Beware Of Credit Card Changes

As many credit card holders know, changes resulting from the CARD Act will become effective on February 22, 2010. With a little less than a week before new regulations restrict how credit card companies conduct business, it is important to review just what changes are taking place. The credit card industry is one which enjoys billions of dollars in profits each year. Despite the fact that new rules and regulations are going in place to protect the consumer, you can bet the credit card companies will do their best to make up lost revenue in other areas. Here we look at three important changes you must be aware of to avoid paying more than you should on credit card purchases.

• Loopholes- The Credit Card Accountability, Responsibility and Disclosure Act (CARD) was enacted to add protection for consumers in a highly unregulated industry. Unfortunately there are several loopholes in the law that can end up costing you more money. One such loophole is in the provision for advance notification. In this provision, card issuers must give advanced notice, 45 days to be exact, for significant changes in terms. This included fees and finance charges. Credit card companies are not required to give advanced notice on credit limit decreases, rate hikes due to payments that are 60+ days late or the expiration of promotional rates. This means it is up to you the consumer to pay close attention to every detail on your credit card statement to avoid paying more money.

• Over the limit- In order to be charged an over the limit fee you must give permission to allow over the limit transactions. If you do not give your permission to allow over the limit purchases, it does not mean necessarily mean a transaction that would put your account over the limit will be denied. If this situation occurs you would have grounds to deny the over the limit fee. If you opt to allow over the limit transactions on your account, you must be informed of the over the limit fee and are only allowed one over the limit fee per billing cycle.

• Annual Fees- Despite speculation that annual fees will become more prevelant as a way to boost revenues, their reappearance has been on the slow side. With that in mind, understand that your credit card issuer can implement an annual fee at any time as long as they provide advanced notice.

Many of the changes taking place within the credit card industry will help consumer moving forward. If you currently have large balances, you are advised to pay down your debt as quickly as possible to avoid being at the mercy of the credit card companies. In the meantime, managing your credit responsibly and paying close attention to every piece of information provided by your card issuer will help you avoid additional fees and penalties that are still a factor.

Money Quiz: Answers to Keep You Debt Free

Starting out on the right financial foot is a great way to make headway into a solvent economic future.  Take the following quiz to see if you are on the right track to financial success.

1. Do you have a budget set up?
Creating a monthly budget and sticking to it is a great way to track your spending.  Keeping a monthly tally of your expenditures will outline where you spend and where you can trim your spending.

Track your spending including all monthly expenses such as mortgage, electrical bill, insurance, and other incidentals such as morning coffee and other special treats.  Keeping systematic record of expenses and budgeting your income, will prevent overspending and collapse into debt.

2. Do you use credit cards  because you have no cash?
Having a credit card for emergency purposes and major necessities is a great way to get out of a bind but for daily regular expenses try using cash.  Using cash prevents over spending and cuts down on discretionary spending such as dining out, entertainment or other unnecessary expenses.

Using a credit card can cause card balances to be ‘run up’ unnecessarily.  Their convenience is proportional to the card holders overspending.  Avoid over spending, cut up the cards and pay with cash.

3. Do you pay off the card with the highest rate first?
Reduce your monthly payments by paying off the card with the greatest interest rate.  Once it is paid off, close it out and cut up the card.  Continue to do this with the card with the next highest monthly interest until you have only one card with a favorable rate.

Also, pay down cards to 50 percent of the card limit.  Balances higher than 50 percent of the limit will reduce your credit score.

4. Are you considering taking on a second job?
Part time work for short term gain may provide some respite to your debt woes.  Taking on a second job to pay off outstanding bills will provide a sense of control and will increase your income.

Getting out of debt and staying out of debt is as simple as spending less than you make.  Spending less can be done with discipline and control.  Create a budget and stick to it and you will be on track to stay out of debt.

Living Debt-Free Can Be Bad For Your Credit Score

Imagine working so hard to pay off all of your debts only to discover that living a debt-free life is bad for your credit score and other aspects of your financial life. As bad as it sounds, it is exactly what happens to many who have done away with credit cards and paid off their loans. Unfortunately, for as hard as people work to get out of debt, the world seems determined to keep people in debt in order to reap financial benefits.

Why Does It Happen?
Credit scores are based on the different factors of your financial life. The score is supposed to be a reflection of how responsible you are for paying back debts in a timely manner and how well you manage your financial obligations. When your credit report has no information to gauge, your score goes down considerably. In theory, a person with lots of debt who still pay on time may have a better score than someone without any debts at all. The credit score formula involves a mix of credit card account activity, mortgage loans, student loans, and other types of extended credit. If you have none of those account types, you have nothing to calculate.

Why Does It Matter?
There are many who feel a credit score is worthless because they are living debt-free and have no plans to apply for a line of credit or a loan in the future. However, that assumption can be a costly one. Nowadays, there are many situations were a credit score will make a big difference in your life such as when applying for a job, renting an apartment, or when you purchase vehicle insurance. These companies will often pull a credit report and base rates or job offerings on your credit score because the score is meant shed light on credit risk factors. For someone who is responsible enough to have no debts, an increase in insurance premiums is boldly unfair.

What To Do About It?
If your credit score is suffering because you are debt free, there are things you can do to help the situation. It may not be the most desirable way for you to fix your finances but when it comes to necessity for insurance purposes, you may not have many other choices. Here are some things to consider for upping your credit score:

Get a Credit Card
You may have closed your credit card accounts long ago but using a credit card for normal, everyday purchases and paying off the balance in full at the end of the billing cycle can signal a jump in your score in a few months time.

Apply for a Loan
It sounds crazy to apply for a loan when you haven’t a need for a loan but it can help you get your credit score back on track. You can visit with your bank or credit union and apply for a small personal loan.  A loan officer may be able to advise which is best for your situation. The money loaned can then be deposited into an account and all monthly payments can be automatically withdrawn each month. This may not be the best solution for everyone but it is an option.

Consumers Beware of Online Christmas Criminals

As holiday shoppers across the nation work on their shopping lists and prepare to dive into Black Friday deals, cyber-criminals are also getting prepared to take advantage of harried consumers who are more concerned with getting all the gifts than they are with their personal security. Online shoppers are at risk for losing money thanks to carefully masterminded plans of attack which allow them to gain access to personal, credit card, and banking information.

Here is a list of the top 6 scams of the online holiday shopping season:

The Invoice Fake-Out
This scam involves thieves sending fake invoices or package delivery confirmation emails that look like they are from major shipping agencies or the US Post Office. These emails will request that customers input credit card information or open an online account in order to get their package delivered properly. That information is then used to gain access to confidential account information and steal money or identities.

A Not-So-Merry Greeting Card
Emailed greeting cards are a popular way to share holiday thoughts with family and friends but criminals are using them to their own advantage. An email is generated and sent out that includes a link which contains malware. When the card recipients click on the link, they are putting themselves at risk. This is an especially tricky scam because so many people are trying to save money by cutting back on extras like greeting cards so it may be natural to think an ecard from Cousin Jean is perfectly reasonable.

Open Airwaves Are Dangerous
Hackers can tap into open WiFi networks or open public computers and steal the information they are able to view. When shopping online, make sure you make purchases from secure computers and secure sites.

Friendly Networking
Social media sites are a so popular these days, it can be easy to fall for a ‘friend request’ email that appear to be from one of the many well-known websites. The emails will request you click on a link to ‘accept’ the request but in doing so, malware can automatically be installed on your computer to steal your personal information.

Not-So-Jolly Holiday Sites
Criminals will often create websites that appear to be selling special holiday-themed products such as ringtones or screensavers. When you purchase and download the files, your computer can be infected with malware or other dangerous programs that can steal your personal information or crash your computer.

Banking Heists
While this scam happens at all times of the year, the holidays are an especially vulnerable time to perform this maneuver. An email is sent out that looks officially like something your bank would send to customers. However, the email instructs readers to enter personal banking information in order to confirm their account, otherwise the account will no longer be accessible. This kind of email can scare consumers into doing as they are told for fear of not being able to access money during the holidays. Remember that no legitimate bank or business will ever ask you to submit confidential information via an email. If you are unsure, contact your bank directly. 

Here is a quick reference list of how to protect yourself online during the holidays and at any time:

• Never click on an links in an email. Contact the company directly if an email is asking for information.
• Use your head and remember the old saying ‘if it looks too good to be true, it probably is”.
• Update your security software on your computer frequently so you are fully protected at all times.
• Shop only on websites and networks that are secured. If you have a WiFi network, be sure to password-protect it.
• Change passwords and make them strong. Don’t use obvious words to create passwords. Instead use a combination of numbers, letter, and symbols to secure your information.
    

Money Management Tips For 2010

People who have wrestled with long standing debt often find themselves facing an unsure future once that debt has been paid off. The reason for this dilemma is the fact that most people who have been dealing with debt for months or even years have no idea what to do with that “extra” cash that is now available in their budget. If you are recently debt-free and not sure how to proceed in the future, the following tips can help you manage your money in the recovering economy.

• Debt- Anyone who has successfully paid off high interest debt (or those currently in the process) understands how long and frustrating the journey can be to debt-free living. With that being said, it is imperative you remember that journey as you move forward in the future. It is true that many people end up in debt for reasons beyond their control, however the rest of the population can usually blame only themselves and poor money management. Avoid future debt whenever possible and tread carefully with credit cards in the coming months. New regulation that will be in place in 2010 should provide some protection to consumers, but those who have historically had trouble managing credit should avoid incurring debt regardless of new rules.

• Savings- Debt is the four letter word that often stands between financial independence and living paycheck-to-paycheck. Once debt has been eliminated, consumers have to deal with an infusion of cash in their daily budget. Do not waste this opportunity to build your savings. The current economy is not offering high yields for savings right now, however this should not discourage you from shopping around for the best interest rate offered for traditional savings accounts. After building an emergency fund, you may consider short term CDs or other savings vehicles that do not tie you into long term commitments. Opportunities for better interest rates are likely right around the corner as the economy improves in upcoming months.

• Rebuild your credit- As consumers and lenders alike gain confidence in the recovering economy, a good credit score will be necessary should you need to borrow money to buy a home or automobile. Take steps today to begin the long process of rebuilding or improving your credit history and credit score. This will help set you apart from the rest of the pack in qualifying for more lucrative terms and conditions for future loans.

Everyone is struggling to find level ground in the wake of the recession. Fortunately all signs indicate the recession is in fact over, however that does not mean things will immediately go back to “normal”. It will likely take many months or years in some cases for consumers and businesses alike to feel confident in the economy. By following these tips you can feel comfortable that you are on the right path the long term financial security.

 

 

How to Get A Credit Card With Bad Credit

With consumer debt on the rise, it’s not surprising that many people’s credit scores have dropped. Even worse is that changes in the credit industry have made it even harder to achieve and sustain a good credit score. What once was considered a great score is now, at best, mediocre. Consumers who are interested in obtaining a credit card but who have problems with their credit may not be eligible for the best credit card offers on the market but there is still hope.

Here are some tips for getting a credit card with bad credit:

Shop Carefully
There are many companies that will advertise credit cards especially for people with bad credit. However, consumers need to be wary of these promotions and read the fine print. There may be creditors willing to give you a credit card but at an interest rate or with terms you can not afford. Do a search and comparison shop for offers of credit for people who have low credit scores and read the agreement carefully before committing any card.

Go Secure
Secured credit cards are a good way to not only obtain a credit card but also to help rebuild your credit if used responsibly. A secured credit card typically requires that an account hold deposit money upfront into an account with the credit card company. The amount deposited into the account initially is your line of credit. You need to use the credit card responsibly and be sure not to overspend. Regular deposits and active use will be reported back to the credit reporting bureaus which can actually improve your credit score. After regular use of a secure credit card, you can build your credit back up enough to qualify for a traditional credit card.

Get A Signer
If your credit is in bad shape or have not established any kind of credit history, you may consider asking a parent or other relative to cosign the application. The co-applicant needs to have great credit and with their credit rating can help you become eligible for your own credit card.

The drawback to having or being a cosigner is that you have to stay on top of your game and use your credit card wisely by making payments on time each month and never going over the credit limit. Otherwise, not only will you suffer credit-wise, your co-signer will too. This arrangement can put a lot of strain on a relationship and it is advisable you look at all your alternatives before asking for a co-signer.

Re-Work Your Credit
Patience is a virtue. If you can adapt to the mindset that you can wait to re-establish your credit, fixing your credit before applying for new credit. Pay off your debts, review your credit report for inaccurate information, and stop spending. Little steps now can lead to big credit fixes in the long run, enabling you to get better deals and interest rates when you are ready to apply for a new credit card.

Rebuild your bad credit easily with these credit cards

Sample Letter: How To Ask for A Lower Interest Rate

With the recent incidents of credit card companies raising interest rates, even on the accounts of excellent customers, many consumers have begun to fight back and are working to get a reduction. Getting a reduction on your credit card interest is not impossible, provided you are a good customer, you pay on time all the time, you have a good credit score, you pay more than the minimum each month, and you do not have a high debt-to-income ratio.

Here is a sample of a letter you can modify and send to your credit card company to request a lower interest rate:

Date

Credit Company Name
Address
Address

Re: Account Number #_____________________

Dear [Name of Credit Card Company]:

I am writing this letter to request a reduction in my current interest rate of ___% to a more reasonable rate of ___% so it is more inline with the current market rate. It has come to my attention that my interest rate has jumped from ___% to ___% in a period of ________ months.

I have visited the websites of several competitors and notice that they are offering an interest rate much lower than what I am currently receiving. [Mention specific examples of other credit card companies as well as their rates.]

I have been a solid, long-standing customer with your company for ___ years and would appreciate your consideration of a lower rate on my account. I feel the increased rate is unfair considering my long-standing history. You will find that I maintain not only a good credit history in general but I have an excellent history of payment with your company.

I would appreciate your consideration of a lowered rate at this time. I would like to remain a loyal customer with your company. If you can not extend a reduction offer, please advise as soon as possible, as I am considering accepting several offers from other card companies who are offering much lower interest rates as well as balance transfer options.

Sincerely,

[Your Name]
[Contact Information]

You can choose to send your letter certified with a return receipt to be sure it has been received by the card company. Give it some time but be sure you do a follow up with the credit card company in about 3-4 weeks by phone if you do not hear from the credit card representatives. If you are still not getting any response about your request, it may be time to start shopping around for a better card with a lowered rate.

Since you have already put the word out to your credit card company about changing companies, be ready to do what you said you would do. With your good credit history and score, you should be able to qualify for a better card. Remember also that you should not rush to close out the current account. Leaving it open but not using it actively will keep your credit score up, which is essential when you are applying for new credit.

How To Negotiate Your Own Credit Card Debts

If your credit card balances are starting to pile up much too high for you to manage, it may be time to take a step forward and ask for assistance. There are now many resources that are available to consumers who are burdened by too much credit card debt. There are companies that will help you settle your debts with lump sum payments and there are debt consolidation programs that help you reduce your monthly payments. Both methods for debt reduction are effective but not all people will be eligible for or able to commit to such programs.What YOU can do is attempt to negotiate new terms on your credit accounts to make life easier for you.

So how can you reduce your debts effectively when you owe money to your creditors? First know that credit card companies are competing for business and many will be willing to work with you. Don’t be afraid to contact your credit card company directly and ask them to work with you on the following issues:

Negotiate the Interest Rate
Many people fall into financial difficulties because their credit card companies raised the interest rates on their accounts. These high interest rates can be negotiated to a lower rate that will save you money each month. Many consumers do not realize that they can contact their credit card companies and ask for a reduction in interest rates. Cite the better rates at another credit card company and don’t be afraid to consider making a switch if your current company is not willing to work with you.
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