True Debt Relief Information

US Treasury to Issue Prepaid Debit Cards for Tax Refunds

2011-02-25T14:28:00.004-05:00

As I mentioned in an earlier blog, the U.S. Treasury is getting in on the growing prepaid debit card trend. Last fall, they announced plans to test prepaid debit cards as a means of providing tax refunds to thousands of low and moderate income taxpayers for the 2010 tax year. Last month, they mailed some 600,000 letters to taxpayers making less than $35,000 a year offering them the option of receiving their refunds on a MyAccountCard Visa Prepaid Debit Card. In addition, the Treasury is also offering automatically deposited tax refunds to thousands of existing employees currently using debit cards for payroll check deposits.

The obvious benefit to the Treasury is the large savings of an estimated $40 million in mailing costs. (They claim it costs them roughly a dollar to mail a tax refund check vs. about 10 cents to deposit money onto a debit card.) Sounds great for the government … right? But what about the taxpayer?

Impact to Taxpayer of Debit Card Tax Refund

For those taxpayers electing to receive their refund via a prepaid debit card, the Treasury claims they will benefit from a refund method that is “faster and safer.” But there is a cost associated with these debit cards. Depending on which version of the debit card they select, taxpayers can incur fees such as monthly service fees ranging from free to $4.95 per month, fees for using out-of-network ATMs, as much as $4.95 to add money to the card, and $2.50 to withdraw cash from a bank teller. For low-income taxpayers who don’t have bank accounts and have trouble cashing checks, this may well be worth the costs. But, before you make a decision, carefully review the different card options being offered to see which is the best for your given financial situation and the way you spend and access your money. I am concerned that some taxpayers could end up losing a fair amount of the refund to fees.

In addition to the taxpayer cost concern, I have real concerns over the process used by the Treasury Department to launch this new tax refund initiative and who really stands to benefit. How did Utah-based Bonneville Bank and Green Dot Corp., the prepaid debit card provider and the largest player in the prepaid debit-card industry, get selected? I'm also concerned that these cards are just another way for banks and credit card companies to profit from excessive fees, especially fees impacting those who can least afford them - low income families and those with a lot of debt. Apparently I’m not alone. Congress, especially the Ways and Means committee, is asking similar questions.

Let me know what you think about this or your experience with prepaid debit cards.

The Pitfalls of Prepaid Debit Cards – What You Need to Know

2011-02-01T11:56:00.006-05:00

The marketing of Prepaid Debit Cards has become a huge business targeting people with poor credit or those who lack the funds to open a bank account. So big a business, in fact, that it is expected to reach $440 billion by 2017. And it seems like everyone is trying to get in on the action with stars such as the Kardashian sisters touting “designer” cards. Even the Department of the Treasury has announced plans to test market prepaid debit cards in place of tax refund checks (more on that in a follow-up blog).

While prepaid debit cards have their benefits, there can be significant pitfalls associated with using these cards. Carefully weigh the benefits against the pitfalls discussed below to determine whether a prepaid debit card is right for your needs and situation.

Marketed Benefits of Prepaid Debit Cards:

No Credit Required – You don’t need to have good credit to get a prepaid debit card since it isn’t a credit card. Your spending is limited by the amount of your own money that you applied – or prepaid - to the card.

Safer than carrying cash – Unlike cash, if your card is lost or stolen, most will replace your card for a nominal fee. For your teens, this may be a much safer option than handing them cash and with greater control than giving them a credit card.

Alternative to a bank account – For people who lack the funds to open a bank account but need to be able to regularly cash payroll checks, a prepaid debit card may be a better option than check cashing services, especially if you can have your payroll check deposited directly to your debit card.

Enable on-line purchases – If you need to make purchases on-line, a prepaid debit card does offer the convenience of a credit card for on-line or over-the-phone transactions.

The Pitfalls of Prepaid Debit Cards: All Prepaid Debit Cards are Not Created Equal:

Unregulated Industry - With no laws in place to govern the types of fees or amounts that can be charged, all debit cards are not created equal. It’s up to you, the consumer, to do your homework, compare card costs and limits, and read the fine print on the cardholder agreement to understand the restrictions.

Fees can quickly eat up your balance – In addition to the purchase price of the card, some charge monthly maintenance fees, cash withdrawal fees, reloading fees, balance inquiry fees, inactivity fees and even bank teller cash advance fees. With fees as high as $9.95 a month for maintenance and $2.50 per ATM withdrawal, you can quickly eat up the balance on your debit card.

They don’t help your credit score – If you need to establish credit, a prepaid debit card won’t help you. Because you are using your own money, there is no credit risk associated with the cards so they don’t help establish credit worthiness. If this is your objective, you may be better off getting a secured credit card that has a credit line limited by a deposit.

Limited Protection - While it may be safer than cash, a prepaid debit card doesn’t carry the same level of protection as found with a standard credit card. Most will replace your card if lost, for a fee, but offer minimal protection for charges made on a stolen card, disputed purchases, or fraudulent charges. It is important to read the fine print regarding the cards restrictions and your obligations for reporting a lost card or purchases you didn’t make.

It pays to take the time to shop before you buy; do your homework to find a card with minimal out-of-pocket costs and it will really pay off in the long run. Remember, there are a lot of people making a lot of money off of your need for cash and convenience so be a savvy shopper, not a guppy for rich celebrities!

Do You Feel Trapped by Mounting Credit Card Debt?

If mounting credit card debt is keeping you from getting credit or making it difficult for you to keep up with the bills, then make 2011 the year you are going to regain control of your finances and your future. Every month you delay, fees, interest, and penalties will continue to pile up and make the debt trap that much harder to get out of.

The professionals at Credit Card Relief are ready to discuss your situation and help you determine what the best course of action is to tackle your debt. Give them a call at (866) 960-5454 for a FREE, no-risk, no-obligation consultation or click here to visit their website. You’ll rest easier tonight if you make that call TODAY!

New FTC Rules Support Consumers Seeking Debt Relief

2011-01-19T15:18:00.007-05:00

In the last quarter of 2010, new FTC rules went into effect to protect consumers seeking debt relief through debt settlement type companies. This change spells good news to those struggling with mounting credit card debt or other unsecured debt for two important reasons:

it cleans up the deceptive and abusive practices that have been associated with some debt relief services and
it reinforces the legitimacy of negotiating-down and settling debts with creditors as a way to get out of debt.

You can now feel comfortable in pursuing this option to eliminate your debt with the protection of the FTC.

How Did the Debt Relief Changes Come About?

Since 2005, when Congress passed The Bankruptcy Abuse Prevention and Consumer Protection Act - which actually limited consumers ability to file Chapter 7 bankruptcy to discharge unsecured debts - consumers have been desperate for ways to unburden themselves of mounting debt, especially credit card debt. With the reduction of home values due to the mortgage crisis, debt-consolidation loans were no longer a viable option. Programs such as Consumer Credit Counseling were also ineffective for many people. Their debt was just too big and the time to pay it back just too many years!

As consumer debt grew, so did the debt settlement industry as a way for people to settle and discharge their debts with their creditors for less than what they owed. While many people have found true relief using a debt settlement company, unfortunately, as is the case in many industries, the rise in demand also lead to the rise in unscrupulous companies making unrealistic promises of how much they could save you and how quickly they could get you out of debt. In addition, many so-called experts in the financial reporting world were skeptical of the industry and critical of options that enabled people to settle debts for less than what was owed. Their philosophy was: “It’s your debt problem; buckle down and pay back what you owe!” The unethical practices of some, along with the negative press, cast a shadow on the industry.

Yet, during all of this, banks and credit card companies themselves were under scrutiny by Congress for their own ruthless practices that kept people in debt by raising interest rates without warning and mounting up over-draft charges and late fees. In 2009, in response to consumer complaints and the rampant rise in debt, Congress passed a new law to protect consumers from these kinds of practices. While this helped to stem the blood flow, it did little to cure the epidemic.

With the FTC’s enactment of the new provisions governing debt relief services under the TSR (Telemarketing Sales Rule), there is now a glimmer of hope for debt-strapped consumers. A better product has emerged from the industry cleanup that provides consumers with a doable solution to debt problems, allowing them to discharge their debts honorably and, in most cases, for less than what they owe.

The new Debt Relief Rules and What They Mean for You

It’s illegal to charge upfront fees. Debt Relief service providers cannot collect any fees from you until they have settled at least one of your debts. They can, with certain restrictions, require you to set aside money in a dedicated account for your fees and for payments to creditors. The benefit to you is that the service provider has a real incentive to settle your debts as quickly as possible; meaning, you will start to reduce your debt burden in a much shorter period of time.
Certain information must be disclosed before signing. Before you sign up for debt settlement services, the provider must disclose specific information about the service, including: how long it will take to get results, how much will it cost, the negative consequences that could result from using debt relief services, and key information on how your account is set up and managed. The benefit to you is that you should have a clearer understanding of how their debt relief program works and what you can reasonably expect before you engage their services.
No misrepresentation of services. Debt relief service providers are prohibited from making false or unsubstantiated claims about their services. Again, the benefit to you is a clearer understanding of what you can expect based on the amount of debt you have and the amount of money you can afford to pay towards discharging those debts. Gone are the deceptive, to-good-to-be-true practices of leading you to believe you can be debt-free for just pennies on the dollar.

I hope this blog post will help those of you struggling with mounting debt and uncertain about whether to look at debt settlement as a way to get out of credit card debt. If you are wondering whether debt settlement is a good option for your debt situation, you can call Credit Card Relief Toll-Free at 866-960-5454 for a free, no-obligation consultation. This is one company that for the past decade has provided a consistently reputable product and has helped thousands of people get out of debt. You can also click here and visit their website to learn more.

Who’s Getting Rich Off Your Credit Card Debt Misery?

2008-02-27T22:53:00.000-05:00

Ever stop to think about who is profiting from the credit card debt you’ve accumulated? Let’s face it. There’s a reason why we get bombarded with credit card offers in the mail, on television, and in the stores. People are getting rich off your spending. First, from the purchases you make, often under the illusion that you’re getting a bargain. Secondly, off the interest they make when you don’t pay off your credit balances at the end of the pay period.

Everyone is pushing you to buy more stuff (including the government with their new tax rebate incentive), from flat-screen televisions, to designer branded apparel. You don’t really need that 40” plasma TV, but all your neighbors have one and it’s now on sale, and oh, by the way, you can purchase it 90 days, 6 months, or a year, same as cash. Why are they so willing to put that television on sale and let you delay payment, with no interest? Because even on sale, the retailers still make a profit and when the bill finally comes due, if you can’t afford to pay it off (which is exactly what they are expecting will happen for a large percentage of customers), they make huge interest profit off your debt – interest that started to accrue back on the date of purchase. You’ve more than lost the "on sale" savings and you now own a television you couldn’t really afford to begin with. The retailer and credit issuer both got rich off your credit debt.

While I was in a local superstore the other day shopping for groceries and a few other items, the store announced several times over their PA system, ‘Open up a charge account with us today and save 30% on your entire purchase.’ What a deal! Even if you don’t need another credit card and you’re only able to make the minimum payments, saving 30% on groceries sure sounds good! Why are they pushing you to sign up for a credit card and give you such a “great” incentive to do so? The store makes out because you’ll end up buying more items - items you wouldn’t ordinarily buy or don’t really need because, after all, this is your one-time opportunity to save 30%. So you end up buying more than you planned and then, when you can’t pay off the balance when your credit card statement comes due, you pay interest on that balance. There went your 30% savings. The reason everyone is pushing you to buy and buy on credit is that they actually hope you can’t pay more than the minimum so they can get your money today, and keep getting it and keep getting it…in the form of high interest payments. And to add insult to injury, that extra credit card just made your credit score go down!

Before you purchase on credit that designer purse, a manicure at the local nail salon, or the latest electronic gadget, think about who is getting rich off your debt. There’s a bank executive buying a vacation home on the beach while you’re struggling to make your mortgage payment on top of those high-interest credit card payments. There’s an advertising executive driving a new sports car, all because he did such a great job convincing you that you needed all this stuff. Meanwhile, you’re late on your credit card payment because you spent the money on high-priced gasoline for your car, a car that you financed for 48 or even 60 months and is now worth less than what you still owe on it! Everyone from retailers, to media executives, to financial institutions have done an excellent job convincing you that you deserve to have everything you want, whether you can afford it or not. Treat yourself now. Pay later. They’ve created a monster – a society of entitlement where people aren’t willing to wait until they can afford the things they want today.

It’s time to jump off this fast moving consumerism train and get out of debt. Don’t let the profit from your debt pay for their children’s Ivy League college education. Pay off your debt and start putting that money, money that used to go toward interest payments, into a savings plan for your own kids’ education or your retirement. If you’re one of the millions of people with high credit card debt ($10,000 or more), have minimal savings and are the one in six who pays only the minimum due every month, then you need a realistic plan to get yourself out of debt and back on track. Click here to read my blog for more information on a plan that can get you free of debt in months instead of years and for less than you currently owe.

For Those in Debt – Will the Government’s Tax Rebate Help?

2008-02-15T16:39:00.001-05:00

Congress passed the “economic stimulus” package last week that includes a tax rebate for middle and lower income Americans filing 2007 taxes. This rebate is designed to “stimulate” the sluggish economy. The White House says that they hope people will spend their rebate checks and thus give the economy a needed shot in the arm. Sounds good...if the problem were that simple! The truth is - many people aren’t spending now because they can no longer afford to! With so many Americans struggling to pay off their credit card debt, dealing with rising property taxes in many areas, and smack dab in the middle of the sub-prime mortgage meltdown and lower home values, they are literally maxed out when it comes to discretionary spending. So does it make sense to hope that many of the people who can least afford to spend more money will use the rebate to buy more stuff? In addition, will this rebate really help these people?

How the Tax Rebate Works
The rebates are designed for single people who make $75,000 or less and married couples who make $150,000 or less. (Those who make more will see little or no rebate due to the rebate phase-out for incomes over these thresholds.) Too many of these consumers in the lower income brackets are barely able to afford the basics. Those who have lost jobs or are struggling with medical or financial hardships have already tapped in to their home’s equity and now don’t have enough to pay their bills each month. Many have to make the hard choice of either paying their mortgage to try to hold on to their homes, or make their credit card payments so they can continue to charge the basics of food, gas for the car and medical prescriptions. If you doubt the seriousness of the problem, read on.

How Bad is the Credit Card Debt Problem?
According to the Better Business Bureau, consumer credit card debt is a staggering $915 billion. This is a reported 7% increase, annually, based on 2007 3rd quarter data, as compared to an average increase of only 2% per year for the previous 6 years. In an effort to keep their heads above water, many are paying high over-the-limit penalties (as much as 35%) because they have charged above their credit card limits in an effort to keep heat on in their homes and gas in their cars. In addition, the credit card default rate (delinquent 60 days or in default) has risen to 7.6%. In spite of all this, the credit card offers keep coming in the mail!

It seems to me that our government should be doing everything it can to encourage people to solve their debt problems and begin living within their financial means, but then again, look at the billions of dollars of debt our country’s Administration has wracked up!

Is There a Solution to Your Debt Problem?
If any of what I am describing feels all too familiar, do yourself a favor and use your tax rebate to get yourself out of debt and back on track. If you have significant debt and the rebate won’t even put a dent in your problem, then don’t wait for your rebate check. You need a true debt solution now! I strongly urge you to consider debt mediation. It is the only solution that can get you out of debt in months instead of years and for less than what you currently owe.

How Debt Mediation Can Help
Debt Mediation is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this type of program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full, and marks the debt “zero balance”, which is very important and positive for your credit report. You’ll get out of debt for less than what you owe and in a fraction of the time it would take to pay off the debt just making the minimum monthly payments. Because they are settling hundreds of thousands of dollars of debt for hundreds of clients, they have relationships built over time and leverage with your creditors that you don’t have. If you’re not clear as to why this approach is better than debt consolidation or consumer credit counseling, then click here to read my earlier blog on the advantages of mediation.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.

The program is Credit Card Relief™.

Nation’s Only Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a network of participating program attorneys, local to their clients, and provides a free initial consultation to determine if debt mediation is the best solution. Once enrolled, your creditors are contacted and told that you now have representation in settling your debt. You now have a professional working for you. That’s where your relief starts. The debt is then mediated by a nationally recognized debtor mediation law firm.

Great Track Record - Credit Card Relief has years of experience, settling over $110,000,000 (one-hundred and ten million) of debt for thousands of clients.

Operates in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%. They also have reasonable fees that you can live with.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.

Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry. You can obtain a free debt consultation from Credit Card Relief™ by clicking here.

Or call (866) 960-5454

They can help you determine the best solution for getting you free of debt.

Don’t Delay! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

Consumer Debt – How the Federal Reserve Rate Cut Impacts Your Debt

2008-01-25T12:26:00.001-05:00

The Federal Reserve’s ¾ point, emergency rate cut appeared to be the shot in the arm that Wall Street needed. After a major sell off in the morning of the cut, there was a significant rebound in the afternoon. This rate cut was good news for banks. The ¾ point cut in the discount rate reduces the rate banks pay to borrow money. This was welcome relief for many. (In case you weren’t aware, many banks are hurting from the recent sub-prime mortgage meltdown. Citigroup alone is writing off some $11 billion in sub-prime mortgage losses.)

Action by the Federal Reserve was later echoed by commercial banks which then cut their prime lending rate by three-quarter of a percent, dropping the rate from 7.25 percent down to 6.50 percent. (The Prime Rate is the benchmark used in establishing most consumer loans, credit card interest rates, etc.)

And this may not be the end for rate cuts! Many experts expect the Federal Reserve to cut rates again at its Jan. 30 meeting. Some are even worried that this emergency action taken before the scheduled meeting may mean the Feds know something we don’t – more bad economic news on the horizon!

But how does all this market volatility and rate cutting affect you and your debt? Is there good news for the average consumer in any of this? The answer for savers is NO! They will face lower returns on their money. For those with debt, the answer is mixed; for some, yes, for others, maybe!

Good News for Home Equity Borrowers – For those with home equity or consolidation loans, you should see a drop in your interest rate by next month. These rates are based on the prime rate so they should mirror the prime rate cut.

Good News for Mortgage Refinance – If you have an adjustable rate mortgage, now may be the time to refinance to a fixed rate. According to Bankrate.com on January 17, the 30 year fixed rate was down to 5.75 percent based on their weekly survey. The Federal Reserve rate cut will most likely drive further cuts in the 30 year rate. Remember, when considering refinancing, you should weigh the mortgage payment savings benefits against the refinance fees. But all in all, it may be the best time to get away from a variable rate that will balloon in say, 5 or less years, especially given the weak housing market.

Mixed News for Credit Card Holders – Some credit card holders could get a break on their interest rates, but it will most likely be limited to those with good credit. It’s important to note that credit card rates don't always track closely with action by the Fed. It could be three months before card holders see the lower rates on their monthly credit card statements. And for those with poor credit, high debt to income ratios, late on payments, etc, you will probably not see any lower rates and those excessive penalty rates are unlikely to change either. Late fees and penalties are big revenue generators for the credit card industry and one of the primary means by which they continue to profit on those in debt in spite of rising credit card defaults.

A Silver Lining for those with high Credit Card Debt – If you have $10,000 or more in credit card debt and have already been late one or more times on your payment, now may be your best time to see if you qualify for debt mediation (or debt settlement). By enrolling in a debt settlement program, you could realistically be out of debt in months instead of years and for less than what you owe!

What is Debt Mediation or Debt Settlement?
Debt Mediation is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this type of program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full, and marks the debt “zero balance”, which is very important and positive for your credit report. You’ll get out of debt for less than what you owe and in a fraction of the time it would take to pay off the debt just making the minimum monthly payments. Because they are settling hundreds of thousands of dollars of debt for hundreds of clients, they have relationships built over time and leverage with your creditors that you don’t have.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.The program is Credit Card Relief™.

Nationally Recognized Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a network of participating program attorneys, local to their clients, and provides a free initial consultation to determine if debt mediation is the best solution. Once enrolled, your creditors are contacted and told that you now have representation in settling your debt. You now have a professional working for you. That’s where your relief starts. The debt is then mediated by a nationally recognized debtor mediation law firm.

Great Track Record - Credit Card Relief has years of experience, settling over $110,000,000 (one-hundred and ten million) of debt for thousands of clients.

Operates in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%. They also have reasonable fees that you can live with.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.

Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.

You can obtain a free debt consultation from Credit Card Relief™ by clicking here.

Or call (866) 960-5454

They can help you determine the best solution for getting you free of debt. For more information, click here.

Don’t Delay! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

A Debt Reduction Diet You Can Live With

2008-01-17T11:42:00.001-05:00

Lately, I have been listening to some of the better-known financial and personal debt "experts" and their advice to people on why and how they should get debt-free. While I don’t disagree in principle with much of what they are saying, I do believe that some of their advice is a little hard to swallow and not always practical for many people struggling with debt. I also know, and question why, they leave out one of the best, and most palatable options available today.

First, let me say, there seems to be this prevailing theme of telling people that: You got yourself into this mess so you better just suck it up and dig your way out, no matter what it takes. Desperate times call for desperate measures. Put yourself on a strict financial diet. If you have to sell everything you own, including the roof over your head to pay off your debt, then just do it!

These may indeed be desperate times, but desperate actions don’t necessarily reap the best rewards. Given the current housing market, it may not be realistic to try to sell your house right now, especially if you have a second mortgage. Assuming you can even get it sold, you may find that you owe more than you can make by selling your house, figuring in realtor fees, etc. I am also baffled how these experts can tell people who are struggling to keep their heads above water to start paying more on their credit card bills than they have in the past in order to pay down their debt. Do you need to make sacrifices and change your spending habits in order to get out of debt? Should you cut out the $4.00 lattes? Yes to both! But for those in serious debt, it just may not be enough, especially for those whose debt is not from frivolous spending habits, but due to legitimate hardship issues. For these people, it could take years to ever pay down their credit card debt at the ridiculous interest rates being charged and with the exorbitant fees and penalties.

It amazes me that we have people talking about how terrible McDonalds and other fast food businesses are to corrupt us with their unhealthy foods, while the credit card industry aggressively goes after and dishes out credit to those already overweight in debt and no one says a word about what they are doing – how the credit card industry is contributing to the unhealthy financial state of millions of Americans. Have you noticed how, even though you are buried in debt, the credit card companies keep sending you credit card offers? They actually love people like you. It is called rolling, but I’ll save that whole explanation for another blog.

Is now the time to commit to a diet plan to eliminate your credit card debt? Absolutely! But it doesn’t have to be the starvation diet you probably have been hearing from others. There is a realistic and effective diet that these so-called experts won’t tell you about. This diet is one that you can live with. It is a diet that can get you debt-free in months instead of years and for far less than what you owe. This is not a miracle pill, nor is it a shady industry scheme. It is a totally legal program, recognized by the credit card industry, for getting you out of debt, and solvent with your creditors. Unlike bankruptcy, it won’t leave you with the serious long-term black mark on your credit. The diet solution I am talking about is debt mediation (or negotiation or settlement).

So why don’t the experts talk about the debt mediation option?
Well, I think there are probably a couple of reasons. 1) I think many don’t really know how it works. Some confuse it with Debt Consolidation. 2) I also think some aren’t comfortable publicly recommending a program in which you will typically pay less than what you owe. With debt mediation, the credit card companies are agreeing to settle for less than what you owe them out of the realization that they may get none of what you owe or just pennies on the dollar if they have to sell your debt to a collection agency. I don’t think the experts want to be the ones telling you that you don’t have to pay back every penny, plus all the outrageous interest, and all the ridiculous fees owed to the creditors. After all, who else but the financial industry (namely credit card companies and banks) are some of the biggest purchasers of television advertisements, the very people sponsoring many of their programs?

Interestingly, they seem to have little problem recommending consumer credit counseling, or debt management, under the guise that many claim to be “not for profit.” Unfortunately, this program has a poor success record with 60-70 % dropping out and is facing serious government scrutiny. In fact, according to Robert Manning, Director of the Center for Consumer Financial Services, the IRS findings conclude that CCCs are essentially debt collectors, not charities. Click Here, to learn more about this unattractive debt solution.

Debt Mediation – The Debt Diet You Can Live With
If you’re one of the thousands of people with high credit card debt ($10,000 or more), have minimal savings and are the one in six who pays only the minimum due every month, then you need a realistic plan to get yourself out of debt and back on track. I recommend you consider debt mediation (or debt settlement). By enrolling in a debt settlement program, you could realistically be out of debt in months instead of years.

What is Debt Mediation or Debt Settlement?
Debt Mediation is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this type of program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full, and marks the debt “zero balance”, which is very important and positive for your credit report. You’ll get out of debt for less than what you owe and in a fraction of the time it would take to pay off the debt just making the minimum monthly payments. Because they are settling hundreds of thousands of dollars of debt for hundreds of clients, they have relationships built over time and leverage with your creditors that you don’t have.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.The program is Credit Card Relief™.

Nationally Recognized Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a network of participating program attorneys, local to their clients, and provides a free initial consultation to determine if debt mediation is the best solution. Once enrolled, your creditors are contacted and told that you now have representation in settling your debt. You now have a professional working for you. That’s where your relief starts. The debt is then mediated by a nationally recognized debtor mediation law firm.

Great Track Record - Credit Card Relief has years of experience, settling over $110,000,000 (one-hundred and ten million) of debt for thousands of clients.

Operates in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%. They also have reasonable fees that you can live with.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.

Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry. You can obtain a free debt consultation from Credit Card Relief™ by clicking here.

Or call (866) 960-5454

They can help you determine the best solution for getting you free of debt.

Don’t Delay! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

The Credit Card Check Trap – One You Should Avoid

2007-12-28T14:31:00.000-05:00

The other day I received a “special offer” from my credit card company, along with a set of blank checks. The offer stated that I could use these checks to pay for anything I wanted, for any amount (up to my credit limit) at a promotional 3.99% fixed APR until the balance is paid. They suggested I use it to make a down payment on a new car, take a vacation, or make some home improvements. Sounds wonderful, doesn’t it? Yes…until you read the fine print!

These checks once again reminded me of the trap that I talked about in an earlier blog, but is well worth reiterating this week after Christmas when most will start receiving their credit card statements for all those financed Christmas purchases. Many will be shocked by the total owed and looking for some way to ease the burden. These low-interest checks certainly appear on the surface to be an answer to a prayer, but buyer beware! There are three major gotchas with these checks that will have you crying the blues if you don’t take the time to read and understand the fine print!

Transaction Fee: In the fine print it states that there will be a transaction fee of 3% applied to the amount of the check. So, let’s say you write a check for $5,000 to pay for your family’s Christmas vacation. That means you will be charged $150 to write that check. Well, you say, maybe it is worth it in order to get that low interest rate until the balance is paid off.
Payment Allocation: That brings us to the next gotcha. In the “Important Information” on the back of the offer, the credit card company states that it MAY allocate payments to the balances with the lowest APRs before applying payments to higher APR balances. The operative word “may” really means “it has the right to” and trust me, it WILL allocate your payments to the lowest rate first. Since you probably made other purchases with your credit card and those purchases naturally accrue interest at your standard higher interest rate of say, 21%, those purchases will now be the last in line to be paid off. By writing one of those low-interest checks, your next credit card payment will be applied to that lower-rate check balance instead of toward your new, higher-rate purchases. This means your new purchases will sit there, building up interest at the higher rate, and you can't stop it without paying off the low-interest balance in full, the very balance you had hoped to pay off over time. So, unless you make no other purchases, of what possible benefit are these low-interest checks?
Grace Period: The final gotcha is that there is no grace period on these checks. Interest starts accruing from the transaction date.

Instead of falling prey to one of these offers that can actually compound your credit card debt problem, use this time to make a resolution and begin a plan to put yourself on the path to financial freedom in 2008.

Get Out of Debt While Cutting Your Monthly Payment

If you’re one of the thousands of people with high credit card debt (over $10,000), have minimal savings and are the one in six who pays only the minimum due every month, then you need a realistic plan to get yourself out of debt and start working towards improving your credit rating. By enrolling in a debt settlement program, you could realistically be out of debt in months instead of years and often for less money per month than what you are currently paying, including interest and penalties. For more information about what debt settlement is, how it can help you, and who you should contact, Click Here.

Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

Consumers with Low Credit Scores Are Being Targeted

2007-12-03T15:24:00.000-05:00

Christmas is just around the corner and the lending institutions are peddling credit cards like there’s no tomorrow. This week alone, I received 6 credit card offers in three days -three of which were from the same bank. Is it just the anticipation of so many consumers using credit to fund their must-have holiday gifts and vacations that’s driving all these offers? Partly…but there’s a lot more going on here than the hope of cashing in on holiday mega-spending. There is a major shift in lending that is coming to the forefront.

Banks and other lending institutions are shifting away from mortgage and home equity lending. The shift is a direct response to the fallout from the sub-prime mortgage crisis and the drop in home values. Home foreclosures have reached the 1 million mark and are rising. Home values in some areas have dropped by as much as 40%. Many homeowners needing to sell, in order to get out from under rising mortgage payments they can no longer afford, can’t. Home equity values across the board are at record lows, due to lower home values and tapped-out equity borrowing, and with nearly 5 million adjustable rate mortgages due to hit within the next year, those in the financial industry are skittish about the next bubble to burst. Even the government is getting involved, trying to come up with a plan to help out sub-prime mortgage holders (it's really the impact on the banks they are worried about) in an effort to keep the economy stable.

Where once there was plenty of money to be made in mortgage refinancing and home-equity lines of credit, the growing crisis has led many to tighten their lending belts - that is, all except for one area. Credit cards have become the new cash cow! In fact, in 2007 the sub-prime market (households with low credit scores of around 600) has become a major target. Some creditors have as much as doubled their direct mail credit card offers to sub-prime customers as compared to 2006. But this isn’t particularly good news for those with less than stellar credit.

The Pitfalls of Sub-Prime Credit Card Offers
These sub-prime targeted credit card offers have some major pitfalls. These offers come with higher interest rates - 25% to even 35%, lower credit limits, usually have annual fees and some even impose an account setup fee, and typically they come with higher fees and penalties. If you accept one of these offers, you can also be assured that the issuer is going to monitor your entire credit activity and general bill paying carefully and if you are late on any other bills you have, they will most likely use it as a reason to raise your interest rate even higher. The sad truth is they can do all of this legally and it’s all in the fine print – if you took the time to read it and were actually able to understand it. They want your business, but if you default on your card, they are going to make sure they have made as much as they could on you in the form of interest, late fees, overdraft charges, and annual fees. After all, that’s where the money is anyway. In 2006 alone, the credit card industry made some $90 billion in interest and $55 billion in late fees.

Instead of falling prey to compounding credit card debt, use this time to make a resolution and begin a plan to put yourself on the path to financial freedom in 2008.

Get Out of Debt While Cutting Your Monthly Payment
If you’re one of the thousands of people with high credit card debt (over $10,000), have minimal savings and are the one in six who pays only the minimum due every month, then you need a realistic plan to get yourself out of debt and start working towards improving your credit rating. By enrolling in a debt settlement program, you could realistically be out of debt in months instead of years and often for less money per month than what you are currently paying, including interest and penalties. For more information about what debt settlement is, how it can help you, and who you should contact, read my blog dated September 29, 2006.

Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

Current Debt Could Jeopardize Your Retirement

2007-11-16T18:03:00.000-05:00

The days of being able to retire at 65 with a decent pension along with social security benefits are virtually over. Pension plans are practically history and certain analysts, along with our President, warn us that our social security system will be out of money down the road if we don’t fix it soon! With thousands of workers affected by the growing troubles of many American manufacturers, especially the automotive industry, an ever increasing number of hourly workers are finding themselves out of work or in jeopardy of losing their jobs. This coming at a point in their lives when they should be looking forward to their approaching retirement instead of looking for another job. To compound the problem, home values are decreasing in many areas and foreclosures are skyrocketing, all due to the overbuilding spurred by glutinous developers, home builders and speculative real estate investors, along with the questionable lending practices of some high-profile mortgage institutions. Now, gasoline prices are over $3.00 per gallon - projected to hit $4.00 per gallon by next year. But even all of this is just the tip of the iceberg. The real threat is what lurks under the waters disguised as “Living the American Dream” – It’s the growing consumer debt.

Consumer Debt Hits an All-time High
According to the Federal Reserve, the total U.S. consumer revolving debt, which includes credit cards, was up to $904 Billion in June of this year. The average American household now holds more than $9,000 in credit card debt and the sad reality is that 70% of hourly workers are living paycheck to paycheck.

All of this means that many Americans aren’t saving. The current collective savings rate for Americans is less than zero and I heard a recent claim that the average 60 year old has only saved around $50,000 towards retirement. Saving money has taken a back seat to paying on debt. While the credit card industry is getting rich, Americans are slowly going broke. In fact, the credit card industry takes in over $40 billion a year in fees and penalties alone. This is money Americans should be putting away towards their retirement.

An example of what debt is doing to savings:

Let’s assume you owe $15,000 in credit card debt at 25% interest and pay only the monthly minimum payments. It will take you 20 years and 8 months to pay off this debt. The total interest you will have paid will be a whopping $16,139. That’s more than the original amount charged and it doesn’t even include any late fees or penalties. It also equates to over thousands of dollars each year that could have gone towards retirement savings.

You may question whether this is a realistic scenario. The truth is people don’t typically start out with that much debt all at once. What really happens is they rack up debt over time on multiple cards, making only the minimum payments each month. The balances keep growing, as do their monthly payments. They can afford the payments, but can’t afford to pay them off, so they keep charging. Then one day, they find themselves $15,000 in debt, living virtually paycheck to paycheck, with a total minimum payment due of $600. Suddenly they can barely afford the minimums let alone have any hope of paying off their mortgage or putting money aside for retirement. So the actual interest they are paying on their charges is well above the $16,000 we used in the example.

Debt as a Threat to Retirement
This kind of debt picture is threatening the likelihood of being able to retire for thousands of Americans. The longer they wait to start saving, the more they will have to set aside out of each week’s paycheck to have any hope of building a nest egg sufficient to be able to retire. But with years of debt staring them in the face, what can they do? When can they hope to start saving? We can’t depend on our government and social security to take care of us in our old age.

Get Out of Debt in Months Instead of Years
If you’re one of the thousands of people with high credit card debt (over $10,000), have minimal savings and are the one in six who pays only the minimum due every month, then you need a realistic plan to get yourself out of debt and back on track to start saving for your retirement. I recommend you consider debt settlement. By enrolling in a debt settlement program, you could realistically be out of debt in months instead of years.

What is Debt Settlement?
Debt Settlement is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this type of program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’ll get out of debt for less than what you owe and in a fraction of the time it would take to pay off the debt just making the minimum monthly payments. Because they are settling hundreds of thousands of dollars of debt for hundreds of clients, they have leverage with your creditors that you don’t have.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.

The program is Credit Card Relief™.

Unique Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a network of participating program attorneys, local to their clients, provide a free initial consultation to determine if debt settlement is the best solution. Once enrolled, your creditors are contacted and told that you now have representation in settling your debt. You now have a professional working for you. That’s where your relief starts. The debt is then mediated by a nationally known debtor mediation law firm.

Great Track Record - Credit Card Relief has years of experience, settling over $100,000,000 (one-hundred million) of debt for thousands of clients.

Operates in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%.Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry. You can obtain a free debt consultation from Credit Card Relief™ by clicking here.

Or call (866) 960-5454

They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

Don’t Delay! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

Waiting too Long to Seek Debt Relief Help– Mounting Credit Card Debt Mistake # 5

2007-11-11T22:04:00.000-05:00

With the average American household carrying around $9,000 in credit card debt and many of those facing rising mortgage payments due to higher property taxes and rising interest rates, it’s easy to see how so many people can become overwhelmed – feeling as though there is no way out! Believe it or not, if you are in serious debt, one of the biggest mistakes you can make is to do nothing!

In this series of blogs, I have been discussing 5 of the biggest mistakes people make when faced with mounting debt, especially credit card debt, and providing some ways you can avoid or correct your mistakes. In my prior blogs I covered the problem with only paying the minimums on your credit card bills, using your home’s equity for credit card debt consolidation, using balance transfer card offers to move debt and using cash advances to make credit card payments. Today I will cover the fifth mistake: Waiting until it’s too late to negotiate with your creditors.

5. Wait until it’s too late to negotiate: If you are one of the thousands of people who find themselves struggling to pay even the minimums, the worst thing you can do is wait until it is too late to face up to your problem and take action. Don’t wait until you find yourself unable to pay.

Once you fail to make your required minimum payments, the credit card company considers your account to be delinquent or “at-risk” which weakens any leverage you may have to settle with your creditors. Delinquent or at-risk accounts are usually turned over to either an internal collection department or an external collection agency, which, in turn, begins contacting you for payment. The longer your account is at-risk, the more likely it is that your creditors will take action against you.

In some cases your account may be sold to a third-party collection agency (for usually pennies on the dollar). Once this happens, the collection agency owns the debt and begins hounding you for payment. The credit card company is now out of the loop and no longer interested in working with you; they’ve technically “gotten their money” from the collection agency.

Failure to pay on your part will likely lead creditors to take legal action against you for breach of contract. Yes, that's right, you signed a contract when you accepted that attractive credit card offer. Once you have a lawsuit filed against you, it is very difficult to negotiate a settlement. You could end up losing your home and having your credit ruined!

Before it’s too late you should check out whether debt settlement is an option for you. Don’t wait until you have lost your leverage to negotiate with your credit card companies on the balances you owe.

How Debt Settlement Works
Debt Settlement is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this type of program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’ll get out of debt for less than what you owe and in a fraction of the time it would take to pay off the debt just making the minimum monthly payments. Because they are settling hundreds of thousands of dollars of debt for hundreds of clients, they have leverage with your creditors that you don’t have. Also, the debt settlement company is in a better position to hold off creditor lawsuits because your creditors recognize that they will likely get more of their money working with the settlement company than they would by harassing or suing you. While your credit rating will drop as a result of being in a settlement program, you won’t ruin your credit for years like you would with a “failure to pay” judgment against you, or with bankruptcy or even consumer credit counseling.

How did Debt Settlement come about? – Debt Settlement, or Debt Negotiation as it is some times called, is a rapidly growing financial service industry that grew out of the exponentially mounting consumer debt and the realization that consumer credit counseling, with its 60-70% dropout rate, just wasn’t working for those seriously in debt.

But it is important to know that not all debt settlement/negotiation companies are alike.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.

The program is Credit Card Relief™.

Unique Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a consortium of attorneys. A network of participating program attorneys, local to their clients, provide a free initial consultation to determine if debt settlement is the best solution and once enrolled, offer limited representation. Your creditors are contacted and told that you now have representation in settling your debt. You now have a professional working for you. That’s where your relief starts. The debt is then mediated by a nationally known debtor mediation law firm.

Great Track Record - Credit Card Relief has years of experience, settling over $100,000,000 (one-hundred million) of debt for thousands of clients.

Operate in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.

Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

Using Credit Card Cash Advances – Mounting Credit Card Debt Mistake # 4

2007-10-24T19:14:00.000-04:00

In this series of blogs, I am discussing 5 of the biggest mistakes people make when faced with mounting debt, especially credit card debt, and providing some ways you can avoid or correct your mistakes. In my three prior blogs I covered the problem with only paying the minimums on your credit card bills, using your home’s equity for credit card debt consolidation and using balance transfer card offers to move debt. Today we will discuss the fourth mistake.

4. Rob Peter to pay Paul: Use credit card cash advances: Cash advances may seem like a way to hold the wolf at bay, but borrowing cash from one credit card to pay on other cards or bills will really cost you and only delay the inevitable. Many people don’t realize that cash advances typically carry both a transaction fee like balance transfers of around 3% and a higher finance charge (interest rate) than applied to other purchases. This means that when you borrow money at, say, 3% fee plus 24% APR to pay on a bill at, say, 12% APR, you’re robbing Peter to pay Paul with money that is costing you more and digging that debt hole you’re already in even deeper.

Be sure to read your credit card statement each month. You may occasionally find that a charge that you considered a “purchase” was actually treated as a cash advance by the credit card company. If you use an ATM machine for a cash advance, there can be an additional charge by the ATM’s bank.
Another gotcha occurs when you make a payment toward your balance. Most issuers apply payments to purchases before they apply payments to cash. If you carry a balance on your card, this means that you will continue to pay that higher interest rate on your cash advances until you pay off your entire balance.
And there is one more legal gotcha on cash advances: If you get into debt and have to consider bankruptcy, cash advances are exempt from Chapter 7 discharge of debts. You will still have to pay back any cash advances.

You’re in serious trouble if you are borrowing more money to make payments on money you already owe. Becoming dependent on cash advances to "make ends meet" can be a sign of serious debt problems.

If You Are In Serious Debt Trouble Do Consider Debt Settlement

If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. Debt Settlement is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’re now out of debt for less than what you owe and in a fraction of the time it would have taken to pay off the debt just making the minimum monthly payments.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.The program is Credit Card Relief™.

What Makes Them Unique?

Great Track Record - Credit Card Relief has years of experience, settling over $100,000,000 (one-hundred million) of debt for thousands of clients.

Operate in 46 states.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.

You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

Check back tomorrow for my next blog that addresses another all too common mistake and what you can do!

Mounting Credit Card Debt – Don’t Make One of These Mistakes – Con’t.

2007-10-21T22:48:00.000-04:00

In this series of blogs, I am discussing 5 of the biggest mistakes people make when faced with mounting debt, especially credit card debt, and providing some ways you can avoid or correct your mistakes. In my two prior blogs I covered the problem with only paying the minimums on your credit card bills and using your home’s equity for credit card debt consolidation. Today we will discuss the third mistake.

3. Using Balance Transfer Card Offers to Move Debt: You’re struggling to pay on your credit card debt each month, and then you get one of those enticing offers to transfer debt from one of your existing cards and not make any payments for 3 months. Wow! It sounds great, doesn’t it? While those low introductory, 0% rates look like an easier way to get out from under your mounting debt, if you aren’t careful it can actually end up costing you more. How?

First, if you are transferring a balance from another card, there is typically a transfer fee. The average fee is 3% of the amount transferred. This means that a transfer of $10,000 could cost you $300 in fees alone.
Second, most issuers only grant a "grace period" on purchases if you have completely paid off your previous balance. If you transferred a balance to take advantage of the low introductory rate and you don’t plan to pay off the balance until the end of the introductory period, say 6 months, interest charges will begin to accrue on each new purchase from the day of the transaction.
Third, issuer terms usually state that 100% of each payment you make is applied to the balance with the lowest interest rate. Since your new purchases are typically subject to a higher interest rate, they will be the last in line to get paid off. Your payments will be applied to that balance you transferred instead of toward your new purchases. So your new purchases will sit there, building up interest at the highest rate, and you can't stop it without paying off the balance transfer in full first, the very balance you had hoped to pay off over time.
Fourth, if you don’t pay off the balance transferred during the introductory period, once the period ends, you’ll be charged higher interest on that left over balance, along with all your new purchases.

What to do instead:

If you’re trying to get away from higher interest cards:

Rather than transferring your balances, stop charging on your higher interest rate cards and work on paying those cards down first, while continuing to pay at least the minimums on all others.
You may be able to negotiate a lower interest rate (as long as your credit hasn’t been damaged), especially if a creditor thinks they might lose your business to another creditor.

If You Are In Serious Debt Trouble Do Consider Debt Settlement

Background – Debt Settlement, or Debt Negotiation as it is some times called, is a rapidly growing financial service industry that grew out of the exponentially mounting consumer debt and the realization that consumer credit counseling, with its 60-70% dropout rate, just wasn’t working for those seriously in debt.
Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.

The program is Credit Card Relief™.

What Makes Them Unique?

Great Track Record - Credit Card Relief has years of experience, settling over $100,000,000 (one-hundred million) of debt for thousands of clients.

Operate in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%.

Unique Program Approach - Their program is unique in that Credit Card Relief uses a consortium of attorneys. A network of participating program attorneys, local to their clients, provide a free initial consultation to determine if debt settlement is the best solution and once enrolled, offer limited representation. The debt is then mediated by a nationally known debtor mediation law firm.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.

Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.

You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

Check back for my next blog that addresses another all too common mistake and what you can do!

Mounting Credit Card Debt – Biggest Mistakes People Make – Con’t.

2007-10-18T23:04:00.000-04:00

In this series of blogs, I am discussing 5 of the biggest mistakes people make when faced with mounting debt, especially credit card debt, and providing some ways you can avoid or correct your mistakes. Yesterday I covered the problem with only paying the minimums on your credit card bills. Today we will discuss the second mistake:

2. Using your home’s equity for credit card debt consolidation: This may seem like a good solution to mounting debt, but it has some potentially serious consequences. By borrowing against the equity you have in your home, you are trading unsecured debt for secured debt. Sure those credit card balances or medical bills are paid off, but now, if you default on what is essentially a second mortgage on your home, the lender can foreclose and you could lose your home. Putting your home at risk is not a good tradeoff, especially for those seriously in debt and already struggling to make monthly payments.

Other Drawbacks

You could owe more on your house than it is worth - With loans typically spread over 15 – 30 years, if you do have to sell your home for any reason in the short term, you could actually owe more between your mortgage balance and home equity loan than what you make on the sale of your home. In the current real estate market with dropping home prices, this is a real threat!
Equity loans typically have an adjustable rate. As the prime rate rises, the loan rate rises and with it your monthly loan payment.
Some people, seeing zero balance credit cards for the first time, suddenly think they have a whole new line of spending power. They somehow forget that they are still paying on that credit card debt! They start charging again and are suddenly faced with both the equity loan and maxed out cards to repay.

What to do Instead:

You may be a candidate for debt settlement. With debt settlement, a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. With this approach, you preserve the equity in your home, while getting out of debt for less than what you owe and in a fraction of the time it would have taken to pay off the debt just making the minimum monthly payments. Read yesterday’s blog for further details on this program and who to contact.

Tomorrow I will cover Mistake Number 3.

Facing Mounting Credit Card Debt – Have You Made One of These Mistakes?

2007-10-17T14:38:00.000-04:00

It is so easy for credit card debt to get out of control. Each month you charge a little more on your credit card, pay the minimum payment, and promise to pay off the balance soon - when you get a little extra cash. Then the car breaks down, so you charge it, then you have out of pocket expenses for unexpected medical bills, so you charge that too! Before you know it, you’re over your credit limit and the credit card company slaps you with over-limit fees and then raises your interest rate. Then another “attractive” credit card offer comes in the mail and now you’re carrying a balance on two, maybe three different cards! It’s not long before you’re over your head in credit card debt. You’re just the kind of customer the credit card companies love! As long as you carry a balance, they are making huge profits on interest and penalties. In fact, the credit card industry takes in over $40 billion a year in fees and penalties alone.

In 2006, over 50 million households carried an average of over $9,000 in credit card debt. If you are one of those households, or think you may be headed in that direction, it is easy to make mistakes in an effort to try to dig out of mounting debt.

In my next several blogs, I will be addressing 5 of the biggest mistakes people make when faced with mounting debt, especially credit card debt, and offer some ways you can avoid or correct your mistakes.

Credit Card Debt Mistake #1- Making Minimum Payments on Credit Cards
Too many individuals are lulled into a false sense of security, telling themselves, ‘As long as I can make the minimum payment each month on my credit card bills, I’ll be okay.’ This is a huge mistake for two reasons.

By making only the minimum payment each month, it will take you years to pay off your balance, if you ever do get out of debt! In fact, it would take you between 9 and 10 years to pay off a $2,000 debt if you made only the minimum 4% payments. Surprised? Well, you’re not alone. Now bump that debt amount up to $10,000 and you’re looking at more than 15 years, and that assumes you stop making any further charges which isn't very likely. Why so long? As you slowly pay down the debt, your minimum payment due each month goes down, dragging out the payoff. This, along with the fact that many credit card companies had their minimums set so low that they didn't even cover the interest due, were the very reasons the government, in 2005, put pressure on the credit card industry to raise their minimums from an average of 1.5% to around 4%. However, since no law has ever been enacted, not all credit card companies have made this change. When you make minimum payments only, you are basically covering the interest each month with very little applied to the principle, usually only about 1%. The brutal reality is - you will probably never be debt free paying only the minimums.
Just getting by each month is like walking a tightrope that could snap at any time. What if you’re late or miss a payment and, as a result, the credit card company raises your interest rate which in turn raises your minimum payment due? What happens if you suddenly find yourself out of work for any reason or get sick and have mounting medical bill? Telling yourself that you’re okay financially as long as you can make the minimum payments each month is like sitting on a ticking time bomb. Sooner or later it is going to go off unless you make some serious changes.

What to do instead:

You must reduce your out of pocket expenses to free up cash. You think, ‘Oh, that’s really hard to do!’ You’re right! We have all been conditioned through advertising to believe that if we want it, we should have it NOW! No point in waiting, just charge it and pay for it later. Well later is here and you can’t pay for it, right? Sit down, as a family if necessary, lay out your bills and your credit card statements, and start cutting out all those expenses you can live without. Nothing is sacred; start chopping! Carry your lunch to work instead of eating out, no more manicures, no more expensive junk food at the grocery store, no more lattes at the local coffee shop, and forgo evenings out with the boys or girls! Get yourself and your family on a budget as quickly as possible and stick to it. Almost every family can find expenses they can cut to free up cash.
Stop charging and start paying cash for everything you can. You will be surprised how this will help you cut your expenses even further. For the things you do charge, keep a running tally on the refrigerator to help you see how quickly it adds up over a month’s time.
Always pay the minimums due and don’t be late on your payments in order to avoid those credit card penalties. To ensure the money is there when the bill comes due, each week, set aside at least ¼ of the money you will need to make your credit card payments.
Start paying down your balance - one card at a time. Now that you have cut your expenses and hopefully freed up some cash, start paying down the credit card with the highest interest rate first, while continuing to pay at least the minimums on all others.

Do Consider Debt Settlement If You Are In Serious Debt Trouble

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.The program is Credit Card Relief™.

What Makes Them Unique?

Great Track Record - Credit Card Relief has years of experience, settling over $100,000,000 (one-hundred million) of debt for thousands of clients.

Operate in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%.Unique Program Approach - Their program is unique in that Credit Card Relief uses a consortium of attorneys. A network of participating program attorneys, local to their clients, provide a free initial consultation to determine if debt settlement is the best solution and once enrolled, offer limited representation. The debt is then mediated by a nationally known debtor mediation law firm.Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

Check back tomorrow for my next blog that addresses another all too common Credit card debt mistake and what you can do!

Credit Card Debt – The Brainwashing of the American Consumer and How to Fight Back

2007-09-21T15:46:00.000-04:00

We have become a nation dependent on credit and credit cards and our acceptance of this dependency is reinforced on a daily basis in media advertising. I particularly like the commercial that tells us something to the effect that ‘the world demands faster money’ which our brains translate to ‘the world requires us to use credit or debit cards everywhere we go or we will be a cog in the wheel of progress.’ Another successful advertising campaign shows people enjoying life, making credit card purchases for various items or activities and then telling us that the results of these ‘financed’ moments is “priceless.” Again, we are brainwashed into using the fulfillment and pleasure derived from these purchases as justification for charging beyond our means because, after all, we just can’t put a price on happiness!

So now that we have all bought into the necessity and joy of credit card spending, the credit card companies have us hooked. In fact, in 2005, consumers in the U.S. were hooked to the staggering total of $1.8 trillion in credit card spending. This industry can now do pretty much whatever it wants to us- and the truth is – it does! The average credit card late fee has risen 162% since 1995. And if you can even begin to understand all the fine print on your credit card contract, you will find a whole list of fees and penalties they can assess: over-the-limit fees, the universal default clause, cash advance fees, transaction fees for certain types of charges, and “trailing” or “residual” interest charges (where cardholders are charged interest on balances they’ve paid the previous month).…and on…and on. All of this prompted an investigation by The General Accountability Office (GAO), which is the investigative arm of Congress. Their report was released late last year and sited a whole list of concerns regarding the practices of this industry. Michigan Democrat Carl Levin was appalled after reviewing the report and said that consumers need a score card to keep track of all the credit card fees and penalties.

In spite of the findings in the GAO report, little is really happening to stop the consumer abuse by the credit card industry. It is interesting to note that in 2005, after huge pressure from the credit card industry, lawmakers passed legislation to make it more difficult for debtors to file bankruptcy to get out of credit card debt. But then in 2006, the credit card industry turned right around and sent out more than eight billion credit card solicitations - a 30% increase. Consumers need to wake up and realize that they are being fed “financial cocaine” and that no one, not even Congress, will protect them by taking on the big boys. It’s up to each and every consumer to fight back!

There are steps every consumer needs to take:

Control credit card spending to no more than what you can truly afford to pay off at the end of the month. Carrying a balance month to month will cost you big time! Those “priceless” purchases could end up costing you twice what you originally paid for them in interest, fees, and penalties by the time they are paid off. Debt Consolidation and Refinancing are no longer attractive “quick fixes.” So if you already carry a substantial balance, then work out a plan to get yourself debt free. If you think you may be in serious debt ($10,000 or more), seek help now! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. Also, read my blog dated September 29, 2006.
Read the fine print of your credit card statement. If there are terms you don’t understand, then contact your credit card issuer and have them explain the terms in plain English. Read my blog dated October 13, 2006 so you understand all the Credit Card Gotcha’s.
Don’t be afraid to try to negotiate better credit card terms, such as a lower interest rate. If you’re paying your bills on time, there is a better than 50% chance they’ll agree to a lower rate, especially if you can site another bank willing to give you a lower rate, so…
Shop around for better terms and better rates.
If you suspect abuses, don’t be afraid to report your bank or card issuer. Contact the Office of the Comptroller of the Currency: http://www.occ.treas.gov/. The credit card industry has more complaints filed against it than any other industry in the U.S.

I recommend you watch the video trailer at “In Debt We Trust.”

A Study Finds Mounting Credit Card Debt Bad for Your Health

2007-08-17T13:50:00.000-04:00

Dealing with the stress of serious credit card debt can actually be bad for your health. This not-so-surprising finding is based on a study conducted by Ohio State University. A study of over 1,000 Ohioans found a strong relationship between worry over rising debt and increased health problems. While the study examined respondents debt in terms of the number of credit cards they held and whether they carried a balance month to month, results actually showed that the real factor in determining debt stress and health problems was based on the amount of a family’s income that was tied up in paying off debt. In fact, those people who had a higher debt to income ratio exhibited higher levels of health related issues.

What can you do if the stress of mounting debt and the worry over the amount of money being paid towards those high interest rates is affecting your health? An authority on stress management told me that taking charge of your situation is a first step to getting stress under control. Worry alone gets you no where. Inaction or status quo fuels stress. Rather, examining your situation and putting together a plan to get your debt under control can actually help relieve some of the stress. While a well thought out plan won’t make the debt miraculously go away, the action of working that plan towards a goal of being debt free will relieve some of the stress and hopefully improve your health.

If you have credit card debt over $10,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. For more information, read my blog dated September 29, 2006.

Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S.

You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt.

Relief From Debt - Don't Make One of These Mistakes

2007-06-20T19:07:00.000-04:00

Growing consumer debt is a very real problem in this country. While the moguls on Wall Street continue to reap the rewards of a bull market and vehemently assert that ‘the economy is booming’, the average American on Main Street isn’t so sure. A recent Washington report states that 70% of hourly workers are living paycheck to paycheck. They struggle silently each day to make ends meet, just getting by, until the car breaks down, dad gets sick and can’t work, or mom looses her job due to the factory closing and her job moving overseas. Then, in desperation to try to resolve the situation, many make one of the all too common mistakes I discuss below which can actually make matters worse! Here is what you need to know so you don’t end up digging your debt pit even deeper!

Don’t Use Your Home
If you thought about taking out an equity line against your home or refinancing your home to use your existing equity to pay off credit card debt, be very, very careful! While it may seem like a good option since the interest rate on an equity line or a mortgage is typically less than on a credit card, there are some serious drawbacks you must be aware of before you make this choice.

Drawbacks

Don’t trade unsecured debt for secured - By borrowing against the equity you have in your home, you are trading unsecured debt for secured debt. Sure those credit card balances or medical bills are paid off, but now, if you default on what is essentially a second mortgage on your home, the lender can foreclose and you could lose your home. Putting your home at risk is not a good tradeoff, especially for those seriously in debt and already struggling to make monthly payments.
You could owe more on your house than it is worth - With loans typically spread over 15 – 30 years, if you do have to sell your home for any reason in the short term, you could actually owe more between your mortgage balance and home equity loan than what you make on the sale of your home. In the current real estate market with dropping home prices, this is a real threat!
Equity loans typically have an adjustable rate. As the prime rate rises, the loan rate rises and with it your monthly loan payment.
Some people, seeing zero balance credit cards for the first time, suddenly think they have a whole new line of spending power. They somehow forget that they are still paying on that credit card debt! They start charging again and are suddenly faced with both the equity loan and maxed out cards to repay.

Watch Out for Low Introductory Rate or Balance Transfer Card Offers
While those enticing low introductory, 0% rates look like an easier way to get out from under your mounting debt, if you aren’t careful it can actually end up costing you more. How can this happen?

First, if you are transferring a balance from another card, there is typically a transfer fee. The average fee is 3% of the amount transferred. Some issuers limit the fees to $75, but a growing number are doing away with the limits. This means that a transfer of $10,000 could cost you $300 in fees alone.
Second, most issuers only grant a "grace period" on purchases if you have completely paid off your previous balance. If you transferred a balance to take advantage of the low introductory rate and you don’t plan to pay off the balance until the end of the introductory period, say 6 months, interest charges will begin to accrue on each new purchase from the day you buy them.
Third, issuer terms usually state that 100% of each payment you make is applied to the balance with the lowest interest rate. Since your new purchases are typically subject to a higher interest rate, they will be the last in line to get paid off. Your payments will be applied to that balance you transferred instead of toward your new purchases. So your new purchases will sit there, building up interest at the highest rate, and you can't stop it without paying off the balance transfer in full, the very balance you had hoped to pay off over time. The only way around this is to take out the low introductory rate card and use it exclusively to pay off your old balances. Make all new purchases on another card until the old balance is paid off. Focusing only on the introductory rate without reading all the terms and conditions could leave you paying more in interest and fees than you did on your old card.
Fourth, if you don’t pay off the balance transferred during the introductory period, once the period ends, they start making higher interest on that left over balance, along with all your new purchases.There is one more potential gotcha buried in the fine print. If you happen to be late on your payment for any reason during the introductory period, your rate will immediately skyrocket, in some cases as high as 30%. Before you sign up, be sure you know what all the terms are for that seemingly wonderful new card offer!

Don’t Assume Bankruptcy Is The Easy Or Only Option
If you thought your best option was to just file bankruptcy and start over…think again! Under the new bankruptcy laws, it is substantially more difficult to file bankruptcy as a means of escaping mounting debt. Under the new laws, before you can file bankruptcy, you must first complete financial counseling. You will have to attend classes and provide detailed records of your income, expenses, and tax records. (Remember, under a “consumer credit counseling” program, you will still be required to pay back the entire debt.) Only if the counseling agency determines that you are financially unable to complete a payment plan will you be able to proceed with filing bankruptcy.

Chapter 7 Bankruptcy discharges (wipes out) your debt. Chapter 7 qualifiers usually have little to no assets. Under Chapter 7, your assets (less those exempt by your state) are sold to pay your creditors as much of the debt you owe as your assets will cover. The remaining “eligible” debt is discharged. However, there is some debt that is not dischargeable and you will still be required to pay in full, such as taxes, spousal and child support, student loans, and certain luxury purchases. Under the new law, items deemed as “luxury” of $500 or more purchased within ninety days of the bankruptcy filing (or $750 within seventy days) are not dischargeable. If your income is too high, you won’t be able to qualify for Chapter 7 and will have to file Chapter 13.

Chapter 13 Bankruptcy is a debt payment plan. You will agree to pay most or all of your debts over a period of time, three to five years. The courts will assign a trustee who will review your finances and determine how much you will pay each month. Again, your Credit Report will show a bankruptcy.

Drawback to Bankruptcy: For many, bankruptcy is the only option, but it isn’t a “get out of debt free” card. It might be a way to stop those harassing phone calls but it is a painful process in and of itself and the wound doesn’t heal quickly. A bankruptcy stays on your credit report for ten years and will stay on your court records for 20 years. Many applications, including those for jobs, loans, or certain types of insurance ask you if you have ever filed for bankruptcy. More and more, companies are conducting background checks on prospective employees and a bankruptcy will show up on the report. Bankruptcy should really be your last resort. There is a better way out!

Do Consider Debt Settlement If You Are In Serious Debt Trouble
If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. Debt Settlement is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’re now out of debt for less than what you owe and in a fraction of the time it would have taken to pay off the debt just making the minimum monthly payments.

Background – Debt Settlement, or Debt Negotiation as it is some times called, is a rapidly growing financial service industry that grew out of the exponentially mounting consumer debt and the realization that consumer credit counseling, with its 60-70% dropout rate, just wasn’t working for those seriously in debt.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.The program is Credit Card Relief™.

What Makes Them Unique? Great Track Record - Credit Card Relief has years of experience, settling over $100,000,000 (one-hundred million) of debt for thousands of clients.Operate in 46 states.Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%.

Unique Program Approach - Their program is unique in that Credit Card Relief uses a consortium of attorneys. A network of participating program attorneys, local to their clients, provide a free initial consultation to determine if debt settlement is the best solution and once enrolled, offer limited representation. The debt is then mediated by a nationally known debtor mediation law firm.Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

Don’t Be Lured By Too-Good-To-Be-True, Get-Out-Of-Debt Options
Advertisements to get you out of debt for pennies on the dollar are all over television and the radio these days, but if it sounds too good to be true, it probably is! If they’re quoting you 50% or more in debt reduction or 12 months to be debt free, ask them if they will put that in writing! Then listen to them back-peddle. Some of these companies have a list of filed complaints with their local Attorney Generals or the Better Business Bureau that are a mile long and some are being scrutinized quite closely. The reality is, most credit card companies will negotiate the balance owed, but not for a mere pennies on the dollar.

Graduating and In Debt - What to do Now!

2007-06-11T22:22:00.000-04:00

Congratulations to all the recent college graduates and welcome to the real world of job hunting, learning to live on your own, and paying off that debt you racked up.

It has been reported that the average college graduate leaves college with $3,000 in credit card debt and at least four credit cards. While $3,000 may not sound like a lot, a surprising few, even with a college degree, have stopped to figure how long it is going to take to pay off that debt while quite probably going further in debt financing a car, buying a new wardrobe for that new job, etc. That $3,000 may only be the tip of the iceberg for those with the added burden of student loans. Paying only the minimum monthly payment on the $3,000 balance (assuming 4% minimum payments), it will take over 11 years to pay off. And that assumes no further charges!

Unfortunately, there are a surprising number of students who have more than $10,000 in credit card debt and as many as ten-twelve cards. How does this happen?

It is amazing to see the ease with which mere kids are able to obtain credit with little to no disposable income. Even more amazing are the number of students who admit they were never educated on the cost of credit – how credit cards work in terms of how interest is calculated, late fees, penalties and how it all affects a person’s credit score. Few knew that the spring break trip they charged is going to affect the interest rate they pay to finance their new car or determine whether they can even get approved to rent an apartment. They simply operated under the premise that upon graduation, they would start to pay off their debts. It never occurred to them that the $10 pizza they charged could end up costing a $100 or more depending on the interest rate charged and any late fees or penalties that apply if late on even one payment or unable to pay the minimum.

Why are so many willing to hand out credit like candy? Because they are all fighting to gain your loyalty as early as possible and ultimately your long-term financial business for auto loans, mortgages, credit lines, and of course, your ongoing credit card purchases. (See what Robert Manning, author of Credit Card Nation, has to say about the tactics of credit card companies.)

Decide now to become a financially responsible adult.

Read my blogs dated October 2006 on Credit Card Gotchas.
Then read your credit card statements carefully so you understand the terms you have agreed to and exactly what you are paying in interest, late fees, etc.
Set up a plan to pay down that debt as quickly as you can, starting with your highest interest credit card, without being late on any of your other cards.

Parents, if you care about your young adults starting out on the right foot, help them get their finances on solid ground. Sit down with them and go through the above steps together, with understanding (not recrimination) and encouragement.

Think You Might Be in Serious Credit Card Trouble? If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. For more information, read my blog dated September 29, 2006.

Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S.

You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt.

Read This Before You Spend Your Tax Refund Check

2007-05-06T14:34:00.000-04:00

If you’re one of the lucky American taxpayers expecting money back from the IRS instead of owing Uncle Sam, you need to read the following before you make plans to spend your federal tax refund check.

The average American family owes more than $8,000 in credit card debt, and pays more than $1,000 per year in interest payments alone. Paying only the minimum 2 to 4% each month can mean years before many will ever be debt-free and that’s assuming they don’t continue to put more on their cards each month. If you can relate to this typical American profile, then please stop and think before you view that refund check as “new found money” and make plans to spend it on food, fun, or luxury goods.

Stop – The money you are being refunded is NOT new-found money. It is money you earned that, instead of paying off those expenses you incurred or earning interest in a savings account, was “loaned” to the government in the form of overpaid taxes. It was yours all along; you’re just getting it back, and without interest I might add!

I am reminded of an episode of Everybody Loves Raymond where Raymond’s brother Robert was having financial difficulties, so Raymond, feeling sorry for his brother and wanting to help, loaned him $1,000. Robert was, needless to say, very touched and very grateful. But a couple days later, to Raymond’s shock and disbelief, Robert informed his family that he was headed to Vegas for a vacation. When Raymond asked him how this was possible given his financial woes, Robert basically told him that it was all thanks to the $1,000 Raymond had given him – money he said he wouldn’t otherwise have had. Robert’s warped logic was that, for a few days, he would feel free of his financial problems. Too many people view their debt in the same manner. It feels like it is always going to be there so why not take the money and have some fun, at least for as long as the tax refund lasts.

Think – Don’t be like Raymond’s brother Robert. If you were to pay only the minimum 4% each month at an average 18.9% APR, against a debt balance of $8,000, it would take you over 14 years to pay off that debt. But if you applied your $1,000 (or whatever amount you get back) refund check each year to your debt balance, you could cut years off the life of your debt and save thousands of dollars in interest, assuming you don’t continue to charge more than you can pay off each month. Don’t think short-term fun like Robert. Think long-term financial health. It’s not too late to make 2007 your year to become fiscally fit.

Act – Commit to a plan now before the refund check comes. Start with your highest interest credit card and plan to pay down that balance first. You can go to www.dinkytown.net and use one of their many financial calculators to evaluate your personal debt situation and how much of an impact this strategy can have over the life of your debt. Once you determine your plan, then stick with it! Sound a little hard to do? Okay, then take $50 of the refund and treat yourself to a nice dinner as your reward for doing the fiscally smart thing with your refund!

Drowning in Debt? If you are one of a growing group of Americans who are literally drowning in debt and feel that your tax refund would barely put a dent in the thousands of dollars you owe, then you may qualify for debt settlement. Your refund check can help you get started to actually negotiate down and then eliminate much of your unsecured debt. You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting free of debt. To learn more about how such a program can help you get debt free, read my blog dated September 29, 2006.

What You Can Do To Avoid Identity Theft

2007-03-01T15:46:00.000-05:00

A friend sent me the following, regarding Identify Theft. I thought it contained some valuable suggestions for things you could do to lower your risk of identity theft, so I am passing these tips along to you. Note that nothing here will PREVENT thieves from trying to steal your identity, but every precaution you take can make it more difficult.

A corporate attorney sent the following out to the employees in his company.

The next time you order checks have only your initials (instead of first name) and last name put on them. If someone takes your checkbook, they will not know if you sign your checks with just your initials or your first name, but your bank will know how you sign your checks. (I’m not convinced that every bank is that diligent in looking at check signatures, but you could use this to prove that you didn’t write the checks.)
Do not sign the back of your credit cards. Instead, put "PHOTO ID REQUIRED." (This doesn’t work if you go anywhere that allows you to scan your card without them ever looking at the back. This practice is becoming the norm in most stores.)
When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the "For" line. Instead, just put the last four numbers. The credit card company knows the rest of the number, and anyone who might be handling your check as it passes through all the check processing channels won't have access to it.
Put your work phone # on your checks instead of your home phone. If you have a P.O. Box, use that instead of your home address. If you do not have a P.O. Box, use your work address. Never have your SS# printed on your checks.(DUH!) You can add it if it is necessary. But if you have it printed, anyone can get it.
Place the contents of your wallet on a photocopy machine. Do both sides of each license, credit card, etc. You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe place. I also carry a photocopy of my passport when travel either here or abroad. We've all heard horror stories about fraud that's committed on us in stealing a name, address, Social Security number, credit cards.

Unfortunately I, an attorney, have firsthand knowledge because my wallet was stolen last month. Within a week, the thieve(S) ordered an expensive monthly cell phone package, applied for a VISA credit card, had a credit line approved to buy a Gateway computer, received a PIN number from DMV to change my driving record information online, and more. But here's some critical information to limit the damage in case this happens to you or someone you know:

We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card numbers handy so you know whom to call. Keep those where you can find them.
File a police report immediately in the jurisdiction where your credit cards, etc., were stolen. This proves to credit providers you were diligent, and this is a first step toward an investigation (if there ever is one).
But here's what is perhaps most important of all: (I never even thought to do this.) Call the 3 national credit reporting organizations immediately to place a fraud alert on your name and Social Security number. I had never heard of doing that until advised by a bank that called to tell me an application for credit was made over the Internet in my name. The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit.By the time I was advised to do this, almost two weeks after the theft, all the damage had been done. There are records of all the credit checks initiated by the thieves' purchases, none of which I knew about before placing the alert. Since then, no additional damage has been done, and the thieves threw my wallet away. This weekend someone turned it in.It seems to have stopped them dead in their tracks.Now, here are the numbers you always need to contact about your wallet, etc., has been stolen:

Equifax: 1-800-525-62852.
Experian (formerly TRW): 1-888-397-37423.
Trans Union: 1-800-680-72894.
Social Security Administration (fraud line): 1-800-269-0271

I would add the following advice:

You don’t have to lose your wallet, credit cards or checkbook to be a victim of identity theft. Look at your bank account balances on a weekly basis. If you have access to your credit card transactions on-line, look at those as well. If you do that, you’ll know if there are any fraudulent charges and be able to act while the banks and credit card companies will take ownership of the problem.

Are You Already in Credit Card Trouble?

It's not to late to start Your New Year’s Resolution Now To Get DEBT FREE!

If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated
September 29, 2006.

What to Look For When Seeking Debt Relief Help

2006-12-06T17:59:00.000-05:00

If you’ve made the decision or are thinking about seeking help in resolving your debt situation, through debt consolidation, credit counseling or debt settlement, read this before you make any calls or fill out any “applications.”

The number of “companies” advertising help with debt can seem pretty overwhelming, and, based on the type of program, most sound very similar in their claims of what they can do for you. So how do you know where to start in selecting who you should talk to?

First- Know you who are talking to! The reason why it seems like there are so many “companies” advertising help with debt is because many of them are really just lead generating companies. They get you to call or fill out contact information on-line, then they SELL your lead to other companies who actually DO provide debt relief services. This wouldn’t be so bad except for one problem. Many sell your lead over and over and you are suddenly bombarded with calls. Avoid these lead generators and go straight to the source. How do you know the difference? If you are looking at companies on the Internet, it is pretty easy. The web pages of Lead Generators just state that they can help you get out of debt quickly and have you fill out a contact form without any information on the site about their debt relief program, how it works, or their company. Particularly watch out for sites that don’t give any address or have an 800 number you can call. These are dead give-aways that they are passing your information on to someone else. You would be surprised by how many of these lead generating companies aren’t even located in the Unites States. The Internet has its benefits but it also allows companies to put up “storefronts” that give you the impression that they are located in this country and you would never be the wiser if you didn’t know how to find out who owns a particular website domain.

Look for clues in the company’s advertising statements. They use phrases like, “our companies” or “we’ll direct you to a solution that is right for you” or “we’ll match you with a debt relief specialist.” Again, these statements usually mean that your lead will be sold to some other entity. If you call from an ad, don’t be afraid to ask specific questions, like: ‘How many companies do you represent?’

Second- Be skeptical of offers that sound too good to be true! There are companies out there advertising their ability to negotiate unbelievable savings for you with your creditors. Be careful! If they’re quoting you 50% or more in debt reduction or 12 months to be debt free, ask them if they will put that in writing! Then listen to them back-peddle. Some of these companies have a list of filed complaints with their local Attorney Generals or the Better Business Bureau that are a mile long and some are being scrutinized quite closely. You want real relief, not unrealistic hype. Better yet—

Check with the Better Business Bureau- They monitor the industry and keep track of complaints made. While it’s common for any business to get a few complaints, if they’re getting a lot, that is probably a warning flag!

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.

The company is Preferred Financial Solutions, Inc. and the program is Credit Card Relief™.

What Makes Them Unique?

Great Track Record - Credit Card Relief has years of experience, settling nearly $100,000,000 (one-hundred million) of debt for thousands of clients.

Operate in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%.

Unique Program Approach - Their program is unique in that Credit Card Relief uses a consortium of attorneys. A network of participating program attorneys, local to their clients, provide a free initial consultation to determine if debt settlement is the best solution and once enrolled, offer limited representation. The debt is then mediated by a nationally known debtor mediation law firm.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.
Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.

You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

Credit Card Strategies for the Holidays

2006-11-09T00:03:00.000-05:00

Tis the Season …To Run Up Credit Card Debt! The influx of tantalizing gift catalogs and those department store charge card specials have reminded me that it is that time of year again…when the excitement of the holidays and shopping for gifts can lead many to over-spend and fall further into credit card debt.

Here are a few tips to help you have a joyous holiday that won’t leave you saying “Bah, humbug!” when you get the bills in the new year.

Keep Things in Perspective – The stores and the credit card companies have brainwashed consumers into believing that in the spirit of gift-giving, the holidays are a time to pull out all the stops. It is okay to spend more at Christmas than we can afford; just charge it! Don’t worry…it’s just money! Christmas only comes once a year, right? But the reality is, if you can’t pay off the bill, you could end up paying on that holiday sweater for a year or more, depending on the interest rate of the card, any late fees, over the limit fees, etc. Where once we only thought of financing our cars, homes, and maybe college, we have now been lured by the credit card industry to finance everything! Their expectation is that in charging everything (on those “great” cash-back rewards cards), you won’t be able to pay the bill and they will make all that interest on you.

Set a Budget - Set a budget for what you can comfortably afford to spend and stick to it. Your goal should be to spend no more than what you can pay off, in total, when the monthly credit card bill comes due. Don’t finance your Christmas. Some people very wisely set up a separate Christmas fund account, setting aside money throughout the year to use for gift-buying, holiday entertaining, travel, etc. This is a good way to keep from overspending. These proactive consumers purchase their holiday cheer with their savings – money they can afford to spend. Don’t have a Christmas fund account?

It’s not too late to sit down and plan your holiday shopping within your spending means. 1) Determine what you can afford to spend, 2) Set your budget, 3) Sit the family down and get everyone to commit to sticking to the budget, 4) Set spending limits for each person on your list, and 5) Keep close tabs on your expenditures. You’ll have a merrier Christmas if you aren’t stressed over how you are going to pay the bills!

If You Charge It, Add Up Your Receipts As You Go – In my younger years, with only a checking account for non-cash purchases, I tracked my expenditures by entering the check amount in the register as I wrote each check. Thus, I always knew exactly how much I had spent against how much I had available to spend. Now with credit cards, when the bill comes, it is often shocking at how quickly that credit card balance added up. If you must charge, the best way to ensure that you are staying within your financial means is to set your limit, then add up your charge card receipts as you go.

Don’t Open Any New Credit Card Accounts – The holidays is an especially good time for the credit card companies and the stores who represent them to ensnare new debtors by offering special discounts. Don’t sign up! The interest you pay will far outweigh any savings you may get and that extra card could negatively impact your other credit card rates. Receiving a 10% discount on your purchases for a day by simply signing up for a new charge card is of little advantage if you can’t pay off the balance in a month. When you spend more than you can pay off and end up carrying a balance at an APR of 21% or more, you will now pay more than the original price for the item instead of getting it at a discount.

In addition, that extra credit card could impact your credit score. The more cards you possess, the lower your credit score. Your lower score can, in turn, cause any of your other creditors to decide that you may be a risk and thus, raise your rates on your other cards. If you must charge, then stick with the cards you already possess.

Are You Already in Credit Card Trouble?

Start Your New Year’s Resolution Now To Get DEBT FREE!

If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

2006-10-30T08:40:00.000-05:00

Consumer Credit Counseling Industry under IRS Scrutiny

The Internal Revenue Service (IRS) is launching a widespread “crack-down” on the non-profit status of Consumer Credit Counseling Agencies operating as so-called charitable organizations. According to the IRS Credit Counseling Compliance Project report, dated May 15, 2006, the IRS has uncovered abuses by a large percentage of credit counseling organizations including: failure to provide education, operating as commercial businesses, and serving the private interests of directors, officers and related entities instead of the best interests of the consumers they are supposed to represent.

Per the report, the IRS examined the nonprofit 501(c)(3) tax-exempt status in 63 cases that represent 56% of the credit counseling industry revenues. Of those cases, 9 have had their non-profit status revoked or terminated and 32 have received proposed revocations. This represents 41% of the industry revenues. In addition, 110 applications for non-profit status were evaluated, of which, only 3 were approved. Further audits of nonprofit credit counseling agencies by the IRS are ongoing.

According to Robert Manning, Director of the Center for Consumer Financial Services, the IRS findings conclude that CCCs are essentially debt collectors, not charities. This conclusion is based on the fact that CCCs obtain the bulk of their funding from the creditors and the fact that the creditors benefit from the results of the debt management plans (DMPs) managed by the CCCs.

Congress has conducted their own review of the credit counseling industry over concerns of abuse and complaints from the collection agency industry that the tax-exempt status of CCCs gives them an unfair advantage. The results of Congress’s investigation concluded that while some agencies are ethical, others charge excessive fees and provide poor service to consumers.
These findings support what I have stated in my previous blogs: Consumer Credit Counseling Agencies essentially act as debt collectors, working for the creditors, not you, the consumer. Their non-profit, tax-exempt status benefits them, not you. CCC is not free.

In summary, if you are experiencing financial difficulties and considering credit counseling, you need to give serious consideration to the implications of these findings. With no significant for-profit credit counseling agencies in existence, it is difficult to predict what will happen to the industry as a result of this crackdown. At a minimum, there will certainly be a number of agencies that will shut down and many that will have to undergo a reorganization in order to maintain their status or to convert to a for-profit entity. This shakeup will most likely impact consumers enrolled in what is typically a 5 to 7 year program. Faced with losing their tax-exempt status, who do you think will pay the price to make up the difference for their lower profits?

Before you consider CCC or bankruptcy, which now requires that you enroll in a credit counseling program, you owe it to yourself to see if you qualify for debt settlement.

Credit counseling typically takes 5 to 7 years to complete and you will be required to pay the entire debt you owe, plus fees.
Debt settlement typically takes only 3 years and can reduce the debt you owe by an average of 40 to 50% (not including fees). You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.

If you do choose the credit counseling approach, be sure to do your homework.

Make sure the company is certified by the National Foundation for Consumer Counseling (NFCC).
Compare fees to make sure you are not paying excessive fees.
Check with the Better Business Bureau to see if there are any outstanding complaints against them, especially regarding timely payment to creditors.

2006-10-17T16:23:00.000-04:00

Purchases vs. Cash Advances - Credit Card Gotchas

This blog is the third of several in which I will address the many gotchas the Credit Card industry uses to its advantage to add to its billions of dollars in revenue each year. What you don’t know or don’t understand about Cash Advances on your credit card will cost you money, so read these, and then study the fine print in your contract.

Purchases vs. Cash Advances – Have you ever received those “convenient” checks in the mail from your credit card company? Before you write one, be sure to read the fine print. Those credit card checks are usually treated as cash advances! Card issuers tout these checks as an easy way to pay off bills or acquire extra spending money. While they may be convenient, that convenience comes at a price. The charge on cash advances is not the same as the regular interest rate on charge purchases. It is usually significantly higher and there is typically no grace period (period of time before interest charges begin). While your regular rate may be 17 to 18%, your cash advance rate can be 20 to 25% and the interest charge begins at the time of the advance. Some creditors charge a flat fee for cash advances, regardless of the amount of the advance and some even charge a combination of the two: flat fee plus interest.
Be sure to read your credit card statement each month.

You may occasionally find that a charge that you considered a “purchase” was actually treated as a cash advance by the credit card company. If you use an ATM machine for a cash advance, there can be an additional charge by the ATM’s bank.

Another gotcha occurs when you make a payment toward your balance. Most issuers apply payments to purchases before they apply payments to cash. If you carry a balance on your card, this means that you will continue to pay that higher interest rate on your cash advances until you pay off your entire balance.

And there is one more legal gotcha on cash advances: If you get into debt and have to consider bankruptcy, cash advances are exempt from Chapter 7 discharge of debts. You will still have to pay back any cash advances.

Becoming dependent on cash advances to "make ends meet" can be a sign of serious debt problems.

Are You in Credit Card Trouble?

If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006. You owe it to yourself to check out your options for eliminating your debt.

More Credit Card Gotchas

2006-10-13T18:59:00.000-04:00

This blog is the second of several in which I will address the many gotchas the Credit Card industry uses to its advantage to add to its billions of dollars in revenue each year. What you don’t know or don’t understand about the fine print on your credit card contract will cost you money, so read these, and then study the fine print in your contract.

This blog addresses fees and penalties.

The credit card industry takes in over $40 billion a year in fees and penalties alone.

Late fees – Like interest rates, there is no limit to the amount credit card companies can charge you for being late on your payment. In 1996, in the case of Smiley vs. Citibank, the U.S. Supreme Court lifted the limits on late fees. As a result, credit card companies have more than doubled their revenues from late fees and penalties. Today, even one day late can result in a charge of as much as $39 or more. There are even cards that expect payment by a certain hour of the day.

Over the limit fees - The credit limit is the maximum total amount for purchases, cash advances, balance transfers, fees, and finance charges you may charge or incur on your credit card. If you go over your limit, you will be charged an over the limit fee that averages around $29. Know your credit limit and know how much you are charging.

No-Balance Fee - Believe it or not, some credit card companies will actually charge you a fee of $2 if you pay off your balance.No-Balance Fee - Believe it or not, some credit card companies will actually charge you a fee of $2 if you pay off your balance.

Inactivity Charges – You can actually be charged for NOT using your card. Some credit card companies will charge a $15 fee if your card remains inactive for more than six months.
Transaction Fee - Card holders are usually charged a transaction fee for charges other than purchases, such as cash advances. These fees are typically a percentage of the transaction amount but can be a fixed fee.

Transaction Fee - Card holders are usually charged a transaction fee for charges other than purchases, such as cash advances. These fees are typically a percentage of the transaction amount but can be a fixed fee.

Are You in Credit Card Trouble?

If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006. You owe it to yourself to check out your options for eliminating your debt.

Credit Card Gotchas

2006-10-10T14:38:00.000-04:00

This blog is the first of several in which I will address the many gotchas the Credit Card industry uses to its advantage to add to its billions of dollars in revenue each year. What you don’t know or don’t understand about the fine print on your credit card contract will cost you money, so read these, and then study the fine print in your contract.

This first blog covers interest rate gotchas.

Low introductory rates – I don’t know about you, but, on average, I receive one new credit card offer in the mail each day, attempting to entice me with low introductory rates. These lower rates typically apply for 6 months up to 12 months and usually cover balance transfers. Sounds great, right? So why offer these low rates? Credit Card companies are seeking “revolvers”, those over one million consumers who carry a balance on their credit cards each month. Creditor statisticians have determined that the average debt-carrying consumer will continue to charge new purchases and won’t pay off his/her balance during that introductory period. They are hoping you will transfer your balances from competing cards to their card so they can earn the interest on those old purchases you’re still paying on, along with all future purchases. Here is how they expect to make their money:

First, the issuer benefits from the balance transfer fee it charges. The average fee is 3% of the amount transferred. Some issuers limit the fees to $75, but a growing number are doing away with the limits. This means that a transfer of $10,000 could cost you $300 in fees alone.

Second, most issuers only grant a "grace period" on purchases if you have completely paid off your previous balance. If you transferred a balance to take advantage of the low introductory rate and you don’t plan to pay off the balance until the end of the introductory period, say 6 months, interest charges will begin to accrue on each new purchase from the day you buy them.

Third, issuer terms usually state that 100% of each payment you make is applied to the balance with the lowest interest rate. Since your new purchases are typically subject to a higher interest rate, they will be the last in line to get paid off. Your payments will be applied to that balance you transferred instead of toward your new purchases. So your new purchases will sit there, building up interest at the highest rate, and you can't stop it without paying off the balance transfer in full, the very balance you had hoped to pay off over time. The only way around this is to take out the low introductory rate card and use it exclusively to pay off your old balances. Make all new purchases on another card until the old balance is paid off. Focusing only on the introductory rate without reading all the terms and conditions could leave you paying more in interest and fees than you did on your old card.

Fourth, if you don’t pay off the balance transferred during the introductory period, once the period ends, they start making higher interest on that left over balance, along with all your new purchases.

There is one more potential gottcha buried in the fine print. If you happen to be late on your payment for any reason during the introductory period, your rate will immediately skyrocket, in some cases as high as 30%. Before you sign up, be sure you know what all the terms are for that seemingly wonderful new card offer!

Interest rate that can change at any time – Unlike a conventional loan where you borrow money at a fixed rate through the life of that loan, you need to understand that the credit card companies reserve the right to change their interest rates at any time, as long as they give you 15 days notice. As the rates go up, so do your minimum payments.

No limit on interest rates – Since the Great Depression, there are no longer Federal usury laws governing the amount of interest a creditor can charge for a loan or credit cards. Credit Card interest rates currently range from around 13% for those with “good” credit to as much as 35% for card holders with poor credit or those considered to be “at risk.” Control of rates has been left up to the states, but several states have very weak or no usury laws. Look at your credit card statement and you will likely see that the issuer is located in Utah, Arizona, Virginia, South Dakota, Delaware, or New Hampshire even though you may have obtained your card through your local bank in another state. That’s because these states have no or high caps on the amount of interest creditors can charge and it is the issuing state’s usury law that sets the limit regardless of where you, the card holder lives.
Universal Default Clause – Even if you make your credit card payments on-time, there is a clause called the “universal default clause” that can allow your credit card company to raise your interest rate if they find out that you defaulted or made late payments to any other creditor or even on a bill, such as your phone bill. This clause may also be executed if they determine your debt to income ratio to be too high. It is not uncommon for the rate to double! Again, when your rate goes up, so does your minimum payment. This clause has become standard in about a third of all credit card contracts.

Are You in Credit Card Trouble?

If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. Read my blog dated September 29, 2006. You owe it to yourself to check out your options for eliminating your debt.

September 29, 2006 - True Debt Relief

2006-09-29T18:58:00.000-04:00

If you are facing financial hardship and feeling overwhelmed by mounting debt, you are not alone. You are part of a growing epidemic. Statistics show that the average family is in debt to the tune of $8,000, not including secured debt such as car loans and mortgages, with as many as 16 credit cards. In fact, 40% of U.S. families spend more than they earn and 70% are living paycheck to paycheck with nothing left over for emergencies. Many of these families are only able to make the minimum payments each month on their credit cards and paying more than $1,000 a year in interest alone! As they show in the Oprah Debt Diet, if you have $8,000 of debt and basically double your monthly payments, you can be out of debt in around 3 years vs. 30. But this isn’t so doable for people with say $16,000 of debt or more. To pay off $16,000 in 3 years would take payments of over $600 every single month which is next to impossible for people struggling to pay their minimums each month. Using a minimum payment schedule, it would take 17 years, or more, to pay off that much debt. This makes debt a true epidemic. But before you despair or resign yourself to either filing bankruptcy or paying on that debt for the next 30 years, you need to keep reading.

There is a solution - And you CAN, most likely, take advantage of it to avoid bankruptcy and get out of debt in a fraction of the time for even less than the total debt you owe. Sound too good to be true? Normally I would say, “If it sounds too good to be true, it is.” But in this case, it really is true!

Thousands of people have already used this solution and are now debt free, saving money and building wealth instead of drowning in debt. Keep reading to learn what this solution is, how it works, and where you can go to find out if you qualify. But because this site is all about providing consumers with the true facts, there is also information about the other options available so you can make an informed decision.

The solution is: Debt Settlement

What is Debt Settlement? – Debt Settlement is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full. You’re now out of debt for less than what you owe.

Using this option, even those seriously in debt, $10,000 or more, are able to get out of debt for significantly less than the amount originally owed and in a fraction of the time it would have taken to pay off the debt just making the minimum monthly payments.

How it Works – Not all debt settlement programs are identical, but in general, this is how they typically work:

You choose the debts you want to enroll in the program. You pay an initial enrollment fee which covers setting up your account and handling future communications with your creditors. As part of the process, most will direct you to close all of your enrolled credit card accounts.
Debt Settlement is not a loan. Based on an analysis of your income, expenses, and debt, they will work with you to determine an amount that you can afford to pay into the program each month. This amount is usually less than what you have been paying each month to your creditors.
Once you have accumulated sufficient funds, the mediator goes to work to negotiate with each of your creditors.
The settlement amounts vary depending on the creditor and the amounts owed, but typically range from 40 – 70 cents on the dollar.
The debt settlement company typically earns its money from the fees and a percent of the savings they are able to negotiate for you.
The time it takes to complete the program (pay your last creditor) varies depending on your debt, the settled amounts and how much you are able to pay in each month, but typically the average time in the program is 1-3 years.

Who should you contact? – There are a number of companies out there that claim to be debt settlement companies and even some consumer credit counseling companies, feeling the pinch of creditors reducing their incentives, are trying to switch over. Some are better than others so I do recommend that you do your homework before you sign up. Be sure to check with your local Better Business Bureau before engaging the services of any company.

There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.

The company is Preferred Financial Solutions, Inc. and the program is Credit Card Relief™.

What Makes Them Unique?

Great Track Record - Credit Card Relief has years of experience, settling nearly $100,000,000 (one-hundred million) of debt for thousands of clients.
Operate in 46 states.
Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%.
Unique Program Approach - Their program is unique in that Credit Card Relief uses a consortium of attorneys. A network of participating program attorneys, local to their clients, provide a free initial consultation to determine if debt settlement is the best solution and once enrolled, offer limited representation. The debt is then mediated by a nationally known debtor mediation law firm.
Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.
Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.

Frequently Asked Questions:

Why can’t I just negotiate with my creditors myself? – First, individuals have little chance of getting to the right person in the creditor organization to discuss negotiating a decent settlement. Second, creditors have little incentive to work with an individual debtor; you are only one of thousands of people who owe them money. Debt Settlement Companies, with their years of experience, know who to talk to and have established relationships with most creditors. More importantly, they have leverage since they represent hundreds of clients and many times are negotiating large blocks of debt.
Won’t this hurt my credit? – If you are seriously in debt, you have most likely already hurt your credit by not paying on time or failing to pay the entire minimum payments each month. Even one missed payment can lower your credit score. If you continue to struggle, over time, you may be forced to pursue bankruptcy which will definitely hurt your credit. By getting out of debt sooner rather than later, you can actually start to save money and begin rebuilding your credit. There is no such thing as a “get of debt free card”, but this solution has been like a miracle for thousands of people just like you who thought they could never be debt free.

I recommend you at least get your free, no-obligation debt consultation by clicking here Credit Card Relief and filling out the contact information.

Don’t Delay! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

I Like What I am hearing, But I Want to Know My Other Options

You basically have 4 other options.

Set Up Your Own Budget/Payment Plan
Debt Consolidation
Consumer Credit Counseling/Debt Management
Bankruptcy

Set Up Your Own Budget/Payment Plan

This could possibly work if you are disciplined, have the knowledge, have the financial resources (aren’t strapped for living expenses), and have the perseverance to stick with it for what may be 17 or more years.

Drawbacks

As they show in the Oprah Debt Diet, if you have $8,000 of debt and basically double your monthly payments, you can be out of debt in around 3 years vs. 30. But this isn’t so doable for people with say $16,000 of debt or more. To pay off $16,000 in 3 years would take payments of over $600 every single month which is next to impossible for people struggling to pay their minimums each month. Using a minumum payment schedule, it would take 17 years, or more, to pay off that much debt. You can go to http://www.dinkytown.net/ and calculate your own debt situation. They have great, easy to use calculators!
This just isn’t an option for the majority of people seriously in debt.

Debt Consolidation Loan

With debt consolidation, you take out a loan to pay off your debts or a portion of your debts. To secure that loan, you must put up some asset you own. For most people, it is the equity they have in their home. Your balances are then paid off and now you make one monthly payment to the lender. The interest rate on the loan is dependent on the time period for which you borrow the money, your credit score, the equity you have available, and the prevailing rates, but it is typically less than the average credit card rate. So where’s the problem?

Drawbacks

You are trading unsecured debt for secured debt; borrowing against the equity you have in a major asset, most likely, your home! Sure those credit card balances or medical bills are paid off, but now, if you default on your consolidation loan, the lender can foreclose and you could lose your home. Putting your home at risk is not a good tradeoff, especially for those seriously in debt and already struggling to make monthly payments.
With loans typically spread over 15 – 30 years, if you do have to sell your home for any reason, you could actually owe more between your mortgage balance and home equity loan than what you make on the sale of your home. In the current real estate market with dropping home prices, this is a real threat!
Debt Consolidation Loans are typically equity loans which have an adjustable rate. As the interest rates rise, the loan rate rises and with it your monthly loan payment.
Some people, seeing zero balance credit cards for the first time, suddenly think they have a whole new line of spending power. They somehow forget that they are still paying on that credit card debt! They start charging again and are suddenly faced with both the consolidation loan and maxed out cards to repay.

Consumer Credit Counseling

Consumer Credit Counseling (CCC) agencies seem to be the fair-haired child of the credit card industry and even the new bankruptcy laws. Why? Because they actually work for the creditors, not the consumer! CCC agencies basically act as debt collectors for the creditors. Back in the 80’s, credit card companies were faced with an increasing number of card holders defaulting on their debt. CCC agencies were actually established by Visa as a way to help them collect on delinquent payments and discourage card holders from filing bankruptcy (the primary option at the time for those seriously in debt). While operated as separate entities, these agencies were actually funded by the credit card industry. They made their money, and still do, by charging the consumer a monthly service fee and receiving a percentage of the debt they collected, typically around 12-15 %. (Today that percent has been reduced to around 8% since the new bankruptcy laws have made it harder for people to file.)

These agencies were so profitable that many similar companies started popping up and today there are literally thousands of such agencies selling their services under a variety of names, a large percentage of which claim to be nonprofit or not-for-profit. Some go by names that can easily be confused with debt consolidation or debt negotiation companies.

Drawbacks – Consumer Credit Counseling is not the best option for many and not all agencies are truly reputable or able to do what they claim. The top three complaints sited by those who have tried CCC are:

High monthly payments and fees: At no point do they negotiate a reduction in the actual debt. You still owe the entire debt to the creditors, plus interest, but in some cases, creditors will reduce the interest rate and/or lower the monthly payments. In order to get you out of debt, your monthly payment will typically be higher than the minimum payment you were already making and in addition, you are paying a monthly fee to the CCC to handle your account.
Lack of headway made on account balances: Because of the length of time required to repay debts under consumer credit counseling, the credit card balances of those enrolled do not change significantly as time goes by and consumers feel duped once again! This has led to a dropout rate of around 60-70%.
Payments not being made on time and late fees accruing: Not all agencies claiming to be CCC’s are good companies. Don’t be fooled by that not-for-profit label. It has been reported in the news that the executives of many of these not-for-profit CCC’s are becoming millionaires on people like you just trying to get out of debt. There have been reports of companies “holding” client payments for as long as possible to earn interest for themselves on the money.
Despite their efforts to convince you of the contrary, Consumer Credit Counseling programs do affect your credit report, so don't be mislead. When you are accepted into a CCC program your creditors will close your accounts and report this to the credit bureaus.

Why not file Bankruptcy?

If you thought your best option was to just file bankruptcy and start over…think again! On October 7, 2005 the new bankruptcy laws went into effect making it substantially more difficult for individuals to file bankruptcy as a means of escaping their mounting debt. Financial institutions have spent millions to “educate” and lobby lawmakers through Political Action Committees (PACs) to get these laws passed to protect their ability to collect and keep consumers in debt. Under the new laws, before you can file bankruptcy, you must first complete financial counseling. You will have to attend classes and provide detailed records of your income, expenses, and tax records. (Remember, under a “consumer credit counseling” program, you will still be required to pay back the entire debt.) Only if the counseling agency determines that you are financially unable to complete a payment plan will you be able to proceed with filing bankruptcy.

How it Works - To proceed with bankruptcy, you will need a bankruptcy attorney to help you determine which type of bankruptcy you qualify for, Chapter 7 or Chapter 13, and to prepare for and handle the court filing. Under the new laws, if your income is too high, you won’t be able to qualify for Chapter 7 and will have to file Chapter 13.

Chapter 7 discharges (wipes out) your debt. Chapter 7 qualifiers usually have little to no assets. Under Chapter 7, your assets (less those exempt by your state) are sold to pay your creditors as much of the debt you owe as your assets will cover. The remaining “eligible” debt is discharged. However, there is some debt that is not dischargeable and you will still be required to pay in full, such as taxes, spousal and child support, student loans, and certain luxury purchases. Under the new law, items deemed as “luxury” of $500 or more purchased within ninety days of the bankruptcy filing (or $750 within seventy days) are not dischargeable.

Chapter 13 is a debt payment plan. You will agree to pay most or all of your debts over a period of time, three to five years. The courts will assign a trustee who will review your finances and determine how much you will pay each month. Again, your Credit Report will show a bankruptcy.

Drawback to Bankruptcy: For many, bankruptcy is the only option, but it isn’t a “get out of debt free” card. It might be a way to stop those harassing phone calls but it is a painful process in and of itself and the wound doesn’t heal quickly. A bankruptcy stays on your credit report for ten years and will stay on your court records for 20 years, and long after, many applications, including those for jobs, loans, or certain types of insurance ask you if you have ever filed for bankruptcy. This should really be your last resort.