Credit Card Quick

Examining the Newest Credit Card Legislation Set to go into Effect

News

Starting next week, credit card companies will be forced to make some changes that will affect all of us who carry credit cards.

New Interest Rate/Grace Period Legislation

One of the most prominent features of this area of the new credit card legislation is that creditors must provide their customers with at least 45 days’ notice before they can raise their interest rates or make other changes to their card’s terms and agreements.

This 45-day notice will enable cardholders to decline this rate increase. Although the card account will be closed, the cardholder will have the option of paying off the balance of their credit card at the original rate.

Another feature of the new credit card legislation due to go into effect next week is that creditors must provide cardholders with at least 21 days to pay their credit card bill. As many of us will attest to, many creditors have shortened this window substantially over the last, few years in an attempt to collect their money.

The new credit card legislation, which was enacted in May by President Obama, will not officially go into effect until February 2010, with the exception of the above mentioned laws.

The Effects of the Credit Card Legislation

As a credit card holder, you have likely seen creditors raising interest rates and hiking minimum payments in anticipation of this new law. Another result of this law, says many financial analysts, is that creditors are pulling back consumers’ credit limits and canceling credit cards on unsuspecting consumers.

At this point, it appears to be a bit of a tug-of-war going on between the government and creditors. Many creditors, who anticipate catastrophic losses as a result of the credit card legislation, are fighting back by raising rates and payments before the law goes into effect.

Many financial analysts agree that the new credit card legislation essentially gives creditors an eight-month loophole during which time they can make the necessary changes to counter the changes mandated by the government.

It is more important than ever to remain educated about your credit card accounts, and to carefully read all material that you receive. And, as always, if you don’t agree with your creditor’s new terms and conditions, you have the right to cancel the card.

The Top Five Credit Card Mistakes Consumers Make

Introduction

Credit cards can serve as a very useful financial tool for responsible individuals. They can also be a nightmare for individuals who don’t use them properly or responsibly.

So, what kind of credit card customer are you?  Have you made a commitment to using your credit cards in a responsible manner? Do you have a sparkling credit score to show for it?

The following list details the five most common mistakes consumers make (and what you can do to avoid them):

1. Not taking the time to read the card’s terms and conditions – The very first thing a consumer should do when applying for a credit card is read its terms and conditions. If you don’t understand them or don’t agree with them, you simply need not apply for the card. Don’t get yourself caught in a bad credit card situation because you didn’t take the time to read the creditor’s terms and conditions!
2. Assuming that more is better – When it comes to credit cards, more is definitely not better. Most consumers can make do with just one or two credit cards. Any more than that and you are more likely to get in over your head in credit card debt.
3. Paying your bill late – Many consumers are under the false assumption that, as long as the creditor gets their payment, their credit score is intact. However, the reality is that creditors look very unfavorably upon consumers who make a habit of paying their credit card bills late. It also doesn’t do your budget (or your credit card balance) any good to pay your credit card bill late because you’ll likely incur costly late payment charges.
4. Exceeding your card’s credit limit – Exceeding your credit limit is a surefire way to rack up costly “over the limit” fees.  It also takes a toll on your credit score, so remain aware of your credit limit and do everything in your power not to exceed it.
5. Making only the minimum payment – You can technically get away with only making the minimum payment, but realize that you’re doing nothing more than paying your interest charges. In other words, your balance will go nowhere fast if you make only the minimum payments. Find extra money in your budget and make a point of paying as much as possible on your card every month.

Today’s Credit Issues: Why Balance Transfer Offers have Changed

Credit Card Rewards

Balance transfer offers were always the way to go. Great, promotional offers, such as 0% interest rates, were the norm and it was quite easy to transfer your credit card balance at a whim. Now, however, creditors have become quite a bit stingier when it comes to balance transfer offers.

This change is due in part, perhaps, to the credit crisis, the poor economy and, most recently, the impending changes in credit card legislation.

Whatever the reason, one thing’s for sure: creditors are pulling back and tightening their belts in an effort to minimize losses in this tough economy.

Today’s Balance Transfer Offers

We’ve all seen a sharp decline in the number of credit offers we receive in the mail on any given day; and that goes for balance transfer offers, as well.

In addition, many of the balance transfer offers we may receive are not quite as attractive as they once were. For example, promotional rates are now quite limited, and balance transfer fees are much higher.

You may find a promotional rate of 0%, for example, but it may last only six months instead of the standard, 12 (or even 24) months we were all so accustomed to receiving.

It is important to also pay close attention to the creditor’s balance transfer fee. This fee, which is based on how much you are borrowing, has recently begun creeping up. Many creditors used to charge about 3% as a balance transfer fee (with a cap of about $50 to $75), and it wasn’t uncommon to see balance transfer fees waived.

However, today’s balance transfer offers are as high as 5%, and caps are becoming a thing of the past. For example, a few years ago if you were to transfer a balance of $10,000, you would pay no more than $75 in fees. However, transfer a $10,000 balance today and you could be faced with a balance transfer fee as high as $500.

Your Options

Don’t get me wrong: there are still plenty of good balance transfer offers around; you just need to search for them.

There are three things you should pay close attention to when deciding to transfer a balance: the introductory rate (and how long it will last); the interest rate on the credit card once the introductory period ends; and the balance transfer fee.

College Students Beware: Learn about Identity Theft before Heading Back to School

Identity Theft

Technology has proven itself to be an evil necessity. Although it has afforded us many ways to communicate and to give and receive information almost instantaneously, it has also opened the door for thieves that nearly effortlessly get a hold of our personal information and use it to steal our money and our identity.

One area that appears to be a hotbed for identity theft is on college campuses.

The following list details the steps you can take to protect yourself and your personal information while you are away at college:

1. Perhaps one of the biggest mistakes college students make is simply forgetting to lock the door to their dorm room or campus apartment. A good lock is the first step in preventing the theft of your personal belonging, as well as your computer and related equipment, which likely have stored, personal and financial information.
2. Use password protection on both your desktop and laptop and change the password often. A simple password for your computer can prevent a great deal of damage to your personal and financial information; and luckily, every computer is equipped with this feature.
3. Be very careful about revealing any personal or financial information on social networking sites or through email. Never, ever respond to an email claiming to be your bank or credit card company, and think twice before providing information, such as your address and birthdate, on social networking sites such as Facebook, MySpace and Twitter.
4. Consider installing a tracking device on your laptop. Tracking devices, which use GPS technology, are surprisingly affordable.
5. Don’t underestimate the power of a good anti-virus and firewall program. This is one area that it pays to shop around and do your homework. Purchase the best and always remember to update it frequently.
6. Beware of public places with Wi-Fi access. Using Wi-Fi services at your campus café is convenient and practical, but it may also not offer you a secure connection. Therefore, it is wise to never engage in personal or financial business (i.e., checking your bank account balance, paying bills, etc.) while connected to a Wi-Fi system.

Today’s Credit Issues: Why has my APR gone Through the Roof?

Choosing Credit Card

Many of us have stumbled across a little surprise, of sorts, the last time we opened our credit card statement: an increase in our credit card’s APR.

As we are beginning to see – and will continue to see throughout the upcoming months – credit card companies are starting to fight back against the new credit card laws due to go into effect next summer.

This may mean raising credit card interest rates, slashing credit limits and closing accounts that have been inactive for some time.

The Universal Default

One of the key terms to pay attention to in your credit card agreements is the card’s universal default. This is a clause, found in most credit card agreements, that gives your creditor the authority to raise your interest rate for a variety of reasons, mainly if the credit card company perceives you as a higher credit risk.

Did you know, for example, that a creditor can raise your APR because you were late on your mortgage payment? Did you also know that your creditor can raise your APR if you recently took out a personal or auto loan (thereby increasing your debt to income ratio)?  It may not seem fair, but it is perfectly legal for a creditor to monitor your credit report and change your APR if they feel that you’ve become a higher credit risk.

Your Options

Unfortunately, you may have few options when it comes to a rise in your credit card’s APR. If you’ve been a good customer in the past, you may be able to contact the creditor and have your APR lowered; however, not many creditors are being lenient about APRs these days.

You may also try to find another credit card and transfer your balance to that card, but it may be quite difficult to find a good deal on a balance transfer.  Something to watch out for: many creditors have begun raising the fees on balance transfers. In fact, Chase has recently announced that it will start charging customers a 5% balance transfer fee, which is the highest in the industry (most balance transfer fees are 3%, but you can expect other creditors to follow Chase’s lead on balance transfer fees).

It is important to keep an eye on your card’s APR and continue making your payments on time for all of your credit cards, as well as your other lenders, as to avoid an increase in your APR.

Thinking Ahead: Adding an Authorized User to your Credit Card

Introduction

As many of us know, it is possible to add an authorized user to our credit card accounts. Often, this may be a spouse, a teenage child or a family member that may otherwise not be able to obtain credit. Although this may be ideal in certain situations, it is definitely a decision about which you may want to think twice.

Any debt that is incurred on your credit card – regardless if it was charged by another individual – is your debt, and you, and only you, are responsible for it in the eyes of the credit card company.

There have been countless situations, for example, when an irate spouse, on the verge of a divorce, charges up credit cards on which he/she is only an authorized user. Or college-age children going off to school and irresponsibly and recklessly spending on their parents’ credit cards.

The bottom line is that adding an authorized credit card user to your credit card comes with its own set of risks. It is therefore of the utmost importance that you put a great deal of thought into this decision because, in the end, it is your credit and your finances on the line.

For example, I had a friend that agreed to add her brother as an authorized user to her credit card account because he had poor credit and was not able to get a card on his own. Although she made it very clear to him that he must pay the balance every month, the card’s balance quickly got out of hand and he was no longer able to afford the payments. Who was stuck with this debt? Yep, you guessed right: my friend.

After all, if she chose to not pay the credit card under the assumption that it was his debt, her credit score would certainly have taken a nose dive and the good credit she had worked for all of her life would have landed in the gutter.

It is important to understand that perhaps the very first mistake my friend made was allowing her brother to act as an authorized user. His bad credit should have been a red flag! After all, if was not able to maintain good credit on his own, what made her think that he would act any differently when it came to her good credit?

In the end, like anything else, the decision to place another individual on your credit card account is a very personal one, as each situation is truly unique. However, if you decide to put a loved one on as an authorized user, continue to closely monitor the account. If you notice any signs of abuse or if your loved one fails to pay the bill – even once – you can swiftly remove them as an authorized user.

How to Deal with a Credit Card Debt Collector

Credit Card Debt

For many of people, the tough housing market and credit crisis has taken its toll. If you’ve lost your job, been sidelined with an exploding mortgage payment or have simply been unable to earn as much money because of the poor economy, then you may have had difficulty handling your credit card bills.

Your creditors may turn to a debt collector when you have been unable to meet your credit card payment obligations for at least a month or more. Debt collectors, whether they work for the creditor or through a third-party collection agency, are paid to collect past-due money.

However, there are a set of guidelines to which they must adhere, and a set of rights that you, as a consumer, should be aware of if a debt collector has begun calling:

• Be aware of the Fair Debt Collection Practices Act. The Fair Debt Collection Practices Act is a federal act set forth to protect consumers from abusive collection practices. If you feel that the debt collector is engaging in abusive or harassing practices, or does not exhibit fair treatment or respect your privacy, then you have the legal right to make them stop harassing you. You may want to check with your state regarding their standards and laws for debt collectors, as well.

For example, a debt collector can not make threats against you, and cannot use abusive or profane language. A debt collector also cannot discuss your personal account information with any third parties or call you at unreasonable hours.

• Once a creditor or debt collection agency has begun calling you, don’t ignore the phone calls. Instead, ask for all pertinent information from the creditor, including their name, address, and telephone and fax number, as well as the specifics about your debt. You can also ask them to not call you at work and to also contact you only by mail – the creditor has a legal obligation to abide by your wishes.
• Keep a file regarding all of the information received by the debt collector, as well as times and dates (and copies, if possible) of all voice mails or phone messages left by the creditor. You may also take notes of your conversations with the debt collector. Most importantly, keep copious notes of any abusive or harassing behavior in case you need to contact the authorities.
• Seek assistance from an accredited consumer counseling agency to help you manage your debts. The best way to deal with creditors is to handle your debts so that they stop contacting you; and to do this, you need to take care of your financial responsibilities, which may mean seeking the assistance of a consumer credit counseling service or bankruptcy attorney.

How to Effectively Manage your Credit Cards in the Event of Possible Unemployment

Credit Repair

In today’s tough economy most of us have witnessed our family and friends facing unemployment. Unfortunately, an increase in unemployment is a direct result of the crumbling housing market and weakening credit sector.

Now, what happens when unemployment threatens your job?

If you find yourself on the receiving end of a possible lay-off or termination, there are a few things you can do to manage your finances, including your credit cards:

1. Take a good, hard look at your budget and find ways to cut expenses. Use that money to cushion your emergency fund so that you won’t be left without a savings account in the event of unemployment. Although many consumers’ first instinct may be to pay off their credit cards with this extra money, it probably isn’t the best idea. Instead, continue to make the minimum payments on all your cards as to protect your credit score, and put any extra cash into an interest-bearing savings or money market account.
2. If times are particularly tough, and you are finding it hard to even make the minimum payments on your credit cards, call the credit card company and ask about their forbearance policy. Many credit card companies will waive the monthly payment for a few months while you work on finding a job.
3. If you feel as if you might be facing unemployment, think ahead and consider a personal consolidation loan or consider consolidating your credit card bills onto one, low-interest credit card that will be much easier to handle if you lose your job.
4. Always pay your unsecured debt first. Although the last thing you would ever want to do is miss your credit card payments, the harsh reality is that, given the choice between paying your mortgage or your credit card payments, you must keep a roof over your head.
5. Contact an accredited consumer counseling agency. An accredited consumer counseling agency may be able to strike a deal with your creditors and give you a much more manageable monthly payment in the event that you can no longer meet your credit card payments each month.

When was The Last Time you Reviewed your Credit Report?

Credit Score

Did you know that you are entitled to receive a copy of your credit report from all three credit reporting bureaus – free of charge – once every 12 months? It’s true!

What are you Waiting for?

For many of us, our demanding lives and careers simply leave us no time to remember small obligations such as ordering our credit report. However, it is the small things that can wreak havoc on our lives if we don’t take care of them.

For example, it may be inconvenient to schedule our yearly physical with our physician, but we know that it is necessary to maintain good health. Well, checking your credit report is just as important for your financial health.

What you don’t Know can Hurt you!

An error or discrepancy on your credit report can cost you much, much more than you think. Consider this: an error on your credit report can lower your credit score, which may mean that the interest rate on your next car loan is higher, which may mean that your payments are higher, which means that you are losing money!

Also, identity or credit card theft can be wreaking havoc on your credit report without you even being aware of it. Many consumers are simply shocked to discover that a thief has used their good credit to take out bogus credit cards. And they’re even more shocked when they don’t discover this until they are turned down for an important loan or credit card.

Taking Matters into your Own Hands

Ordering a copy of your credit card each year enables you to keep on top of your credit report so that you can better manage your finances and financial health.

If you find an error or discrepancy on your credit report, it is important to immediately contact the credit reporting agency on which it appears so that they can begin investigating the mistake. You may also need to contact the creditor to remedy the error, as well.

In today’s tough, economic state, excellent credit is more important than ever, so always remember to check your credit report on an annual basis (some financial experts recommend checking as often as every three to four months) so that you can stay abreast of your financial information.

Minimum Payment Increases – How to Handle these Unwelcomed Changes

Choosing Credit Card

Many credit card companies have recently begun raising the minimum payments for their card holders, much to the dismay of the card holders. These minimum payment increases are often the answer for credit card companies that are fighting back against the new credit card legislation recently signed into law by President Obama.

Many credit card companies fear that they will lose significant revenue due to the recent credit card legislation, so they have begun increasing minimum payments as a result. Although the new law will place tight restrictions on things such as interest rate hikes, there is no law in place when it comes to an issuer’s minimum payment schedule.

Many credit card holders, however, may see their credit card minimum payments jump to unmanageable levels, thereby preventing them from making the required payment. For many consumers in today’s tough economic climate, this change could ultimately destroy their credit.

So, the question is: as a card holder, is there anything you can do to fight these minimum payment increases?

• Consider the card’s opt-out provision. An opt-out provision, which must be offered to cardholders in the event that the issuer raises minimum payments, is essentially an agreement that allows a cardholder to keep the original terms on the card if he/she closes the account.
• Contact your credit card company and negotiate. If you have been a loyal customer and have always paid your bills on time then you may have room to negotiate. Many credit card companies will negotiate with you regarding a change in your minimum payments if you have proven yourself to be a dependable customer.
• Consider a balance transfer. If you get nowhere with your credit card company, then you may want to consider transferring your balance to another open credit card. Of course, you will also need to carefully consider the pros and cons of a balance transfer, including balance transfer fees, the interest rate on the other card and, of course, the minimum payment requirements on the other card.

The bottom line is that you don’t need to accept a minimum payment increase. You do have rights and options, so explore them before a minimum payment increase wreaks havoc on your good credit score.