credit card debt
How to reduce Credit Card Interest Rate
The Credit Card Act has provided a great deal of added protection for consumers in the use of credit cards and the manor in which banks can market to its customers. However, one area that was not addressed was limiting the rate that can be charged after proper notice is provided to existing customers. As a result, many consumers have found that just trying to stay current on their credit card payments is very difficult, especially when you try to pay back the amount that you charge each month. The reason for this is that the past debt with its interest payments tends to increase each month through negative amortization.
There are a number of ways to reduce your inertest rates. However, one way that will work very well for those high rate cards, which consumers typically do not use any longer, but do carry significant balances is to negotiate with your credit card company on the rate based upon some consideration the consumer can provide. For example, you may want to propose to not use the card any longer, but just pay back the principal and interest currently owed to the creditor. In consideration for that, ask if the credit card company will reduce the interest rate. This in affect will shut off your credit card, but at the same time, allow you to pay the debt down.
The key to negotiating to pay and not use the card is to not harm your credit rating or FICO Score. The reason being, you do not want other creditors to reduce your limits or raise your interest rates based upon a reduction in your credit score. The question then begs to be asked, how will such an arrangement be reported on your credit report? It is imperative that when negotiating with the Credit Card Company, you require them to continue to report your account as open and current. This type of negotiation is not a debt settlement, and you are not proposing to pay any less then 100% of the unsecured balance. All that is happening is the Credit Card Company can take solace in knowing that the consumer poses no additional risk to incur fees that can not be paid back
Changing laws on mall gift cards
Have you ever received a gift card for the mall or one of those pre-paid Visa or MasterCard, only to find out when you tried to use them that the card has expired, or due to the length of time, much of the funds were not available for your use? This is an unfortunate occurrence for many consumers. However, as of August 22, 2010, the Federal Credit Card Act has established a new set of rules and regulations relative to gift cards. The specific issues this new law tackles is relative to limiting penalty fees and rate increases, and expiration dates not listed on the card.
There are several key changes to the law as it relates to these gift cards and gift certificates is that the law limits the expiration date to five years from the date of issue. So even if you have a card that indicates it is only good for a year, the issuing company will have to provide you with a new card should such a printed expiration occur less then five years from the date of purchase.
Additionally, just because you receive a gift card, does not mean you must use it right away or loose some of the value due to inactivity or service charge fees. More specifically, there must be no activity for over one year before such penalties can be assessed and even then only once per month can any funds be deducted.
Perhaps the most important aspect of the new law is the requirement for explicit written disclose of any penalties for certain uses on the face of the gift card. In addition, the contact information for the issuing company must be clearly identified on the card, so that should the user have any questions about any loss of funds, there is an indication of the proper company who is ultimately responsible. It should be noted though that cards produced before April of 2010 can still be sold on the open market until August 1, 2011.
The bottom line is that as consumer’s and as gift givers, we are all protected against the big banks and other Creditor’s selling us a bill of goods that can not be used for its intended purpose any longer.
How to fix a false statement on your credit report
In order to determine if you should be granted the use and privilege of a credit card, mortgage, car loan or other source of funding, most creditors rely heavily on your credit report. These credit reports are generated by information provided by your current creditors, that is those who you owe money for goods and services. The score itself is derived by looking at several factors including you new debt, the type of credit used, the total amounts owed, your payment history and how long you have owed a certain debt.
It’s estimated that 3 out of 4 credit reports contain some sort of inaccurate information. If one of your creditors reports something negative, such as a missed payment, or an improper amount of debt owed, your credit score can decline. So what do you do if someone has misrepresented a fact to the major credit boroughs?
The first step that you must take is become informed. More specifically, you must know that there is a misrepresentation on your credit report and in order to do that, you need to get a copy of your credit report and review it. The Federal Trade Commission, (“FTC”) is the government agency that regulates and monitors credit scoring, credit collections and all debt issues. Several years ago, the FTC and other political figures pushed for a law that allows consumers to get a free credit report annually without needing to pay. In order to obtain a free credit report you can go to www.annualcreditreport.com or call 877-322-8228.
Once you have confirmed that your credit report contains inaccurate information, The Fair Credit Reporting Act provides a means for correcting these mistakes by allowing you to challenge any information you believe to be incorrect. If you challenge something and the information isn’t verified within a certain period of time, the Act even requires that it be automatically removed. You can complete this process of challenging the information on your own or you can hire a professional to assist you; it is a very time consuming process oftentimes, so you must decide how much time you are able and willing to devote to the process when deciding whether or not to seek out help.
As you move forward in an effort to repair your credit, it is also helpful to be aware that there are protections available to you from debt collectors as outlined in the FDCPA (Fair Debt Collection Protection Act) that protects you from excessive and inappropriate collection methods. You can set what times collection calls can come and where, especially if you do so in writing. Generally they’re allowed to call any number they have between 8AM and 9PM. However, if you make them aware of a certain time or place that calls would be inappropriate; they are not allowed to call.
Understanding the new credit card laws
Credit cards, if used properly, can be useful and convenient tool, and can even help build a strong credit score that will assist you with future borrowing. However, owning a credit card makes it easy to spend money you don’t have and when the interest is taken into account, consumers can build massive debt. According to The Nilson Report, April 2009, In the average American owed $10,637 in credit card debt. The U.S. Census Bureau reported that credit card debt is growing and predicted that about 181 million Americans would owe credit card debt by 2010. That figure is up from 163 million Americans in 2008. As a nation we have become a plastic society, using our credit cards instead of actual money in our pockets.
The Credit card companies understand the temptation that has been provided to their clients and in the past have made it extremely easy for consumers to obtain credit cards. Recently, these same credit card companies have significantly increased interest rates, decreased spending limits and targeted young consumers with little experience managing their own finances. In order to combat this practice, the Federal Government has recently passed the Credit Card Accountability, Responsibility and Disclosure Act which will take effect in February 2010.
There are many sweeping changes to the way credit card companies conduct business. the following are some of the key changes including restrictions on raising interest rates permanently on borrowers who are delinquent 60 or more days. If the Consumer pays on time for 6 straight months, the credit card interest rate must be reinstated to the original lower rate.
The new law also requires that the advertised low interest rates must have a minimum 6 month period of time and prohibits increased rates in the first year a cardholder has a new account. This is important because it limits the Consumer’s liability on initial purchases.
The law also addresses late fees and penalties for paying your bill by phone, mail, or online and makes it unlawful to access additional fees to accept payments in this way. In the past, if a consumer wanted to pay at the last minute by phone, they would have to pay an extra fee, which is not lawful any longer.
Finally, the law also includes several measures aimed at protecting young consumers and college students, who until now have been blindsided with offers of easy credit. The law requires that consumers under the age of 21 will now be required to have co-signers, such as parents or other adults over the age of 21, who will take on joint liability for any card debts that are incurred. This will essentially end the marketing campaigns on college campuses. “Young people thrown on college campuses can be extremely vulnerable to these practices,” says Brad Lazarus, principal at Omega Advisors, a Chicago financial planning firm. Some credit card companies offer students nominal gifts, free food or free T-shirts just for applying. But the Credit Card Accountability, Responsibility and Disclosure Act makes this practice unlawful at application sites on or near college campuses. As an additional protection of the most vulnerable consumers under the new law, credit reporting agencies can’t provide the credit reports of under-21 year old consumers to credit card companies unless the consumer specifically requests that they do so.
