Many stores will offer you 15 percent off when you sign up for a credit card. That 15 percent savings can end up costing you more in the long run; maybe you get hooked into using the store’s card and building your personal debt. Additionally, you may pay around 19.5 percent interest and if you make the minimum payment each month, you’ll be lucky to have the merchandise paid off by 2012. You wind up paying three …continue reading the article titled Beware of Credit Card Sweetners

This was an interesting article that I read and I thought that I would pass it on. The article was written by Linda Stern and published in Reuters.

By Linda Stern Sat Aug 19, 9:31 AM ET

WASHINGTON (Reuters) - It’s not your fault. Mind games you learned as a child might be to blame for that rising MasterCard balance.

“We make decisions about money and debt and spending from what we saw as children,” says Stephanie Jaeger, a consultant whose “Mind Over Money” business counsels everyone from currency traders to cash-crunched young adults. “Most people have experiences … (as children) that they spend the rest of their lives recreating.”
Jaeger’s theory is that people overspend and get into trouble with debt because they are using their adults powers to soothe their childhood hurts. Someone who heard “no!” all the time as a child might like to go shopping and say “yes!” to himself, for example.

People are taught, in very subtle ways, that money is laden with messages that they need to address. One person might think money is dirty or tainted, and need to get rid of it as soon as possible… by spending, of course. Another might think they have to spend profligately to feel good about themselves.

There are myriad other emotional reasons …continue reading the article titled Show & tell your kids about debt

Tapping into your home equity or your retirement account to pay off credit card or other unsecured debt is always a bad idea. It seams like more and more lenders and other financial services companies are encouraging you to do both. Don’t do it and here’s why:

Home Equity Loans to pay off credit card and other unsecured debt –

Sure, it’s advertised that using a home equity loan or line of credit is an easy way to get out of those “high interest rate” credit card debts. The logic is that the home equity line of credit or refinance loan (debt consolidation loan) interest rate is lower than the interest rates you would be currently paying on your credit cards. You save money. Great! The second rational is that the interest rates on the line of credit or home equity loan is usually tax deductible. Greater still! You save more money.

Based upon the above, many Americans have taken advantage of these types of loans to pay off their credit card bills. Actually, by the end of 2004, the Federal Reserve reported that Americans borrowed a total of $826 billion dollars against the equity in their homes. To put that into perspective, in 1997 (just 7 years earlier), Americans borrowed $416 billion dollars. That’s about a 50% increase in borrowing.

So, why are so many Americans still in debt? …continue reading the article titled Two of the biggest mistakes you can make when paying off credit card debt:

Like so many American families living paycheck to paycheck that don’t have adequate savings or access to conventional credit cards, getting a payday loan for those “unexpected” expenses can become a real nightmare. Although it may seem like a good idea it really isn’t.

As anyone that has gotten caught up in this cycle can tell you, the main problem is that the money for your first payday loan is paid back by your next paycheck. That leaves you with less income and puts you behind on your usual expenses. So, it’s easy to see how people either go back to get another loan or renew their existing one. This not only keeps you in the hole but makes it very difficult to save money and break the cycle.

How about the costs? …continue reading the article titled Payday loans can be a vicious cycle…

There are many telltale signs that will indicate you may be headed for debt trouble. I have gathered about a dozen areas for you to look at. If you answer yes to a couple of them, be warned.

1. Are your credit card balances rising while your income level has stayed the same or has decreased?

2. Are you only paying the minimum or less than the minimum balances …continue reading the article titled Financial trouble ahead?

As part of my job, I come across many different debt settlement and credit counseling companies advertising creative. A current trend that I have seen is the touting of the new bankruptcy law. The creative informs the consumer that filing for bankruptcy is nearly impossible or isn’t allowed anymore. Their lives would be ruined, etc. That’s simply not true.

Some major factors propelling bankruptcies for the past decade are still existent today. In almost 50% of all consumer bankruptcy cases filed, medical bills were a factor. About 41% of all moderate to middle income consumers are either uninsured or underinsured. That’s up by 28% since 2001.

More and more you are seeing credit card interest rates with no caps. The new provisions with most credit cards being issued provides that; if a consumer is late on a single payment (it doesn’t have to be with that issuing lender), the interest rate penalty can sore above 30%. People who are already facing medical bills or an unexpected job loss now further burdened with huge finance charges (they add up pretty quickly) will find themselves unable to keep up with future payments.

Even though the bankruptcy laws have changed, it is not impossible or more difficult to file (there are a few more obstacles but I wouldn’t call them difficult). If you do file for bankruptcy, you life is not over. Here are some things you should know about filing for bankruptcy:

1. All of your debts are not wiped out in a Chapter 7 bankruptcy. There are certain types of debts that can not …continue reading the article titled Sometimes filing for Bankruptcy just makes sense

I HARDLY EVER RECOMMEND THIS TYPE OF PROGRAM. However, some of you have asked me to explain a little bit about Credit Counseling as a way to get out of debt and how it works.

Credit Counseling was actually created and is funded by your credit card companies. Initially, it was a way for them to recover money from people who were not making payments. Instead of losing that money or spending more money (through collections and lawyers) to try and recover it, they created a “safe” place for a consumer to go so they still get something. Actually, they get all of the balance owed and interest. It has now evolved into a billion dollar industry.

Normally, a credit counseling company will negotiate a reduced interest rate on your credit cards (your creditors would have to accept this proposal and may not reduce the interest rate at all, it all depends on your financial situation and the credit counseling company’s relationship with your creditors). Most often than not, most credit counseling companies usually have a pre-arrangement with the creditors. They know how much the creditor will reduce the interest rate by, how much they will get at their “fair share” of the monies collected, etc.

On average, you can expect to pay back your entire balance at 6-12% interest. …continue reading the article titled Consumer Credit Counseling

Four out of every five cards issued today come with a variable rate. Most also come with a Universal Default provision (meaning that if you are late on any payment, it doesn’t have to be to that particular creditor, your interest rate can increase to as much as 30%).

The variable interest rate has been on the rise and is continuing to increase. The rate is tied to the Federal Reserve. As the Federal Reserve raises short-term rates, …continue reading the article titled Credit Card Interest Rates are on the Rise…

If you have fallen behind on your credit card payments, you can expect a phone call. OK, you can expect a lot of phone calls. If you are going to attempt to deal with the debt collector on your own, remember that you are going head-to-head with a tough professional that does this everyday for a living.

It pays to know your rights. Keep a detailed record of all of your communications when you speak to them. Note the time and date of the call, the person that you spoke with (get their ID number if they have one) and everything that they said.

Before talking to any debt collector, review the Fair Debt Collection Practices Act. This is a general “rule book” that the creditors have to play by. Follow this link to better prepare yourself for battle. http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm. Many states also have their own “rules of engagement” that you should know. You can find out more about what your state allows a debt collector to do by contacting your local attorney general’s office. Just do a quick Google search; attorney general California debt collector (for example) and there will be a direct link about that States Fair Debt Collection Practices Act.

After you have beefed up on the FDCPA, here is what you should do next:

Prioritize your bills. –

No matter what a debt collector says, when you are having financial difficulty, the most important bill to pay is not your credit card bill. Providing for your family comes first. You need to make your mortgage, vehicle, utilities and insurance payments. Provide for groceries and other life essentials as well. If you don’t make your mortgage payments, you run the risk of losing your home to foreclosure. If you don’t make your vehicle payments, you run the risk of having your vehicle repossessed (not to mention that in most cases, you won’t be able to get to work to make money to take care of your bills). Not eating and skipping required medications is not a good idea for obvious reasons.

If you don’t make your credit card payments, they would have to sue you first before they could do anything to you. This process will normally take several months to get to. They can’t garnish your wages or put you in jail or whatever other things a debt collector will say to get you to pay them right away. So remember, take care of your family and your most important bills first.

Estimate how much you can afford to …continue reading the article titled Negotiating Tips when dealing with Credit Card Collections