Credit Card Lowdown

A Credit Card Debt Survivor's Easy-to-Get Tips

Financial gurus say only people with low self-esteem make credit card faux pas - But I was a confident person, though not an expert, and was in control of my finances. I made all the regular payments on insurance and mortgages. Took out insurance for the family and myself and also lived a reasonably good life with a holiday every year.

Life was great till I saw how much my credit card debts were... I decided to take a good long look at my spending and repaying and let me tell you it wasn’t easy understanding and accepting the mistakes I made. Down the financial memory lane I was astounded at my bloopers. But with some good commonsense I managed to snuff out this sparking dynamite of a problem.

After some research I realized that paying the minimum balance on my credit card did nothing to my principal debt. So I learnt the ugly truth that the 2% or the now 4% minimum monthly payment mainly went only to the interest and only the rest to the principal. That means that I would never actually pay up the principal. Like my holiday bills will never be paid if I continue to make the minimum payment alone.

The thought of paying off the credit card companies for the next thirty years was scary. So I did what most people did in 2005 – refinanced my home with a cash-out option. With the extra cash paid off my credit cards with the highest debts one by one and kept up minimum payments on the one credit card with least interest and best features. You can imagine the pure pleasure in cutting up those paid up cards.

Today, my home maybe the collateral but I don’t default on the payments and whenever I buy on credit I make sure to pay back as much as possible of the purchase possible. So are you facing mounting credit card debts like I once did?  The key is to aim to make the maximum monthly payments on your credit card purchases and to remember to chuck the high interest cards.

Minorities face troublesome times as foreclosures rise

The last decade has been a good time for the housing industry, the mortgage loan industry and for people belonging to the lower economic strata of society. The housing boom during this period helped a large number of people take homes, which they otherwise may not have been able to afford.

And the fact that minority home ownership rates rose above 50 percent for the first time in 2004 is a laudable fact. But before we go into a back-patting mode, let us look at the deeper and murkier part of this entire story. Behind this success lies a disturbing trend. In the past few years areas with large poor and minority populations in places like Cleveland, Chicago, Philadelphia and Atlanta have experienced a sharp rise in foreclosures. In some cases, these have more than doubled, according to an analysis by The New York Times and researchers.

And this is not going to end anytime now. According to experts, this is only the first wave of financial distress and there is more to come. And the culprit in all this is the subprime mortgage, which initially seemed like a godsend and has now become a nightmare for the minorities.

Credit card abuse at Parks Department

This bit of news should teach us to be wary and very careful with our credit cards. Recently it was found that Parks Department workers misused special credit cards to cut through red tape. Ny1.com reports:

A report by city Comptroller William Thompson’s office found managers split up bills to stay under the spending limit on more than a dozen purchases, totaling more than $24,000.

Read more: Report Finds Parks Department Workers Misused Credit Cards

‘Touch-and-go' cards simplify payment process

Touch-and-go cards seem to have become the rage all over the country as now Citizens Bank plans to add this payment option to all its debit cards by June. This system allows customers to complete any transactions by tapping their card against an electronic reader and they don’t need to swipe it and sign a receipt. Boston.com reports:

The idea is also spreading to more unconventional places: MasterCard, which backs the Citizens cards and calls its technology PayPass, recently unveiled plans to conduct a trial of the payment system with the New York City public transit system. Visa is testing the idea of allowing people to make payments by cellphone for payments and might configure touch-and-go cards to work with vending machines so customers don't have to fish for change.

Read more: Citizens plans 'touch-and-go' cards

Canceling charges are difficult with automated payments

If you are one of those who make use of automatic payments to pay their bills, then here’s a bit of news for you. It can be extremely tiresome to cancel such arrangements.

According to certain debt counselors, lawyers and Better Business Bureaus around the country, the number of complaints from consumers is increasing considerably. Most of them complain about their inability to stop the recurring bills charged to their bank accounts and credit cards. One of the biggest problems is the confusing rule that is set down to change the mode of payment. And to make matters worse, these rules differ depending on whether your payments are linked to a bank account or credit card! Azcentral.com reports:

Banks say they aren't able to cancel recurring credit-card charges when a consumer has signed a long-term contract with a merchant, such as an extended gym membership. Meanwhile, credit-card companies Visa USA and MasterCard International say they've upgraded their systems to help banks and consumers more efficiently stop automatic payments.

Read more: Automated payments make canceling charges difficult

Simple steps to ease debt

While most of us do realize how important our credit rating is, a large number of people don’t know what to do to improve their ratings. Agreed, you could go to a credit counselor and work out the best solution possible. But if your debt burden is not too high, then you could use a few of these tips to get your credit score back on track.

Credit cards are one of the main reasons people fall into debt. They are easy to carry and use. But they also spell trouble if you don’t control your expenditure. So one of the first things you need to do is take one drastic step: eliminate credit cards from your daily life.

Sounds ridiculous doesn’t it? But stopping using them means you have an idea of how much money actually leaves your hands. Of course, in the short term it may mean your credit score gets affected, but in the end, you are better off knowing how much is spent and on what.

Next thing is to create a budget and set timelines within which you must have made all your essential payments like bills, loan repayments etc. Initially this may be difficult and you may be tempted to put it off, but it is best to get over this difficult part as soon as possible. If you find yourself incapable of creating a workable budget, then go get yourself some help. But don’t delay making one.

Sticking to your budget and living within your means is the next step. Difficult, yes but not impossible. All you need to do is keep your debt within manageable limits. As a rule, your non-mortgage debt payments should not be more than 15 percent of your pay each month. Use these simple steps and see your credit score rising.

Are you using plastic to pay taxes? Think again

And you thought you could only buy things with your credit card. Well, here’s some news for you: Now credit card issuers are encouraging people to use their credit cards to pay federal taxes. And an increasing number of people are falling for this easy trap. Check out these figures: In 2005, nearly 1.5 million taxpayers paid federal taxes on their credit cards or MasterCard- and Visa-linked debit cards. According to IRS data, this figure is up 54 percent from 2004!

And to make the offer even more lucrative, credit card companies like Chase and United Airlines are now awarding double miles for each dollar of taxes paid on their United Mileage Plus SignatureVisa card. Not to be outdone, American Express also has similar deals on its Delta and Starwood credit cards.

Now should this added convenience make us taxpayers happy or should we be wary and read between the lines before using plastic to pay taxes. The second option is more viable. And there are many reasons against using plastic, of which the most prominent is that the rewards from credit card companies are not going to stop them from charging you interest rates. These rates can go up as high as 30 percent if you don't pay off your credit card bill every month.

Another problem with using credit cards is that in addition to the tax, you will have to pay an extra 2.49 percent of the federal or state tax. This fee goes to third-party companies that process the transaction.

Despite all these problems associated with using credit cards, the number of people availing of this facility is only increasing. According to experts, the number of tax payments charged to credit cards will rise even further in 2006.

Three simple steps to debt freedom

According to economists, getting out of debt is as difficult as trying to quit smoking. Extremely difficult, both these tasks require a great amount of determination and the will to break the underlying patterns of behavior. But of course, there is help and following these simple but difficult steps will ensure that you are debt free for life. CNN.com reports:

Play let's make a deal Call your current card companies and explain that you intend to transfer your balance to another issuer unless your rate is lowered, suggests Scott Bilker, author of "Talk Your Way out of Credit Card Debt." If your credit score is above about 750, you should be able to get your rate under 10%, he says. And, he adds, you should still be able to knock a few points off your rate even if your credit score is as low as 650.

Read more: A smart credit-card plan; the perfect paydown strategy; 11 moves to consider.

Choose your low interest credit card carefully

Have you been duped into using what seemed to be a low interest credit card and were shocked to see the rates jump at the end of the period? You are not alone. Thousands indiscriminately use their cards during the introductory period, believing that the rates are low. And then they are jolted awake by the bills.

But there are ways to counter this problem. One of the first things you should do when going for a low rate credit card is read the fine print. Don’t get taken in by the rates. Read carefully before you accept. DailyIndia.com reports:

The best low interest rate credit card will charge a low rate of interest and have low annual fees; several purported low interest rate credit cards have an annual fee as high as $ 60. This can offset any savings that may accrue from the low rate of interest.

Read more: Which low interest credit card is right for me?

Easy steps to improve credit

Your credit history isn’t so very good and you need some help cleaning up your record? Well, here are a few tips from a couple of experts on how to better your record and repair your credit score. Localsource.com reports:

As a rule of thumb, financial experts say that non-mortgage debt payments should not exceed 10 to 15 percent of your take-home pay each month. Too much current debt will make lenders thing twice about extending you new credit.

Read more: These Easy Steps Can Help Improve Your Credit

Freddie Mac extends foreclosure hiatus

National mortgage company Freddie Mac recently announced that it was extending its suspension of foreclosures until May 31 in 21 parishes and counties in Louisiana, Mississippi, Alabama and Texas – the states that suffered the most from hurricanes Katrina and Rita. Freddie Mac also plans to lift the moratorium on foreclosures in areas that experienced the least damage. 2theadvocate.com reports:

Freddie Mac, however, is strongly encouraging servicers to extend mortgage relief to borrowers with Freddie Mac loans on a case-by-case basis regardless of zone. Freddie Mac authorizes servicers to provide a wide range of mortgage relief to storm victims, including forbearance for up to one year from the date of the disaster.

Read more: Foreclosure hiatus extended in areas

Valentine's Day and credit card woes

Valentines day and most people plan outrageously priced gifts for their special someone. Many couples hope to go on a romantic outing and others are tempted by the umpteen online ads that pop up with roses, chocolates and diamonds.

Credit cards are probably the easiest way to buy and credit card companies usually tie up with hotels and retailers and try to woo you into buying that special gift for your loved one. February begins with a lull in consumer buying after holidays, but this picks up during Valentine's Day. But let's not forget that this month also brought us our huge credit card bills in the mail.

Its time to rein-in those extravagant gift ideas in the name of love. It's  universally true that love sours when finances crumble. Most spouses may not be happy if you add to your already escalating credit card bills. The interest rates on credit cards are also increasing and it is the most convenient way of spending. All the freebies might be very attractive but your credit card bills could eventually snuff out all the romance.

However, before you splurge on your love you could check your credit report and credit scores. You can get your credit reports free every 12 months now. Dealcatchcer.com has found the Free Experian Credit Report that offers free credit reports to anyone who signs in to their credit check program can get their report.

You will be charged nothing if you cancel your membership within a month. Plus for just an extra $5 you are even given your credit score. Basically you are better informed about your credit status and also detect major changes and identity frauds. You can also do this without lowering your credit score. It also gives you a chance to detect mistakes and dispute them.

Surveys conducted by credit card companies themselves say that 57 percent of consumers secretly hope they will be gifted a surprise Valentine getaway trip abroad. But it's good that most consumers surveyed also think it's foolish to use up an entire credit card's maximum even on these romantic indulgences.

Credit Cards: Late Fees

It can be very tricky avoiding late fees on credit card payments mainly due to the procedures involved. It takes 5 to 7 days from the time your payment is actually received by the credit card company till it is reflected in your account. In case your payment is being made by certified or air mail, checks are stapled or bound with a paperclip to the remittance stub, or include a cover letter, another couple of days are sure top be added before your payment reaches your account.

The reason for the delay is that the sorting machine has a conveyor belt that is just able to accommodate an envelope, enclosed check or money order and remittance stub. Everything else, even a mere paper clip requires manual sorting to be done.

It usually takes 7 to 10 days for your payment to be credited if sent by post. However your bill may only be mailed as late as 10 days before the due date. So avoiding late fees can prove nearly impossible. One way to avoid delaying your payment unintentionally or otherwise is to pay online or over the phone. Credit card info.com reports:

The Company processes millions of payments each month through huge sorting machines (in training we saw a short video of this process). From the time we ACTUALLY receive your payment in our warehouse to the time the payment posts to your account takes 5-7 days.

Merchant Charges

The fact is, it is possible that merchants charge credit card users more than cash customers for the same purchase. Until 1984, the Federal Truth-in-Lending Act outlawed surcharges on credit card purchases. Since then however, no federal law has come up to take its place, even though other provisions of the law are still valid. Bankcard Holders of America allow certain states to prohibit surcharges.

While Discover permits surcharges for the states not mentioned, Visa and MasterCard rule against them. In the case of American Express, the practice is discouraged but for merchants entertaining MasterCard or Visa, it is prohibited due to their policy of disallowing discrimination.

The loophole that occurs in this context is that cash discounts can be offered by merchants. The implication is that you are not made to pay more than the price tag for using a credit card but they may charge less for cash payments. In the fine print of certain companies all prices reflect cash discount for card users to pay a certain amount more than the specified price. Despite being legal, this contradicts the essence of the law or regulations. This may exclude the service fee for services like tele-booking of tickets, but in person, higher charge than cash is not allowed. Credit card info.com reports:

Can the merchant charge credit card users more than cash customers for the same item? In a word, maybe. In a few more words-- probably, if the merchant goes about it the right way. The Federal Truth-in-Lending Act prohibited surcharges on credit card purchases until 1984; since then, there has been no Federal law on that subject. (Other provisions of the law are still in force.) The states of CA, CO, CT, FL, KS, MA, ME, NY, OK, and TX have laws against surcharges, according to Bankcard Holders of America.

Checking Your Credit Report

As far as your credit report is concerned, what you don’t know can hurt you. From credit card companies to landlords and employers, it can make or break your future. If it proves that you have been responsible in the past, in all likelihood you will be responsible in the future as well. Any major financial decision including a new home, job, credit card, etc means checking your report.

On receiving your report, go through it in detail. Anything negative on the report should be corrected right away, like unpaid bills. Once you have paid the dues, have the concerned business notify the credit reporting agencies of the fact.

You also need to check your report for accuracy. This includes mention of accounts you didn’t open, charges you didn’t make or delinquencies you are not responsible for. If you spot any trace of fraud, waste no time in getting in touch with the credit reporting agencies, to inform them and request a fraud alert in your file.

Get yourself the 3-in-1 credit report that displays your credit history as per the three main credit reporting agencies. You also have the option of Equifax Credit Watch Gold or Silver offering early alerts on any new questionable entries. It also offers up to $20,000 in identity theft insurance according to the program. Credit card info.com reports:

Your credit report is used by many different lenders and other entities to make decisions about you. When it comes to your credit report, it’s what you don’t know that can hurt you. Credit card companies, mortgage loan companies, auto loan and insurance companies, even landlords and employers check credit reports to find out about your credit past. The reason? They figure if you were responsible in the past, you will most likely be responsible in the future.

What is a Credit Report?

Of the three main credit reporting agencies in the US, Equifax keeps records of your credit history. The information is collected on a continuous basis from all the sources you have availed credit from.

This information is available in the form of a credit report which are purchased by potential lenders, employers and landlords to determine whether they find you suitable as a candidate.

The credit report carries all your personal details that you’ve mentioned in your credit applications including name, addresses, social security number, date of birth and employers.

The majority of the information on your credit report is mainly on details of credit accounts that you have opened in the past. The date of the account being opened, credit limit, loan amount, payment terms, balance and history of payments are all included.

The report also records the number of times your credit report has been sought whether by a lender, service provider, landlord or employer, which remain for upto two years.

Public records from government sources including liens, bankruptcies and overdue child support may also be on the credit report for a period of 7 years. Credit card info.com reports:

Equifax is one of the leading credit reporting agencies in the United States -- there are two others. Each maintains information about you and your credit history. This information is gathered on an ongoing basis from many sources that have extended you credit.

Control credit card use

Think of debt as a disease for which credit cards are the most common cause of contacting it. Have you ever heard of anyone who made their fortune by borrowing money for personal expenses?

Reconsider the purchases you’ve been making with your credit card by thinking of them in terms of cash purchases. Anything you can repay in 25 days should be avoided.

The only purposes when it’s acceptable to use credit cards are for safety and convenience.

Online purchases in particular should not be made with debit cards as it gives thieves and errors the opportunity to empty your checking account directly.

Having no balance on your card can be advantageous as you can get a card that doesn’t charge an annual fee and offers a grace period before the interest rate is activated.

If you are in the habit of carrying a balance, you should get yourself a card with low interest rate. The annual fee is of little consequence.

At most carry no more than two or three credit cards at any time. Not only are they unnecessary but losing or being robbed of them would mean paying $50 per card. Credit card info.com reports:

Debt is a disease and credit cards are one of the easiest ways to get sick. Nobody ever got wealthy borrowing money for gifts, clothes, restaurants, entertainment, or travel.

Believe it or not: Consumer borrowing against credit cards slowing down!

If you thought that the doomsday predictions that you would sink into a debt hole did not apply to you, then you may have finally been vindicated. According to recent findings, in 2005, consumer borrowing rose at the slowest pace since 1992. This was because Americans relied less on credit cards and more on loans against the value of their homes. Seattlepi.nwsource.com reports:

Consumer borrowing with credit cards slowed over the past five years as Americans tapped lower-cost home-equity loans. The share of cash-out refinancing in the fourth quarter for loans owned by Freddie Mac rose to the highest level in five years, suggesting homeowners are still using property to finance spending.

Read more: Consumer borrowing with credit cards slows

Home-loan fraud under the scanner in Ohio

If you live in Ohio, you must dread having to get a mortgage loan. People in Ohio can now breathe a sigh of relief. For long the predatory lending tactics and high foreclosure rates of mortgage loan companies have plagued them. Now, help seems at hand. Ohio seems to be taking its bid to crack down on these two problems quite seriously. Republican state senators recently unveiled a compromise bill. This proposed bill plans to expand the Consumer Sales Practices Act to cover most mortgage brokers and loan officers.

The changes proposed in the bill could give the Ohio attorney general's office authority to prosecute offenders. This will overcome the problems that the Department of Commerce faces due to weaker regulations. News.enquirer.com reports:

Ohio's nearly 3.2 percent foreclosure rate at the end of third-quarter 2005 is the nation's highest, according to the Mortgage Bankers Association. The national average was just under 1 percent.

Read more: Ohio bill targets home-loan fraud

A look at the Chase Platinum

Did you know that there are nearly 1000 Chase credit cards for consumers to choose from? If you didn’t, then join the gang. Not many people are aware about this awesome number. Most of these cards are ‘affinity’ cards. This means they have direct tie-ins with certain types of stores or manufacturers. While you may have encountered a few of these cards at some point of time, let’s have a look at one card that seems to stand above the rest of the Chase cards.

The Chase Platinum is the one of the most popular Chase cards. You can get it as the Chase Platinum MasterCard or Chase Platinum VISA card. Its plus points include 0% APR for the first 12 months. It has no annual fee; a fixed low rate once the introductory period is over; and lots of other benefits.

Check out this site to avoid foreclosure

For those of you who are facing the scary prospect of foreclosure, help may be at hand: in the form of a website! StopForeclosureNow.com is a new, free Internet resource guide that attempts to help homeowners avoid the foreclosure of their homes. Powerhomebiz.com reports:

"What was worse there were unscrupulous investors and lenders out there that took advantage of them and literally stole their home from them. If these unfortunate people knew the rules, and knew their options, they could have avoided this whole situation entirely. That's why I created this site, " said Bob Gatchel the founder of this site.

Read more: New Website Shows Homeowners How to Avoid Foreclosure

Americans are drowning in credit card debt

Most Americans would like to think that this great nation is a great example of a diverse nation. But there is one thread that unites all Americans across great divides: we just love to spend money. Americans have increasingly been spending more than what they earn. And the trend is worrisome to say the least. According to a poll conducted by ACNielsen, Americans, along with the Portuguese, are the world’s worst savers!

And there are more statistics to increase the worry lines on your forehead. According to the Federal Reserve, U.S. consumer debt stood at $2.16 trillion as of October 2005. Enidnews.com reports:

"We see clients with $60,000 in credit card debt, " said Jennifer Delcamp, CCCS vice president and a former counselor. "That’s not uncommon. We don’t say credit cards are bad, we try to teach people to use them responsibly. "

Read more: Credit cards, medical bills are a key source of financial woes

Credit bureaus display English bias

Accessing your credit report is one of the best means of controlling fraud and checking identity theft. But how is the credit report useful to non-English speaking or reading people? Hispanics, who are unable to read or write English, are learning the hard way that credit bureaus refuse to operate in any language but English. Sun-sentinel.com reports:

Two of the three major credit bureaus don't make credit reports available in Spanish. "It's very tough if you have no English or very limited English to get through that Web site," said Linda Sherry, director of national priorities at Consumer Action, a San Francisco-based group.

Read more: Hispanics who don't speak English find it difficult to check credit reports

iMAX Business Solutions expands services

iMAX Business Solutions, a company that specializes in providing high risk merchants with technologically sophisticated and secure payment gateways for all types of high risk merchants, recently announced the expansion of their High Risk Merchant Account Program. This program allows businesses that are considered too risky for most banks and credit card processing companies to process without limits. Sys-con.com reports:

"We offer our merchants a complete solution to all there offshore needs," says Scott Burke, President, iMAX Business Solutions. "We have a staff of professionals that are zeroed in on the high-risk arena. We offer offshore company formations, offshore bank accounts, and most importantly, secure offshore direct and third party merchant processing accounts for high risk businesses".

Read more: iMAX Business Solutions Expands Their Services to Include High Risk Merchant Accounts and Offshore Credit Card Processing

Transferring your credit card balance? Beware of transfer fees

If you’ve been using credit cards, and have a debt that is big enough to cause you some pain, then you are a prime candidate for this game. Here you are given tantalizing offers of transferring your credit card balance to a new card at zero percent interest for six months. Sounds just too good to be true, right? And yet, you cannot resist the temptation. After all, this way, you can transfer all your debt to the new freebie card and avoid paying interest for some more time.

But if CardRatings.com, a consumer-oriented Web site, is to be believed, you’re better off staying miles away from such offers. Card issuers attach a fee called a transfer fee every time you move your credit around. These fees are a percentage of the amount transferred and the catch here is that no cap is spelled out for the transfer fee in the card agreement. So, essentially if you plan to put $10,000 on your new card, an uncapped 4 percent fee would put you down by $400!

High credit card debts? Use these tips

According to a report released by the American Bankers Association, most Americans are behind on credit card payments. This may not come as news to you, but the fact that the increasingly deplorable debt situation of most Americans is worrisome. According to the report, the months from July through September 2005 saw the number of credit card accounts 30 days past due — or more, reaching its highest levels ever.

Agreed that the times are bad, there is a recession on, and natural disasters have taken their toll and well, things are not as good as they used to be. But instead of wallowing in self-pity, we can do a few things to better our credit standing. One of the most important things to do is take control of our credit card debts. They are the most debilitating and difficult-to-pay-off-debts. But there are things you can do to avoid or wipe out credit card debt. Michigansthumb.com reports:

Investigate consolidating debt onto one card. This may be more advantageous to you in your effort to wipe out debt.

Read more: Tips for avoiding, exiting credit debt