New FTC Rules Support Consumers Seeking Debt Relief

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:

1. it cleans up the deceptive and abusive practices that have been associated with some debt relief services and
2. 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

1. 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.
2. 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.
3. 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?

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?

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

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

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

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!

1. 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.
2. 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?
3. 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

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

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.