The Federal Reserve, as expected delivered a second interest rate cut in as many months on Wednesday.
But credit cardholders should not expect an instant personal return in the form of lower bills due to the Fed's Oct. 31 action. The rate cut will cause credit card rates to fall, too, but not for everyone, not far and not necessarily soon.
The Federal ReserveThe Fed's rate-setting group, the Federal Open Market Committee, voted to lower the federal funds rate a quarter point, from 4.75 to 4.5 percent. Because banks always peg their prime rates to the federal funds rate, the prime rate will also fall a quarter point, to 7.5 percent. A majority of card-issuing banks base their annual percentage rates (APRs) on the prime rate, so many cardholders should expect their rates to fall, as well -- eventually.
However, this may be the last rate cut from the Fed in the near future. In the statement accompanying its decision, the committee said it saw a balanced economy, one it expects to rebound. Analysts saw this as a signal that this quarter point cut would be the last, unless economic conditions worsen sharply.
Whether your credit card rate falls, and how soon, is determined by several factors.
Key among them:
• Whether the card carries a fixed rate or a variable rate.
• The timing of the change, as dictated by the card agreement.
• The decision of card issuers, which can change any term of the agreement, including interest rate, with just 15 days' notice.
Fixed cards vs. variable cards
First, cardholders need to dig out their card agreements and see whether they signed up for a fixed- or variable-rate credit card.
Fixed-rate cards, as the name implies, are not pegged to the prime rate. They are set at the number spelled out in the agreement -- but again, the issuer can change that agreement in just 15 days.
"Many of the cards are not going to be affected immediately if they are fixed-rate or in an intro teaser period," says Michael Rubin, author of "Beyond Paycheck to Paycheck." Tony Plath, associate professor of finance at the University of North Carolina at Charlotte, agrees. "I think lenders will take a wait-and-see approach on fixed-rate cards. But on the variable-rate side, I would expect that to passed on to consumers very quickly," he says.
Variable rate cardholders "will see a fairly quick adjustment downward in their rates, depending on the terms of their credit cards. Most credit cards are spread off the prime rate and the prime rate will move down immediately," says John Burford, senior vice president and chief economist with The International Bank of Miami.
For fixed rate cards, the danger of economic weakness could keep banks from giving anything back to the cardholder when it comes to lowering APRs, says Lewis Mandell, professor of finance and managerial economics at the University at Buffalo, SUNY. "There probably won't be a decrease in rates simply because when the Fed decreases rates in does so in anticipation of worsening economic conditions. In a period of Fed rate-cutting you'd be unlikely to see rate-cutting by the credit card industry because they anticipate higher write-offs, which decrease their spread and their profitability," Mandell says. A "write-off" occurs when a cardholder is so far behind in payments that the card issuer gives up, writing off the debt as a loss.
How soon will card rates change?
The card agreement also spells out how soon an issuer will change its variable rates once prime rate moves. Some can pull the trigger at the end of each billing cycle, others give themselves 90 days.
A 90-day window to make APR adjustments would leave cardholders with less-favorable terms through much of the holiday shopping season. Professor Plath believes card companies, fearing shoppers' wrath, won't wait. "Banks will be quick to respond for the publicity and also to avoid a recession in order to protect consumer confidence, preserve the Christmas season and give consumers rate relief on debt service," he says.
Consumers should consult the disclosures provided by their credit card issuer to find out exactly how and when their own APR will change in the wake of the Fed's decision.
Small savings
Don't expect much. A quarter-point rate cut, though it cheered Wall Street, isn't enough to dramatically improve the lot of people on Main Street.
"It won't be life-changing for most people," says Rubin.
http://www.creditcards.com/fed-rate-change-credit-card.php
Thursday, November 8, 2007
Online shopping options offer credit card safety
About half of all Americans do at least some holiday shopping online. While buying presents on the Internet beats fighting the holiday mall crowd, it also carries the risk of identity theft and fraud, so new solutions are being created to further safeguard credit card information. Here are some of the best recognized, and safe, online shopping alternatives.
Virtual cards
Virtual credit cards are not very popular, but they are excellent for consumers very fearful about losing control of their personal information. These cards allow consumers to shop using a temporary number connected to their existing account that functions for the length of the transaction or at just one store. Credit card issuers including Citibank and Discover offer virtual cards. Because the virtual card is linked to your existing account, charges appear on your regular statement. While they can be used to minimize the exposure of your credit card information online, virtual cards cannot be used in the physical world.
Scott Mitic, CEO of TrustedID, an identity theft protection company, knows of several new options for further protecting consumer information. "Some issuers are now creating one-time-use cards that can be used in physical stores in addition to online," he says. "And a company called Revolution Money has recently created an anonymous credit card that contains no personal information on it or stored inside it. That way if it gets in the wrong hands, nobody can connect it with you." The Revolution Card requires a PIN number to make purchases, which safeguards it if it is stolen.
PayPal
PayPal, a company owned by eBay, is probably the best-known credit card alternative. Consumers looking to make payments with PayPal provide the service with a source of funds in the form of either a credit card or a bank account. Instead of giving account data directly to a seller, you tell PayPal to transfer your payment to the seller's account, with PayPal identifying you to the seller only through your e-mail address.
Although an increasing number of smaller merchants accept PayPal, most large commercial Web sites do not. And while PayPal promises complete refunds for unauthorized transactions, its safeguards against unethical merchants are much less complete. Payments of up to $1,000 are covered for qualified eBay purchases if you do not receive the item or it is "significantly not as described."
Using a credit card to fund your PayPal account could enable you to recover money via a chargeback through the credit card company. But because PayPal is responsible for the entire amount, it expects you to exhaust its dispute resolution process before turning to your credit card issuer. That delay could mean you miss the credit card issuer's deadline for reimbursement. Even so, Susan Grant, director of the National Consumers League's fraud center, says consumers should always use their credit cards on PayPal as a safeguard. "There have been some suits by state general attorneys concerning some problems with PayPal in regards to them not making clear to people what their protections are," Grant says. "When you make payments with your credit card, you have protection from federal rights. But if you make a purchase using your bank account, you lack the same protection."
Electronic payment systems
More recently, some Web sites have begun to rely on electronic payment systems that many consumers already use to pay their monthly bills. With ModaSolutions' Secure-eBill, for example, the electronic payment system is generally offered as an option for payment in addition to credit cards or PayPal.
Customers who select this option receive an invoice e-mail from the merchant. First-time customers need to establish that merchant as a payee with their bank or electronic bill-paying service. After making the necessary payment, the customer is e-mailed a confirmation that the merchant has received the funds. Instead of merchants having access to any bank information, ModaSolutions just informs them that a payment has been posted to their account in the customer's name.
Difficulties with electronic payment include possibly having to wait several days for the payment to be processed, as well as having to set up numerous payees you may not give repeat business to. Additionally, since the payment is a direct debit from your bank account, you will have no chargeback remedy if you are unhappy with the purchase.
Merchant programs
Regardless of where you shop, major credit cards have zero-liability policies for credit card transactions without the cardholder's authorization. It can be a major headache to clean up if your credit card number is stolen, so for extra safety, shop online at merchants who take part in the Verified by Visa or Verified by MasterCard programs. The number of merchants using these two programs is relatively small, though many more are asking for the card identification number to ensure the card is in the shopper's physical possession.
Finally, keeping an active eye on your credit card account online can alert you very quickly to any fraud. Experts recommend going online to look for unauthorized charges that may be a sign of identity theft, which is a much more serious problem than credit card fraud.
Mitic asks consumers to be cautious but not paranoid about their information getting into the wrong hands. "There isn't a need for consumer hysteria. There are simple steps we should all be doing, but there is no point in living in a state of fear."
http://www.creditcards.com/Online-Shopping-Options-Offer-Credit-Card-Safety.php
Virtual cards
Virtual credit cards are not very popular, but they are excellent for consumers very fearful about losing control of their personal information. These cards allow consumers to shop using a temporary number connected to their existing account that functions for the length of the transaction or at just one store. Credit card issuers including Citibank and Discover offer virtual cards. Because the virtual card is linked to your existing account, charges appear on your regular statement. While they can be used to minimize the exposure of your credit card information online, virtual cards cannot be used in the physical world.
Scott Mitic, CEO of TrustedID, an identity theft protection company, knows of several new options for further protecting consumer information. "Some issuers are now creating one-time-use cards that can be used in physical stores in addition to online," he says. "And a company called Revolution Money has recently created an anonymous credit card that contains no personal information on it or stored inside it. That way if it gets in the wrong hands, nobody can connect it with you." The Revolution Card requires a PIN number to make purchases, which safeguards it if it is stolen.
PayPal
PayPal, a company owned by eBay, is probably the best-known credit card alternative. Consumers looking to make payments with PayPal provide the service with a source of funds in the form of either a credit card or a bank account. Instead of giving account data directly to a seller, you tell PayPal to transfer your payment to the seller's account, with PayPal identifying you to the seller only through your e-mail address.
Although an increasing number of smaller merchants accept PayPal, most large commercial Web sites do not. And while PayPal promises complete refunds for unauthorized transactions, its safeguards against unethical merchants are much less complete. Payments of up to $1,000 are covered for qualified eBay purchases if you do not receive the item or it is "significantly not as described."
Using a credit card to fund your PayPal account could enable you to recover money via a chargeback through the credit card company. But because PayPal is responsible for the entire amount, it expects you to exhaust its dispute resolution process before turning to your credit card issuer. That delay could mean you miss the credit card issuer's deadline for reimbursement. Even so, Susan Grant, director of the National Consumers League's fraud center, says consumers should always use their credit cards on PayPal as a safeguard. "There have been some suits by state general attorneys concerning some problems with PayPal in regards to them not making clear to people what their protections are," Grant says. "When you make payments with your credit card, you have protection from federal rights. But if you make a purchase using your bank account, you lack the same protection."
Electronic payment systems
More recently, some Web sites have begun to rely on electronic payment systems that many consumers already use to pay their monthly bills. With ModaSolutions' Secure-eBill, for example, the electronic payment system is generally offered as an option for payment in addition to credit cards or PayPal.
Customers who select this option receive an invoice e-mail from the merchant. First-time customers need to establish that merchant as a payee with their bank or electronic bill-paying service. After making the necessary payment, the customer is e-mailed a confirmation that the merchant has received the funds. Instead of merchants having access to any bank information, ModaSolutions just informs them that a payment has been posted to their account in the customer's name.
Difficulties with electronic payment include possibly having to wait several days for the payment to be processed, as well as having to set up numerous payees you may not give repeat business to. Additionally, since the payment is a direct debit from your bank account, you will have no chargeback remedy if you are unhappy with the purchase.
Merchant programs
Regardless of where you shop, major credit cards have zero-liability policies for credit card transactions without the cardholder's authorization. It can be a major headache to clean up if your credit card number is stolen, so for extra safety, shop online at merchants who take part in the Verified by Visa or Verified by MasterCard programs. The number of merchants using these two programs is relatively small, though many more are asking for the card identification number to ensure the card is in the shopper's physical possession.
Finally, keeping an active eye on your credit card account online can alert you very quickly to any fraud. Experts recommend going online to look for unauthorized charges that may be a sign of identity theft, which is a much more serious problem than credit card fraud.
Mitic asks consumers to be cautious but not paranoid about their information getting into the wrong hands. "There isn't a need for consumer hysteria. There are simple steps we should all be doing, but there is no point in living in a state of fear."
http://www.creditcards.com/Online-Shopping-Options-Offer-Credit-Card-Safety.php
8 ways to compare credit cards
Not all credit cards are created equal, and comparing credit card offers can be challenging. What is best for one person may not be best for another, so it is important to weigh a multitude of factors, including interest rate, fees, rewards programs and member benefits.
Brad Stroh, co-CEO of Bills.com, breaks down some of the most important factors one should look for and compare in a credit card offer.
1. Type of card
Credit cards have many variations, but they fall into three major classes.
* Secured cards require a security deposit and are for those who have no credit or bad credit.
* Regular cards do not require a security deposit but have few features. They have higher credit limits than secured cards but lower limits than premium cards.
* Premium cards (gold, platinum, titanium) offer higher credit limits and usually have extra features such as travel insurance or emergency service.
2. Grace period
This is the number of days you have to pay your bill in full without triggering a finance charge.
3. How the finance charge is calculated
This is the dollar amount you pay to use credit, and it depends in part on your outstanding balance and the annual percentage rate (APR). Companies use various methods to calculate your outstanding balance, and the method can make a big difference in the finance charge. Your outstanding balance may be calculated over one or two billing cycles; including or excluding new purchases in the balance and by using the adjusted balance, average daily balance or previous balance. Know if the card has a minimum finance charge.
4. Fees
Some cards have annual fees, over-the-limit fees, late payment fees, foreign transaction fees, balance transfer fees and more. Pay attention to the fine print.
5. Cash advance features
Most cash advances carry a much higher interest rate than regular purchases. If you plan to use cash advances, look for information about access (ATM, "checks," APR, fees, limits and how payments are credited).
6. Credit limit
Your personal credit limit will be determined by your credit history, but some cards come with a preset credit limit.
7. Incentives and reward programs
Rewards cards can include cash rebates on purchases, online account access, frequent flyer miles, additional warranty coverage, car rental insurance, travel discounts, concierge services and more. If you have no credit or bad credit, you may have to work on building good credit before you are approved for a card with rewards and incentives.
8. Interest rate
Interest rates will be described in the credit card offer as fixed or variable, although in practice, there is not as much difference as the names imply. Variable rate cards will have their APRs pegged to an index -- most commonly the prime rate -- and will go up and down as short-term rates change in the larger economy. You may think you avoid the interest rate risk with a fixed rate card, but you won't. Federal law allows card issuers to change any terms of the card, including its rate, with just 15 days' notice.
If you are the type of person who pays your entire credit card balance each month on time, Stroh says, "A low interest rate credit card is not as important as one with no annual fee or and a longer grace period."
Unfortunately, many people are not so disciplined about paying off their credit cards in full and on time every month. If you occasionally or often carry a balance on your credit cards, a low interest credit card may be best for you. The difference between a low 10 percent APR interest rate and a higher 20 percent APR interest rate is significant over time. Just remember that some cards have an introductory 0 percent APR for several months to a year, then jump to higher APRs. If you have large purchases to make, it is wisest to pay them off during the time in which your introductory APR is still active.
If you plan to use the card for cash advances, look for a card with a lower APR and low fees on cash advances, since APR for that type of transaction can be quite high. "Understand that a single credit card may have several APRs," Stroh says. "They include APRs for purchases, for cash advances, for balance transfers, penalty APRs for late payments, introductory APRs, delayed APRs, which come in after the introductory rate expires, fixed versus variable APR and tired APRs, which happen when different rates are applied to different levels of the outstanding balance."
When determining what the best credit card is for you, remember that credit cards all have unique terms and conditions, which should be scrutinized and compared before you fill out an application.
http://www.creditcards.com/compare-article.php
Brad Stroh, co-CEO of Bills.com, breaks down some of the most important factors one should look for and compare in a credit card offer.
1. Type of card
Credit cards have many variations, but they fall into three major classes.
* Secured cards require a security deposit and are for those who have no credit or bad credit.
* Regular cards do not require a security deposit but have few features. They have higher credit limits than secured cards but lower limits than premium cards.
* Premium cards (gold, platinum, titanium) offer higher credit limits and usually have extra features such as travel insurance or emergency service.
2. Grace period
This is the number of days you have to pay your bill in full without triggering a finance charge.
3. How the finance charge is calculated
This is the dollar amount you pay to use credit, and it depends in part on your outstanding balance and the annual percentage rate (APR). Companies use various methods to calculate your outstanding balance, and the method can make a big difference in the finance charge. Your outstanding balance may be calculated over one or two billing cycles; including or excluding new purchases in the balance and by using the adjusted balance, average daily balance or previous balance. Know if the card has a minimum finance charge.
4. Fees
Some cards have annual fees, over-the-limit fees, late payment fees, foreign transaction fees, balance transfer fees and more. Pay attention to the fine print.
5. Cash advance features
Most cash advances carry a much higher interest rate than regular purchases. If you plan to use cash advances, look for information about access (ATM, "checks," APR, fees, limits and how payments are credited).
6. Credit limit
Your personal credit limit will be determined by your credit history, but some cards come with a preset credit limit.
7. Incentives and reward programs
Rewards cards can include cash rebates on purchases, online account access, frequent flyer miles, additional warranty coverage, car rental insurance, travel discounts, concierge services and more. If you have no credit or bad credit, you may have to work on building good credit before you are approved for a card with rewards and incentives.
8. Interest rate
Interest rates will be described in the credit card offer as fixed or variable, although in practice, there is not as much difference as the names imply. Variable rate cards will have their APRs pegged to an index -- most commonly the prime rate -- and will go up and down as short-term rates change in the larger economy. You may think you avoid the interest rate risk with a fixed rate card, but you won't. Federal law allows card issuers to change any terms of the card, including its rate, with just 15 days' notice.
If you are the type of person who pays your entire credit card balance each month on time, Stroh says, "A low interest rate credit card is not as important as one with no annual fee or and a longer grace period."
Unfortunately, many people are not so disciplined about paying off their credit cards in full and on time every month. If you occasionally or often carry a balance on your credit cards, a low interest credit card may be best for you. The difference between a low 10 percent APR interest rate and a higher 20 percent APR interest rate is significant over time. Just remember that some cards have an introductory 0 percent APR for several months to a year, then jump to higher APRs. If you have large purchases to make, it is wisest to pay them off during the time in which your introductory APR is still active.
If you plan to use the card for cash advances, look for a card with a lower APR and low fees on cash advances, since APR for that type of transaction can be quite high. "Understand that a single credit card may have several APRs," Stroh says. "They include APRs for purchases, for cash advances, for balance transfers, penalty APRs for late payments, introductory APRs, delayed APRs, which come in after the introductory rate expires, fixed versus variable APR and tired APRs, which happen when different rates are applied to different levels of the outstanding balance."
When determining what the best credit card is for you, remember that credit cards all have unique terms and conditions, which should be scrutinized and compared before you fill out an application.
http://www.creditcards.com/compare-article.php
FAQ about credit cards and disasters
When a disaster strikes, credit cards can be a lifeline, providing for immediate needs and easing discomfort. These are the most common questions that come up for smartly dealing with credit cards when lives are in disarray.
Residents watch as fires approach.I have lost my credit card. What can I do?
Contact that bank that issued the credit card. All credit card issuers have toll-free customer service telephone numbers. A local bank branch office may assist you or you can call directory assistance for the nearest bank. Ask a friend of relative with Internet access to search online for the toll-free number. Do not call Visa or MasterCard; they are not credit card issuers.
What if I don't know my account number and don't have the last monthly statement? Can they still access my information?
Yes. They can still access your information with other information that you provide.
Do I have to continue paying my monthly bills even if I'm displaced or homeless?
The emergency does not release you from your obligations to repay your debts. Consumer credit advisers urge credit card holders to call the banks that issued the cards immediately. Inform them of your location and circumstances. Ask for temporary relief while you are recovering. The banks have different options that may include: eliminating the minimum monthly payment requirement, increasing your line of credit to allow you to purchase emergency supplies, suspending late fees and/or finance charges or rushing orders for replacement credit cards. If you fail to call the bank and you do not pay the required monthly amount on time, you may be subject to late fees. Negative information may be sent to the credit reporting agencies.
What if I no longer have access to my mail because I'm under mandatory evacuation orders?
Call the bank that issued the credit card and explain the situation. They may be able to provide you with your account balance and amount due so that you can pay the minimum by phone or on the Web.
My card is maxed out and I need to buy supplies? What can I do?
The bank may be able to temporarily increase your credit limit to allow you to make emergency transactions. If you know you are near your credit limit on the credit card, call the bank to avoid the embarrassment of having a purchase denied at the store.
Should I get a cash advance on my credit card to cover my emergency expenses?
Consumer credit advisers urge credit card owners to avoid using cash advances if possible. They generally have hefty interest rates that exceed the normal annual percentage rate for purchases made on the same card.
Can a relative call the bank or credit card company on my behalf to request an additional line of credit?
To protect your privacy and security, banks will only release information to authorized credit card users and account holders.
Can I place a note in my credit report to explain late or delinquent payments during this period?
The Fair Credit Reporting Act allows consumers to place a statement containing up to 100 words in their credit reports explaining the circumstances surrounding negative credit information.
Will the bank report negative information about me to the credit reporting bureaus?
If you call the bank to work out alternative payment arrangements and meet those provisions, you may avoid negative reports. Keeping in touch with the bank's customer service representative -- and not forcing them to send your case to a collections agent -- is a smart move.
See related stories: Card issuers offer relief to Californians affected by wildfires, Credit card disaster checklist
http://www.creditcards.com/credit-card-disaster-faq.php
Residents watch as fires approach.I have lost my credit card. What can I do?
Contact that bank that issued the credit card. All credit card issuers have toll-free customer service telephone numbers. A local bank branch office may assist you or you can call directory assistance for the nearest bank. Ask a friend of relative with Internet access to search online for the toll-free number. Do not call Visa or MasterCard; they are not credit card issuers.
What if I don't know my account number and don't have the last monthly statement? Can they still access my information?
Yes. They can still access your information with other information that you provide.
Do I have to continue paying my monthly bills even if I'm displaced or homeless?
The emergency does not release you from your obligations to repay your debts. Consumer credit advisers urge credit card holders to call the banks that issued the cards immediately. Inform them of your location and circumstances. Ask for temporary relief while you are recovering. The banks have different options that may include: eliminating the minimum monthly payment requirement, increasing your line of credit to allow you to purchase emergency supplies, suspending late fees and/or finance charges or rushing orders for replacement credit cards. If you fail to call the bank and you do not pay the required monthly amount on time, you may be subject to late fees. Negative information may be sent to the credit reporting agencies.
What if I no longer have access to my mail because I'm under mandatory evacuation orders?
Call the bank that issued the credit card and explain the situation. They may be able to provide you with your account balance and amount due so that you can pay the minimum by phone or on the Web.
My card is maxed out and I need to buy supplies? What can I do?
The bank may be able to temporarily increase your credit limit to allow you to make emergency transactions. If you know you are near your credit limit on the credit card, call the bank to avoid the embarrassment of having a purchase denied at the store.
Should I get a cash advance on my credit card to cover my emergency expenses?
Consumer credit advisers urge credit card owners to avoid using cash advances if possible. They generally have hefty interest rates that exceed the normal annual percentage rate for purchases made on the same card.
Can a relative call the bank or credit card company on my behalf to request an additional line of credit?
To protect your privacy and security, banks will only release information to authorized credit card users and account holders.
Can I place a note in my credit report to explain late or delinquent payments during this period?
The Fair Credit Reporting Act allows consumers to place a statement containing up to 100 words in their credit reports explaining the circumstances surrounding negative credit information.
Will the bank report negative information about me to the credit reporting bureaus?
If you call the bank to work out alternative payment arrangements and meet those provisions, you may avoid negative reports. Keeping in touch with the bank's customer service representative -- and not forcing them to send your case to a collections agent -- is a smart move.
See related stories: Card issuers offer relief to Californians affected by wildfires, Credit card disaster checklist
http://www.creditcards.com/credit-card-disaster-faq.php
11 ways for seniors to mop up credit card debt
Before she sought help from the nonprofit Consolidated Credit Counseling Services Inc. about three years ago, Joyce Roberts' credit card debt had swelled to between $10,000 and $15,000. This Massachusetts baby boomer had essentially gone bust.
Now Roberts, 51, pays $270 a month through Consolidated Credit Counseling in hopes of erasing her credit card debt within the next year. She no longer has any credit cards -- just an ATM card. Roberts says the debt mounted because she'd been making only the minimum monthly payments on her credit card bills -- something she advises others not to do.
"I was always a day late and a dollar short," Roberts says. "I've never gotten really close to being financially secure."
Once the debt is eliminated, Roberts plans to quit her part-time weekend gig at McDonald's but maintain her full-time job as a customer service representative at an optical supply company. Working 50 to 60 hours a week, she pulls in monthly income of $1,300 to $1,400. Roberts worries she'll work until she's 80 or 90 years old.
"I'm either going to get out of debt or die doing it," says Roberts, who is divorced and has two adult daughters. "I have high hopes."
Experts offer these tips for getting out of debt:
1. Draw a financial road map.
2. Set a daily spending limit.
3. Pay high-priority debts first.
4. Pare credit card spending.
5. Cash in available, nonretirement assets.
6. Find a low-interest rate credit card.
7. Return to work.
8. Look into a reverse mortgage.
9. Reassess your lifestyle.
10. Go to an accredited credit counselor.
11. Consider bankruptcy.
1. Draw a "financial road map" that includes setting up a household budget, says Cate Williams, vice president of financial literacy at Money Management International, a nonprofit organization that offers financial guidance and debt management services. For tips on creating a household budget, visit www.consumercredit.com/budget-sheet.htm
www.thebeehive.org/highlights/free_household_budget.htm or
www.clearpointcreditcounselingsolutions.org/credit_counseling_tools.aspx
2. Set a daily spending limit to avoid impulse purchases. "A lot of people don't monitor their spending that closely. It's easy to get into trouble," says Liz Pulliam Weston, a personal finance author and columnist.
3. If you get into financial trouble, pay your higher-priority debts first, advises the National Consumer Law Center. Don't let yourself be pressured into making credit card payments at the risk of losing a home or car.
4. Pare your credit card spending. Keep one low-interest credit card for emergencies, Williams suggests, and close the rest of your accounts. "The credit card companies will live without you," Weston says.
5. Examine liquidation of some of your assets, such as a certificate of deposit. However, don't siphon your retirement assets to pay off credit cards.
"You don't want to throw good money after bad," Weston says. "I've talked to way too many people who drained assets that could have been protected in bankruptcy -- such as retirement funds and home equity -- only to end up filing anyway. They often spend years trying to pay bills that were ultimately impossible to pay, then spend more years recovering from the bankruptcy."
6. Transfer your balances to credit cards with lower interest rates, Weston recommends, or negotiate directly with your card issuers to obtain lower rates. However, negotiating works only if your credit scores are strong, she says, and you're willing to threaten to close an account if a card issuer doesn't comply with your wishes. Switching balances to lower-rate cards can cut total interest costs -- if you work to reduce those balances.
"The big danger is that instead, you'll use the low rates as an excuse to keep racking up more debt," Weston says, "or you'll just tread water paying the minimums and then your teaser rate expires, leaving you with costlier debt."
7. Consider returning to or remaining in the workforce to maintain or boost your income. "It's an amazingly obvious point, and a lot of people don't think about that," says Christian Weller, a senior fellow at the Center for American Progress and an associate professor of public policy at the University of Massachusetts in Boston.
8. If you own a home, look into a reverse mortgage, Williams says. A reverse mortgage is a loan against your home that you don't have to pay back for as long as you live there. You must own your home and be at least 62 years old to qualify. For more information about reverse mortgages, visit informational pages from the U.S. Department of Housing and Urban Development, the Federal Trade Commission or AARP.
9. Reassess your lifestyle. Should you, for instance, sell your home and downsize, perhaps even rent a place to live?
10. Reach out to a legitimate credit counseling agency. For a list of reputable agencies, check with the National Foundation of Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
11. If you recognize that your financial straits are dire, consult with an attorney about the possibility of filing for bankruptcy. "It's certainly not anybody's first choice. It's always a last resort," says Teresa A. Sullivan, a longtime bankruptcy researcher who is provost and executive vice-president for academic affairs at the University of Michigan. Related story: Older Americans’ credit card debt rising
To comment on this story, write to editors@creditcards.com.
http://www.creditcards.com/sidebar-debt-help-seniors.php
Now Roberts, 51, pays $270 a month through Consolidated Credit Counseling in hopes of erasing her credit card debt within the next year. She no longer has any credit cards -- just an ATM card. Roberts says the debt mounted because she'd been making only the minimum monthly payments on her credit card bills -- something she advises others not to do.
"I was always a day late and a dollar short," Roberts says. "I've never gotten really close to being financially secure."
Once the debt is eliminated, Roberts plans to quit her part-time weekend gig at McDonald's but maintain her full-time job as a customer service representative at an optical supply company. Working 50 to 60 hours a week, she pulls in monthly income of $1,300 to $1,400. Roberts worries she'll work until she's 80 or 90 years old.
"I'm either going to get out of debt or die doing it," says Roberts, who is divorced and has two adult daughters. "I have high hopes."
Experts offer these tips for getting out of debt:
1. Draw a financial road map.
2. Set a daily spending limit.
3. Pay high-priority debts first.
4. Pare credit card spending.
5. Cash in available, nonretirement assets.
6. Find a low-interest rate credit card.
7. Return to work.
8. Look into a reverse mortgage.
9. Reassess your lifestyle.
10. Go to an accredited credit counselor.
11. Consider bankruptcy.
1. Draw a "financial road map" that includes setting up a household budget, says Cate Williams, vice president of financial literacy at Money Management International, a nonprofit organization that offers financial guidance and debt management services. For tips on creating a household budget, visit www.consumercredit.com/budget-sheet.htm
www.thebeehive.org/highlights/free_household_budget.htm or
www.clearpointcreditcounselingsolutions.org/credit_counseling_tools.aspx
2. Set a daily spending limit to avoid impulse purchases. "A lot of people don't monitor their spending that closely. It's easy to get into trouble," says Liz Pulliam Weston, a personal finance author and columnist.
3. If you get into financial trouble, pay your higher-priority debts first, advises the National Consumer Law Center. Don't let yourself be pressured into making credit card payments at the risk of losing a home or car.
4. Pare your credit card spending. Keep one low-interest credit card for emergencies, Williams suggests, and close the rest of your accounts. "The credit card companies will live without you," Weston says.
5. Examine liquidation of some of your assets, such as a certificate of deposit. However, don't siphon your retirement assets to pay off credit cards.
"You don't want to throw good money after bad," Weston says. "I've talked to way too many people who drained assets that could have been protected in bankruptcy -- such as retirement funds and home equity -- only to end up filing anyway. They often spend years trying to pay bills that were ultimately impossible to pay, then spend more years recovering from the bankruptcy."
6. Transfer your balances to credit cards with lower interest rates, Weston recommends, or negotiate directly with your card issuers to obtain lower rates. However, negotiating works only if your credit scores are strong, she says, and you're willing to threaten to close an account if a card issuer doesn't comply with your wishes. Switching balances to lower-rate cards can cut total interest costs -- if you work to reduce those balances.
"The big danger is that instead, you'll use the low rates as an excuse to keep racking up more debt," Weston says, "or you'll just tread water paying the minimums and then your teaser rate expires, leaving you with costlier debt."
7. Consider returning to or remaining in the workforce to maintain or boost your income. "It's an amazingly obvious point, and a lot of people don't think about that," says Christian Weller, a senior fellow at the Center for American Progress and an associate professor of public policy at the University of Massachusetts in Boston.
8. If you own a home, look into a reverse mortgage, Williams says. A reverse mortgage is a loan against your home that you don't have to pay back for as long as you live there. You must own your home and be at least 62 years old to qualify. For more information about reverse mortgages, visit informational pages from the U.S. Department of Housing and Urban Development, the Federal Trade Commission or AARP.
9. Reassess your lifestyle. Should you, for instance, sell your home and downsize, perhaps even rent a place to live?
10. Reach out to a legitimate credit counseling agency. For a list of reputable agencies, check with the National Foundation of Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
11. If you recognize that your financial straits are dire, consult with an attorney about the possibility of filing for bankruptcy. "It's certainly not anybody's first choice. It's always a last resort," says Teresa A. Sullivan, a longtime bankruptcy researcher who is provost and executive vice-president for academic affairs at the University of Michigan. Related story: Older Americans’ credit card debt rising
To comment on this story, write to editors@creditcards.com.
http://www.creditcards.com/sidebar-debt-help-seniors.php
Free 3-in-1 Credit Report
If you haven’t looked at your credit report lately, you might be shocked to discover that it has errors and possibly even some mistakes that can be corrected. You might even find that you have overlooked a bill or two in the past, and it needs to be taken care of. This is where a good reputable credit repair company can come in and fix those mistakes and erase any black marks that you may have. Just be sure it is a reputable credit repair company that you are dealing with.
It is important that you review your financial history every year, because there could be instances of theft, fraud and human error related to your credit report that can damage your score without your knowledge. Your credit report can be examined by persons other than yourself. Bank agents, lenders, service agents and property owners are some of the people that can look at your credit report when they need to make a decision over whether you are eligible to receive a loan or their services. Your credit score will determine the terms, repayment schedule and interest rate of any loan that you are seeking.
The internet and other technology have made it possible to get your full credit report upon your request from the three major agencies that are the Experian, TransUnion and Equifax. You can get a free copy of your financial history annually from these three agencies. You will be able to find plenty of online information about how to get your free report. Websites can also have useful information about how to fix your score, should it have a few blemishes. When you view your report, you will also be able to seen who all the agencies that have requested your financial history in the past.
How Do I Get My Free 3-in-1 Credit Report?
Now that you are aware of how your credit report impacts your finances, you may be wondering “How do I get my Free 3-in-1 Credit Report?” Easy, To learn more about obtaining a free online credit report, visit http://freeonlinecreditcheck.googlepages.com/, an excellent resource on credit reports and your credit score. There are dozens of websites that offer totally free credit reports. There are so many, in fact, that it can be a little bit overwhelming when trying to decide which company to choose. Some things to look for when choosing a credit reporting service are: ease of use, customer service and assistance, detail of reports, accuracy of reports, and whether they offer to assist in repairing your credit score.
Find Out What’s on Your Credit Report… Click Here!
http://www.creditcardarticles.net/2007/11/07/free-3-in-1-credit-report/#more-353
Get What You Want - 7 Tips To Better Credit Scores
Improving credit scores is not an exact science. Not all credit
reports are created equal. Some have collection accounts, others have a bankruptcy filing, some have tax liens, some just have slow payments. Of course there are infinite possible scenarios for what is on your credit report. Making a difference on your history
takes time and you have to do things correctly or you will likely
face more time and more work to have your credit rebound. It will
rebound, but it will take longer. Here are some solutions to
solving some of the negative items on credit accounts.
1. The most important thing to remember is that the credit bureaus
heavily weight your last two years of credit history in
calculating your credit scores. No matter what you have on your
credit report, if you are going to clean things up, start with
items that went bad in the last two years. Accounts that are older
than two years have a negligible impact on your scores. If you
start to work on these older items, the creditors of these
accounts will update your credit report indicating recent
activity. When this happens the credit scoring system picks up on
the recent activity on a negative credit account and it will most
likely result in a lower credit score versus the improvement you
were looking for. If you are looking to improve your scores for a
mortgage or a auto loan, wait until you get the loan before you go
to fix these older accounts. Most of the time the credit lender
you are looking to borrower from does not care too much about
items that are older than 2 years.
2. If you set up a repayment plan and ask for something in return.
By this, I mean, agree to make payments to catch up in exchange
for the creditor to remove previous past due payments if you keep
your promise to have your payments in on time. By all means, if
you make an agreement to make a payment or settle your account,
keep your promise to do so. You will be surprised as to what you
can accomplish with cleaning up your credit report if you keep
your promises.
3. Speaking of repayment plans, avoid them if you can. First of
all, you probably don’t need another monthly payment in your
budget. Second, your creditor is more likely to settle the account
with you for less than you owe them if you will pay them a lump
sum payment. Agree to pay them by a certain date and then do it.
While you are negotiating this with them, ask them for something in return. Ask them to delete the account completely once they
have been paid. They have the power to do this, and there is
nothing in the US Fair Credit and Lending Laws that say credit
accounts have to be on your credit report, or to stay on your
credit report. You could also ask them to indicate on your report
“paid in full” and show a “zero” balance if they will not remove the
account. Specifically ask them to not indicate “settled for less
than full balance”. This will negatively impact your credit score.
4. Do not close out older credit cards. I have seen it happen all
too often, I will pull credit on someone looking for a mortgage and
I will see old credit card accounts on their credit report that show
great history but the words “account closed by consumer request”.
This is a tragedy because this hurts the credit score of this
individual. Credit scoring takes into consideration you older
accounts and gives you positive points for the age of your
accounts.
5. This is another “no brainer” tip: make your payments on time.
If you are past due on a credit account or more than one, get them
caught up as soon as possible. Your credit scores will continue to
be low as long as you are past due on any account within the past
12 months. If you are behind on more than one account, get one
caught up first, then move to another one. Do not try to catch
them all at once, unless you all of a sudden get some money by
winning the lottery or something like that.
6. Make sure you have somewhere between 3-5 credit accounts open,
and make sure they are active. You want to make sure your credit
card accounts have activity on them at least every 6 months if not
more. If you go longer than this, the creditor will probably mark
the account as inactive. This will either keep your scores the
same or perhaps even lower them.
7. Lower your “debt to credit limit” ratio. What this means is
that your credit score is impacted heavily by the amount of debt
you owe against the maximum credit limits on your revolving credit
accounts (credit cards). For example: if you owe $7,500 and your
credit limit is $10,000 then your ratio is 75%. The threshold
number to keep your ratio under is 50%. Obviously you can lower
this ratio if you pay off some of you debt. If you are going to
pay more than your minimum make the extra payments on one card at
a time. Do not spread your extra payments around. The other thing
to consider it to contact your credit card company to see if they
will extend your credit limit. You will have to be in good
standing with them for them to consider doing this. If they do
extend it, this will lower your ratio.
Here is a bonus tip for business owners. If you are self employed and
you have a lot of personal debt as a result of putting your
business debt on your personal credit cards you could consider
opening up a business credit card. These cards are easier to get
than you might think. What’s key about these accounts is they are
not always reported to your credit report. When you get the card
issued to you, you could transfer your personal credit card debt
to your business card. This will improve your debt to credit limit
on your personal credit and your scores will go up.
For additional information on consumer credit go to: GetPreQualified.com.
For
additional information on establishing credit go to: Tips on Establishing Credit
Article written by: Dale Stouffer. Dale has been a mortgage broker since 1996 and has served on the Pennsylvania Association of Mortgage Brokers as an instructor to other mortgage brokers, and as a education and legislative chair at both the local chapter and state levels. Dale owns GetPreQualified.com, which is a consumer credit and financial services education and product portal.
http://www.creditcardarticles.net/2007/11/07/get-what-you-want-7-tips-to-better-credit-scores/
reports are created equal. Some have collection accounts, others have a bankruptcy filing, some have tax liens, some just have slow payments. Of course there are infinite possible scenarios for what is on your credit report. Making a difference on your history
takes time and you have to do things correctly or you will likely
face more time and more work to have your credit rebound. It will
rebound, but it will take longer. Here are some solutions to
solving some of the negative items on credit accounts.
1. The most important thing to remember is that the credit bureaus
heavily weight your last two years of credit history in
calculating your credit scores. No matter what you have on your
credit report, if you are going to clean things up, start with
items that went bad in the last two years. Accounts that are older
than two years have a negligible impact on your scores. If you
start to work on these older items, the creditors of these
accounts will update your credit report indicating recent
activity. When this happens the credit scoring system picks up on
the recent activity on a negative credit account and it will most
likely result in a lower credit score versus the improvement you
were looking for. If you are looking to improve your scores for a
mortgage or a auto loan, wait until you get the loan before you go
to fix these older accounts. Most of the time the credit lender
you are looking to borrower from does not care too much about
items that are older than 2 years.
2. If you set up a repayment plan and ask for something in return.
By this, I mean, agree to make payments to catch up in exchange
for the creditor to remove previous past due payments if you keep
your promise to have your payments in on time. By all means, if
you make an agreement to make a payment or settle your account,
keep your promise to do so. You will be surprised as to what you
can accomplish with cleaning up your credit report if you keep
your promises.
3. Speaking of repayment plans, avoid them if you can. First of
all, you probably don’t need another monthly payment in your
budget. Second, your creditor is more likely to settle the account
with you for less than you owe them if you will pay them a lump
sum payment. Agree to pay them by a certain date and then do it.
While you are negotiating this with them, ask them for something in return. Ask them to delete the account completely once they
have been paid. They have the power to do this, and there is
nothing in the US Fair Credit and Lending Laws that say credit
accounts have to be on your credit report, or to stay on your
credit report. You could also ask them to indicate on your report
“paid in full” and show a “zero” balance if they will not remove the
account. Specifically ask them to not indicate “settled for less
than full balance”. This will negatively impact your credit score.
4. Do not close out older credit cards. I have seen it happen all
too often, I will pull credit on someone looking for a mortgage and
I will see old credit card accounts on their credit report that show
great history but the words “account closed by consumer request”.
This is a tragedy because this hurts the credit score of this
individual. Credit scoring takes into consideration you older
accounts and gives you positive points for the age of your
accounts.
5. This is another “no brainer” tip: make your payments on time.
If you are past due on a credit account or more than one, get them
caught up as soon as possible. Your credit scores will continue to
be low as long as you are past due on any account within the past
12 months. If you are behind on more than one account, get one
caught up first, then move to another one. Do not try to catch
them all at once, unless you all of a sudden get some money by
winning the lottery or something like that.
6. Make sure you have somewhere between 3-5 credit accounts open,
and make sure they are active. You want to make sure your credit
card accounts have activity on them at least every 6 months if not
more. If you go longer than this, the creditor will probably mark
the account as inactive. This will either keep your scores the
same or perhaps even lower them.
7. Lower your “debt to credit limit” ratio. What this means is
that your credit score is impacted heavily by the amount of debt
you owe against the maximum credit limits on your revolving credit
accounts (credit cards). For example: if you owe $7,500 and your
credit limit is $10,000 then your ratio is 75%. The threshold
number to keep your ratio under is 50%. Obviously you can lower
this ratio if you pay off some of you debt. If you are going to
pay more than your minimum make the extra payments on one card at
a time. Do not spread your extra payments around. The other thing
to consider it to contact your credit card company to see if they
will extend your credit limit. You will have to be in good
standing with them for them to consider doing this. If they do
extend it, this will lower your ratio.
Here is a bonus tip for business owners. If you are self employed and
you have a lot of personal debt as a result of putting your
business debt on your personal credit cards you could consider
opening up a business credit card. These cards are easier to get
than you might think. What’s key about these accounts is they are
not always reported to your credit report. When you get the card
issued to you, you could transfer your personal credit card debt
to your business card. This will improve your debt to credit limit
on your personal credit and your scores will go up.
For additional information on consumer credit go to: GetPreQualified.com.
For
additional information on establishing credit go to: Tips on Establishing Credit
Article written by: Dale Stouffer. Dale has been a mortgage broker since 1996 and has served on the Pennsylvania Association of Mortgage Brokers as an instructor to other mortgage brokers, and as a education and legislative chair at both the local chapter and state levels. Dale owns GetPreQualified.com, which is a consumer credit and financial services education and product portal.
http://www.creditcardarticles.net/2007/11/07/get-what-you-want-7-tips-to-better-credit-scores/
Instant Approval Credit Cards: No Need to Wait
The Internet has sped up the process of almost everything, including credit cards. Now you can apply online for an instant approval credit card. After filling out an application, you will find out in less than a minute if you have been approved. It’s just that easy and fast! Here’s what you need to know about instant approval credit cards and if they’re right for you.
How Instant Approval Credit Cards Work
If you’re considering applying for an instant approval credit card, the process is simple. The first step is to fill out an online application. After submitting the application, plan to wait a few seconds or minutes while the information is processed. You will then be notified about your approval status. Once you have been approved, the credit card company sends you a card. While the approval time is short, you will not receive the plastic card immediately (they can’t send it through cyberspace yet). You can expect to wait a week or two while the company sends the card in the mail. Once you receive and activate the card, it is yours to use. The entire process for an instant approval credit card is much speedier than applying through the postal mail or over the phone.
One note: instant approval credit card applicants that have good to excellent credit history are the most likely to be approved. If you have filed for bankruptcy or have a history of bad credit, your chances of approval are greatly reduced. Also, if you have recently been denied a credit card through a particular company, you are less likely to be instantly approved by that company. While you still may have other credit card options (such as bad credit credit cards), an instant approval credit card may not be the best choice for your situation.
What Information You’ll Need
Once you’ve decided to apply for an instant approval credit card, you may wonder what information you will be asked for. Applications vary depending on the company; however, most of them require the same basic information from you. Plan to include your personal information, such as name, e-mail address, date of birth, home address and employment information. Some credit card companies will ask about your annual income, income source, and checking and savings accounts. You may also be asked about housing status, monthly housing payments, and the length of time at your current residence.
Check the Benefits
When considering which instant approval credit card to apply for, make sure to look at the various benefits offered. You may be interested in getting cash back, receiving travel miles for dollars spent, or getting gas benefits. Choose benefits that you can use and enjoy. By doing so, you will get the most out of your credit card.
Determine if Instant Approval Credit Cards are Right for You
If you want to save time when applying for a credit card, an instant approval credit card is a great choice. If your credit history is good or better, this card is a safe and speedy option. By choosing a card with benefits that suit you, you will make the most of your credit card use.
Looking for an instant approval credit card today? Gather your information, choose the card with the best benefits for your lifestyle, and then apply online. It’s just that simple.
http://www.credit-card-surplus.com/articles/instantapprovalcreditcards.php
How Instant Approval Credit Cards Work
If you’re considering applying for an instant approval credit card, the process is simple. The first step is to fill out an online application. After submitting the application, plan to wait a few seconds or minutes while the information is processed. You will then be notified about your approval status. Once you have been approved, the credit card company sends you a card. While the approval time is short, you will not receive the plastic card immediately (they can’t send it through cyberspace yet). You can expect to wait a week or two while the company sends the card in the mail. Once you receive and activate the card, it is yours to use. The entire process for an instant approval credit card is much speedier than applying through the postal mail or over the phone.
One note: instant approval credit card applicants that have good to excellent credit history are the most likely to be approved. If you have filed for bankruptcy or have a history of bad credit, your chances of approval are greatly reduced. Also, if you have recently been denied a credit card through a particular company, you are less likely to be instantly approved by that company. While you still may have other credit card options (such as bad credit credit cards), an instant approval credit card may not be the best choice for your situation.
What Information You’ll Need
Once you’ve decided to apply for an instant approval credit card, you may wonder what information you will be asked for. Applications vary depending on the company; however, most of them require the same basic information from you. Plan to include your personal information, such as name, e-mail address, date of birth, home address and employment information. Some credit card companies will ask about your annual income, income source, and checking and savings accounts. You may also be asked about housing status, monthly housing payments, and the length of time at your current residence.
Check the Benefits
When considering which instant approval credit card to apply for, make sure to look at the various benefits offered. You may be interested in getting cash back, receiving travel miles for dollars spent, or getting gas benefits. Choose benefits that you can use and enjoy. By doing so, you will get the most out of your credit card.
Determine if Instant Approval Credit Cards are Right for You
If you want to save time when applying for a credit card, an instant approval credit card is a great choice. If your credit history is good or better, this card is a safe and speedy option. By choosing a card with benefits that suit you, you will make the most of your credit card use.
Looking for an instant approval credit card today? Gather your information, choose the card with the best benefits for your lifestyle, and then apply online. It’s just that simple.
http://www.credit-card-surplus.com/articles/instantapprovalcreditcards.php
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