounts and hard credit inquiries. The only other record that could be included is if you’ve ever filed for bankruptcy. 

 

 

How Does Unemployment Affect Credit Scores?

Stated by credit repair experts, being unemployed in and of itself doesn’t directly impact your credit score. The primary areas of concern you have to face is the requirement of continuing to pay at least the minimum on your credit card statements and loans. 

 

High Utilization of Credit Cards May Affect Your Credit Score

The difficulty in unemployment is the potential necessity to use more credit than you usually would. Credit utilization is one of the most significant factors that contribute to determining your credit score. It’s recommended to keep your credit utilization to no more than 30% of your total credit limit. This means if you have a total limit of $10,000, then you should only have $3,000 of credit used at any one time.

 

If you go slightly over the 30% ratio, you won’t see significant changes to your score. If you go far over the percentage, however, your score will lose points. High credit utilization will always reduce your credit score. The higher you go over the recommended 30%, the more your credit score will be impacted. Nearly maxed-out credit cards indicate to credit rating companies that they might be dealing with a risky borrower. Even if you have all the intentions of paying your credit cards back down in full once you get a new job, your score will be impacted during the period when your utilization is too high.

 

Limited Funds or Income May Result in Late Payments

The most significant contributing factor to your credit score is your payment history. If you have limited funds and you don’t have savings stashed away to compensate for lack of a paycheck, you might need to miss payments on your credit cards. Unfortunately, this can significantly reduce your credit score. Even one missed payment can lower your score by as much as 90-110 points. If you miss enough payments that your account is sent to collections, your score could be damaged even more. 

 

unemployment effect on credit

How to Help Lessen the Impact of Unemployment on Your Credit Score

Thankfully, there are several ways to help lessen the impact on your credit score when you’re unemployed. The key with each of these is to reach out to your lending agency and ask. Credit card companies can often provide a form of financial relief to customers, but they can’t help you if they don’t know you need assistance.

Common Forms of Assistance that Creditors Can Offer

Credit card companies and loan agencies can offer help when customers encounter a time of crisis, such as unemployment. Inquire with your lending agency to determine which of these options might be accessible to you during this time.

 

Lowering a Monthly Minimum Payment

If you need more time to pay off your bills, credit card companies and lending agencies can offer help to lower your monthly payments for a short duration until you get back on your feet. Ask them about these options to work out something that will help you manage your finances during unemployment.

 

Waiving or Refunding Late Fees

If you have a history of on-time payments, your credit card company will likely be more than happy to work with you and provide this option. When there is history and proof that you’re a reliable customer that pays back your bills, they’ll be more willing to waive the associated fees with late payments while you’re unemployed.

 

Reducing the Interest Rate

By lowering the interest rate, you can extend the amount of your loan and pay back less each month without it negatively impacting your finances.

 

Establishing a Payment Plan to Pay Off Existing Balances

A payment plan differs from your minimum monthly payment. Your lending company can work with you to adjust your monthly payment and come up with a better payment plan that you can manage even while dealing with unemployment. This may look like lowered interest, a lengthened period, or a waiver of monthly payments during a specified period. 

 

The CARES Act

CARES is short for the “Coronavirus Aid, Relief, and Economic Security Act,” and it was signed into law in March. This act provides consumers with credit protections during a time of uncertainty, unemployment, and upheaval. 

 

The act specifies how companies are to report data to credit bureaus for consumers that have payment accommodations in place. It also specifies that you can request that lending companies add a code to your credit report that indicates you were impacted by a natural or declared disaster. Coronavirus is a declared disaster. Though FICO doesn’t recognize the codes, VantageScore will disregard late payments for any accounts with the code attached.

 

It can be challenging to handle finances when you lose a job. Naturally, we tend to rely on credit cards to meet our needs and get us through. Keep this article in mind, so you don’t indirectly impact your credit score. Thankfully, however, there are options and financial relief that may help lessen the impact on your credit score during this unprecedented time.

Build Your Credit Fast with These 6 Easy Steps

Build Your Credit Fast with These 6 Easy Steps

Reading Time: 4 minutes

A good credit score depicts a person’s creditworthiness, and this will give you a chance for lower interest rates when you apply for a loan. If your credit score is not where you want it to be, there are many ways that you can do to improve your score.

 

 

How Fast Can You Build Your Credit?

Stated by a credit repair specialist, A credit score takes time to build and improve. While you can’t transform your score overnight, with steady and consistent efforts, you can see dramatic improvement. If starting from zero, you can expect to build a decent credit score in six months. For the major credit scoring companies to compile enough history of your credit use for a score, you need at least one active account open for a minimum of six months. If you’re trying to repair damaged credit, the longer you have to rebuild it, the better, but you can start to see improvements within three months.

 

 

What Can You Do to Boost Your Credit?

Consistent, steady improvement will do the most to improve your credit over time. Nothing happens overnight when it comes to your credit score, but some things contribute more than others. Here are six things you can do to increase your credit.

 

Apply for a Secured Card

If you want an easy instant-boost to your credit, apply for a secure credit card. These cards require a cash deposit upfront as collateral against the purchases you’ll make. The benefit of this card is your ability to control the credit limit by paying a higher security deposit. 

 

One of the factors in your credit score is how much credit you use. It’s best to stay under 30%, so if you apply for a secured card and place $1,000 as your security deposit, keep your credit usage under $300. Each month you consistently stay under a 30% credit utilization, you’ll see your credit score improve.

 

Become an Authorized Credit Card User build your credit

This is an incredibly easy way to build your credit, so long as you choose the right person’s credit card. By becoming an authorized user on a friend or relative’s credit card, their credit utilization and history of payment will be reflected in your score. If you have a little credit history, using this tactic works well.

 

To do this right, you’ll want to make sure you choose someone who has a credit card with a consistent low balance, a history of no late payments, and a high credit limit. Do not sign on to another person’s card if they have a history of poor credit utilization. Their credit behavior, good and bad, will be reflected in your score.

 

Ask for a Raise of Credit Limit

If you consistently struggle to stay under your credit limit, apply to your credit card company for an increase in your credit line. A higher credit limit can help improve your score by keeping your utilization lower. When your credit line increased, the increase itself is also reflected favorably on your credit score. An increase in credit demonstrates that you are viewed as a stable cardholder by credit card companies.

 

Correct Wrong Information on Credit Reports

There are many ways to track your credit score. Popular websites and apps such as Experian and Nerd Wallet offer free credit score tracking. But why is monitoring your credit score important? Because knowing when incorrect information is entered into your score is vital for getting it fixed. 

 

Though it may not happen often, there are times when incorrect information may get entered into your credit report. When this happens, your score could be negatively affected. The only way to reverse this is by having the credit scoring companies such as Equifax, Experian, and TransUnion remove this information. 

 

When it comes to removing false information from your credit score, it usually takes more than a phone call to point out the mistake. There will be checking, referencing, and the potential for documentation needed from you. It will take some time to get the incorrect information removed, and your score repaired. It is best to get the process started as soon as you notice an inaccuracy pop up, so get your score back to normal quickly.

 

Make Payments on Time

Your payment history is one of the most significant factors when improving your credit score. On-time payments will always contribute to improving your score. The more record you have of never missing a payment, the more your score will go up. When it comes to payments, you should always pay at least the minimum, as noted on your credit statement each month. Paying more than the minimum is advisable to reduce interest payments and lower your credit utilization. But, if you can only do the minimum, at least do that.

 

It may not seem like a big deal to miss one or two payments. However, a late payment can cause a drop in your credit score, ranging anywhere from 90 to 110 points. That’s enough to take you from a “good” rating to a “fair” rating and instantly increase interest rates on loans or even disqualify you from obtaining loan approval. Though the score will rise again as you faithfully make payments, you could feel the effects of late payment for as long as seven years. 

 

Applying Credit Utilization

Credit utilization has to do with how much credit you use in contrast to your credit limit. Low credit utilization is beneficial, and, in general, you shouldn’t use more than 30% of your limit. If you have a credit limit of $1,000, for example, you should keep your credit under $300 each month or until you pay it off. Low utilization sends the message that you know how to manage credit well, and you aren’t at risk of borrowing more than you can payback.

 

Improving your credit score takes time. Being financially responsible and practicing the steps outlined in this article will help you boost your credit. And while there are many things you can do on your own, if you’re still at a loss, it could be best to hire a credit repair company to help you out.

 

Can Refinancing Affect Your Credit Score?

Can Refinancing Affect Your Credit Score?

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Refinancing may offer several benefits for you. However, before you head out and apply for refinancing, there are things that you should learn regarding its benefits and risk.

 

 

What is Refinancing?

Refinancing is a key strategy that can help your finances in the long-run. When you refinance, you essentially take out a new loan to pay off the debt owed on an old loan. While on the surface it may sound like you’re merely replacing one loan for another, the new loan should have financial benefits such as better terms, interest rates, or features that will benefit you more than your old loan. 

Numerous types of loans have refinancing options such as home mortgages, auto loans, personal loans, and student loans.

 

 

What are the Benefits and Risks When You Refinance a Loan?

Stated by a credit repair company, when making a financial decision as important as refinancing, it’s vital to understand both the benefits and potential risks you face in the process. Never enter a refinancing situation when you are unaware of the precise terms, conditions, benefits, and adverse effects that it may have on your financial record.

 

Lower Your Interest Rate

Many people choose to refinance their loans because a better interest rate is available. This is a good reason since lower interest rates mean savings in the long run. The less you must pay in interest, the more you’ll save during the life of your loan. This is especially true with significantly large loans such as school, home, or auto.

 

Reduce Monthly Payments

If you found a loan with a lower interest rate, you can probably afford to make smaller payments than on your original loan. If you need lower monthly payments, this could be an excellent direction to take. Be sure that your extended payment plan doesn’t end up making you pay more in the end due to an increased duration of your payment plan.

 

Change Repayment Term

Do you want to change your repayment term to extend or shorten the length of your loan? Refinancing can help you do that. Most people want to extend the period of their loan payment and find that a refinanced loan with a lower interest rate is helpful to extend the duration of their loan. You can also choose to refinance a long-term loan into a shorter-term option.

 

Change Loan Type refinancing loans

Refinancing gives you the option to change the type of loan you take out. Many who have acquired a variable-rate loan change to a fixed-rate loan. Variable-rate loans cause your monthly payment to go up and down as interest rates change. A fixed-rate loan, on the other hand, applies a fixed monthly payment to the entire term of your loan. If you need the stability that a fixed-rate loan provides, but you have a variable-rate loan, then refinancing could be a good option.

 

Consolidate Debt

If you have multiple loans, refinancing can help you condense them all into one single loan. Not only will it be easier to keep track of your total debt, but it could help you save money in the long-run if you find an option with a lower interest rate.

 

 

Risks When You Refinance a Loan

As with anything in life, there are positives and negatives with refinancing. Here are three downsides that you should consider before deciding to refinance.

 

Transaction Costs are Expensive

When you refinance, you’ll have to pay closing costs just like you did when you first drew the loan. If you’re refinancing a significant loan such as home or auto, your closing costs could be in the thousands. You’ll need to determine whether the new terms outweigh the closing costs you’ll pay to secure the loan.

 

Higher Long-Term Interest Cost

Refinancing is often used to extend a loan period. Though your monthly payments will likely be lowered, if you stretch your loan out significantly, you could end up paying substantially more in interest.

 

Risk Losing Value and Benefits

Understand what you will be losing if you refinance. Does your present loan offer benefits that you can’t live without? Even though a refinanced loan may provide some savings, you might be better off keeping your current loan in order to keep your benefits.

does refinancing effect credit

What Happens to Your Credit Score When You Refinance a Loan?

As beneficial as refinancing a loan may be, it will impact your credit score. Keep these issues in mind when deciding whether refinancing is worth it.

 

Credit Inquiries Affect Your Score

When you apply for a refinance loan, the lending company will inquire into your credit score and credit history. This is known as a “hard inquiry.” Though temporary, this type of inquiry will negatively impact your credit score.

 

Multiple Loan Applications Can Negatively Impact Your Credit Score

Your application itself isn’t what will hurt your credit score. With each application, however, a hard inquiry will be made by the lending company. When several hard inquiries are made over a short amount of time, your credit score will be negatively impacted. The good thing is that the impact is only short-lived. Be sure to submit your loan applications over the same time period, so drawn-out loan applications won’t continually impact your score.

 

Closing an Account May Lower Your Credit Score

When you refinance, your old loan account will be closed. You’ll then start over with a new loan, a new open date, and a blank payment history. Because of this, your credit score might get lowered. The good news is that, as long as your closed account was in good standing, the negative impact on your score is less than it might be otherwise.

As beneficial as refinancing can be, applying for a refinance loan will almost always lower your credit score. If you do refinance, focus on getting your credit score back to normal by making payments on time, giving your score time to improve, and paying your credit cards off in full each month. 

Deep Dish Pizza, Jazz, and Sports: The History of Chicago, IL

Deep Dish Pizza, Jazz, and Sports: The History of Chicago, IL

Reading Time: 4 minutes

With an estimated 2.7 million residents, Chicago has become the third-largest city in America. Whether you prefer to call it The Windy City, The Second City, the City of Big Shoulders, The City That Works, or The White City, Chicago’s plethora of nicknames are a tribute to the metro area’s rich and fascinating history. Before transforming into the modern city we know today, Chicago experienced a number of historical events that helped shape the city into the highly sought-after destination it is now known for. 

 

 

When was Chicago Founded?

As one of the largest cities in the American Midwest, Chicago was founded in 1830. The region was incorporated as a town in 1833 and later as a city in 1837. As the popular 1916 poem by Carl Sandburg put it, Chicago grew to become the “Hog Butcher, Tool Maker, Stacker of Wheat, Player with Railroads and Freight Handler to the Nation.” Chicago’s name first appeared in 1688 as “Chigagou,” which is an Algonquian term for “onion field.”

 

In 1779, Jean Baptiste Point du Sable, a merchant, and trapper acknowledged for establishing the trading post that developed into Chicago, became the first permanent settler in the region. The Chicago region is located along a water route that links the Mississippi River with the Great Lakes, making the area home for many tribes who used the accessibility to water for travel, healing, and food. It became a traditional homeland to several Native American tribes, including the Illinois, Miami, Potawatomie, Ojibwa, Menominee, and Ho-Chunk.

 

 

What was Chicago Before it Became a City?

Prehistory and Early Years

In 1973, two French explorers and missionaries, Jacques Marquette and Louis Joliet crossed the Great Portage, between Illinois and the Chicago River during their expedition. The first non-indigenous settler, Jean Baptiste Point du Sable, was a Santo Domingan with mixed European and African ancestry. In 1803, the United States Army built Fort Dearborn, located on the southern bank of the Chicago River. In 1812, however, it was decimated by an Indian raid during the Battle of Fort Dearborn. Four years later, it was rebuilt. Chicago remained a small settlement up until 1837 when it was officially acknowledged as a city. 

 

chicago history

Chicago as a Trading Center

The Black Hawk War of 1832 marked the end of the Native American resistance in the region. After being incorporated as a city in 1837, the population count reached about 4,000 people. It was the year 1848 when Chicago procured its first railroad and telegraph, helping the city become the transport hub for the U.S. Later two innovations surrounding the Board of Trade’s wheat grading standards and grain elevators revolutionized the way crops were sold at the time. By 1854, the city was recognized as the world’s largest grain port, with a population count of nearly 30,000 people. 

 

 

What Are Some Significant Historical Events in Chicago?

The 1886 Haymarket Affair

The Haymarket Affair, also commonly referred to as the Haymarket Riot or the Haymarket Incident, took place on May 4, 1886. At the time, strikes held by industrial workers occurred frequently, as workers fought to eradicate the dangerous working conditions, and low wages they were exposed to. On May 4th a labor protest rally near Haymarket Square took a turn for the worse when riots broke out and a bomb was hauled at the police.  

 

The violence resulted in at least eight deaths. While there wasn’t any concrete evidence, eight radical labor activists were apprehended and convicted of setting off the bomb. Four of the eight men were hung as a punishment. Instead of moving the agenda forward, the Haymarket Affair wound up being a major setback for America’s labor movement. It made fighting for rights, such as an eight-hour workday, arduous for organized protestors. 

 

The Great Fire in 1871 and its Rebuild

A fire that broke out in October of 1871 had left over 100,000 residents homeless, and one-third of Chicago destroyed. What sparked the initial fire remains unknown to this day, but drought, wooden buildings, and high winds helped fuel the massive flames. A majority of railroads and factories were untouched by the fire. 

 

World Columbian Exposition of 1893

In the late 1800s, the city of Chicago blossomed into a national retail center, producing a number of big business tycoons, like George Pullman, Philip Armour, Marshal Field, and Potter Palmer. In 1885, Chicago was introduced to its first skyscraper, which was 10-stories high. Later, architects like Walter Gropius, Ludwig Mies van der Rohe, and Louis Sullivan all contributed to the city’s expanding skyline. 

 

In 1893, Chicago held the World’s Columbian Exposition, attracting well over 20 million visitors. They dubbed it “White City” in honor of the Gilded Age buildings constructed alongside Chicago’s lakefront. The exposition buildings were so aesthetically striking that they inspired the launch of a new movement known as the “City Beautiful” movement. The focus was on incorporating Beaux-Arts design into American city planning.

 

chicago history

 

What Is the Status of Chicago Today?

Today, Chicago is still flourishing, with nearly 3 million people calling the city home. As the third-largest U.S. city, Chicago is replete with culture, sports, food, infrastructures, and many attractions suitable for all ages. One of the magical facets of this city is the 8,800 acres of green space and 600 parks speckled through the metro area. The Chicago Park District has earned the title of being the largest municipal park manager in the nation. 

 

The Windy City is also home to nearly 200 art galleries, 60 museums, and 20 neighborhood-sponsored art centers. It also houses one of the oldest zoos in America – the Lincoln Park Zoo, which still offers free admission into its facilities. Among the city’s attractions is The Museum of Science and Industry – the largest in its category, the Western Hemisphere. With all these sites to see, it’s no surprise that the City of Big Shoulders is a popular place for tourists and families alike. 

 

Chicago’s thriving economy and lively arts and culture scene are all a tribute to the city’s rich history. There’s nothing better than reflecting upon how the city was established, watching how certain events unfolded through the years, and seeing how Chicago has transformed into the beloved city we know today.