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June 23, 2009

Smart Credit Cardholders Are Costing Credit Companies

Amidst all the shouting of credit cardholders over how they are being fleeced by credit card companies, it is sometimes difficult to see that credit card companies themselves are suffering in the current credit card crisis.

Smart Credit Cardholders Are Costing Credit Companies Credit cardholders, both good and bad, have a huge effect on how a credit card company flourishes or flounders in the current economy. In the case of bad credit cardholders, the cause and effect are quite obvious to see. Bad credit cardholders cost credit card companies a lot when they do not pay off their debts. It can be said that credit card companies are covering themselves from risks by increasing interest rates for riskier borrowers. However, when the borrower ultimately fails to pay the debt, it becomes a write off for the company, a loss in their books.

The effect of good credit cardholders are a bit more subtle to see. Good credit cardholders, by definition are good at maintaining their credit. This means that these cardholders rarely, if they ever do, carry any balance on their credit lines. They are also smart spenders and are well-versed in how to “game” the credit card system so that they get the best benefits without the risk of incurring high debts.

A favorite practice among good credit cardholders is to maintain two or more credit cards while actually using only one credit card. The one or two extra cards are used mainly to keep their available credit up so that they can maintain a high credit score. Since credit card companies will cancel cards that don’t have any activity on them, these cardholders will usually charge minimal amounts on these credit cards and pay them off completely every month. Maintaining a credit card this way can earn the credit card company very little while costing them a lot. Also, the one credit card that these credit cardholders are using constantly is, most probably the one with the best rewards offer. They will also be very punctual in paying any balances. This means that, while the credit company is spending on awards, they are earning little from interests.

When credit card companies lose profits, they will usually spread the cost around, increasing interest rates and other cost of service for their other customers. Bad and good credit cardholders are therefore a problem for both credit card companies and other credit cardholders because, by costing the companies more, they are inadvertently stifling the availability of credit for the average cardholder. Still, as credit cardholders get smarter about handling their credit and move further away from the traditional sources of profits for credit card companies, the companies themselves may have to look for a more profitable business model as the current one.

June 16, 2009

Young Credit Cardholders Up For Some Regulation

The Credit CARD (Card Accountability, Responsibility and Disclosure Act ) Act is going to be putting a dent on college students plannig to get some financial independence once they start college.

Young Credit Cardholders Up For Some Regulation To date, credit card companies have been aggressively marketing their plastic to college students. College students make for great credit cardholders because, one, they are purchase-promiscuous. They are up on the latest trends and, whether it be designer coffee or designer jeans, these trends almost always means spending and purchases, something that plastic is inherently perfect for. Two, college students, once hooked on plastic (and on the ensuing debt), make for long term, if not life long, customers.

Recent data from Sallie Mae shows just how bad the credit problem among college students are. Figures show that the average college student owns more than one credit card and owes large debts they have no hope of repaying before finishing college. Most college students also graduate with large debts to their name, a bad piece of luggage to have when you are out looking for a job. Why? Because employers right now are looking at credit reports as much as academic records to determine acceptable employees.

Parents are therefore going to be much relieved when the credit card bill comes into play. Unfortunately, that won’t be for several months yet. In fact, this year’s college opening may be the last time that credit cards are going to be very easy for students to get. Still, with the credit card bill in place, students will learn some financial responsibility, whether they want to or not.

The biggest change that the credit card bill will bring is prohibiting college students to own credit cards unless they have a co-signer such as a parent, a guardian or someone older than 21 years old who will be jointly liable for the debt incurred on the credit card. This means that the co-signer will be responsible for 100% of all debts that the credit card incurs.

Students can bypass this requirement, however if they can prove that they are financially independent enough to repay any debts he or she puts on her credit card. Of course, if a college student is already at this level of financial responsibility, it is safe to say that his or her parents hardly need to worry.

With these two conditions in place, parents looking out for their children’s financial welfare can keep them away from debt for a few years more until they graduate. Hopefully, by that time, another legislation included in the bill will have sunk in enough for their children to keep away from credit card debt: educating students for financial responsibility.

June 13, 2009

Probable Credit Card Bill Side Effects Could Add More Burden To Cardholders

Judging by the clamor for the credit card bill and the general jubilation among credit cardholders and their supporters when President Barack Obama signed it this May, it could not have come at a more timely fashion.

Probable Credit Card Bill Side Effects Could Add More Burden To Cardholders The credit card bill is a very important and much needed piece of legislation for credit cardholders. Already burdened with the economic recession and the employment crisis, credit cardholders were staggering under the weight of rising interest rates and fees that credit card companies, themselves trying to stem the tide of the bad economy, were giving out every month. Unfortunately, while the bill has already become law, credit cardholders will still have to hold out for a few more months before it actually becomes active. In the meantime, credit companies are doing everything they can to cover their expected losses due to the bill.

The credit card bill provides many changes in the credit industry which is supposed to benefit credit cardholders. These include more transparency for credit card company practices, a tighter hold on the capability of credit companies to raise interest rates and fees and more control on who can and cannot be offered credit cards. Legislators expect the bill to bring a lot of benefits to cardholders. However, industry watchers see some negative side effects when the credit card bill becomes active.

Obviously, credit card companies are going to lose a lot of profits when the bill goes active. They will be seeking out ways to make up for those lost profits. The bill does not set a cap for interest rates or banking fees and provides no price control. This may be one way where credit card companies could make up for their losses. Cardholders can expect a higher starting interest rate and higher banking fees. Annual fees are going to be much more common for credit cards as well.

Credit cardholders who keep up with their bills, while they seem to be good customers, actually do not generate enough profits for credit card companies. As a result, many perks that they’ve been enjoying such as reward programs and more attractive interest rate offers will probably be ended. They won’t be exempt from high initial interest rates and fees either and they will probably be burdened with annual fees too, if they are not already.

While credit card companies will lose their capability to arbitrarily raise interest rates, they will still be able to raise it as long as they provide notifications according to the requirements of the credit card bill.

To avoid difficulties in the future, credit cardholders should do their best right now to pay off their debts, keep their debt balances low and use their rewards points as well.

June 12, 2009

Who Is Really In Charge Of Your Credit?

Credit card companies, it seems, go out of their way to make their practices as obfuscated as possible. For instance, have you every run across these credit cards that offer 0% interest rates?

Who Is Really In Charge Of Your Credit? At first glance, the offer seems awesome. That is actually what the credit card companies are banking on, that you, as a consumer, will buy into their product based mainly on your “first glance” judgment. Of course, if you were really to take a step back and think about it more, you’d realize that a 0% interest rate is just too good to be true. And, once you ask about the terms of the card, you find out that it is. Once you miss a single monthly bill, your 0% interest rate zooms right to 10% or even more.

There is also this kind of “condescending” practice of credit card companies where they give you customer service assistance as if you don’t really deserve the help you are getting. Ask them for help and they put you on hold. They love to put you on hold, don’t they? Have you ever tried negotiating with a customer service person for, say foregoing your automatic interest rate increase because you missed your due date by one day? Basically, you have to hold something over their head in order for them to do anything. You could threaten to cancel your line (won’t work if you have a bad record with them) or you could appeal to their sense of business courtesy. You can remind them how loyal a customer you’ve been and how you are the best credit customer in the world that you deserve an award for it (again, won’t work if you have a bad record).

Obviously, credit card companies (and maybe cardholders as well) have forgotten who really is in charge in the game of credit issuing and paying. Credit is, basically a convenience. It is not a necessity as many credit industry supporters would say. Consumers, by and large can do without credit. Albeit they will have to make drastic changes with their lives (which has been heavily affected by credit card spending habits), it is very doable.

The credit card bill, when it finally becomes active, will level the field somewhat. The legislations in the bill will force a more moderate kind of credit practice. However, in the end it is the cardholders themselves who can force a change in the way credit card companies. All they have to do is to start being in charge of their credit.

June 3, 2009

Credit Card Spending Will Never Be The Same

The economic crash caught many American consumers in surprise. However, financial analysts and watchers have said that it was a long time in coming.

For several years, American consumers had gone on a spending spree with their credit cards without really taking into account what the final costs would be. When the financial crash happened, credit industry experts saw that the soaring credit card debt played a large role in it.

Credit Card Spending Will Never Be The Same The Federal Reserve maintains a survey of the total revolving debt that American consumers carry. Estimates put 90% of this amount to credit card balances. According to their figures, American consumers had $177 billion in revolving debt in September of 1988. 20 years later, in September 2008, figure was $977 billion, an increase of more than five times the 1988 value. However, in the current economical climate, consumers are drastically cutting back and current survey, dating back to last October, show a continuous drop in revolving debt, a rare occurrence.

Originally, credit cards came out as a perk for a bank’s valued customers. However, by the time credit scoring became popular, credit companies began mass marketing credit cards, claiming that they could uniquely tailor the card’s rates and penalties according to the consumer’s financial score. This resulted in a huge expansion of the credit card market. Credit cards became available even to people who had very low credit scores. This will soon come to end once the credit card bill comes into play.

Making credit cards available to people with low credit scores may seem to be a generous move by credit card companies. However, the reality is not so reassuring. People have found out that these credit cards, while seemingly helpful, actually carry high interest rates and high fees which will ultimately bury the cardholder in debt. The credit card bill will put a stop to this by tightening restrictions on how credit cards are issued. It will muzzle many other practices of credit card companies as well.

The credit card industry is, of course not pleased with this. They argue that the credit card bill will cut down their profits. To make up for their losses, they will have to lower available credit, increase initial interest rates and cut down on awards and perks programs. These industry warnings carry little threat to American consumers who are now realizing just how dangerous credit card spending can be. The drop in revolving debt may just be the first indication of a growing change among American consumers’ spending habits. A change which will hopefully lead to smarter, more efficient credit cardholders.

May 31, 2009

Interchange Fees May Be Next Target for Legislation

The recent passage of the credit card bill from Congress was cause for celebration for credit cardholders, though the legislation itself won’t become active until nine months have passed. Now, the government is looking into other credit card practices that seem unfair to consumers and how best to legislate them.

Interchange Fees May Be Next Target for Legislation Currently, the Government Accountability Office is studying credit card usage among American consumers. They are interested in one particular practice and its effect on merchants and credit cardholders: interchange fees.

Interchange fees are fees that merchants pay whenever a customer uses a credit card. Essentially, when a merchant’s customer uses his or her plastic to purchase an item, the bank of the merchant pays an interchange fee to the bank of the credit cardholder so that the transaction goes through. This is true not only for credit cards but also for debit cards as well. The interchange fee for every transaction is usually at 1% to 2% of the total amount of the credit cardholders’ purchase. Thus, for a transaction of $100, the merchant has to pay anywhere from $1 to $2.

Most people take interchange fees for granted, as they are often buried within their transactions. However, some are taking keen interest in them. Consumer advocates are very much aware of how much interchange fees affect daily purchases of credit cardholders. Merchants are also quite aware of them, being the group who has to shoulder the payment or pass it on to their customers. The credit card companies are also very much aware of the profits that they are getting from interchange fees. Although a 1% charge may seem minimal to the regular consumer, it can mean millions to a credit card company that sees profit from it from thousands of credit card transactions every day.

The recently passed Credit CARD bill (Credit Card Accountability, Responsibility and Disclosure Act) actually has a provision that can be used to address interchange fees. The provision requires investigation on fees that merchants have to pay so that their customers can use credit cards. The main thrust of the provision is to provide disclosure to consumers on the credit card industry’s practices.

Some have noted, however, that disclosure is not enough for change to happen. Although informing credit cardholders of credit card industry practices seems like a good first step, there is still a need for stronger legislation. It ultimately depends on whether there is a change in the way credit cardholders use their credit.

May 30, 2009

Bayh Says Good Credit Cardholders Will Not Be Penalized

Senator Evan Bayh made a stop in Fort Wayne last Wednesday to hold a dialog regarding the recently passed credit card bill and what it will mean for consumers. One of the hottest topics was the credit card industry’s assertion that responsible credit cardholders will be the ones getting penalized because of the practices of bad credit cardholders once the bill becomes active.

Senator Evan Bayh According to Sen. Bayh, the regulations included in the credit card bill are specifically designed to protect and help out credit cardholders who have been hit by high interest rates and fees because they have had to rely more on their credit cards when the economic crisis hit. The senator told reporters stories about people who saw such incredible interest rate hikes, some from 0% to 29%, just for missing the payment deadline by one day. Many of those experiencing such high interest rate hikes belong to the middle class and, according to Sen. Bayh, they were “getting ripped off by credit card companies”.

With the new law in place, credit cardholders who regularly pay off their credit card bills will be protected from interest rate hikes. Credit cardholders will also have more time to examine their bills, as credit card companies will have to mail the bills 21 days before they become due. In the past, the ruling was 14 days. Notifications regarding interest rate and fee changes will also have to be given to credit cardholders 45 days before they are to take effect.

The legislation will obviously provide protection to credit cardholders who are having problems with their bill payments and are keeping their credit cards active by paying only the minimum amount due. In the past few years, credit card companies have been making a lot of money off these kinds of customers – customers who do not default but who try to keep their credit cards active by paying the minimum amount, which does not really subtract substantially from their debts. This is going to end when the credit card bill becomes active.

Critics are therefore saying that because of the large loss in profits from bad credit cardholders, credit card companies are going to turn to good credit cardholders to make up.

“That is not going to be allowed to happen,” Sen. Bayh said.

He cautioned the credit industry from punishing good credit cardholders and said that should it happen, Congress will probably revisit the law to penalize such practices. He also said that the situation is not likely to become reality. Since the credit card industry is very competitive, a credit card company that penalizes good credit cardholders will probably lose their customers to another credit card company with a better offer.

May 28, 2009

Choosing a Credit Card When You Have an Excellent Credit Score

Like most things, a credit card can both be your friend and your foe. If you are not very good at balancing your finances and paying off your monthly credit card bills, then you may be having debt problems right now. However, if you have kept your finances up to date and you have no outstanding debts, then you might be one of the few who are heaving a sigh of relief over your financial standing, considering the economic situation right now.

credit-score If you are good with your finances, chances are, you will have an excellent credit score. As anyone who keeps track of their finances would know, your credit score indicates how financially responsible you are. For creditors, people with high financial scores are the ideal customers. Keeping this in mind, you should therefore ditch your credit cards that are not offering you the best service when it comes to credit. Shop around for a better deal. Here are a few tips that you can use.

Fees and Interest Rates

If you are using a credit card that imposes fees on you, give it up. As a consumer with a high credit score, you are an ideal customer for most credit card companies, especially during these troubled times. Do not bring your business to a credit card company that has you paying for a service that is offered free by other credit card companies. Do not worry; you will not be exchanging fees for service. Credit cards that carry no fees are just as good as credit cards that carry them.

You would also want to choose credit cards that offer low interest rates. Do not be fooled by low starting interest rates. Some of these rates can skyrocket the moment creditors feel they can get away with it. Good credit standing should make good interest rates much easier for you to get.

Points and Incentives

As a savvy credit cardholder, you might be wary of the points and incentives system of credit cards. They are obviously just another gimmick of the credit card companies to get you to spend more. That may be but the fact remains that earning points whenever you use your credit card is a great way to get something back every time you put money out.

Incentives are also another great way to get something extra out of your credit card spending. Try and align the incentives to something that you use every day. For instance, a credit card that gives fuel purchasing incentives might be good for you if you drive to work daily.

May 27, 2009

Will Credit Card Bill Burdens Responsible Credit Cardholders?

The passage of the credit card bill has gone remarkably fast. The House version passed during the last days of April and the Senate version just got passed last week. A few days later and President Barack Obama signed the bill into law.

Will Credit Card Bill Burdens Responsible Credit Cardholders Credit cardholders are excited to finally see some sensible regulation for credit cards. Long feeling oppressed and frustrated by arbitrary interest rate increases and unreasonable fees, credit cardholders have been pressing for the passage of the credit card bill since it first came out in congress.

On the other hand, the credit card industry has been against the credit card bill from the start. Their stance is quite understandable, considering that, with the passage of the credit card bill, they have been essentially stripped of their most lucrative customers the past few years, subprime borrowers.

Partially to limit support for the credit card bill, the credit card industry has been issuing dire warnings of what is to come should the credit card bill become law. One of the most ominous is that responsible cardholders, those who keep their payments up to date and maintain good credit scores, will get hit hard and will basically end up supporting bad borrowers.

The credit card industry says that this will happen because, in order to make up for their losses and decrease their exposure to financial risks, they will have to make credit much less available to credit cardholders, regardless of credit standing. Annual fees will be making a comeback. Initial interest rates will also soar to balance out the inability of borrowers to increase interest rates on existing debts. Reward point programs will also be put a stop or, at least severely curtailed.

These dire warnings, though worrying, may not actually come true. What will assuredly happen when the credit card law becomes active is that credit cardholders will again have some confidence and trust on their credit cards. They won’t be worrying about high interest rates and fees and other unfair credit card industry practices.

The credit card bill won’t save all credit cardholders, however. Those with large credit card debts will have a ways to go to get out of debt. At the very least, however, they won’t have as hard a time paying down their debts.

With credit cardholders much more confident, cardholders will most likely be returning to their plastic for their purchases. They will also most likely be more choosy and intelligent in their choice of credit cards, what with the new credit card bill transparency measures. This will mean high competition among credit card companies. With competition taking place, the credit card company able to offer the best features and incentives package wins which makes the probability of the industry’s dire warnings coming true very low indeed.

May 19, 2009

Credit Card Debt: Where the Problem Lies

Credit Card Debt: Where the Problem Lies The credit bill is going to get passed soon enough, but is it really enough to get Americans off debt in the long term? Some say that legislation will take care of that by limiting and reigning in the credit card industry, which seems to have been running wild the last few years. Others argue that the problem is actually the American people themselves, specifically their spending habits.

So, where does the problem lie? If you really take the time to look at it, you’ll see that the problem is shared all around and every part of the problem, from the creditors to the credit cardholders, holds the solution to the entire problem.

Judging by the recent public outcry over the unfair and downright deceitful practices of credit card companies, it definitely seems that credit card issuers are the root cause of the problem. Their sudden rate hikes and imposition of high transaction fees to their customers without any prior notice and without even taking into account their customer’s credit history is certainly right there with outright highway robbery.

Other questionable practices perpetrated by the credit industry include allowing overdraws so that they can make money off the interest or the overdraw fees, extending credit to people who are not in a stable enough financial situation to pay off their credits and, perhaps the sneakiest of all, increasing interest rates if the customer pays late to an unrelated credit card company or even a utility company.

The credit card bill, which will soon come out of congress, should stop these practices and some others. However, there is some degree of truth over justifications of credit industry insiders who say that the credit card industry never forced their customers to sign up to their programs or to charge excessively on their credit cards.

It is very true, cardholders were never forced to charge expensive dinners, luxury gadgets, and unnecessary expenses without considering if they could pay for it or not. The mantra for the spending habits of America seems to have been “spend, spend, and spend” for the past few years. It also didn’t help that the credit card industry encouraged this habit by lowering their credit card application requirements, offering deceptive packages and generally giving consumers enough leeway to bury themselves in debt for the next ten years or more.

Although the credit card industry has a lot to answer for, clearly the spending habits of the American consumer need to change as well. Fortunately, the economic crisis, the employment slump and the oppressive actions of the credit industry have put such a strain on every American consumer’s finances that they are doing just that.

May 18, 2009

Credit Card Legislation is Good, Says Government amidst Credit Industry Warnings

The credit card industry has issued warnings that the passage of the credit card bill will mean that credit will no longer be available to some consumers.

Credit Card Legislation is Good

Following a huge outcry from consumers, President Barack Obama and the congress have made a legislation that aims to correct certain practices of the credit card industry, which many consider to be deceitful and unfair. There is a high probability that the legislation will be placed on the President’s desk by Tuesday next week. With the passage of the bill, the credit card industry will experience sweeping changes that will most likely have a negative impact on the profitability of credit card companies. The dire warnings of the credit card industry are most likely to come true as well.

In response to credit industry warnings of credit drying up for some consumers, the government is saying that it is fine with it. Backing up the stance of the government, many senators have been commenting that if getting credit comes at the cost of the credit cardholder not being able to pay it off, then the consumer is better off not having any in the first place.

The biggest impact that the credit card bill will have will be in the credit card industry, however. The most affected will be credit card issuers who issue credit cards to people with low credit scores. Some of these issuers survive on people who are unable to keep up with their monthly balances by having higher interest rates and more stringent penalties. The legislation in the bill will expressly stop this kind of flagrant abuse. Other industry players will also experience a slow down of profits as the legislation puts limits on interest rate hikes. For instance, a provision on the bill requires that if a customer gets an interest rate increase because of late payments, the issuer must lower the interest rate if the customer is able to pay on time for six consecutive months.

Austan Goolsbee, economic advisor of the White House, said in an interview that, “There’s nothing that says credit-card companies need to maintain exactly the same profit rates that they have when there aren’t rules on the road”.

“We’ve gotten into situations where some of the most egregious actors have pushed us to the point where it’s like, ‘Well if you didn’t want to be mugged, you shouldn’t have been walking out in the park because everyone knows there’s muggers out here,’ the economic advisor further elaborated.

May 17, 2009

Settle Your Debts Easily with Debt Consolidation Loans

If you are one of many Americans having debt problems, then you know that the situation is becoming worse and worse as the economic crisis continues. As the available cash in American households begin to dwindle, the more debts a household has, the more problematic the situation gets. If you have a similar problem, you might want to consider consolidating your loans.

Credit Cards and Debt

Credit cards have become the de facto standard for a large number of financial transactions in the U.S. The ease of use and convenience that credit cards offer is incomparable to having to carry a large amount of bills and coins on your person whenever you have to go and make a purchase. Unfortunately, that convenience and ease of use also makes credit cards financial traps that many people have fallen into.

Credit card transactions have a way of making the cardholder forget that the transaction actually translates to debt. This debt often adds up alarmingly and, before they know it, cardholders find themselves deep in debt.

High Interest Debts and Multiple Debts

The interest rates of credit cards have been soaring these past few months. Although some cards still offer affordable and low interests, they are the exception rather than the rule nowadays.

Paying off your debt also becomes doubly hard when you owe debt to multiple lines of credit. Usually, each line of credit you have to pay off will have a different set of rules and interest rates.

Debt consolidation can answer your debt problems.

If you find yourself having to deal with large debt payments and juggling multiple debts every month, you ought to see what debt consolidation can do for you.

Basically, debt consolidation can do two things for you to make your life easier. First, it can greatly reduce your monthly debt payments. This can help you catch up with your debts without sacrificing necessary expenses. Secondly, a debt consolidation program can simplify your debt payment scheme so that you have to deal with only one or two debt payments every month.

How does it work?

Debt consolidation is basically the same as taking out a loan to pay off all your debts. You will then have to pay only the loan that you took out instead of all the debts that you previously had. This can help you in a number of ways.

Usually, the loan that you take out in a debt consolidation program will demand lesser monthly payments from you. Also, by taking out one loan to pay off all your other loans, you will now have only one loan to pay off.

Debt consolidation can be a lifesaver in this troubled economy. If you are someone who is getting hit bad with debts, you should visit a debt consolidation agency and see what they can do for you.

May 15, 2009

How to Keep Your Credit Rating Up

The economic downturn has gotten the entire country in an uproar. Prices of basic goods are soaring, employment is going down, and interest rates are jumping from as low as 1.7% to as high as 25%. One thing that the economic collapse has proven is how important good credit rating is.

Banks have upped their interest rates to astronomical heights since the economic crisis began. They have also drastically lowered the credit limits for most credit holders. In most cases, those who have bad credit ratings come out worse off than those with good ratings. This is only logical, as banks place more trust on people with good credit and are more willing to give them some leeway. They are also more anxious to keep the business of people with good credit rating.

For those who are in heavy debt, getting out of it in this economy can be very difficult. Paying off high interest rates with very little extra cash and with a bad job market only worsens the problem. Fortunately, people with bad debt can get their interest rates adjusted to more reasonable levels. Again, those who have good credit ratings get off lighter than those who do not.

The simplest way to get your credit score high is to make sure that you don’t have any debts in the first place. This means paying off your bills before the deadline. Usually, the more consistent you are at paying on time, the higher your score gets.

One of the biggest culprits in getting your credit score down is your credit card. Make sure to use it wisely. A good rule is to keep your balances low on all your credit cards. Keep in mind that the proportion between what you owe and what is available to you in your credit lines is what dictates your score. Another important issue related to this is closing unused credit cards. Unused credit cards mean unused credit available to you. If you close the card, you will lower your available credit, which will affect your credit score.

It is also not advisable to apply for too many credit cards. Although getting a lot of credit cards increase your available credit, which helps your credit score, you might be labeled as a risky borrower instead, which will lower your credit score.

In the event that you find it difficult to pay off your credit cards, make arrangements with your creditors for a lowered interest rate or some other plan to help you keep up with your payments as soon as you can.

It is important to remember that getting your credit score higher can take time. You will have to keep at it if you want your credit rating to improve.

May 13, 2009

Credit CARD Act on the Way out from the Senate

It seems that the Senate’s Credit CARD (Credit Card Accountability, Responsibility and Disclosure) Act may be on the way to President Obama’s desk no later than the end of the week. Recently, Senator Chris Dodd, Senate Banking Committee Chairman, announced that a compromise has been made.

The Credit CARD Act of the Senate is part of the government’s response to the growing public outcry over increasing credit card interest rates and other fees. Late last April, the House of Representatives approved the Credit Cardholders Bill of Rights as well. The Credit CARD Act has been in the Senate since early this month.

One major bump in the passage of the act was the debate between the Republicans and the Democrats over debtors who were burdened with huge interest rates because of tardiness over their credit card payments.

The Republicans wanted to grant credit card lenders the right to set interest rates according to a borrower’s previous delinquent payment record. Democrats, on the other hand, were against this, stating that debtors who find themselves in similar situations would already be having a hard time paying their debts. An increase in their interest rates would only make it even harder for them to get themselves out of debt.

Although firmly supporting the ban on retroactive credit card rate increases, Senator Chris Dodd soon realized that the bill would not get Senate approval without the support of Republican senators. A compromise was reached between the two camps.

As the legislation now stands, credit card institutions retain the right to raise interest rates of delinquent consumers under the condition that they would lower the rates if the cardholder is able to meet the bills for six months. They are also prohibited from raising interest rates until the cardholder has been delinquent for at least 60 days. Credit card institutions also have to review the terms of the cardholder every six months. Finally, the Credit CARD act also adds Federal Reserve regulations, which require it to report credit cost and availability updates to the Congress every two years.

Along with the shaky economy and the unemployment problems of the U.S., the sudden rise in credit card interest rates has put a strain on every U.S. Citizen’s finances. The Credit CARD Act will provide some relief for credit cardholders who have been struggling with making their monthly payments on time due to sudden interest rate hikes. Once the legislation gets out of Senate, it will go to President Barrack Obama for approval. The bill will be in effect nine months after the signature of the president has been placed on it.

May 12, 2009

Town Hall Discussion on Credit Card Issues on the Way

Town Hall Discussion on Credit Card Issues on the Way As the credit card crisis continues, the White House is once again flexing its influence to confront the issue affecting a large majority of American citizens. This time, President Barack Obama plans to hold a town hall meeting during a planned stop in New Mexico on May 14. The President plans to open discussions on the credit card crisis during the meeting and to push for the passage of the credit card reform bill in Congress.

Robert Gibbs, press secretary of the White House, expressed to reporters the administration’s “strong desire to get something done on an issue of tremendous importance to middle class families and that is to rein in some of the excesses and some of the abuses that we’ve seen from credit cards over the past many years”.

Gibbs further elaborated on the administration’s stance saying, “For many people, credit cards provide an opportunity to finance purchases, but we think there’s a more equitable way to do that. Those reforms are on their way through Congress.”

The White House press release came as cardholders were reeling after the effects of the sudden interest rate increases and banking fees that came to effect last year and earlier this year. Rate hikes and card fees became the norm as banks struggled to keep afloat while the economic crisis continued. Unfortunately, cardholders were ill prepared for the sudden interest and fee increases, having to contend with a failing job market and a drop in the property markets.

The first signs of the changes on credit card legislation were first seen in the new federal rules which were set to become effective on July 1, 2010. Earlier this year, the credit card crisis got some much needed attention from President Barrack Obama and a bill arrived in the House of Representatives early this year.

The credit card amendment has already passed through the lower house and is currently going through deliberations in the U.S. Senate. It passed through the House of Representatives late in the month of April and was known as the Credit Cardholders’ Bill of Rights. The passage was by an overwhelming vote of 357 to 70.

In the U.S. Senate, the bill is sponsored by Senator Christopher Dodd and Senator Richard Shelby, who is Dodd’s GOP counterpart. The Senate bill has been named as The Credit Card Accountability, Responsibility, and Disclosure Act or the Credit CARD Act. The bill is supposed to be a tougher version of what the House of Representatives recently passed.

As the bill continues to be deliberated in the senate, President Obama’s town hall discussion is calculated to boost support for it and, at the same time, inform the public on what the bill entails and what it will mean for the American cardholder.

May 11, 2009

Three Ways To Win Against Credit Card Debt

Credit card debt is a fact of life. That needs to change as soon as possible, especially if you want to survive the economic crisis. To do just that, read on.

Don’t Spend What You Don’t Have

Credit cards are very convenient, no argument. With credit cards, you don’t have to carry a wad of cash every time you go out, you only use a small, thin card to pay for your purchases and you get to shop even if you don’t actually have the money to pay for it. That last one is the problem.

Credit cards make it easy for you to buy something on the assumption that you can pay for it someday. Most people rationalize that they can easily pay off their credit card purchase by paying a fraction of the item’s price every month. Unfortunately, that is not always the case which is, of course why many people are finding themselves in credit card debt nowadays.

If you really want the convenience of a credit card, use a debit card. With a debit card, you are buying with your own money. Thus, you can be sure that when you buy, it is paid for then and there. You won’t have monthly payments or interest rates. It’s a win-win, unless you want to buy something which you don’t have the money for. If, you really need to spend what you don’t have, read the next one.

Pay Your Debts Right

If you read your monthly credit card bill, you’ll see some figures their labeled as “minimum amount due”. Avoid paying that as much as you can.

If you only pay the minimum amount on your bill, you’re not actually paying to lessen your debt balance. You need to remember that the longer your balance stays on your bill, the higher the interest you are getting. So what you really want to do is ignore that deceiving “minimum amount due”, calculate the highest amount you can pay towards your actual debt balance and pay that amount. That way, you avoid the high interest rates and get to congratulate yourself on playing smart.

However, if you’re in over your head already, the last one is for you.

Move To A Cheaper Card

Credit companies love to sell you credit cards. It can be annoying but it can give you a break with your credit card debt problem. If your credit card is an old one, the interest rate on that card is probably higher than that of a new card.

What you should do is to get a new card with a low or even zero interest rate and move your card balance to that. Just be aware that the low or zero interest rate is usually offered for a limited time, usually a few months. Make sure you maximize your payments during that period to get the best out of the deal.

April 24, 2009

Chief Economics Adviser Gets Some Sleep During Meeting With President and Credit Card Executives

In a meeting held in the Roosevelt Room of the White House with President Obama and credit card executives on summersweb1 April 23^rd, 2009, the chief economics adviser, Lawrence Summers was caught taking a nap at the table. Of course, the photographers had a good time with this, snapping pictures left and right of the man has he nodded off, holding his head on his hand and eventually sliding right off his hand before waking up.

Reporters all over the internet have also had a good time with the story, and comments from readers express outrage that in a time when the economy is doing so poorly and millions of people are wondering how they’ll keep food on the table our chief economics adviser is snoozing on the job. Some have gone as far as saying his ability to nap during the meeting just shows a lack of concern for American citizens – since Mr. Summers needn’t worry about where his next paycheck will come from.

The Caucus reported the story yesterday, with a couple of photographs, including the one seen here. While inappropriate to nap during a meeting, people should cut the man a little slack. The world happens to be in a major economic recession, and you can bet the chief economics adviser has been kept busy working with the President to come up with solutions to the troubled economy. Aides reported that Mr. Summers has hosted a number of midnight telephone calls, in addition to working the normal day hours – it’s human to become tired and need to sleep when the body and mind aren’t given enough time to rest.

April 12, 2009

NextSpace on Cooper Street in Santa Cruz, California Saw Unexpected Jump in Business When Fiber Optic Internet Was Vandalized on April 9th

Could you survive a day without Internet access? On Thursday, April 9^th, vandalism of fiber optic cables in Santa Cruz, California cut out Internet and cell phone service for most residents and business owners. ATMs didn’t work, some banks were forced to close their doors while others allowed one customer in at a time and attempted to assist them without the use of their computer systems, and most shops couldn’t process credit or debit card payments.

Some shops would jot down customer credit card information to process once the computer systems were restored, but for customers who didn’t trust strangers with their credit card details, they went without or resorted to using checks – something that many people have almost forgotten how to do!

The Wells Fargo branch on Mount Hermon Road was able to use emergency protocols to continue servicing customers, although things moved at a snail’s pace and customers were waiting in line outside the branch for their turn. Customers of downtown Wells Fargo and Comerica branches weren’t as lucky to wait though, and couldn’t use their bank at all as they had to close down for the day.

A graphic designer planning to take a conference call while sipping a coffee at LuLu Carpenter’s coffee shop was unable to reach her client without cell phone or internet access. Kevin Marlar of Marlar Construction said work came to a standstill as he waited for people to show up with building plans – nothing could be faxed, bids couldn’t be received.

Our society has come to rely on internet and cell phone communications for everything from basic communication to payment processing to keeping a business running. When those communications stop – so do many businesses and the routines of everyone are affected.

Some businesses took advantage of the lack of internet and communication services and turned it into an opportunity for enterprise. The co-founder of NextSpace on Cooper Street took to riding his bike through downtown Santa Cruz, shouting out that the internet works at NextSpace – and provided day passes to individuals wanting to use the co-working office space and lounge. NextSpace uses Comcast internet, which apparently doesn’t rely on the same fiber optic network that the rest of Santa Cruz uses, because it was one of the few providers that still offered services on Thursday.

“We saw a ton of people,” Kabanagh, the chief operating office of NextSpace, said. “The refugees from the land of no Internet.” Interested in visiting NextSpace?

NextSpace Tour from Margaret Rosas on Vimeo.

Also interesting was newspapers reported that their newspaper boxes emptied quickly as people purchased newspapers along Pacific Avenue in order to get news on a day when they couldn’t get it from their internet connections.

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