Credit Card Lowdown

Seven steps to destroy credit card dependence

According to the latest estimates, Americans are now carrying $683 billion in revolving credit card debt – the outstanding unpaid balances on which people pay interest! And worse, according to a report by Cambridge Consumer Credit Index, only 13% of Americans with an outstanding balance could afford to pay more than half the balance. Moneycentral.msn.com reports:

If you’re overwhelmed with debt, the economy is giving you some breathing room now. Take advantage of the upturn to liquidate your debt. The next time around, you might not have this opportunity. There’s still a push in Congress for more stringent bankruptcy legislation. And if interest rates start to rise, the burden of variable-rate credit cards and mortgages will become heavier to bear.

Read more: Trapped by debt? Free yourself in 7 steps

Man uses stolen credit cards for Internet shopping spree

Here’s one more reason why you should be wary of identity theft. Recently, a Greenridge man confessed to using stolen credit cards to buy merchandise online and ripping off an Internet company for more than $18,000! Silive.com reports:

According to court documents, Terrill D. Johnson, 26, of Ilyssa Way, told investigators, "I wrongly took customer credit card receipts and used them to purchase a large amount of items for myself through the Internet -- Amazon.com -- on my computer."

Read more: Court papers: Man said he used stolen credit cards for Internet shopping spree

Your credit card is monitoring you

You probably don’t know that when you travel abroad, your credit card company monitors you through your use of their credit card. Credit card companies usually check on you if their computers detect an abnormal pattern of use. Msnbc.msn.com reports:

As credit card fraud has become more global and more sophisticated, so have efforts to ferret out illegitimate charges. Credit card companies have invested heavily in sophisticated anti-fraud computer software, which uses a complex algorithm to analyze the pattern of transactions, weighing such variables as dollar amount, time of day, day of the week, merchant category and the country in which the charges are made.

Read more: Your credit card is watching you

Foreclosure-prevention forums on the prowl

As interest rates rise and people find it difficult to repay their loans, foreclosures are becoming more common. This is happening more in the case of people who are already living on the edge and have probably bought their homes using the much-reviled sub-prime mortgage loans. So, they find it doubly difficult to repay their loans and are forced into foreclosure. My original assumption was that there probably was no easy solution to this problem. Of course, the solution is not easy but the fact that there is a way to solve this crisis is welcome enough. As these foreclosures become more of a norm than an aberration, many of the people involved in the business are beginning to feel the pinch.

Now a group of 70 businesses in Columbus, Ohio, have set up a task force to try to reduce the number of foreclosures in the city. The group plans to host neighborhood forums that will provide information on foreclosure issues. The task force has been planning the forums since December. The group is led by Franklin County Treasurer Richard Cordray and includes realty agents, builders and housing agency representatives.

This youth brigade is financially savvy

Holidays are a time for overspending; for just forgetting how much money runs out your pockets. And when you come back from that lovely vacation with that beautiful tan, you are brought back to earth with a thud – thanks to your credit card bills. While popular media would love to have us believe that this is what the youngsters of today are up to, reality is something else altogether.

I know this sounds incredulous – okay, so some of us do overspend, but we do have more brains than our parents and seniors give us credit for. And we do know when enough is enough. So, while there is the occasional story of maxed-out credit cards, what you will most probably see now are 20 and 30-somethings who know what they are about and know where their finances are headed. And some of them have learnt their lesson the hard way – by battling enormous credit card debt. Mercurynews.com reports:

The others I spoke to said they spent only what they can afford to pay back in full when the MasterCard and Visa bills start coming next month.

Read more: Some young gift buyers set to pay bills

This youth brigade is financially savvy

Holidays are a time for overspending; for just forgetting how much money runs out your pockets. And when you come back from that lovely vacation with that beautiful tan, you are brought back to earth with a thud – thanks to your credit card bills. While popular media would love to have us believe that this is what the youngsters of today are up to, reality is something else altogether.

I know this sounds incredulous – okay, so some of us do overspend, but we do have more brains than our parents and seniors give us credit for. And we do know when enough is enough. So, while there is the occasional story of maxed-out credit cards, what you will most probably see now are 20 and 30-somethings who know what they are about and know where their finances are headed. And some of them have learnt their lesson the hard way – by battling enormous credit card debt. Mercurynews.com reports:

The others I spoke to said they spent only what they can afford to pay back in full when the Mastercard and Visa bills start coming next month.

Read more: Some young gift buyers set to pay bills

Web merchants fight Internet fraud

Credit card chargebacks are a way of life with most web-based companies and most of them had learnt to live with the inevitable loss of some money in the process of doing business. But now, more and more companies have begun to give fraudsters a run for their money and are refusing to give up without a good fight. I know all this sounds confusing so let’s start at the beginning.

Credit card chargeback is a payment fraud that saps hundreds of millions of dollars from online revenues of Internet-based companies. So, how does this kind of payment fraud happen? Let me explain with an example: A person orders a laptop from an online electronics company and offers to pay with his credit card. The laptop is shipped to him and his account is debited. However, after the due date, the person calls up the company and fraudulently claims that he hasn’t received the laptop. This would render the sale void and the person can then get his money and a free laptop as well. Alternately, the person could also claim that he did not order the product at all.

This just shows how easy it is for a customer to get a charge reversed. At the same time, it is extremely time-consuming for an Internet merchant to prove the sale was legitimate. Internet merchants suffer more from this kind of fraud because unlike a face-to-face sale, an online transaction does not require a customer's signature or credit card imprint.

However, now, Internet companies along with credit card firms are trying to fight back these fraudsters. Card companies are now offering payer-authentication services and other fraud-fighting tools and are also streamlining the process by which chargeback disputes are mediated. Visa and MasterCard already have some options available to merchants like a payer-authentication service, called ‘Verified by Visa’ for Visa cards and ‘SecureCode’ for MasterCard. If you are a cardholder registered with the programs, Internet retailers can ask for a password registered with your bank. This gives the retailer evidence of the purchase and advantage should a dispute arise.

And if you wanted to know what happened to the person who bought the laptop – well he first complained to the web-based company that he didn’t receive the laptop. When the company offered to send an FBI officer to his house to investigate, he immediately called back and informed them that he ‘just’ got the laptop!

Having a Baby? Don’t get buried under credit card debt

Planning to have a baby? If it is your first baby, then you are probably excited and happy about the new arrival and are busy making plans for how to welcome your little one. There’s so much work to be done before the baby comes like decorating the nursery, buying little outfits, stocking up on diapers, getting good strollers… the list is endless.

But do you have any idea how much all this is going to cost you? I know this sounds more than just a little impolite. I mean, how does one ask about finances at such a joyous occasion. But now is the time to take stock and find out if you are up to paying for all the things that your baby will need. All those lovely items for your child don’t come cheap, and if you are not planning, you may find yourself buried in credit card debt.

Here’s a bit of news that could make you come down to earth with a thud: According to a September 2005 survey sponsored by REDBOOK magazine and Visa USA, 41 percent of expecting parents said they were not financially ready for their baby. So, how do you work this out so you can get your baby all those fun things and yet not have a too deep dent in your pockets? We’ll examine that next time.

Canceling charges are difficult with automated payments

It is the modern amenities and facilities that make life extremely smooth. But in case of a small error, these facilities can make life extremely difficult as well. I know you are probably wondering why I’m trying to sound philosophical when we are here to discuss credit cards. Well, this little bit does have something to do with credit cards, or rather, the automatic payment facility offered by certain credit card companies.

If you are one of those who make use of automatic payments to pay your bills, then here’s a bit of news for you. It can be extremely tiresome to cancel such arrangements. I know this should actually be a cakewalk. Now there didn’t seem to be any hitch when you signed up for the service so why the trouble now? Well, all one can say is, ‘such is life’. 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. And to make matters worse, these rules differ depending on whether your payments are linked to a bank account or credit card. Now, unable to stand the frustration any longer, people have even begun filing lawsuits against vendors or their banks to keep the charges from recurring.

Meanwhile banks, which have been bearing the brunt of complaints, say that they are unable to cancel recurring credit-card charges when a consumer has signed a long-term contracts like an extended gym membership. However, things are not as bad as they sound. In response to this troublesome issue, credit card companies Visa USA and MasterCard International say they've upgraded their systems. The new system is supposed to help banks and consumers more efficiently stop automatic payments.

Ripped up form yields spanking new credit card

Ever read the government websites that ask you to tear up any unwanted credit solicitations as it helps prevent identity theft. All these notifications and advices seem useless when you hear about the experiences of a young man who got a spanking new credit card after he’d torn up the application form, taped it back again and then sent off the application. Blog.washingtonpost.com reports:

The unsolicited credit-card offers "are a ticking time bomb. You have to take some extra step to get rid of them, which is really bothersome because you didn't ask for them in the first place.

Read more: Ripped Up Over Credit

Tiring Taxes? Try using your credit cards

Tax season is well upon us and the IRS is busy giving last minute tax tips to the young recruits. You can now charge federal income taxes to an American Express, Discover, MasterCard, or VISA account by contacting one of the two companies authorized by the IRS to process credit card payments. Thecitizen.com reports:

There is no IRS fee for credit card payments; however, the service providers do charge a convenience fee based on the amount charged. Once you’ve completed the transaction, be sure to write down the confirmation number and the amount of your tax payment.

Read more: IRS gives last-minute tax tips

Pastor charged with identity and credit card thefts

I really don’t know how to react to this bit of news. So instead of giving my comments as I usually do on most other matters, here I will let the reader decide what to make of this bit of news. Recently, the pastor of a prominent East Orange church and his wife were arrested. The charges against them included identity theft and using false information to open up credit card accounts.

The Rev. Dwight Gill of New Hope Baptist Church was arrested at his home on Friday. He was charged with two counts of fraudulent credit cards, one count of identity theft and theft of services. Gill however has refused to comment on the charges against him. Some of the church members seem to be aware of the charges against their priest but they too have declined to comment on the situation. Nj.com reports:

Gill's wife, Bonnie, turned herself in to East Orange police later Friday morning and faces the same charges. Gill and his wife posted bail late Friday night and were released, police said.

Read more: East Orange pastor charged with identity and credit card thefts

Ohio drowning in foreclosure soup

Ohio seems to be in a pretty bad shape as far as foreclosures are concerned. According to reports, one of every 71 households in Ohio filed for foreclosure in 2005. Around 64,000 foreclosures were filed last year. This figure is four times the number from a decade ago according to a report released by the Cleveland nonprofit group Policy Matters Ohio.

The number one cause of this high foreclosure rate was the prevalence of predatory lenders. Interestingly, even two years back, county sheriffs have been warning the state that these lenders were causing unprecedented foreclosures Job losses were another cause. This state, which already has the dubious distinction of being the foreclosure capital of the country, is headed for worse news. Filings jumped to more than 8 percent in 2005, and according to experts, the worst is yet to come

Do you know the new minimum payment standards?

Though there was an increase in credit card minimum payments in the recent past, many people are still unaware of the practical details of this change. For starters, the new standard payment is 1% of the outstanding balance, plus all current finance charges and any other fees. Msnbc.msn.com reports:

The upshot is that there is a relatively new mandate for credit card issuers, and it's designed to help borrowers pay off debt more quickly. For some issuers, this means increasing (but not necessarily doubling) minimum payments. For others, it means no change at all, if the company's current policy meets the requirements.

Read more: Good Credit Card News Overstated

Tips to better your credit score

A big debt, a bad credit score, innumerable loan repayments and a few financial mistakes – that’s all it takes for your finances to get to the point of no return. If you’ve realized that you need to do something about the situation before it devours you, then here are a few steps that will help you improve your credit score. Remember, these are not ‘get results quickly’ methods. Almost all these steps will take time and repairing a bad credit score will take a considerable amount of time and patience. So, banish all the delusions in your head and check out these simple steps.

One of the first things you need to do is obtain free copies of your credit reports. Ensure that they are accurate. In case there are any incorrect items, you can dispute them with the bureau that reported them. You should also get your credit score while you're at it.

Once you have an idea of how deep in debt you are, you can begin creating a plan to pay off outstanding balances like student loans and credit card debts. Most creditors live by the dictum ‘Better late than never’. They understand that you may have had your reasons for falling behind on your obligation. All that matters to them is the fact that you paid what you owed them.

Next in line are your current credit obligations. Don’t try to delay making payments on them – nearly 35 percent of your credit score is calculated based on whether you pay on time. So, if you pay on time, you are sending a message across to potential creditors that you can be responsible with credit.

Lastly, the most important thing is to have a lot of patience. Your credit score is not going to improve overnight. You will be required to make sacrifices and scrimp and save on money to make your payments. While you are repaying your debt, try to create a plan that will help you stay out of debt in future. This will ensure that your credit score remains good and that you never fall into such a trap again.

Beware of foreclosure frauds

If you are facing problems with your mortgage, which could lead to foreclosure, be warned about a type of fraud that is being carried out by certain unscrupulous characters. If you’ve missed two or three monthly payments, your lender would file a notice of default with the county recorder's office. These scam artists read the notices, zero in on their victims and then trick them into signing over title to their homes. Latimes.com reports:

While still considered low, indications are that the nation's foreclosure rate is on the rise, meaning the pool of potential victims is growing. Overall, the foreclosure rate in the Los Angeles region has doubled since October, according to RealtyTrac Inc., an Irvine-based company that monitors foreclosures. As of February, the rate was one foreclosure for every 1,223 households.

Read more: Foreclosure Fraud Finds a Home

Debit cards become more lucrative than credit cards

In the past couple of years, America has seen a subtle shift in consumer preferences. People are now opting to use debit cards as the electronic alternative to paying with cash or checks. The best thing about these cards is that they can be used anywhere a credit card is accepted. And unlike credit card users, customers can keep better track of their spending habits as every purchase and ATM withdrawal is posted on the monthly statement. Another added advantage is that debit card users need not pay any finance charges and will not have to worry about mounting debts as in the case of credit card users.

Now it is natural for you to think that if it was so beneficial, why are more people not being encouraged to use debit cards over credit cards. Well, realizing that making people use debit cards is more worthwhile, an increasing number of banks are now offering reward programs similar to those available to many credit card customers. Northjersey.com reports:

Through the end of this month, PNC Bank is giving away 10,000 "bonus points" to those who sign up for a debit card reward program. Those 10,000 points could be redeemed for a $25 gift certificate at Linens 'n Things, TGI Friday's or Avis Rent-A-Car, among other companies.

Read more: Rewards rolled out as more customers sign on to debit cards