credit card debts « Credit Card News

Credit Cards » Credit Card News » Playing The Credit Card Game Right

July 6, 2009

Playing The Credit Card Game Right

Judging from the current media perception of what is now happening to the credit industry, you would probably think that getting a credit card is more hassle than it is actually worth. Actually, credit cards can be very beneficial to you when you use it right. Use it wrong, however and you will be paying through the nose to get out of the mess you’ll get yourself into.

Playing The Credit Card Game Right Using credit cards is similar to playing a game. The problem with this particular game is that the odds are stacked against you so high that one mistake will bury you to the neck. However, as long as you keep to the rules and play it smart, you’ll come out a winner I the end.

When using your credit card, always remember that the payment you are making for your purchases is a loan. Loans have their uses but they also have interest rates. Interest rates are the fee you pay for taking out a loan. Miss out on paying the loan and your interest rates bites you harder.

On that note, maybe you are thinking that paying for purchases with a loan is a bad financial move. You’d be one step ahead of everyone else if you did. You should start thinking about getting a debit card. Like credit cards, you get to pay with plastic when you use debit cards. Unlike credit cards, you are not paying with a loan but from an amount you deposited earlier.

One of the biggest problems with credit card payments is keeping up with the schedule. It’s not like you don’t have anything else occupying your time other than your credit card debts. So you might want to setup an automatic payment service. Just make sure that the service is reliable and pays on time. Also, when paying your debts, avoid the “minimum amount” trap. When you pay the minimum amount, a large chunk of your payment goes to paying off your interest, not the debt itself.

For those carrying multiple credit cards and have debts on them, remember to focus on repaying the biggest debts first. The bigger the debt, the larger the interest. Also, if you have multiple credit cards, there is a high probability that one of those cards is a 0% interest card you are using for debt payments. If so, avoid using your debt payment card for purchases.

Finally, never go over your credit limits so that you don’t get hit with a hefty fee. More importantly, do not ever use your credit card to withdraw cash. You’ll get hit with a withdrawal interest rate, a withdrawal fee and your withdrawal will start earning your credit company interest on that very same day.

July 3, 2009

As School Year Start, Student Credit Card Worry Begins

Parents are once again coming around to that time of the year when they send their children of to college to hopefully earn their degrees and move on to a good life. Unfortunately, a lot of bad things can happen when their kids are in college and, if statistics from Sallie Mae are to be believed, one of the worst is credit card debt.

As School Year Start, Student Credit Card Worry Begins Credit cards and students are definitely a bad mix. The problem is quite widespread and well known. Unfortunately, the problem had enough time to grow and get big enough so that some students graduating from college this year will be several years away from paying off all their credit card debts. That is a very serious financial situation to be in, considering that these students are just starting off professionally.

A recent study from Sallie Mae show that the graduating students of last year carried an average of $4,100 in debt. That’s up by $1,200 from 2004’s average of $2,900. It gets worse. According to the statistics, one in five college seniors have a credit card balance higher than $7,000. Also, 62% of them have more than four credit cards at a time. The situation is an alarming one, considering that a majority of college students don’t have any reliable employment and that their credit card payments largely depend on the money that their parents are giving them. What is even more troubling is that many college students are not very well equipped to handle the responsibilities of carrying credit card debt.

The new credit card bill that President signed last May will mean more protection for credit card holders and, in fact one of the primary targets for protection in the bill are students.
There have been many complaints against credit card companies offering easy-to-get credit cards to students. Because students are seen as big spenders, credit card companies see them as golden earning opportunities. Unfortunately, in the end it is the parents who will have to shoulder the burden of paying off those spendings. Another option is to go into debt. Alarmingly, most college student are not very worried about debt and consider it as a normal part of their lives. This kind of thinking is very dangerous, especially when the people who are carrying them are the future generations of the country.

For most consumer advocates -and parents, the credit card bill is a big step forward. Although credit card companies are going to be complaining about it – and some students as well, the legislation in the bill will help young Americans avoid the dangers of getting into large debts and losing several years of monthly income to paying it off.

July 2, 2009

Students Carrying Heavy Debts Will Benefit From Debt Consolidation Options

Nowadays, with the economic difficulties American consumers are facing and the ongoing credit crunch, graduating students are facing a worrying future, most especially those who are carrying large credit card debts. Currently, graduating students carry an average of $23,000 in debts.

Students Carrying Heavy Debts Will Benefit From Debt Consolidation Options That’s a very large debt to be carrying for students and the parents who support them. Fortunately, after July 1, students are going to be able to participate in a few debt consolidation programs that will offer them better chances at paying off their debts through much lower costs and a more agreeable payment arrangement.

Students can easily apply for a debt consolidation arrangement which usually comes with no extra fees. The special offers are usually available for a grace period of six months after the student graduations. This is a typical scenario and may not be true for all. If a student applies for a debt consolidation during this grace period, they can get very affordable rates for their debt consolidation loan.

Students who are using the Stafford loan could see a rate drop from 3.61 percent to 1.88 percent. For students who are already repaying their loans at 4.21 percent, the drop could be as low as 2.4%. Students who are in the PLUS loans could see a drop from 5.01 percent to 3.28 percent.

Mark Kantrowitz, the publisher of the college financial aid industry tracking website FinAid, says that these rates being offered are “historically low”. He also adds that it is unlikely that these low rates will be available later on.

Up to July of 2006, federal student loans had variable rates with an upper limit of 8.25 percent for Stafford loans and 9 percent for PLUS loans. Afterwards, the rates were fixed to 6.8 percent for Stafford loans. Subsidized Stafford loans have been decreasing for every year. Starting from 6.8 percent, it is now at 3.4 percent though it is scheduled to return to 6.8 percent unless Congress acts against it. The FFEL Plus loans are also currently at a fixed rate of 8.5 percent while the Direct PLUS loans are at 7.9 percent.

With the new, lowered rates of these student loans, students carrying heavy debts after graduation should now have a better chance of tackling with their debts. Debt consolidation is also a necessity for students who want to opt for a deferred payment plan for their loans. A deferred payment plan can give students ten to twenty years to pay off their debts, depending on the plan that they get.

However, students should know that a deferred payment plan can significantly increase the cost of the loan.

June 27, 2009

Debt Laden Consumers Find Ready Help With Credit Counselors

Saddled with financial burdens ranging from home loans to credit card debts, American consumers are now frantically looking for the best and the quickest way to get out of debt and repay loans. Otherwise, they face the unenviable prospect of declaring bankruptcy or losing their homes.

Debt Laden Consumers Find Ready Help With Credit Counselors The problem is that some American consumers just don’t know where to turn to. Many of them recognize that getting themselves out of their financial dilemma needs more skill than what they have. They just don’t know where to turn to for the particular set of skills that they need.

One particular helpful group of people who can help American consumers untangle their finances are the credit counselors. Credit counselors are people who specialize in helping the average American consumer burdened with debt to find ways to make paying off their debts easier.

Michelle Jones, senior vice president of Consumer Credit Counseling Service of Greater Atlanta says, “We help consumers create a lean, sustainable budget that will support the family’s housing costs”.

In fact, Consumer Credit Counseling Service of Greater Atlanta is just one of the many credit counseling groups across the U.S. who are helping American consumers get their financial act together and keep themselves afloat amidst the threat of debts, loans and the current economic depression.

Credit counseling groups have plenty to offer debt-ridden American consumers. A visit to a credit counselor will usually mean a full review of the consumer’s debts, income and expenses. By analyzing their client’s financial details, credit counselors can form an exact financial picture and see where money is leaking out and where money can be saved. They can then suggest ways for the client to save up and get their finances back on track.

Another important service that credit counseling groups offer their clients are loan modifications and debt payment plan negotiations. These offers often depend on how good the monthly income of the client is. Usually, the higher the monthly income, the better the chances for a client to have a loan or debt renegotiated.

With the current economic climate, getting out of debt is a major priority for every American consumer. Credit counseling groups offer one of the most helpful and genuine credit help services for them. Credit counselors often offer very low costs for their services. However, like any financial arrangement, American consumers should first check if the group that they are dealing with is actually legitimate.

June 18, 2009

Credit Card Companies Opting For Quick Fixes

As the economic recession continues, credit cardholders are getting weighed down by credit card debt more and more. Rising interest rates and fees threaten to make it heavier still. However, a curious budding practice among credit card companies may be the answer to credit cardholders’ problems.

1194188_31355691 While credit cardholders are worrying about their individual credit card debts, credit card companies are also in dire straits financially themselves. In March, revolving credit was recorded at a total amount of $939.6 billion. Revolving credit is often used as a measure of credit card debt as it is a close approximation of the debt value. According to the Federal Reserve, during the first quarter of the year, the total credit card debts that credit companies had, 6.5% were debts that were 30 days overdue, at least. The Federal Reserve first began following this particular data in 1991 and, since that time, the value from the first quarter was the highest that they ever encountered. The write offs that credit card companies were also at a peak.

With the passage of a few months, the numbers have hardly gotten better which has credit card companies worried. Furthermore, regulations dictate that a credit card balance that has been six months delinquent will have its value reduced to zero in the credit card company’s books. The thinking is that if the borrower is unable to pay up to that point, the probabilities are that the debt will never be repaid.

Faced with high toxic assets and losing the entire debt to a write off, credit card companies are doing the unexpected, they are accepting debt payments 50% or lower than the original debt to have the debt forgiven.

According to Credit.com founder Adam K. Levin, creditors are willing accept a small percentage of the debt payment rather than get nothing in the end. Thus, credit cardholders with large debts that cannot pay their debts completely have the opportunity to offer their credit company payment which is only a percentage of the original debt in order to have their debts completely removed.

The situation is such that credit cardholders who call up their creditors can have these kinds of offered accepted directly by the customer support person they are talking to without consultation of their supervisors. In fact, some credit card companies are actually doing the calling themselves and offering similar deals to people with unpaid debts.

The trade off of this seemingly fantastic kind of deal is that the credit cardholders’ credit records will have a large black mark on it. Still, compared to the prospect of carrying heavy debt indefinitely, the trade off seems worth it.

May 22, 2009

Amendment in Just Passed Credit Card Bill to Protect Students

The recently passed credit card bill primarily addresses many of the unfair practices of the credit card industry. One particular amendment in the bill specifically calls for the protection of students. Sen. Bob Corker and Sen. Dian Feinstein are the sponsors of the amendment.

Amendment in Just Passed Credit Card Bill to Protect Students Credit card debts from college students are fast becoming a serious problem. Credit card companies often exploit college students, giving credit card offers to them while knowing that they are hardly in the position to be able to pay off their debts. Oftentimes, college students graduate with an already large amount of debt to their name, even before they find employment.

Sen. Corker had this to say, ““Far too often, young adults don’t read the fine print of credit card offers and rack up huge debts that follow them throughout life. As a father of two daughters in college, I’m constantly making sure my girls aren’t signed up for any of the many credit card offers targeting college students.”

About the amendment, Senator Corker explained, “This amendment reforms credit card marketing practices aimed at college students so that the terms are fair, transparent, and more easily understood by the consumer. It would also commission a study to fully examine the problem of student credit card debt so we can help make sure these young Americans aren’t burdened and hampered by excessive debt.”

Senator Feinstein also added that, “Colleges should not be encouraging their students to sign up for products with high interest rates and fees that can get them bogged down in debt.”

Senator Feinstein believes that college students are far more susceptible to get into credit card debt, as they lack the experience and the knowledge on smart credit management. Usually, these debts also stay with them for decades, making it difficult for them to start their professional careers. According to the Senator, the amendment simply puts some “common-sense restrictions” to the credit card industry, which will stop deceptive industry practices from abusing college students as well as other young consumers.

The amendment included by the two senators in the credit card bill will protect students from credit card debt through:

disallowing credit card companies to offer gifts to students who apply for credit cards
require public disclosure from universities who have marketing agreements with credit card companies
require reports from credit card companies on their financial compensations to alumni associations and schools through said agreements and what the companies are getting in return
ask for the assistance of the Government Accountability Office to determine the extent of these agreements and their effect on student debt