Credit Cards » Credit Card News » How To Manage Your Credit Card To Avoid Financial Disaster
Date July 28, 2009

How To Manage Your Credit Card To Avoid Financial Disaster

If you are a credit card holder nowadays, it almost seems like you are holding a financial ticking time bomb. As you might have noticed, the whole consumer-sphere is abuzz with the recent controversies regarding credit cards and the credit companies who issue them.

How To Manage Your Credit Card To Avoid Financial DisasterA lot of the buzz that is going around is about the widespread practice among credit card companies of increasing interest rates as well as fees while introducing new fees as well. Because of these changes, many credit card holders are finding it more and more difficult to maintain their credit cards.

What is even more worrying is that, while credit card companies are making it hard to pay off your debts, they are also cutting off your available credit. Some even go so far as to use “balance chasing” schemes which is when the credit company lowers your available credit to a level just above your balance. The end result is that you have a large balance on your card while also having very low available credit. This can completely ruin your credit score as your credit score is the ratio between your available credit and your balance. Also, you will find that you can hardly use your credit card anymore because you don’t have available credit left.

So how do you keep your finances from imploding due to all the pressure that credit companies are putting on you? First, now is really the best time to maintain a balance free credit card. You have to try your best to pay your balance every month. In this regard, you might want to think about using your credit card less so that you are sure that whatever balance you have you can pay it off at the end of the month.

While using your credit cards less nowadays is highly recommended, this does not mean that you should stop using your card altogether. That will just give your credit company an excuse to close down your credit account. You will definitely need a healthy credit card line to maintain a healthy credit score. So charge purchases on your credit card now and then. Just make sure to keep it at manageable levels.

Finally, with the way credit card companies are hiking interest rates and fees and cutting available credit, you should really be very aware of any changes that are going to happen to your credit card account. Always read your bills and look out for any communications from your credit company which might contain details about interest and fee hikes or available credit reductions.

Date July 17, 2009

Card Holders Seeing Sudden Credit Card Cancellations

The credit card industry is in a state of upheaval right now due to several factors. First is the general economic downturn which affected gravely the credit industry, sending several major credit companies to the brink of bankruptcy.

Card Holders Seeing Sudden Credit Card Cancellations The rise in delinquencies and write offs were primarily one of the major causes of the credit industry crisis and the situation is still continuing today, albeit there have been some improvements and the industry is getting back some of its confidence. Finally, the credit card industry is also currently in a state of overhaul to adapt itself to prepare for the upcoming activation of the credit card bill on the first quarter of next year.

As a result of all of these, credit card companies are now introducing several changes to their business model, many of which are hurting credit card holders. Currently, credit card holders are seeing their interest rates and their fees go sky high. New fees and charges are also being introduced. Credit card companies are also actively cutting down available credit for their credit card holders. However, the worst thing that can happen to any credit card holder is getting their credit card suddenly canceled.

If you have a credit card, this is probably something you ought to be aware of. Credit card cancellations are usually done by a credit card company for a number of reasons. The most common is when they consider a credit card holder as too high a risk for them to continue maintaining as a customer. However, they can also cite any other reason as well.

Credit card companies can cancel your credit card at anytime with but one condition: that  they inform you ahead of time, usually thirty days, before they cut you off. The problem is that most notices are sent through snail mail, so you can just imagine your chances of getting their notice on time. Plus, you might have moved too and forgot to update your mailing address or you might be traveling when the notice arrived.

Getting your credit card canceled can be quit alarming. Many people have had the nasty surprise of paying with their card only to have the purchase rejected because the card has been canceled. What’s even more worrying is that, right now, some credit card companies are cutting off the credit lines of people who are relatively low risk borrowers. So even if you are up to date with your payments, you might still get your credit cut.

So far, the practice is still not that widespread but there are indications that it may soon be. If you become a victim of this kind of practice, you should try calling up your credit company, though there is little hope that you’ll get your credit line back.

Date July 9, 2009

Watch Your Credit To Survive The Credit Crunch

As the magic hour when the credit card bill becomes active approaches, credit card companies are scrambling to tighten up credit and raise interest rates to ensure that, with the bill in place, they can still keep their profit margins.

Watch Your Credit To Survive The Credit CrunchOne of the most controversial amendments in the credit card bill will stop credit card companies from arbitrarily hiking up their interest rates and fees. As a result, most credit card companies are making their interest and fee changes now, while the credit card bill is still several months away.

As a credit card holder, you, along with the majority of credit card holders in America, have probably seen your interest rate go ski high while your available credit was cut off. Like you, many credit card holders are finding it harder and harder to keep up with their debts and to use their credit cards. If you want to survive the on going credit crunch, you should probably take heed of these hints.

If you are carrying a balance, do as much as you can to get rid of that balance. If you are one of those stuck with high interest rates, try calling up your credit company to arrange for better rates. If you find yourself stuck between a choice of cutting down your monthly payments and getting hit on your credit score, you should probably consider letting your credit score get hit. Unless you plan to take a loan anytime soon, your credit score will bounce back with time and some effort on your part. Having to live with high monthly payments could bring you to financial disaster.

If you are planning to move your balance to a low interest card, be very careful. Many card holders have been trapped because they moved their balance to another credit card, not knowing that the credit company would later on raise the minimum monthly payments. Credit card companies are also hiking up their transfer fees so you also need to consider that.

If you are lucky enough to have no balances in your cards, then try and keep it that way as much as possible. Be very careful of fees as well which are now at very high levels. You should always be aware of your credit limits. The cost of going over the limit can be quite high so always keep an eye on the credit limits of your card. In this regard, keep an eye on your mail as your credit company might be lowering your credit limits at any time.

Date July 5, 2009

Consumer-Costly Changes Being Implemented By Credit Companies For The Credit Card Bill

The credit card bill’s passage may have provided some hope to consumers over the way that their credit card companies were charging and billing them but the changes are still several long months away. In the meantime, credit card companies are continuing their objectionable practices and are even making them worse.

Consumer-Costly Changes Being Implemented By Credit Companies For The Credit Card BillAs the credit card bill’s activation comes nearer and nearer, credit card companies are beginning to get worried that they may not be able to make a profit as well as they used to a few years ago. As a result, they are now raising their rates and fees before it gets too difficult to change them when the credit card bill becomes active.

A recent study has shown that credit has now become more and more expensive for credit card holders and credit card companies are getting more and more aggressive in collecting as much as they can from consumers. One major observation was that credit card companies are still as deceptive as ever, something which will hopefully change, once the transparency laws included in the credit card bill becomes active. One example of this is the concept of universal default. Universal default is an exploitative practice among credit companies where the credit card holder experiences higher interest rates on his debt because of debts from other credit card companies. Basically, the credit company will review the debts that their customer has, even debts from other creditors, and will adjust their rates according to their findings. Nowadays, credit card companies are avoiding the term “universal default” and will say that they do not practice it. However, they are still basically doing the same thing, though they’re referring to it by another name, usually stating “market conditions”.

Credit card companies are also getting more and more aggressive over issuing charges. A lot of them are charging fees for bill payments that involve human to human interaction, usually around $10 to $15 and rising. Fees for late payments are also getting higher, ranging from around $20 to $38 approximately. Over the limit fees are also getting higher, around $32 to $39. Cash advance charges and balance transfer charges are also getting higher and higher.

Observers are saying that these changes are the results of the credit card companies adapting itself to the upcoming credit card bill. Many credit companies are afraid that the credit card bill will stifle their ability to generate profits, though some analysts say that credit card companies will still be earning large profits even with the credit card bill in place. In the end, it is the consumers that are getting hit hard and many are moving away from credit cards to consider other options such as debit cards.

Date July 1, 2009

Can You Really Settle Debts Through A Partial Payment?

If you have been following the news, you are probably aware of how much of a crisis the credit card industry is in right now. If you are also one of the many Americans who are having problems with credit card debt, you are probably highly interested in getting rid of those debts quickly.

Can You Really Settle Debts Through A Partial Payment?You’ve probably heard of debt consolidation loans, credit counseling options and debt settlement companies. You might also have come across a strange article or news item where some lucky credit card holder was able to settle their debts for by paying an amount far lesser than their original debt. “Is that for real?”, you probably ask yourself. Actually, yes it is and here’s why.

Credit card companies are now experiencing a large number of charge offs. A charge off is when the company has to consider a debt as a loss. Usually, a debt is written in the books of a credit card company as an asset. However, once the credit stops paying that debt, the credit card companies get worried. This is because, if the non payment continues for six months, they will have to writ it off as a loss. This means that the debt is very likely to remain unpaid. For obvious reasons, credit card companies want to avoid this as much as possible.

This is where a debt settlement arrangement comes in. As mentioned earlier, a debt settlement is when a debtor pays an amount far lower than the original debt to have it settled. Because credit card companies do not want to list debts as losses, they are more agreeablt to letting the debt be settled for a lesser amount than losing the entire amount instead.

This kind of arrangement is actually what is making debt settlement companies large profits right now. The ability of these companies to settle debts for far lesser than they are worth are enticing many people to sign up for their service, even with their high upfront costs and risky practices. What most consumers don’t know is that, debt settlement arrangements can easily be arranged by the consumers themselves. There is really no need for a third party negotiator.

If you have a large credit card debt and you are having some trouble paying it off, you should probably call up your credit card company and see if you can get a debt settlement arrangement. The chances are actually very good that you can actually have your debts forgiven while only paying around fifty to seventy percent of the original debt. Sounds great? It is but you should know that by going into a debt settlement agreement, your credit score will take a big hit. The record will also stay with your score for seven years which will greatly stifle your ability to take out a loan.

Date June 30, 2009

Practical Tips For Debt Ridden Credit Card Owners

Getting a credit card can be quite a liberating experience – until you find yourself deep in credit card debt. With the current economy the way it is, if you are carrying a large balance every month on you credit cards, you are possibly in a very risky financial position.

Practical Tips For Debt Ridden Credit Card Owners Aside from the bad economy and the dry up in employment, you will also have to contend with increasing interest rates and fees. Banks are currently very eager to earn as much as they can out of you. You see, not only are credit institutions in a bind due to the economic crisis, they are also in a hurry to earn as much as they can before the credit card bill takes action against them, which should be around February next year. Right now, it is a very bad time to be a credit card holder with a big debt.

So how can you get yourself out of credit card debt? There are no hard and fast rules on how you can do this. It depends mostly on what your financial situation is like and what can work for one person may not work for another. However, one thing that every credit card holder who wants to zero out their balance should do is to review their financial situation. Basically, you want to figure out how much you owe and how much you earn. Figure out where your finances are going to every month, how optimal is your credit card payment set up and how much “free” every month.

To start with, list down all your credit cards. For each of your credit lines, list your balance, their minimum payments and interest rates. After doing that, figure out your income and see how much is the exact amount that you can safely allocate to debt payments every month. Although it is tempting to allocate as much as possible to debt payments, make sure to reserve some cash for day to day expenses. Also, give yourself some financial leeway for unexpected events.

Once you’ve got that list and you’ve figured out your available cash for debt payment, pay off the cards with the smallest balance first, regardless of its interest rate. Now list your cards according to their rate of interest. Schedule your payments so that you make only the minimum payments for all your credit cards except the one with the highest interest rate. The remaining debt payment allocation that you have should go to paying off your credit card with the highest interest rate. Once that’s done, move on to the card with the next highest interest rate until you have all your debts paid off.

Date June 24, 2009

A Scam Called Vishing

It has long been known that credit card security is basically a running joke among scammers who make a living out of stealing people’s identities to make a quick buck. There are many ways wherein a credit card holder can lose control of his credit identity and end up in deep debt of purchases not his own. It seems that another type of credit card scam has been detected. They are calling it “vishing” and it is as insidious as they come.

A Scam Called Vishing“Vishing” is a play on the word “phishing”. Phishing is a type of scam which is popular online. The main purpose of the scam is to pose as a legitimate person or company and fish (“phish”) for the personal information of people connected to the internet. The key to a successful phishing scam is being able to convincingly impersonate a legitimate and trusted company or person.

Vishiing seems to have taken the scam of phishing offline and into the real world. Whereas in phishing, the common hook was a fake (but legitimate looking) e-mail, in vishing, the hook is a phone call. In vishing, the scammer makes a call to the victim and poses as a bank or credit company to get important details from a person. The key to the scam is the ability of the scammer to make the Caller ID of the phone display a legitimate number. With a seemingly legitimate caller ID, the victims are more apt to trust the caller and give up sensitive information to the scammer.

During a vishing scam, the scammer will make a call to their victim who they have already profiled thoroughly. The only thing they lack will be some important credit card information which they need to scam the victim’s credit card line. When the call is answered by the victim, the scammer will then tell him that the scammer belongs to the security department of the victim’s credit company. The scammer will inform the victim that he is getting the call because his credit company (the one the scammer is posing as a representative of) has detected a suspect purchase made on his credit card. The victim will then be asked to verify certain information which the scammer already knows from profiling the victim at an earlier date. The scammer will then ask the victim for some information from his credit card. This information, along with the other personal details of the victim, will be what the scammer will use to defraud the victim.

To avoid being victimized by vishing, if you receive a similar call as this, ask for the caller’s employer ID and their name. Then immediately hangup and call your credit company to verify if the person actually does work for them.