Financial Magazine » Credit Card Debt

Credit Cards, an Epidemic?

admin — Wed, 06 Apr 2011 08:45:13 +0000

Credit Cards are bad. Period. There is no other way to say it. Credit Cards, along with interest only loans (which I’ll save for another day) are a true plague. The only reason why you should not give up credit cards is if you enjoy throwing money down the drain. I will attempt to outline for you ways in which credit card companies prey on people. Not just people, but people who are already in debt over their head. Below you will find a couple real life examples of the low life practices credit card companies use every single day. I will detail for you why most Credit Counseling Services are bad, and should not even be considered as a viable option. I will give you sources for how to truly get out of debt and some people/organizations that can help. In the end, I truly hope you do learn something from this page. I hope that it gives you the willingness to get out of debt and stop throwing your hard earned money down the drain.

Throughout college I personally had one credit card which I vowed would be used only in situations when I was out of money and something came up that I just couldn’t misss out on. Well, for a young college kid both of those situations came up quiet often. I, like most of my part-time working friends, ran out of money frequently and it seemed like there was something going on every other day that I just couldn’t miss out on. The credit limit on my Visa was $2,000. By the time I graduated from college I had about $1,200 on it. Some of my friends ran up $10,000′s of credit card debt. I started a full-time job and paid off my card right away. One of my unfortunate friends is stuck with $9K left on a card with an annual rate of over 18%… He also has a new apartment and is currently making $26K per year. This is just one example of how it starts. He hadn’t planned on having that much debt. But it happened. He would knew his bank account was getting low and right there next to his debit card was his Visa.

A year later I got married and brought on my wife’s student loan and credit card debt of just over $1,000. This is when I first realized how low credit card companies can go. My wife requested a hold on her account for 4 months prior to our wedding. Things were tight and she asked if she could postpone paying for that amount of time. She was told that would be fine, but she didn’t get the reps name or a confirmation number. Fast forward to 5 months later after our honeymoon. When I opened the bill I almost threw up. The balance was $1,700. A $700 increase in 5 months time. I called the credit card company right away and after going through many loops to be authorized to talk to them on behalf of my wife I found out the problem. The hold was never put on the account and they have no record of my wife ever calling. How can I dispute that with no record of it myself. So, my wife’s account incurred some serious late charges over the 5 month period of time. But it doesn’t stop there. I asked the rep what the annual percentage rate for her card is…34%..

After waking up from fainting, I quickly called my credit card company and asked about any balance transfer deals. Luckily they had a deal for prime – 2%, so I transferred the entire amount and we’re still paying on it today (almost gone though!).

I’ll briefly touch on a couple more examples of the tactics used by credit card companies, then get to a true action plan for getting out of debt. Credit Card companies literally accept almost anyone. You may balk and that thinking, well I have been declined etc. What most people don’t know is that the companies actually only check a sample of credit reports.
A high percentage of credit reports go unchecked, thus people in debt up to their ears often qualify for a new card and the hold they’ve dug gets deeper and deeper. Credit Card companies are notorious for using great promotions (bait) to get people signed on. There are some things you should be cognizant of before taking any of these deals. If you’re reading this page the type of deal you would most likely be interested in is a balance transfer deal. Most balance transfer promotions offer 0% for x period of time.

The only time you should even consider one of these promotions is if the transfer amount is minimal and you are absolutely confident you will have no trouble paying it off within the year. The rate after the promotion typically increases to 15% or greater and you’ll end up in the same position you’re currently in. You should be patient and find a deal where the balance transfer rate remains the same throughout the life of the transfer. You should also only go with the promotion if you can get at least the prime rate, even better would be prime – x%. Lastly, it is implicit that the payments be made on time, every month. Otherwise the rate will increase exponentially and you’re screwed, again.

So, you’ve gotten yourself into this mess and you want to know your options… You only have a few options, but you should feel comforted to know that these methods are prove. You probably have heard commercials on the radio, or even seen some on TV for credit counseling services, promising to consolidate your debt and lower your down payment. What those commercials fail to tell you is that a majority of those companies are actually owned by… the Credit Card companies… Another thing the commercials don’t tell you is that using a service like that is seen as a step above filing bankruptcy as far as your credit score is concerned. Here are some options that will allow you to get out of the hole, without damaging your credit report for 10 years.

Debt Snowball You’ve likely heard about it before, or you may even know what it is already. That is fine. The key point here is that you must put it into action. As Dave Ramsey, the originator of this method said “”This is the toughest of all the Baby Steps,” he writes. “It is so hard, but it is so worth it.” For those of you that don’t know what it is, here is a brief summary:

Keep in mind that this excludes your home mortgage, as well as any other real-estate or business loan that totals more than 50% of your annual income.

Make a list of your debt (lets say there are 5 on your list), putting it in order with the highest rate debt first. Pay the minimum payments on 2-5 and pay as much as you can possibly pay on #1. Once you’ve paid off number 1, the amount that you can pay on #2 will increase by default (snowball effect).

To learn more about the Debt Snowball method and for inspiration on getting through this process I highly recommend Dave Ramseys books, which are available at Amazon.com

If you feel that you need guidance from a third party to get out of debt and shred you credit cards there are a handful of credit counselors that truly have your best interest at heart. Be sure and check out Dave Ramsey’s website to find the closest counselor today.

Chris Jones is the director at Credit Card Insight [http://www.creditcardinsight.netl]. CreditCardInsight.net [http://www.creditcardinsight.net] provides a wealth of information on credit cards, credit repair [http://creditcardinsight.net/credit-card-consolidation-services.php], and debt consolidation.

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Managing Multiple Credit Cards

admin — Wed, 02 Mar 2011 03:19:14 +0000

If you are struggling with credit cards and are trying to figure out how to manage them without declaring bankruptcy, then you need to read this. Americans are finding themselves with increasing numbers of credit cards. There are some strategies to living without credit cards forever.

Credit card debt accumulates interest faster than any other type of loan. At 20% and sometimes higher, Americans lose thousands paying off credit cards. The first thing to do is to decrease how much you put on them every month. Get to a point where you do not even use your credit cards any more. This may take a while and it will require working out a budget and getting on the straight and narrow. Perhaps selling a new vehicle for a used one or if you need a drastic solution, you may be forced to live with relatives and liquidate your assets in order to prevent a bankruptcy. Please see your financial advisor or a wise relative.

Once you have weaned yourself off the credit cards, determine how much you can pay off each month and find more ways to increase that amount every month. If your first impression is to pay off the cards with the lowest balance, please think again. It would be nice to pay off that one card with only a few hundred on it but your problem is interest. It is costing you a lot of money. Figure out how much you could be paying your balance down if ALL or none of your money went towards interest. You could crawl out of this financial hole much faster if that was the case. Find the credit card that has the highest interest rate and pay that off first. Pay the minimums on everything else until that balance is zero. Do not stop until it is zero or another card’s interest rate climbs to become the highest.

Once a credit card is paid off, cut it up and throw it away. Plan to throw away all of your cards but one. Find one card that you have had the longest and keep that one. Even if it is not the lowest interest rate, your plan is to never pay interest again so that does not matter. By keeping the credit card with the most history, your credit score will take account of your long history with the same card and your it will increase faster than with a brand new card with little history.

A popular solution is to transfer credit card balances to a 0% credit card. That interest rate will expire but it does prevent interest from building up. This method would force you to open many accounts and keep opening and closing credit cards in order to escape paying interest. This may work however, your credit score will drop to reflect this behavior. If that credit score drops and you apply for a home mortgage, the interest rate will be higher. One way or another you will pay interest, I suggest not opening new accounts and transferring balance since it only benefits you in the long run and you need a permanent fix.

It may sound simple but it will take patience. Look at the problem at a weekly or monthly and make small steps. If you are late on credit card payments, talk to the lenders and tell them your plan. If you communicate with them, you can manage this debt much easier. If they know you have a plan, they can rest easier. Of course, you still need repay it but if lenders have no idea what is going on, than they will be forced to act and really put you in a bind.

Michael Russell Your Independent guide to Credit Cards

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Consumer Debt, Bad For America

admin — Sun, 06 Sep 2009 19:04:33 +0000

Consumer debt is debt that is accrued by purchasing consumer products as opposed to investment debt that is used to make investments. The vast majority of consumer debt in American is in the form of credit card debt. Consumer debt is fast approaching the one trillion dollar (1,000,000,000,000.00) mark. Credit card debt makes up about 880 billion dollars of this amount. As the rate of debt has increased the rate of individual savings has declined dramatically. A great many Americans have no retirement savings and are not investing in any retirement plan where they are employed.

Many people feel there is nothing wrong with high levels of consumer debt and some leading economists, business and political leaders actually have encouraged it. However the people that are encouraging excessive debt appear to profit the most from it. This conflict of interest means there is a genuine lack of credibility to these reports.

Even the FICO or credit score is designed to increase the amount of debt. The more debt you have and the longer you have been in debt all will raise your credit score. Something is wrong with this system. While many people are constantly trying to increase their credit score many very wealthy people have credit scores of 0, thats right zero. What wrong with this picture.

No matter what you have read or how much you have been brainwashed, debt is a bad thing. You will never become wealthy if you are carrying any form of consumer debt especially if it is credit card debt. If you want to be wealthy then you have to live debt free. It is a pure mathematical fact that cannot be denied even by the credit card companies and their slick marketing. Every dollar that you pay in credit card interest, late fees and penalties is wasted income that could be invested in the future of your family.

Recently the Federal Reserve has started to rein in the predatory lending practices that credit card companies have been using to entice and then trap people into a debt nightmare. Credit card companies have replaced the Mafia as the top loan sharks in America. In recent years credit card companies have charged their customers or victims more than 90 billion dollars in late fees and penalties. Most of these profits are taken through the use of predatory and immoral lending practices. That is more than they earned in interest payments.

If you really want to enjoy the American dream you have to live debt free. Stay away from all forms of consumer debt or credit. Live at or slightly below your means. This means you will be living on a cash basis which in turn means that you will be saving a lot of money that can be used to increase your net worth. Just saving and investing the money that you would be paying in credit card interest, late fees and penalties will make you wealthy in less time than you can believe. If you want to rich then do not use any form of consumer debt especially credit cards.

The Online Debt Collection Website is located at http://www.onlinedebtcollectionhelp.com. We help you understand consumer debt and what it means to you and your family.

The Pitfalls of Consumer Debt

admin — Fri, 21 Aug 2009 14:40:24 +0000

Credit card debt is not the only kind of debt that gets us into financial trouble, but it is the easiest. When many people think of debt, they automatically think of credit cards, but the truth is, consumer debt can take just as much of a toll on a person’s finances as credit card debt. The difference is that it’s much more difficult to add to the debt load since you have to go into the lender and apply for more funds instead of simply taking out a card and using. Of course, in the big picture, the combination of credit card and loans make up what we know as consumer debt, meaning debt as a part of the entire economic picture.

In some cases, we think of it in terms of credit cards and car loans, but the term can be a part of personal debt as well. Whatever we call it, these debts are taking a toll on both individuals and our economy as people struggle to get out of debt and lack the funds to put money back into the retail exchange system.

People have been relying on consumer borrowing for many years in order to compensate for those items for which they don’t have the immediate cash. There was a time that people relied on bank loans for the purchase of furniture, televisions and other similar items, but today, most of those items are charged to a credit card, thus the reason that credit card debt is at an all time high. Instead of people buying furniture, and financing it through the consumer borrowing circle for 36 months as they used to do, they put it on a credit card and take twenty years to pay for it. That doesn’t mean that consumers are not borrowing because they still finance cars, homes, vacations, and even vacation homes, all of which add to the reduction of disposable spending in the economy.

With so much consumer debt, people are using all of their disposable income to pay off their debts, and they have nothing left over to return to the economy. As a result, many stores and retailers are suffering from low sales volume, even during Christmas when the highest volume of sales is generated. Retailers are no longer able to depend on Christmas shopping to make up for an entire year of slumping sales, so they have to be creative and generate income throughout the year in case holiday sales slump. Those who do spend at the holidays do it online, a habit that has been on the increase for the past five or six years. There are many reasons shopping online is a good idea and many reasons it can hurt a budget. It means they don’t have to go shopping, but it also adds to credit card debt. No mall traffic and no crowded lines make it worth it for some. Everything comes back to too much spending of borrowed money giving consumers less money to spend putting cash back into the economy.

James Copper is a writer for http://www.stop-repossession-today.co.uk

5 Financial Tips For College Students

admin — Fri, 17 Jul 2009 13:57:55 +0000

If you are a college student, you are probably concentrating on your studies and trying to get an education that will benefit you in the future. One thing that you may not be thinking about is how to handle your money, and failing to do so can leave you in a pretty big financial mess by the time you are out of college. It is important that you take control of your finances now if you want your financial future to be bright. The following are some tips that can help you with your finances to avoid any college financial disasters.

Tip #1 – Only Use Credit Cards in Emergencies – Once you get a credit card it can be all to easy to start racking up the credit card debt. This is a bad way to start out and you will probably end up with bad credit if you are using credit cards all of the time. Remember, the money you spend on credit cards will need to be repaid. It is best if you save your credit card for emergencies instead of buying that new pair of shoes or paying for an evening out.

Tip #2 – Pay Off the Balance Every Month – It is also important that you pay off your balance each month if you have a credit card. Leaving a balance on the card can result in you paying extra money on interest, so you will save money if you pay off the balance every month. This will also keep you from getting in credit card debt over your head as well.

Tip #3 – Pay Bills on Time – Now is the time to start building your credit history, and you can do this by always paying your bills on time. If you fail to pay your bills on time, it can get quite expensive. Many companies will charge late fees if you do not pay on time and your interest rates may go up as well, costing you even more money for being late.

Tip #4 – Start Saving Now – Many college students do not realize how important saving really is, but if you can start saving while you are in college, you can reap from great benefits when you are older. Saving now will get you in the habit of saving, you will earn money from the money you save, and you will have extra money set aside in case of any emergencies as well.

Tip #5 – Look for the Best Checking Account – You can actually save a great deal of money if you look around and find the best checking account. Look for an account that has no fee for starting an account and no minimum balance. You may also want to check into any debit card fees, and fees for deposits of withdrawals. Some banks will actually offer totally free checking for college students, so take advantage of this and you can save a great deal of money every year.

Find Student Credit Cards @ http://www.findcollegecards.com/

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Understanding Consumer Debt Consolidation

admin — Mon, 06 Jul 2009 21:17:11 +0000

If you are facing what seems to be an impossible financial situation due to staggering credit card debt, it may be time to get some help. One of the first options you should consider is a company that specializes in consumer debt consolidation. You will be able to consolidate almost all your unsecured debt so that when you visit the mailbox you will no longer have dozens of statements stamped “Past Due” or “Open Immediately”.

Having an enormous amount of debt can be very stressful. In fact many marriages and relationships end over financial reasons. Contacting a consumer debt consolidation specialist will help get the financial burdens you are carrying reduced quickly and using this option instead of declaring bankruptcy is always the best the way to go, if at all possible.

Who Can Benefit From Consumer Debt Consolidation Help?

Not every consumer will qualify for debt consolidation help. When you are calling for information, you need to have all your financial information on hand. For example, you need to have the most recent statement from every credit card that you owe money to. You will also need to provide information on your other debt like car loans, or mortgages. You will also need the last two or three paycheck stubs for each person listed on these debts so they can get a good idea of how much income is coming into the home.

If you have only $2000-$5000 of unsecured debt you will not qualify for help in the form of debt consolidation. If fact they may refer you to a credit counseling organization to help you learn how to manage your money properly. If however, you have anywhere from $10,000 and above in unsecured debt plus a mortgage payment, a car loan and you are getting to that 30 days late area, you can definitely benefit from consumer debt consolidation advice.

Do I Qualify for Consumer Debt Consolidation Help?

Most companies require that you can show steady proof of employment before they will help you. You must have a substantial amount of unsecured debt. Some examples of unsecured debt are major credit cards, like Visa or MasterCard, gas cards, hospital bills, department credit cards, old utility bills, and outstanding repossession loans. Debts that will not qualify for consolidation are secured loans like your home mortgage, car loans, or boat loans. This type of debt is secured by collateral so it does not qualify.

What Can Debt Consolidation Due For Me?

Once you have spoken to a consumer debt consolidation specialist and have been approved, what they will do is work with you and get you one larger loan. They will use this loan to pay off all the creditors that you owe money too. When you are accepted into this payment policy almost every one of your creditors will require you to close your account. This keeps you from running up more debt as you are trying to fix the original problem.

Once you have your financial situation under control, you will see how much stress all those bills and late fees added to your life. You will no longer be a slave to debt, and will hopefully have learned how much more stress-free it is to live without the burden of high debt.

For more insights and additional information about Consumer Debt Consolidation please visit our web site at http://www.debtconsolidationstrategies.com