Basic Credit Card Stuff

New basic credit card scam: phony debt collectors and phony collection agencies

2010-12-08T00:21:00.000-08:00

In this type of economy we live in we have to be vigilant about scams. Everyone wants to get your cash. When dealing with debt collectors or a collection agency, before making any payment or payment arrangement, make sure you get it in writing. Don't fall into the time pressure they put on you with claims that if you don't pay by the end of the phone call they will sue you. The legal process is a long process and doesn't happen overnight. One more day to get it in writing and to call them back to make sure the people you are dealing with are legitimate is worth the wait. Once you send them the cash, it will be almost impossible to get it back.

CLEVELAND - Ohio consumers are getting phone calls from someone claiming to be a debt collector. But, is the caller legit?

"Fast talking foreigner and he said I was delinquent and we're going to take legal action," Tim Swancer remembered.

Swancer is a college student working full time, and figured a payment from an online payday loan slipped through the cracks. He had no reason to doubt the debt collector, so he paid it off.

"He knew who it was from. He knew how much. He knew the last four digits of my social security number. He knew my birthday and place of employment," Swancer explained.

Under the law, Swancer has the right to request documentation of the debt before making any payment. Swancer didn't exercise that right.

After he paid, he looked through his paperwork for proof of debt. Swancer didn't find anything. The debt also didn't appear on his credit report.

"Two days later, I got a letter from CashNet USA saying we value you as a customer," Swancer said. The letter offered a promotional rate if he took out another loan.

The timing didn't add up for Swancer, so he called CashNet USA.

"They knew exactly what was going on. They knew there were fraudulent phone calls," Swancer said.

CashNet USA warns consumers about these phony calls on its website and says the calls are not being made by anyone affiliated with the company.

The parent company of CashNet USA did not return our repeated calls for comment. According to the company's website, customers of Payday Advance, Cashland, Cash America, and SuperPawn are also getting calls. Some people who never did business with these companies are getting calls.

The Illinois Attorney General also issued a warning for bogus debt collectors using a variety of names beside CashNet USA including: Morgan & Associates, Federal Bureau of Investigators, DNR Recovery, DNI Recovery, Legal Accounts Association, Department of Law and Enforcement, America Legal Services, Quick Cash, and ACS.

Swancer just wonders why he never got a letter warning him about this problem.

"I'm afraid someone might have my information," Swancer said.

Swancer is lucky. His bank refunded the debit card payment.

CashNet USA refers consumers to the Federal Trade Commission, but that agency won't say if it's investigating.

Taking advantage of credit card reward programs

2010-12-02T01:16:00.000-08:00

This is definitely the best time of year to use your credit cards to take advantage of credit card reward programs. The best way to maximize your rewards is to check out the website and see the terms and agreements. If you prefer not to read, then you can always call the customer service number and ask them if there are any special offers by using their credit card this month.

Richmond Times Dispatch:

Card issuers have been ramping up the incentives lately, says Bill Hardekopf, CEO of LowCards.com and the author of "The Credit Card Guidebook." This means you might be able to put an extra $50 or $100 in your pocket. Here's how:

• Use extra spending to your advantage. If you're going to spend hundreds of dollars, you might as well get a little gift for yourself in the form of cash back. There are two cards that are offering big cash-back bonuses right now if you hit a certain spending level, Hardekopf says. One is the Chase Freedom Visa, which gives you $100 if you spend $799 within the first three months that you have the card. The other is the Discover More card. With that, you'll get $100 for spending $500 within the first three months.

• Select your cash-back categories wisely. A fairly new trend in rewards cards is extra cash back in certain categories. Sometimes they rotate and are chosen by the card issuer, but sometimes you can select them yourself. They often include things like additional cash back at drug stores, department stores, grocery stores and gas stations. It's worth investigating because you may be able to opt to get extra points by targeting your rewards to the categories where you plan to do your shopping. Selecting to get additional bang for your buck at a department store, for instance, would probably be a good choice during the holidays.

• Be pre-emptive. It's great to get a little cash back after the holidays that you can put toward paying off your bills, but it's even better to just spend less out of pocket from the start. If you already have points accrued from your spending throughout the year, now's the time to use them.

• Be careful with store cards. Store cards seem to be handing out more lucrative rewards than ever, says Ben Woolsey, director of consumer research for CreditCards.com. Still, you want to tread carefully, particularly if you're going to be shopping for a major loan in the near future. Store cards are notoriously bad for your credit score, for three main reasons, according to John Ulzheimer, a credit expert at Credit.com.

For one, they have low credit limits, which means even modest purchases will result in a high utilization ratio of that card. Retail inquiries are also among the most damaging kind in the eyes of creditors, and adding a new account to your mix will bring down the average age of accounts on your credit report (you want as long a history as possible).

Be sure to only charge what you have budgeted for, otherwise, you will be in for a shocking reminder come your next statement. Happy holidays!

Illegal credit card practices

2010-10-04T11:25:00.000-07:00

Credit card companies are so big and powerful they get away with a lot of things both legally and illegally. They make certain things possible with their army of lobbyists. If they can't get it passed that way, they tend to do it anyways hoping not to get caught.

Every once in a while they do slip up and have to pay penalties. This article below explains how visa, mastercard and American express have settled up or are being sued.

WASHINGTON (AP) -- The Justice Department on Monday sued credit card company American Express for alleged anticompetitive practices while proposing a settlement with the two biggest credit card companies, MasterCard and Visa.

In papers filed in federal court in Brooklyn, the department and various state attorneys general sued all three companies, saying they were attempting to insulate themselves from competition.

At the same time, the Justice Department filed a proposed settlement with Visa and MasterCard.

"We want to put more money in consumers' pockets, and by eliminating credit card companies' anticompetitive rule, we will accomplish that," Attorney General Eric Holder said in remarks prepared for an afternoon news conference.

The lawsuit says the card companies are impeding merchants from promoting the use of competing credit or charge cards with lower acceptance fees.

Each time consumers use a credit card to make a purchase, the merchant must pay a fee. Such fees brought in $35 billion last year to the three credit card companies and their affiliated banks.

Under the proposed settlement, Visa and MasterCard agree not to prohibit merchants from offering customers discounts or rebates for using a particular kind of card.

Credit card vs Prepaid Debit card

2010-09-24T12:10:00.000-07:00

There are many differences and similarities between credit cards and prepaid debit cards. Depending on your situation may determine which is the most beneficial to you based on your usage. This article from Yahoo Finance does a great job explaining the differences. Hopefully, you will be able to figure out what will work best in your situation.

Yahoo Finance:

Sporting the Visa and MasterCard logos, reloadable prepaid debit cards are marketed as an affordable alternative to fee-laden bank accounts.

In the last decade, they have proliferated everywhere -- online, in grocery stores, drug stores and big box chains such as Wal-Mart. But consumer advocates argue that prepaid debit cards are brimming with an array of pricey fees and lack the regulatory protection of traditional debit cards.

Prepaid debit cards are not connected to a specific bank account. Cardholders deposit money with the card's issuer to "load" the card. Usage has grown sharply: Last year $28.63 billion was loaded onto prepaid debit cards, up 47 percent from 2008, according to Ben Jackson, senior analyst with Mercator Advisory Group.

The cards were initially designed for the millions of consumers who have bad credit or no access to traditional bank accounts. Up to 10 percent of American families are "unbanked," according to a 2008 study by the Federal Deposit Insurance Corporation. Prepaid debit cards allow these consumers to shop online, pay bills online and do other activities they can't do with cash. Some card issuers report bill-paying activity to smaller credit bureaus, helping consumers rebuild tarnished credit scores.

But the cards are also gaining popularity among consumers who are fed up with bankoverdraft and penalty fees. The industry is marketing the cards to people who routinely overdraw their accounts, arguing that a prepaid debit offers a less costly option.

Anna Daugherty, 23, an editor at a public relations firm in Michigan, starting using a prepaid debit card 18 months ago after racking up $250 in overdraft charges. "My bank always cleared the most expensive thing first, it wasn't chronological," she says, so several smaller purchases made on her debit card would push the account into overdraft, even if the transactions took place the day before a large bill, such as a rent check, was presented for payment.

"I was so angry with that bank it kind of woke me up, and I decided I had to start taking control of my finances," says Daugherty. "I use the card for my gas, so I know I'm not spending my gas money for other things; and if I know I have a group of friends coming over and have to make a big dinner, I take the money out of my normal grocery budget and set it aside on the card."

The biggest player in the pre-paid industry is Green Dot, which raised $164 million in an initial public offering in July and has 3 million active users. It offers cards and reload services at some 50,000 retail stores nationwide, and it offers co-branded cards through Wal-Mart, Kmart and Meijer. Competitors include NetSpend, AccountNow and RushCard.

"Banked customers come into a prepaid card very much around the issue of control," says Mark Troughton, president, cards and network, for Green Dot. "Using their debit cards on their bank accounts, they get into overdraft and penalty fees. On the prepaid debit cards, you spend what you load, which helps you stay on budget. There are no penalty or overdraft fees."

But consumer advocates say the cards contain a variety of fees that can make them equally expensive -- including overdraft fees. A study updated last week by Consumers Union found 12 different charges associated with pre-paid debit cards. They may include fees to acquire the card, a monthly maintenance fee, an ATM fee, a fee to use the card to pay a bill online or at point of sale (especially for PIN-transactions), a fee to check the balance on the card, inactivity fees and a fee to load money onto the card (the exception is typically people who have their paychecks direct-deposited onto the card, or load $1,000 a month).

The report reviewed 19 prepaid cards, comparing their costs using a hypothetical consumer's activity. It found costs in the first month ranged from $16.59 to use a Wal-Mart Money Card, to $17.60 for an AccountNow card, to $43.75 for a RushCard.

Moreover, some cards do indeed charge overdraft or "shortage" fees, says Michelle Jun, staff attorney with Consumers Union and author of the report. Many customers do signature transactions rather than enter a PIN because the latter sometimes triggers a fee.

"Those signature transactions are not in real time most of the time, so they don't get processed until the end of the day," Jun explains. "So you may have that amount on the card at one time, but at end of day you might not have sufficient funds because a transaction hasn't cleared yet. The terms and conditions say you need to make up that negative balance -- and some charge a shortage fee." Jun suggests consumers who have a checking account use a bank debit card and simply opt out of overdraft protection, so the transaction is denied if the funds are insufficient.

Mercator's Jackson says part of the problem is that fees are based on customer usage. "The cost varies from card to card and cardholder to cardholder, so it's caveat emptor," he explains. "If the buyer knows what he needs the card for, and compares the fees, then he can come out ahead. But if it's willy-nilly 'I want this because it has the Visa logo and I can buy stuff online' -- but someone is not paying attention to what it costs to reload or do transactions -- it's going to become difficult."

The other issue is what costs are being compared. "Consumers Union typically compares prepaid cards to free checking accounts, and prepaid cards lose," says Jackson. "Prepaid card advocates compare their products to the cost of going to a check cashing store and paying for a bunch of money orders to pay your bills -- and prepaid cards win."

Aside from the issue of fees, consumer advocates are concerned that the cards don't offer the same protections as debit cards tied to a bank account, which are regulated by the Electronic Funds Transfer Act (EFTA) and Regulation E. If consumers contact a debit card issuer about a lost or stolen card within two business days, liability is limited to no more than $50. If a lost or stolen debit card is not reported to the issuer within two business days, a consumer's liability is capped at $500.

The industry says it offers similar protections in its terms and conditions. But consumer advocates say these can be changed or rescinded because companies reserve the right to change the terms of the contract at any time for any reason. Reloadable prepaid debit cards are also not covered by the new restrictions of the CARD Act, such as the rule prohibiting gift cards from expiring before five years, and banning inactivity fees in the first 12 months.

"We take it for granted that it is safe to use a debit card under the EFTA. Those same rules should apply to prepaid debit cards," says Jean Ann Fox, director of consumer protection with the Consumer Federation of America. In addition, "it's hard to tell from card to card which ones are structured so there is FDIC insurance" and if the consumer's funds would be protected if the institution issuing the cards failed.

"I think it's a valid concern," says Troughton of Green Dot, which sells FDIC-insured cards. "As far as I know, the vast majority is FDIC-insured, but consumers need to look program by program."

Perhaps the most contentious issue is that some companies link the prepaid debit card to an expensive line of credit -- a cash advance that essentially works like a payday loan. "A cash advance on a prepaid debit card has triple-digit interest rates, and is repaid by deducting the next deposit to the card all at one time, so consumers don't get an installment repayment schedule," says Fox. "This is a debt trap for consumers who might use these cards."

Troughton says Green Dot has no plans to expand into this service. "We don't believe there is a way to offer short-term credit today in a fair and value-oriented way," he says. "I don't think it's a good value to customers."

Class Action Lawsuit Filed Against American Express

2010-09-20T07:15:00.000-07:00

I think as we see more credit card companies violating the interest rate laws recently passed, there will also be an increase in class action law suits against them. This law firm has started one against American Express and put out a press release.

Atlanta, GA (PRWEB) September 17, 2010 -- Atlanta law firm Webb, Klase & Lemond, LLC has filed a class action lawsuit against American Express alleging that the company unilaterally increased consumer interest rates in violation of the applicable credit card agreements. The complaint asserts that these increases were contrary to American Express' long-standing practice of tying its rates on many credit card accounts to the Prime Rate, the interest rate charged by banks to their most creditworthy customers. This commitment was established in the company's form contracts and through years of consistent dealings with customers according to the suit. The complaint states that American Express raised rates even for consumers who have always maintained their good standing by satisfying all account requirements, such as making required payments and not exceeding credit limits. Furthermore, the plaintiff claims American Express has taken such action even against those whose credit scores and general creditworthiness have not declined. The suit requests that customers be refunded all excessive interest charges in addition to several other forms of relief. The case, styled Meeks v. American Express Centurion Bank, Inc., is pending in the Superior Court of Fulton County, Georgia and has been assigned Case Number 2010CV190851.

According to the suit, for several years Mr. Meeks was charged a "fixed-variable" interest rate equal to the Prime Rate plus a "marginal rate" of 2.99 percent. In this manner, the plaintiff claims the company's interest rates tracked the Prime Rate, moving up when the Prime Rate climbed and down when the Prime Rate fell. The complaint asserts that the company unilaterally ended this practice in late 2008 and throughout 2009 by periodically increasing customers' marginal rates such that - even as the Prime Rate fell to historic lows - customers suffered higher and higher interest charges. For example, Mr. Meeks' marginal rate went from 2.99 percent to 11.99 percent and thus, even with the Prime Rate at 3.25 percent, American Express charged him interest of over 15 percent, according to the lawsuit. Mr. Meeks claims the improper and excessive rate hikes have cost him hundreds of dollars and more than doubled his monthly payments.

The lawsuit asserts that American Express imposed these higher rates even on existing customer balances. In addition, the suit alleges that American Express's offer that customers could reject this interest rate increase by freezing or closing their credit card accounts is inadequate because, as the company is well aware, most consumers rely on their credit card accounts and closing any credit line has a negative impact on a consumer's credit score. As a result, the complaint contends that customers have been forced to accept American Express' unilateral rate increases.

If you wish to discuss this action or have any questions concerning this press release, please contact Webb, Klase & Lemond by e-mail at contact(at)webbllc(dot)com or by calling (770) 444-9325.

Dealing with Collection Agencies on deliquent credit cards and charge offs

2010-08-24T07:14:00.000-07:00

This was a very good article that I think consumers who are new to collections may find helpful. In this economy, dealing with collectors can be difficult. Most of them do violate the FDCPA and try to intimidate consumers to pay.

There are remedies to deal with credit card delinquencies and charge offs.

Collections Recon:

If you use credit cards, owe money on a personal loan, or are paying on a home mortgage, you are a debtor. If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a debt collector.

When owing a legitimate bill that is overdue, a debtor should immediately try to make arrangements with the company owed. If arrangements are unsuccessful or the amount owed is still not paid, collection agencies will usually be called upon to contact the debtor. Most of these agencies are ethical in their practices. However, some use practices that are unethical as well as illegal.

The federal Fair Debt Collection Practices Act requires that debt collectors treat you fairly by prohibiting certain methods of debt collection. Much of the law places limits on the activities of debt collectors, which are defined as any person, other than the creditor, who regularly collects debts owed to others. For instance, it can be an attorney who regularly collects debts or a company that pursues debt collection as a business practice.

Debt collectors may contact you in person, through the mail, or by telephone, telegram, or fax. However, they may not contact you at unreasonable times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves.

You can stop a debt collector from contacting you by writing a letter to the collection agency telling it to stop. After that, the agency may only contact you to say there will be no further contact or to notify you that some specific action will be taken. This however, does not stop the collection proceedings, only the contacts.

Certain types of collection practices are expressly prohibited. Harassment, threats of bodily harm, or the advertisement of your debt is prohibited. Debt collectors may not make false statements about your credit history or lie about what action they can legally take against you.
Often collection agencies obtain a group of overdue accounts from a creditor. If the agency collects what is owed, they receive a percentage of the payment in return for their services. If the collection agency collects a percentage of what is paid, the original creditor still owns the account and the collection agency has no right to sue the debtor. Some unscrupulous collectors will threaten to take a debtor to court when actually they do not have the legal right and have no intention to do so. This kind of scare tactic frequently works but is illegal. All the collection agency can do in this situation is to put a derogatory entry into a debtor’s credit report, which may follow the debtor for years.

Some collection agencies buy bad debts called “charge-offs” from original creditors. The debtor now owes the full amount to the purchaser. The agency might only pay the original creditor 1 percent to 5 percent of face value because the chances of recovery decrease substantially with time. The agencies’ profits come from the difference between the purchase price and the amounts that are eventually collected.

You have the right to sue a debt collector in state or federal court if you believe the law was violated. However, even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you truly owe it.

The North Dakota Department of Financial Institutions must license all debt collectors. You can file a complaint against a debt collector by contacting the Department of Financial Institutions at 701-328-9933.

For more information on your rights under the Federal Fair Debt Collection Practices Act see http://www.ag.nd.gov/Brochures/FactSheet/Fair.pdf.
The Attorney General’s Consumer Protection Division investigates allegations of fraud in the marketplace. Investigators also mediate individual complaints against businesses. If you have a consumer problem or question, call the Consumer Protection Division at 328-3404, toll-free at 1-800-472-2600, or 1-800-366-6888 (w/TTY). This article and other consumer information is located on our website at www.ag.nd.gov.

NFL Reward cards to be cancelled, use the points or lose them

2010-07-05T18:52:00.000-07:00

I think this is no surprise since many banks are losing money, they are doing what they can to save any money. They have done it by cancelling members cards even if they are in good standing.

Fortunately, some of them are giving memebers a chance to cash in those points before they do away with the plan.

NEW YORK (AP) -- The National Football League's decision to move its branded credit card business from Bank of America to British banker Barclays is forcing customers of the Charlotte, N.C., bank to scramble to spend reward points before they expire next month.
On message boards, in between talk about upcoming training camps, fans are discussing how they'll spend their points in Bank of America's "NFL Extra Points" program. They have until the end of August, just before Barclays' new program begins in September.
Fans can get a one-hour appearance from the Denver Broncos mascot Miles for 40,000 points, Pittsburgh Steelers head rest covers for 3,250 points, or replica team jerseys for 10,400 points. Fans also can buy "experiences" such as visiting the playing field before the game. A point typically equals $1 spent on the card.
There's a giant countdown clock ticking away the time on the program's site, http://www.nflextrapoints.com -- 57 days as of Monday.
Ann Weinzimmer has racked up about 5,000 points on her Cleveland Browns card. The 33-year-old Cleveland lawyer is frustrated that her accounts seem to keep changing ownership. She's planning to look for better point deals rather than get a new NFL card.
Weinzimmer -- who notes she's really more of a Cincinnati Bengals fan -- will probably spend her points on baseball caps. "I might as well, otherwise you're just throwing it away," she said.
The market for credit cards affiliated with sports teams, universities or other special-interest ventures has been growing and consolidating amid the financial shakeout. The NFL likes having credit card partners because it gets a cut of the business beyond the initial payment for the rights to the franchise. Credit card companies like the programs because rabid fans don't need much convincing to sign up.
Bank of America Corp. won't say why it and the NFL failed to reach agreement on an extension of a contract it has held since 1995. It is still the official bank of Major League Baseball and for four NFL teams, the Washington Redskins, New England Patriots, Carolina Panthers and Dallas Cowboys, which let it issue debit cards with their logos but not credit cards. The NFL, which announced the deal with Barclays last month, declined further comment.
Bank of America's credit card business is large. It reached a peak of $184 billion in balances outstanding in 2008, but it was stung in the recession by growing defaults. The default rate went from 3.9 percent in 2006 after it acquired MBNA to 11.2 percent by the end of 2009, though the rate has started to improve.
The sticking point in the NFL talks may have been the issue of debit cards, said Odysseas Papadimitriou, a former executive with Capital One and now CEO of CardHub.com, a credit card comparison site. Banks prefer debit cards because customers usually keep their accounts longer -- which means less work to land new accounts. And customers are also less likely to run up debt because debit card charges are automatically deducted from customers' checking accounts.

New Basic Credit Card Changes

2010-06-28T03:57:00.000-07:00

It seems like there are many more changes happening in Congress that will affect your basic credit and debit card transactions. From fee to rewards and discounts from paying cash.

Associated Press:

Hate those merchants that won’t let you use your credit card unless you spend more than a certain amount? Well, now they have Congress’s blessing, as long as the minimum is not higher than $10. The Federal Reserve can increase the minimum if it chooses. As for maximums, only the federal government and colleges and universities can limit what people spend. So if you are paying tuition on a credit card and earning a couple of free plane tickets each year, that fun may soon end.
Merchants are also free to offer discounts to people who pay cash instead of using cards, or use debit instead of credit cards. They will not, however, be able to charge one price for people using American Express cards and a lower price for people using Visa and MasterCard credit cards.
Merchants will also not be allowed to give discounts based on which bank issued the debit or credit card you are using. Why would a merchant want to do that? Because the bill gives the Federal Reserve the ability to set a limit on the fees that stores must pay to accept debit cards. The catch here, though, is that only banks with more than $10 billion in assets would be subject to the cap. As a result, merchants may have to pay more to accept debit cards from smaller banks and credit unions than big banks like Bank of America and Chase. And if that were to happen, stores might be tempted to offer discounts to people with big bank debit cards.
Oddly, community bankers and credit unions don’t want to end up earning more money from merchant fees than big banks do, even though it would give them a competitive advantage. Why not? They worry that the big banks will immediately put pressure on Visa and MasterCard to lower merchant fees for all debit cards, not just the big banks’ cards. Thus, the smaller institutions had hoped that the status quo would remain, with everyone continuing to earn fat fees from the merchants forever.
It is not clear what the Fed will do or how the big banks and Visa and MasterCard will react. This could take a few years to play out, or many years if lawsuits start flying. Some merchants may try to play fast and loose with the rules too. Bill Hampel, chief economist of the Credit Union National Association, figures that small retailers might happily accept debit cards with the names of big banks that they recognize and then ask shoppers with cards from no-name institutions to use cash or some other card.

Will canceling credit cards hurt your credit score?

2010-05-06T13:09:00.000-07:00

With credit card companies raising rates and fees on cards consumers don't use, the question is should I cancel my credit card since I don't use it? Instead of going into the whole FICO logic and trying to find out what the effects will be, I will simply advise you to close the credit card account. If you don't use it and don't want to pay the fees, then cancel it.

Will this lower my credit score? Yes, it will but not by much and that score decrease will only be temporary. In today's economy, credit has become a luxury and should be used sparingly.

4 Basic Credit Card Errors

2010-04-06T23:04:00.000-07:00

This was a cool article I wanted to share with you. These are mistakes anyone can make.

Christian Science Monitor:

1. Not Paying Attention to Due Dates

This recently happened to me. I got my email notification of the statement, logged it in the back of my mind that I needed to pay that bill and unfortunately got busy and never bothered to pull that statement out of the back of my mind until two days after the bill was due.

I know what you’re thinking – just automate your bill pay! Yes, I should do that, but I do like to take a look at what’s on the statement and make sure everything is correct. This forces me to do that.

Making a late payment even if it is only by a few days can rack up ridiculous charges that only compound your debt. Those annoying charges can also have an impact on your credit report. Being vigilant about paying your debt and paying it on time is key.

What I’ll do is give American Express a call and see what they can do for me. Since I don’t carry a balance, normally pay on time and have been a long-time, loyal customer I’m hoping they’ll waive those charges for me.

2. Not Paying Your Bill in Full Each Month

This is where it all begins doesn’t it? You’re a willing victim to the crazy cycle. You buy something you can’t afford and think, “I get paid in two weeks, I’ll just put it on the credit card and as soon as I get the bill I will pay it off” and then something else comes up.

Emergencies happen or you find some other trinket you want to buy and you put that on your credit card too. At the end of the of the month you receive a hefty bill. What do you do? If you only pay what you can and wind up leaving a balance on the card that accrues interest at insane amounts, you’re asking for trouble and perpetuating the cycle!

Just think, with a little discipline and some self control you could’ve avoided unnecessary spending and used that money to open a Roth IRA or fund some other type of investment account.

3. Not Realizing You Have Credit Card Problems

Okay, this sounds silly, how can you not recognize that you have credit card problems? Well, it’s actually fairly easy. I spent the majority of my college years and shortly after living the high life without any regard to the thousands of dollars I was racking up!

I didn’t even realize that I had a credit card problem. I just figured this was a normal part of existence and that once I made more money, then I would pay off that debt! No big deal right?

Little did I realize that I needed to make some drastic changes! Get real with yourself and ask if you’ve got some spending issues.

4. Not Negotiating With Credit Card Companies

It puzzles me that more people don’t call their credit card companies to negotiate with them. You can negotiate things like interest rates, late payment fees or even payment plans. If nothing else, it doesn’t hurt to give them a call and find out what they can do for you.

The person who never asks, never receives. Now of course there is no guarantee that the credit card company will do anything, but wouldn’t it be nice to know if they were willing to do something?

Getting out of debt is not easy, but don’t make it harder on yourself by making simple mistakes that can easily be avoided.

If your spouse dies, then do you have to pay the credit card?

2010-03-25T23:33:00.000-07:00

My understanding of credit cards regardless of whether you live in a community property state or not is that only the primary cardholder is responsible if it is a individual account. Even if that cardholder authorizes others to use the card, only the primary person is responsible. If the primary card holder passes away, then the authorized cardholders are not held responsible for the debt.

This is different from a joint account where both users were approved jointly as co-applicants. In that case, both are held responsible for the debt even if one of them passes away.

Check out this HSBC recent story in the Chicago Tribune:

For most of his adult life, Elmer Duncan was a loyal Carson Pirie Scott customer.

By his wife's estimation, he first opened an account with the Chicago department store in the mid-1950s. Ruby Duncan said it was her husband's preferred place to shop, and he always paid his bills on time.

When he died July 17, Elmer Duncan left a $2,361.04 balance on his Carson Pirie Scott credit card, which is administered by HSBCbank.

Since her name was never on the account, Ruby Duncan sent HSBC a copy of her husband's death certificate and assumed the debt would go away.

Instead, HSBC sent a new bill — with her name on it.

"It's never been my account. I never signed any papers that said it was my account," she said. "I thought it was very distasteful."

In November, HSBC sent the account to collections in Ruby Duncan's name. Fed up, Duncan quit trying to contact HSBC and began ignoring their calls.

"I'm still grieving for my husband," she said. "We were married 38 years. That's a long time. I didn't need all the aggravation that I got from them."

After realizing the problem would not go away, Duncan wrote What's Your Problem? in late January.

"I pay my bills, and my credit is good," she said. "They tried to mess up my credit, and that's what really made me angry. Your credit is part of your life. As old as I am, I still want my credit to be good."

Duncan said that if the debt was hers, she would pay it. But the credit card in question was strictly her husband's.

The Problem Partner, Kristin Samuelson, contacted HSBC spokeswoman Kate Durham, who reviewed Duncan's concerns.

Two days later, HSBC decided to erase the $2,361.04 debt and correct Duncan's credit record.

Durham said she could not discuss the specifics of Duncan's case, citing privacy concerns. But she said the company's goal is to ensure "all of our customers receive a positive card experience with each and every interaction."

"Since learning more about this particular situation, we have since resolved the matter in Ms. Duncan's favor," Durham said.

Duncan said HSBC sent her a letter telling her it had erased the charges and would inform the credit bureaus within 90 days.

"I'm happy that they decided to do that, but I felt they really kind of messed me over because they kept trying to send letters," she said. "They tried to mess up my credit. They knew they weren't supposed to do that."

New Basic Credit Card Law 2.22.2010 FAQ

2010-02-19T07:12:00.000-08:00

This is a more personal Q&A I found on Kiplingers site. I thought they were good questions and answers and think you might find them useful.

Kiplingers:

After the new credit-card legislation takes effect February 22, I know that a bank can’t raise my interest rate if I pay my credit-card bill on time, even if I am late paying other bills. But can an issuer restrict use of my card in other ways?

Yes. Under the Credit Card Accountability Responsibility and Disclosure Act, if your credit report shows late payments, your card issuer could decide you have become a risky customer and cut your credit limit, impose an annual fee or raise your interest rate on future transactions. You must receive 45 days’ notice of any rate increase.

What happens if I decide to opt out of a rate increase?

You won’t be able to use the card to make new purchases. You’ll have five years to pay off your account balance at the old rate, or you will have to continue to make monthly payments. Your new payment may not be more than twice as much as the old minimum payment.

I bought a new refrigerator using my card last spring and was able to defer payments for 12 months. The grace period ends in April. How can I be sure that my monthly payments are applied to the deferred balance and not to more recent purchases?

The CARD act requires that any payment you make over the minimum be applied first to the balance with the highest interest rate and then to balances with lower rates. However, for the two months before the grace period ends, the entire amount you pay in excess of the minimum must be applied to the deferred balance.

My credit-card company used to insist that my payment arrive by 10 a.m. on the day that it was due and charged a fee if I didn’t meet the deadline. Do the new rules offer any relief?

The CARD act imposes clear and simple payment rules. Payments are always due on the same day of the month and are considered to be on time if they are posted by 5 p.m. If the due date falls on a weekend or holiday and your payment isn’t processed until the next business day, it is still considered on time. Your card issuer may not charge you a fee to pay by phone or electronic transfer unless you receive expedited service.

Can retailers still offer customers approval for a store credit card at checkout?

Instant credit isn’t going away, but it could be a lot less instantaneous. The CARD act requires that issuers consider your ability to pay before extending credit. Previously, retailers could enter your name, address and Social Security number into the computer, get your credit score and immediately decide whether you were creditworthy. It’s unclear how the new system will work and how much financial information you will have to provide (perhaps income and any debts), but the process is likely to be more cumbersome.

Does the CARD act apply to gift cards?

Yes, although the provisions that cover them do not go into effect until August. After that, gift cards will have to remain valid for five years. Dormancy or inactivity fees will be forbidden unless the card has not been used for 12 months, and then you may be charged only one fee per month. Fees to replace expired cards that have money on them will be forbidden. You may still be charged a fee of $4 to $8 to purchase or activate a card.

Will my monthly statement look different?

Yes, it will show how much you really pay in principal and interest if you make only the minimum payment, as well as how long it will take to pay off your entire balance. It will also tell you how much you’d have to pay each month to repay the balance in 36 months and the total amount you will pay[MSOffice1] in principal and interest. Plus, the statement must conspicuously display the payment due date, any late-payment fees and the late-payment penalty rate.

I never keep those fine-print agreements that come with new credit cards. Is there a way to verify the terms and conditions of my card?

Yes, issuers must now post card agreements on their Web sites and provide a copy to the Federal Reserve Board, which will compile and post them on its Web site.

What do these new laws mean for basic credit cards?

2010-02-18T14:50:00.000-08:00

The new credit card laws that go into effect this week are suppose to protect and help consumers. What do the experts think about it?

Huffington Post:

The credit card reforms enacted by Congress and signed by the president last year are set to take effect on Monday. Unsurprisingly, credit card issuers have already found several ways to get around the reforms.

Harvard professor Elizabeth Warren, chairwoman of the bailout oversight panel, said on Thursday that the shortcomings of the credit card reforms show the need for an independent agency that protects consumers from the financial industry.

"[The Credit Card Accountability, Responsibility, and Disclosure Act] is a good first step but it isn't enough alone," said Warren on a conference call with reporters hosted by the U.S. Public Interest Research Group. "The credit card industry and the entire consumer credit industry is broken. We need an agency, a cop on the beat that is flexible and responsive."

The House of Representatives approved a financial regulatory reform bill that includes a Consumer Financial Protection Agency. It's fate in the Senate is uncertain.

Warren described a new credit card trick to get around new restrictions on arbitrary interest rate increase and "hair trigger" rate increases for barely-late payments.

"Last week, somebody showed me a letter from their bank that raised their interest rate from 9.9 percent to 29.9 percent -- not because the person had done anything wrong or failed to pay, just a rate increase -- but then gave a so-called 'rebate' back to 11.9 percent," Warren said. "So now the company can impose its 29.9 percent rate increase anytime it wants because that is the actual rate on the card. In other words, this issuer has just figured out a way to slide slightly over from the rule of the CARD Act and avoid the intent of the rule in order to go back to the practices that Congress has deemed abusive."

That's a new one. In September, the Center for Responsible Lending issued a report titled "Dodging Reform" identifying eight new tricks credit card issuers had come up with. The Federal Reserve, when it promulgated rules for the industry to follow the reforms, squashed two of the evasions identified by the Center.

New Basic Credit Card Rules and Changes

2010-02-15T22:34:00.000-08:00

Visa now has No Signature Required transactions

2010-02-12T11:04:00.000-08:00

I think this new rule makes it convenient to both merchants and credit card customers, but I can see more issues that arise from this action. I think there is the possibility of more fraud and more charge backs.

I know it is just for the $25 transaction, but think about how many transactions are made below that amount. On top of that, there are many transactions done online that are risk to be disputed.

I was surprised to not have to sign a receipt at the store recently, but felt like the process is less secure.

Business Week:

Visa Inc today announced plans to offer its No Signature Required program to the majority of merchant categories in the United States beginning July 2010, making the switch to Visa digital currency even more convenient and compelling.

Under the new expanded program, for domestic transactions $25 and less, retailers can accept U.S.-issued Visa cards for purchases without requiring a cardholder signature; this program has the potential to increase speed at the point of sale and enhance customer satisfaction.

"Visa's No Signature Required program has been enormously popular with Visa cardholders and merchants in busy retail environments like quick service restaurants and coffee shops," said Bill Sheedy, president, the Americas, Visa Inc. "Innovation comes in many forms and enabling Visa cardholders to swipe their card and go at most U.S. retailers is a small, but significant advance in the ongoing migration to digital currency."

According to a Visa Inc. survey, 69 percent of participants surveyed cited either convenience or speed as the primary reason for using their credit or debit card. Visa consumer research also found that payment options influence a consumer's decision to visit a business and acceptance of payment cards has the potential to lead to stronger customer satisfaction and retention for retailers.

With the changes announced today, approximately 98 percent of all U.S. merchant category codes in the Visa system will be covered by the No Signature Required program.

Currently 26 merchant categories are eligible for No Signature Required in the U.S. They include: auto parking lots and garages; bakeries; book stores; bus lines; candy, nut and confectionary stores; car washes; dairy stores; drug stores and pharmacies; dry cleaners; fast food restaurants; laundries; local commuter transport; miscellaneous food stores; motion picture theaters; news dealers and newsstands; quick copy services; restaurants; service stations; taxicabs and limousines; tolls and bridges and video rental stores.

Offering the No Signature Required program will allow hundreds of thousands more U.S. retailers, including traditionally cash-heavy merchants such as discount stores, to enjoy greater benefit from card acceptance on low dollar transactions. These benefits include the potential for faster payment, increased sales and operating efficiencies they don't get from cash and checks.

New Basic Credit Card Rules

2010-01-28T04:00:00.000-08:00

This coming February we have many new basic credit card rules going into effect. Anyone who has a credit card or obtains one in the future will be affected.

Here are some examples that may be similar to your situation. Of course, this is just a small sampling.

Kiplingers:

Can the bank still raise my interest rate?Yes. The issuer can raise the rate on an existing card as long as you are given 45 days’ notice. If you apply for a new card, however, the issuer may not increase your interest rate for one year, and then it may charge the higher rate only on new purchases, not your existing balance. There are, however, some significant exceptions to this prohibition. Even on a new card, your rate can go up if it is based on an index that fluctuates, such as the prime rate, or if you are more than 60 days late making the minimum payment. (Your minimum monthly payment may increase, too.) Issuers have been switching cardholders from fixed interest rates to variable rates for months to take advantage of this loophole.

I changed cards to snag a low rate on balance transfers. But the rate for new purchases is much higher. What happens when I pay my bill? The CARD Act really helps here. It requires issuers to apply your payment to the balance with the higher rate. Previously, issuers automatically applied payments to the lowest-rate balance.

I lost my job, and I’m having trouble paying my mortgage. But I’ve kept up the payments on my credit card. Can the issuer cancel my card? No. Paying your mortgage or any other bill late no longer affects your credit card. Your payment record on the card itself is all that matters.

My credit score recently dropped to 680. Can I still qualify for a credit card? A few years ago, banks liberally offered credit cards to people with scores in the 650-to-680 range and then raised their rates if they paid late. With default rates hovering around 11%, however, issuers are making it more difficult to qualify for a card if your credit score is below 700. Try applying at an institution where you have a checking account, mortgage or certificate of deposit, recommends Ken Lin, of CreditKarma.com. If that doesn’t work, you could get a secured card – you’ll deposit a sum in the bank, which then becomes your credit limit. After a year of making on-time payments, you may qualify for an unsecured card.

My daughter is going off to college next fall. Can she get a credit card? It’s unlikely that she will qualify for one on her own. If she is under 21, she can obtain a credit card only if an adult cosigns or if she can prove she has adequate income to pay the bill. If you decide to cosign, you accept responsibility for all her expenditures, so you need to talk to her in advance about using her card wisely.

Credit cards harder to obtain

2010-01-08T12:58:00.000-08:00

You may have good credit or some credit challenges, but in the past you would of been able to get a credit card albeit a higher interest rate. Now, it may not be as easy because the economy is hurting all the credit card companies.

This in turn has forced them to scale back on the amount of credit available to loan out. They simply have been forced to become more conservative in their lending practices. According to Bloomberg:

Jan. 8 (Bloomberg) -- Consumer credit in the U.S. dropped a record $17.5 billion in November as unemployment close to a 26- year high discouraged borrowing and banks limited access to loans.

The slump in credit to $2.46 trillion was more than anticipated and followed a revised $4.2 billion drop in October, Federal Reserve figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News projected a decrease of $5 billion. The series of 10 straight declines was the longest since record-keeping began in 1943.

A labor market that’s shed 7.2 million jobs since the recession started in December 2007 is restraining consumer spending that accounts for about 70 percent of the economy. Fed policy makers have said tighter bank lending standards and reductions in credit lines are hampering the recovery.

So if you are turned down now for a credit card, don't take it completely personally. The credit card companies are just in their own struggles.

New Credit Card Fees

2010-01-01T17:32:00.000-08:00

With the New Year here come new credit card laws. However, banks have already taken action to make sure they are able to make up lost revenues. In the previous posts, we discussed the interest rate increases, changing fixed rates to variable rates, and reducing credit limits and canceling cards.

If you escaped the notice of the credit card companies from taking these actions against you, then you are lucky. However, the credit card companies have made sure not to have any fees fall through the cracks. When you receive your latest statement, there will be no doubt little inserts in tiny print explaining new and extra fees for things that used to be complimentary.

Wall Street Journal:

Credit-card companies already have been racing to slip new fees and practices into customer contracts ahead of the law. Issuers are closing accounts, switching cards with fixed interest rates to variable rates and introducing cards that have an annual fee.

Christopher Moss, who regularly shops at sporting-goods chain Gander Mountain, recently was notified that he will be charged a $1 "processing fee" each time he receives a printed statement of his Gander credit-card account rather than an electronic one. The 50-year-old paralegal said he is prepared to cut up the credit card even though he likes the loyalty rewards that come with it.

"It's not like I can't afford it, but it's another little stick in the consumer's eye," Mr. Moss said.

The Gander Mountain card is issued by World Financial Network National Bank, a unit of Alliance Data Systems Corp., of Dallas. The company, which also issues credit cards for women's clothing chain Ann Taylor Stores and lingerie maker Victoria's Secret, says that the decision to charge the fee is partly tied to the costs that it will incur from the new rules.

"One requirement of the Credit Card Act of 2009 is that monthly billing statements will now have to include significantly more information pertaining to the cardholder's terms and conditions, thus increasing the amount of paper, production and postal expenses as well as having a greater environmental impact," the company said in a written statement.

Issuers also are likely to water down rewards programs and introduce fees for inactive accounts. "There are so many things that issuers can do that the Card Act doesn't touch," said Bill Hardekopf, chief executive officer of LowCards.com, a Web site that tracks the industry.

In addition to the credit-card rules, the government will crack down next year on ways banks charge overdraft fees, which are assessed when a customer overdraws an account.

New Federal Reserve rules will require banks to receive customer consent before they can be charged such a fee. That is a significant change from the current practice, in which banks typically honor withdrawals and then levy a fee if the account is overdrawn. The Fed estimates that banks generate $25 billion to $38 billion a year in overdraft fees.

The changes come against a backdrop of rising anger at the nation's banks—having been largely supported by hundreds of billions of public bailout dollars in late 2008 and 2009. One recent survey by Chicago's Bank Administration Institute found that 43% of retail-bank executives feel that consumer trust in banks has eroded in the past six months.

79.99% Interest Rate Cards

2009-12-18T10:23:00.000-08:00

You have to read the fine print to make sure you don't get something that is not beneficial to you. In a recent article, it mentions a credit card that charges 79.99% interest rates!

NEW YORK —

It's no mistake. This credit card's interest rate is 79.9 percent.

The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It's a strategy other subprime card issuers could start adopting to get around the new rules.

Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card's credit line.

In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn't set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.

"It's the highest on the market. It's the highest we've ever seen," said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.

The terms are eyebrow raising, but First Premier targets people with bad credit who likely can't get approved for cards elsewhere. It's a group that tends to lean heavily on credit too, meaning they'll likely incur the steep financing charges.

So for a $300 balance, a cardholder would pay about $20 a month in interest.

First Premier said the 79.9 APR offer is a test and that it's too early to tell whether it will be continued, according to an e-mailed statement. To comply with the new law, the bank said it will no longer offer the card that has $256 in first-year fees as of Feb. 21, 2010. However, customers will still be able to use their existing cards. The bank said "no final decisions" have been made regarding any rate changes for those cards.

First Premier noted that it needed to "price our product based on the risk associated with this market."

The bank declined to specify how many people were offered the 79.9 APR card.

According to First Premier's Web site, the credit cards are serviced by its sister organization Premier Bankcard. The company, based in Sioux Falls, S.D., says Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers.

In a mailing sent to prospective customers in October with the revamped terms, First Premier writes "...you might have less-than-perfect credit and we're OK with that." The letter notes that an online application or phone call is still required, but guarantees a 60-second status confirmation.

The letter also states there are no hidden fees that aren't disclosed in the attached form. That's where the 79.9 percent interest rate and $75 annual fee are listed. There's also $29 penalty if you pay late or go over your $300 credit limit.

Even if First Premier doesn't stick with the 79.9 APR, it will likely hike rates considerably from the current 9.9 percent to offset the lower fees, said Shahani of Synovate.

The revamped terms may not be the only changes; First Premier also appears to be moving away from the riskiest borrowers.

The bank typically mails offers to subprime households, meaning those with credit scores below 700. In the third quarter, however, 84 percent of its offers were sent to subprime households, down from 91 percent the same period last year, according to Synovate.

First Premier could be cleaning up its credit card portfolio since the new regulations will limit its ability to raise interest rates. That could mean First Premier won't issue cards as liberally to those with bad credit.

As harsh as First Premier's terms seem, that could be a blow to those who rely on the card, said Odysseas Papadimitriou, CEO of CardHub.com.

"Even when the cost of credit is astronomical, for people in true emergencies, it's much better than not having access to credit," said Papadimitriou.

Until Feb. 21, First Premier is still offering its even-higher-fee card online. So the price for credit the bank charges is at least $256 in first-year fees.

Why is my interest rate going up?

2009-12-02T14:35:00.000-08:00

The laws have passed and will soon be in effect. There will be many emails and letters sent out to numerous customers letting them know their interest rates will be going up.

You might be wondering why was I targeted? I haven't made any late payments, never been over the limit, and have a long credit history with that credit card company. The reason lies not in your credit profile, but in the actual credit card company itself.

But here's what the new law won't do: It won't prevent interest rates from going up for the vast majority of customers.

Credit card rates: Nowhere to go but up

Even after Feb. 22, holders of so-called variable-rate cards can expect to see increases. Variable rates are based on the prime rate and meant to follow the rise and fall of that index.

The problem for consumers is that the prime rate is at 3.25%, an historic low. It will almost certainly go up, experts say. And so will credit card rates, which currently average 14.9%, according to the Federal Reserve.

"It does leave a lot of room for growth and prices will go up," said Joshua Frank, a senior analyst for the Center for Responsible Lending.

While most credit card holders already have variable-rate cards, banks have been busy these past few months making sure nearly all customers have those kinds of cards. In addition, some banks are setting a floor on certain accounts to prevent rates from sinking below a minimum level, according to a Pew Charitable Trusts study.

"The credit card reforms outlawed some seriously abusive practices, but the cards will still be loaded with other tricks and traps," said Harvard University professor Elizabeth Warren, an advocate for consumer financial protections.

Indeed, the expectation that interest rates will tick higher exemplifies the difficulty lawmakers faced when crafting the new rules: They wanted to protect consumers without killing credit availability at a time when bank loans are already choked.

Basic Credit Card Annual Percentage Rate

2009-11-25T12:37:00.000-08:00

One of the most basic credit card stuff you need to understand is annual percentage rate. This is not just the nominal interest rate. Interest rates are what you are charged for purchases and cash advances.

However, the annual percentage rate (APR)includes annual fees, late fees, over the limit fees, and any other fees the credit card companies charge. All these charges are just a form of interest, so when you add these fees in as interest the APR increases dramatically. All fees are a cost of borrowing credit. Once you pay any fee, the APR increases accordingly.

Wikipedia:

There are at least three ways of computing effective APR:

* by compounding the interest rate for each year, without considering fees;

* origination fees are added to the balance due, and the total amount is treated as the basis for computing compound interest;

* the origination fees are amortized as a short-term loan. This loan is due in the first payment(s), and the unpaid balance is amortized as a second long-term loan. The extra first payment(s) is dedicated to primarily paying origination fees and interest charges on that portion.

For example, consider a $100 loan which must be repaid after one month, at 5% interest, plus a $10 fee. If the fee is neglected, this loan has a (year-long) effective APR of approximately 79% (1.05^12 =~1.7958). If the $10 fee were considered, the interest increases by 10% ($10/$100) for the month, with the effective APR being approximately 435% (1.15^12 =~5.3502, as 535%-100%=435%). Hence there are at least two possible "effective APRs": 79% and 435%.

More Basic Credit Card Reasons For Card Cancellations and Limit Reductions

2009-11-12T10:41:00.000-08:00

It is amazing how fast the credit environment has changed in the last 2 years. Everyone had become more credit savvy and understood the term and conditions of cards, annual percentage rates, FICO scores, debt to income ratios, and most things you could think of. We managed our credit cards and paid them all on time to maintain the best credit profiles as possible.

And yet all this effort seems for nothing. The banks and credit card companies are doing something unprecedented. They are taking preemptive action to eliminate risk regardless of the individual's personal situation. Across the board, they are cutting credit card limits and canceling cards because the recession dictates it. There are many stories of people getting their credit cards canceled or credit limits drastically reduced.

Federal Reserve Study Shows Banks Tightening Credit Card Approvals, Increasing Rates and Fees

The Federal Reserve issued a statement this month that essentially agrees with the findings of private studies and journalists about the state of the credit card industry. Releasing results from its quarterly survey of banks to journalists, the Federal Reserve noted that more banks rely on fees and finance charges from cardholders in good standing to offset losses from defaulted accounts.

Therefore, according to the Fed's survey results, many banks intend to increase annual fees, raise interest rates, and pursue more service charges on most credit card accounts. Some survey respondents told researchers that some of their companies' actions were prompted by pending credit card regulations. However, most bank officials responding to the Fed's request noted that credit card account changes were mostly designed to insulate lenders from the effects of a sour global economy.

Roughly one in four banks responding to the Fed's survey reported tightening their credit card approval standards in the past quarter. While that figure may sound high to casual observers, industry analysts note that a similar survey conducted in the summer of 2008 resulted in a 75% affirmative response to the same question. Lending industry observers note that this trend represents a more prudent approach to offering credit cards and setting credit limits, compared to the loose market of only a few years ago.

HIgher interest rates on the way for everyone

2009-11-09T21:51:00.000-08:00

In the past credit card companies would base your interest rates on your personal credit profile, job stability, and net worth (assets minus liabilities). That was the past and under the new economy, they are making decisions across the board on their entire credit card portfolio.

Frankly, the credit card companies are bleeding losses through charge offs that reflect the current unemployment rate of +10%. That is an extremely high number and will continue to go only up in the near future. Thus, the credit card companies have to make up the money through higher interest rates and fees on the remaining credit card customers.

New York Times:

In their defense, banking officials say they have no choice but to raise rates and limit credit. Because of the new rules and the prolonged economic malaise, they say it is now far riskier to issue credit cards than it was just a few years ago.

“We sell credit; we don’t sell sweaters,” said Kenneth J. Clayton, senior vice president for card policy at the American Bankers Association. “The only way to manage your return is through the price of the product or the availability.”

The nation’s largest banks are scrambling to figure out a new business model that fits within the new rules and current economic conditions. Those banks made handsome profits over the last decade by charging high interest rates and penalty fees to a small group of customers who routinely paid late or exceeded their balances.

Already, banks are shifting to a model in which a smaller pool of Americans will be eligible for credit cards, and customers with cards will probably pay more for the privilege through annual fees and higher interest.

Citibank closing credit card accounts

2009-10-22T22:04:00.000-07:00

If you are a Citibank credit card holder and find that your credit card is now closed, don't take it too hard. There are basic reasons why a credit card company will close on an account. Some of these basic card card reasons are delinquent account, change in financial status, change in credit reports, change in income, and change in FICO scores.

You may not fall under one of these reasons and may in fact have been loyal, never been late, and have a solid job, income, and assets. Then the other reason is your bank is simply struggling.

MSNBC:

NEW YORK - Shannon Burdette tried to pay with her Shell Mastercard after filling up her gas tank this weekend but found the card rejected.

Confused, she called the customer service line on the back of the card, issued by Citibank, and was told the account was closed because of something that appeared on her credit report. But when the Sykesville, Md., resident got a copy of her credit report online, the only negative thing she saw was "closed at credit grantor's request" on the Shell MasterCard account.

"They said there was a routine review," said Burdette, who maintained that she and her husband, Brian, used the card regularly and always paid the bill on time.

Burdette isn't alone. People across the country have been reporting similar experiences in postings on various consumer Web sites.

Citi confirmed the basics. The bank said in a statement it "decided to close a limited number of oil partner co-branded MasterCard accounts." That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards

Basic credit card reform

2009-10-12T19:53:00.000-07:00

Credit card reform is on the way. The reforms are to protect consumers from the abuses that take place now from credit card companies. Basically the credit card companies can raise interest rates, minimum payment amounts, or any terms of the contract at any time, but with the new laws enacted the credit card companies will be required to give written notice.

Channel3000.com:

The Credit Card Act of 2009 is being hailed as the largest reform ever imposed on the credit card industry, and the move is meant to increase consumer protection -- but it could also have some negative effects for those with good credit.

In the current fast-paced world fraught with economic challenges, paper or plastic has taken on a whole new meaning. More and more people are relying on plastic for their purchases, but credit cards as we know them today are undergoing a big change.

"It's going to be a different playing field," said Michael Johnson, finance instructor at Madison Area Technical College. "It's not going to be quite as easy to get into trouble as it has been in the past."

The Credit Card Act of 2009 is 33 pages of very complicated material, but it is full of important information for those who use credit cards. For example, under the legislation, 18 to 20 year olds will no longer be able to get a credit card without a co-signer.

Another change aimed at protecting consumers adds the right of the cardholder to reject an interest rate hike.

Starting in February, when the legislation takes effect, credit card companies must inform you in writing that they're going to increase your rate -- and you can say no. The rejection would close your account, but would still allow you to continue paying off the balance at the current interest rate.Another thing that will change is how credit card companies apply your monthly payments to your credit card balance.

Unfortunately, the credit card companies have already taken preemptive action to get around those new laws. Specifically, they have already raised interest rates and payments, and changed fixed rate to variable interest rates.

Credit card limit reductions and cancellations

2009-09-15T17:01:00.000-07:00

If you have a perfect credit history and received a notice from your credit card company detailing information of a credit card reduction or cancellation of your card, then there is no need to panic. This is just the economy squeezing the credit card companies to take action to maximize profits and reduce liability. Unfortunately, you have become the victim of the economic downturn.

Not too long ago, the banks and credit card companies would look at your overall financial picture. They would take into consideration your employment and how long you have worked there, your income and how steady it is, and your payment history through credit reports or your FICO score. Now, they are under such great pressure to stay above water, that if you live in the wrong zip code or shop at the wrong place, then your credit card is adjusted.

Philly.com:

According to FICO's study, card issuers sliced credit limits for an estimated 33 million U.S. card holders between October and April.

An estimated 24 million consumers saw their credit limits reduced despite the absence of any new "risk triggers" during the study period. Those card holders generally had low balances, didn't use up a lot of their available credit, had very few - if any - reports of missed payments, and had a long credit history.

About one-third of the group, or 8.5 million, saw their credit scores drop after their limits were cut, typically less than 20 points, FICO said.

The cuts had "negligible impact" on the scores of about 3.5 million people, and 12 million consumers saw score increases.

The best credit cards right now

2009-07-10T17:14:00.000-07:00

Everyone has credit cards for different reasons. If you do use them, then you can take advantage of the perks they offer by understanding your own spending habits.

This was actually a nice summary I found at Money.com and wanted to share it with you. Each picture links to the credit card summary from the actual money article.

Why was my credit card limit reduced

2009-06-10T19:39:00.000-07:00

We live in an unusual time as far as the economy is concerned. It seems like normal financial advice dished out by the money experts no longer apply. During these recessionary times, this one specifically, all credit card companies without exception are doing things that they normally don't.
Credit card companies are reducing credit card limits without any regard to consumer credit profiles, credit scores, or financial situations based on debt to income ratios. The banks simply have taken many more losses than in normal times, so they have to tighten credit standards to reduce losses. They are far from the customer service era of doing things to satisfy customers. They have changed their attitude and focused everything on the bottom line. Banks do not care if they piss off loyal customers paying on time because they are being buried in losses and just trying to stay afloat.
If you find your credit limit reduced and your financial situation has not changed, then chances are you are simply a victim of the credit card company reducing limits based on entire portfolios being minimized for loss exposure. It doesn't matter if your FICO score is high, you have no other debt or no debt at all, or if you have a high net worth. I know it is hard not to take it personal and become angry, but the fact of the matter is credit card companies are reducing every one's credit. The idea is if you have no more credit available, you can't default on it. It doesn't make any sense in the big scheme of things, but the credit card companies aren't looking pass today in making their credit limit decisions.

Basic Credit Card Relief

2009-04-03T21:50:00.000-07:00

In the environment we live in, we have been taught to pay our bills on time and if possible pay them off in full every month. Unfortunately, during these recessionary times you may find yourself overextended because of job loss, hours cut, spouse's job loss , or simply reduced income for whatever reason.

The number one priority is taking care of your family that includes making sure they have a roof over their heads, food on the table, and money to pay all the utilities. Keep you car loan current so you have a vehicle to get back and forth to work. The credit cards should be the least of your worries.

You can call the credit card companies and ask to for reduced rates and reduced payments. They generally will not accommodate you if your payment is on time and your account is current. However, once you fall behind and talk to a collections representative, they will have programs to get you current.

I was surprised to see Suze Orman with her latest advice which I agree with. In these hard times if you don't have a big emergency cash fund, then pay only the minimum on your credit cards. This is advice I would recommend from Suze.

Suze Orman and the New Rules of Credit Card Debt

"If you have an unpaid credit card balance [and] not much saved up in emergency savings, I need you to listen up. My advice has changed. I want you to only pay the minimum due on your credit card balance, and instead, make it your top priority to build as much of an emergency cash fund as you can," Orman said on the program.

Telling her fans not to prioritize paying off credit card debt is quite a shocker since her focus has long been about getting out of debt. In her latest book, 2009 Action Plan: Keeping Your Money Safe & Sound, she dedicates an entire chapter on the subject. But Orman says that now, with the number of unemployed Americans rising, having an emergency savings fund is even more important than being debt-free. "The sad reality is that the credit card industry is taking actions to protect themselves with no regard to your needs or how good you have been in paying your bills on time," she said, referring to the fact that credit card companies have been lowering credit limits, increasing interest rates, and revoking credit cards altogether.

That means that many Americans could find themselves without any access to credit following a job loss, when they need it most. If someone finds themselves out of work and without a credit card, then Orman worries about her ability to put food on the table. That is why an emergency fund is key, she says. So instead of prioritizing paying of debt, Orman says that all spare dough--after making the minimum payments--should go into an emergency savings fund. Ideally, she says, that fund should contain eight months worth of living expenses.

While this approach makes sense for those living with little or no savings, consumers who already have a significant emergency fund should still focus on paying off credit card debt. That's something Orman, along with other financial experts, really emphasize. For those with rainy day funds large enough to last eight months, these more familiar rules still apply:

If you are just in over your head and can't take the nonstop calls you get from your credit card companies, then you should explore bankruptcy as an option. Yes, your ego may hurt, but you should put this aside for the sake of taking care of your family. You don't want to become a casualty of the recession/depression we are in and become homeless on top of being unemployed.

Basic Credit Card help or assistance

2009-03-10T18:11:00.000-07:00

In the climate that we are in, it is to your advantage to know basic credit card stuff, since it is easy to fall into a hardship caused by a change in income. There can be a death in the family, a layoff, an injury or illness, and numerous other reasons to fall behind on your credit card payments. Credit card companies are actually willing to help you.

There are companies who can help or assist you with consolidations but I would recommend you do it yourself. It will take some time waiting on the phone but it will be worth it. You may not get the result you want with the first call but something can always be worked out.

In this environment we are in, it is not only the consumer that is having cash flow problems but the credit card company themselves. They all want your money and if you call in and can get the right person to speak with, you should get some positive results.

Before calling in, you should have an idea of what you want to accomplish. The goal should be a payment plan that will fit into your budget. Assuming your income is back to normal and you are just behind a few months, try to get the credit card company to "recast" your credit card back to a current status without coming up with the payments in arrears. The credit card company will want at least a payment to get you back into a current payment status before putting you in a current payment status. Some credit card companies may even put your account temporarily at 0% interest rate.

Now, if your income is reduced permanently, then you need to put a budget on paper to see what you can reasonably afford. That means take you take home income after taxes and subtract on the necessities: mortgage/rent, car payment and insurance, utilities, and money for food. Take the amount that is left over, and divide that with the number of credit cards that you have. This is the goal you are shooting for, and when you talk with the credit card company, the representative may actually ask you for all this information anyways.

There are some situations where you can actually ask for a forbearance such as your student loans. Just ask if it is available on your credit card and what the requirements are to qualify.

If you are in the military, you can let the credit card company know you want to take advantage of the sailors and soldiers relief act.

The Soldiers' and Sailors' Civil Relief Act (SSCRA) of 1940 is essentially a reenactment of the 1918 statute. Experience during World War II and subsequent armed conflicts made certain changes in the statute necessary. The first of these amendments became law in 1942. In amending the Act, Congress was motivated, in part, by the desire to override court decisions that, in some instances, had led to restrictive interpretations of the Act. The latest amendment occurred in 1991 as a result of Desert Shield/Storm.
Reservists and members of the National Guard (when in active federal service) are also protected under the SSCRA. SSCRA (for all) begins on the first day of active duty, which means when the person ships out to basic training (Basic Training, and job-school are considered active duty for Guard and Reserve personnel, as well as active duty personnel). Some protections under the act extend for a limited time beyond active duty discharge or release but are tied to the discharge/release date. Additionally, some of the Act’s protections extend to the members’ dependents.

Whenever you get a payment plan or arrangement set up with the credit card company, please be sure to get it in writing. This will avoid any misunderstandings and protect you in the future in case the representative you worked with is no longer with that company.

One thing I would like to say most people would not agree with is don't access your IRAs, 401Ks, or other retirement accounts to pay off your credit card accounts or loans. Those are long term savings that should be left alone until you are ready to retire. It may be tempting to pull out those funds, but there are tax implications that will work against you.

If you have no income after your home payment and the basic necessities to take care of your family, then you might want to consider seeing an attorney in regards to filing bankruptcy. This is not an easy thing to do, but you should put your pride aside and make sure taking care of your family is the number priority.

0% interest rate credit cards still exist

2009-02-01T14:07:00.000-08:00

Even though credit card companies are lowering credit limits and even raising interest rates for their current customer for one reason or another, there will always be other credit card companies looking to sign up new customers.

If you are one of these customers who have maintained a great payment history and it reflects in your FICO score and experian, transunion, and equifax credit reports, then definitely explore your options to get the best rates for yourself. There are a ton of credit card companies who offer 0% interest rates that are good from 6 months to a year. I am still aware of one card issuer who still offers 0% for 15 months.

Another great reason for getting cards with lower interest rates is saving money. If you carry a balance, this is a great way to save money every month and help pay down balances faster.

Watch the latest videos on YouTube.com

Credit card videos

2009-02-01T00:01:00.000-08:00

There is a ton of information about credit cards on the internet. It is sometimes difficult to read and understand the terms of agreement that come with credit cards. Most of them are basic and are intended to protect the credit card companies.

The credit card agreement is a contract that allows the credit card issuers to charge off the account (write off the credit card debt) for non payment, transfer or sell the card to another bank or card issuer, change the terms and conditions, as well as sue you for default or breach of contract.

The video below helps explain financial terms to help you understand better how your credit cards and other loan products work.

Watch the latest videos on YouTube.com

Basic credit cards with rewards

2008-12-01T20:02:00.000-08:00

One of the great thing about some credit cards are their rewards features. I have actually cashed in on many great rewards without changing my spending habits. Everything I would normally buy or pay for cash such as gas, utilities, groceries, I would just used my rewards credit card to build points.

So what have I been able to get for free from these rewards programs. I have received gift cards for BestBuy and was able to buy a laptop for free. I have also received gift cards for Apple Itunes, Starbucks, and other stores I shop at. I have also received 2 sets of travel luggage, airplane tickets, and hotel stays.

I think that is pretty amazing. I do use Discover too and usually just get cash when I get to a certain thresh hold. Planning is important when using your rewards credit cards. Discover is one of the cards that will increase their bonus points every 3 months into categories. Just check out their site in the rewards program and you will know what I mean.

Banks basically canceling credit cards

2008-11-29T18:42:00.000-08:00

I recently received a letter from the bank for a credit card that I have had at least 8 years. No late payments, no balances, no recent activity. I have kept it for building credit and as an emergency card in case I needed for some unforeseen event. There is no annual fee so it met my needs.

By the way, this letter was from Washington Mutual. Unlike my American Express cards that just lowered my credit limits to the balances I owed, they sent me a letter that was a bit more upfront. They said since I don't use my card and have had no activity on it in the last 12 months, we are canceling it. I know some would be offended by this, but knowing that this bank basically failed how can you really get mad.

Even if they did charge me an annual fee and made some money off me from that, I think they would have canceled the account anyways. Because of our current state of economy, more credit card issuers are canceling accounts that are not profitable. Banks are basically going into defensive mode and will basically be canceling credit cards to survive for the long term.

Basic Credit Card Reasons for Decline

2008-11-28T03:44:00.000-08:00

OK, you are at the mall with your credit cards in hand this Black Friday and ready to charge some great deals after shopping for a few hours. You patiently waited for 15 to 30 minutes in line, but when the cashier rings up your sale, she says the card has been declined. Good thing you had a back up credit card with you and some cash to make sure you were covered.

In the back of your mind you must be wondering, why didn't the charge go through. The card is paid up to date and I have plenty of available credit. There is no basic credit card reason of this account to be declined. You make a mental note to yourself to call the credit card issuer when you get home.

Before you call, there are basic credit card reasons for your purchase to be declined. Some may be for security reasons, if you don't make that many purchases on that particular card. That has happened to me recently, but I usually get a call from my credit card company asking to confirm if I just made a few purchases at so and so places. The credit card companies have security features that flag your account when there is unusual activity or excessive activity on your credit cards. They do this for your protection, but most importantly their protection. The credit card company would prefer to decline your purchase and restrict your account, than to take a loss from fraudulent credit card purchases. That makes sense. Of course, this will also get you to call them if you are the legitimate person authorized to charge on the credit card.

Another basic credit card reason to get declined is if your payment is late or was just late in the last billing cycle. Credit card companies have programs that will flag your accounts if you miss making a payment in the billing cycle before your due date. You will know you are late if you check your statements because there will be a monster late charge and possibly over the limit charge added on. Ouch!

There is also the dreaded decrease in credit limit reason which will cause your account to decline because the credit card company has reduced your credit to the balance you owe on it. Like I said I am blogging about my personal experiences and this one bites. Especially if you haven't been late on any of your payments. Here is my personal blog about that. I hate when that happens. There are many reasons why the credit card company may have lowered your limit recently, but that is a blog post in itself.

Now the worst reason to have your credit card declined is because the credit card company has canceled your account. You should have been notified by mail or email, but may have overlooked it. Again, the reasons of why they would have canceled your accounts is another post in itself, too.

There are many basic reasons why your credit card company would decline your purchase like the reasons listed above. It could be as simple as you taking an expired credit card with you or a newly issued credit card that you have forgot to activate. Of course, the best way to find out the reason your credit card was declined specifically is to call the credit card company's customer service (unfortunately you will have to wait awhile because their call volume this time of the year is through the roof).

My Basic Credit Card Stuff

2008-11-28T00:48:00.001-08:00

If you have no credit, limited credit, bad or good credit, this blog will help you learn all the basic credit card stuff you will want to know. There are many sites out there that deal with credit cards, but this blog will be based on my own personal experience and knowledge. You should of course read other sites to confirm any information here.

I have over 20 personal and business credit cards including visa, mastercard, American express, and discover. They all have their advantages and disadvantages. Hopefully, you will find the information I post on my blog beneficial to your needs.

When I first started building my credit history, it was a challenge because creditors didn't want to be the first to grant you credit. I first started with the instant approval cards at the major retailers. This seemed to be the best way to get started for me. I didn't want to pay annual fees and I was just a student with a part time job. At the time, I didn't understand why the major credit card companies didn't want to grant me a visa or mastercard with a modest credit limit.

I have been in the credit industry for about 20 years now. My perspective has dramatically changed from what I thought was something I deserved vs what credit companies are really after. They are like any other business who want to make a profit and the way to accomplish this is to reduce risk by approving credit applications to those who have proven themselves.

When I was 18 years old, I wanted to have a credit card for the sake of having a credit card. That really doesn't make any sense, but when you are a kid like me you get obsessed with certain things. For me it was building my credit so in the future I could buy things on credit like a car and house and get those loans at the cheapest rates.

Originally, I applies to 4 major retailers for their charge cards. I was approved for 2 of them. I didn't shop at those places, but forced myself to buy things I didn't need so I could pay them back. That is simply how you establish credit.

Introduction Credit Card Basics

2008-11-28T00:27:00.000-08:00

Welcome to Basic Credit Card Stuff for beginners. This site provides tips and techniques for consumers in order to help understand credit cards. If you have questions not covered in Basic Credit Card Stuff, please feel free to post a question in the comment section and I will email you in confidence.