Credit Card Quick

Why You Should Never Give up on Your Credit

Introduction

You’ve lost your job, you’ve missed months of credit card payments, and your credit is the last thing on you mind. It is best to just walk away from your debt obligations, right?

Wrong!

It may be quite tempting to just give up on your credit, especially if you feel your debts are simply too overwhelming to handle anymore. However, giving up on your credit is never the right decision to make, and here’s why:

• Judgments – Although creditors of unsecured loans such as credit cards and personal loans cannot take away your home, for example, they can take you to court where a judgment against you can be made by a judge. If a creditor wins a judgment against you in court, the court can begin to garnish your wages. Instead, it is best to call your creditor and set up a realistic repayment plan so you can stay on good terms with them. Ignoring the problem will not make it go away; it will simply delay the inevitable.
• Other credit – Your poor credit history can affect you years into the future. In other word, an abandoned credit card today can affect your ability to obtain a home or car loan years down the line. You may have forgotten about your past credit mistakes, but I guarantee you creditors and credit reporting agencies have not.
• Jobs – The job market is tight, and employers are increasingly looking further into their employees’ habits. As a result, it has become more common for employers to look at the credit scores and reports of potential employees. The reason is quite simple: some employers may find a direct correlation between a potential employee’s responsibility and their credit score. A low credit score may raise a red flag with an employer, thereby preventing you from getting that job of your dreams.

If you feel like your credit cards and other loans are simply too much to handle it is best to contact your creditors directly and talk to them about your financial struggles. Most creditors will be willing to work out a more affordable payment plan with you, so it always pays to ask.

The Steps Creditors May Take to Collect Past Due Payments

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If you miss a credit card payment, do you know what steps your credit card company will take to collect their money? Unfortunately, many people have fallen behind on their credit card payments over the last, few years; and, as such, credit card companies have had to collect their money.

Here is what you can expect if you fail to make a credit card payment:

• You miss your due date – You will likely receive a few, polite phone calls to remind you of a missed payment.
• You are 30 days past due – Someone who is 30 days past due on their account will have likely missed the payment before the next billing cycle rolls around. In this case, the creditor will likely use “soft tactics” to receive their payment. You may expect to receive phone calls, emails and letters, although all of these tactics will be decidedly patient and helpful. Once 30 days has passed without a payment, the creditor will likely report you to the credit bureaus as delinquent.

Now is a great time to ask your creditor to help you find solutions to your financial problems. During this stage of the game the creditor will likely negotiate more manageable payment arrangements with you. Don’t, however, avoid the creditor and ignore the problem; it will only make things worse.

• You are 60 days past due – OK, now things are really starting to look bad. You’ve missed two billing cycles and the creditor has almost certainly reported your account as delinquent to the credit reporting bureaus. Plus, they are also likely not so nice anymore. Most creditors will issue a warning telling you that if you don’t pay on your card it could end up in serious delinquency.

It’s not too late to talk to your credit card company about working together to find a solution to your credit card woes.

• You are more than 90 days past due – Many creditors will simply write off the debt as a charge-off if you fail to pay for three or more months, meaning that it will go to a third-party collections agency who will, no doubt, employ more aggressive tactics to get their money.  Your debt with the creditor could ultimately be brought to court, as well, resulting in wage garnishment.

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What you should know about Credit Card Payments

Introduction

The most important thing to consider when managing your credit cards is the payment. When it comes down to it, if you don’t understand the payment system, you may find yourself either deep in debt or in over your head with late payments and finance changes. Either way, it is up to you to understand the process of managing your credit card payments so you will build a strong credit history – not destroy it.

When managing your credit card and the payments associated with it, there are a few things to consider:

• The minimum payment – Before writing the check to your credit card company, pay close attention to the minimum balance payment if you are unable to pay off the card’s entire balance. If you fail to pay at least the minimum balance, you will likely get caught with late payment fees, which therefore hurts your credit. Even if you think you know your card’s minimum payment amount, check it each month, as it may change according to your credit card balance. In addition, many creditors have begun implementing higher minimum payments as a result of the CARD Act, so you may find that your card’s minimum payment is higher than it used to be.
• The payment due date – In addition to understanding your credit card’s due date, consider that it takes time to receive and process a credit card payment. In particular, consider the time it may take for your payment to arrive in the mail or get processed through your bank or credit card online payment system. Keep in mind, also, that your credit card company may charge you a fee for making a rush payment through their online payment system, so record your card’s due date in your smart phone or organizer.
• How you pay – There are a number of ways you can pay on your credit card each month, including through your bank’s online banking system, through your credit card’s website, through the mail or even by phone. If you want to make sure your payment reaches the creditor on time each month, it is probably best to pay your credit card through an online bill system or through your credit card’s website.

How to Best Deal with Credit Card Debt Collectors

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Unfortunately, credit card delinquencies are the sign of the times in which we live. With high unemployment rates and homes in foreclosure, many individuals have found themselves in the unfortunate position of being late on their credit card payments.

And with late payments, as we all know, comes credit card debt collectors. If you are in over your head with credit card bills and credit card debt collectors have begun calling you, here’s what you need to know:

• Ask the debt collector to validate the debt. Under law, credit card debt collectors must send you your debts in writing if you request it. Wait until you have received the debt validation and you have reviewed it before you begin to make payment arrangements.
• Understand that, under the Fair Debt Collection Practices Act, debt collectors are not allowed to contact you before 8AM or after 9PM. In addition, they are not permitted to use any profanity or make any threats against you. If anything like this has been happening, immediately contact the FTC to file a grievance.
• You have the right to request that all future correspondence between you and the creditor be done in writing.  Under law, the creditor must abide by your request. This can put an end to those phone calls every day.
• Ever time you have contact with the debt collector, take down notes. Keep any voicemails or letters from the debt collector, and write down the times, dates and the name of the person you talked to.
• Once you have established a set of guidelines with the debt collector, begin working with them to arrange a payment plan. You may also be able to negotiate a lower payoff amount than you currently owe. Regardless of whether you pay off your debt in full or settle the debt for less you will experience a good hit on your credit score; therefore, it is often in your best interest to negotiate a lower amount. Most importantly, don’t agree to a payment plan that you cannot realistically afford to pay each month; instead, start the negotiations low so that you can be better equipped to pay off the debt in a reasonable amount of time.

Teaching your Teen about Responsible Credit Card Use

Introduction

An uneducated teen with a credit card is a recipe for disaster. It is therefore up to you, as the parent, to educate your teenage spender about the advantages and disadvantages of credit cards so that they have the knowledge necessary to make smart financial choices.

A credit card can be a powerful financial tool and can help your young adult establish credit so that they can enjoy the benefits that come with a great credit score. However, it can also prove to be incredibly detrimental and can affect their financial decisions for years to come.

It is therefore never too early to begin talking with your teen about credit card and finances in general. Your instruction and guidance will allow them to make better choices when it comes time to establish their own credit.

Here’s what you should let you teen know about credit cards:

1. Think before you buy – Many people find themselves in deep financial trouble, merely because they failed to think before they purchased. Credit cards can enhance debt, mainly because many people are more likely to spend on them than they would if they were spending cash. Let your teen know that credit card purchases must be well thought out ahead of time; otherwise, their credit card decisions could come back to haunt them if they can’t afford to pay them back.
2. Your mistakes now can affect your life for years to come – Don’t just assume that because you’re young that your credit decisions don’t matter; nothing could be further from the truth! Your spending decisions can haunt you for years to come if you spend wildly on credit cards. Renting an apartment, buying car or purchasing your first home can all be sidelined if your credit suffered as a result of poor credit management.
3. Always make your payments on time. Never assume that credit card payments are any less important than other financial obligations – You should treat your credit card payment jus t like you would any other type of debt because it is just as important as other debts in the eyes of the credit card companies and the credit reporting agencies.

A Sign of the Times: Credit Users Slowly becoming more Responsible Spenders

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Many of us have been guilty of it: spending way beyond our means over the last few years. And it’s no wonder; we all were in overdrive, enjoying a booming economy and a healthy housing market. However, all good things had to come to an end, that the economy was no exception.

As a result, many Americans found themselves in record debt; savings depleted, homes foreclosed; and credit cards maxed.

Fiscally Responsible Spending

The other side of this chaos, however, has been a silver lining, of sorts. Fiscally responsible consumers have emerged, giving way to more responsible spending. Late credit card payments have dropped and the personal savings records has jumped 3.6 percent after many months of freefalling.

In addition, it appears that many credit card customers are now making more than the minimum payment on their credit cards and the country’s outstanding credit card debt has fallen nearly $100 billion over the last year.

A Glimmer of Hope

Even though the unemployment rate across the country is still problematic in terms of credit card repayment, there does seem to be more than just a glimmer of hope on the horizon.

Many credit card consumers have learned one important lesson: that we alone are responsible for our credit card debt and that we must make adjustments in our lives to overcome our debt and lead a more financially responsible lifestyle.

Although the credit card legislation has helped many credit card customers, in realty it has been the customers themselves that are simply tired of living in credit card debt. Many people, as such, have learned that credit cards can be a very useful financial tool without becoming a burden or worse, a nightmare.

Many credit card companies have also begun restructuring their businesses, lowering credit card limits and tightening standards on credit card approval. From clearer repayment terms to upfront interest rates and fees, credit cards have jumped on the responsible bandwagon, and there’s sure to be many credit card customers that will benefit as a result.

Making the Choice between Bankruptcy and Credit Card Consolidation

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With the economy and credit crisis taking its toll on countless Americans, many people have had to make the hard decision to either file bankruptcy or enter into a credit card consolidation program. If you are on the receiving end of finances that have spun out of control, you may have also considered either bankruptcy or debt consolidation.

The question is: which one is right for you?

The deciding factor for most individuals is the impact these decisions will have on their credit score. In particular, they want to know which move will cause the least amount of damage to their credit.

Debt Consolidation Programs

Let’s first take a look at debt consolidation. A debt consolidation program is generally reserved for individuals who are already behind on their credit card payments. Although the process of debt consolidation does lower one’s credit, the impact of paying off bills also works to raise their credit score back up again.

However, it must be understood that, during a debt consolidation program, that the debt will be marked “satisfied” or “paid in full;” otherwise, the debt consolidation will likely have a negative impact on the individual’s credit score.

Bankruptcy

The other alternative to debt consolidation is usually bankruptcy, which generally carries with a negative connotation; and rightly so. Bankruptcy can lower one’s credit score up to 250 points, and bankruptcy can stay on an individual’s credit score for up to ten years.

Keep in mind, also, that not everyone will qualify for bankruptcy, and not everyone will qualify for Chapter 7, which is the total liquidation of all debts (also called straight bankruptcy). Instead, some individuals may qualify for Chapter 13, which essentially means that the individual must repay the debt.

Chapter 13, although it doesn’t provide for the total liquidation that Chapter 7 does, allows the debtors to keep their property and pay their debts over a certain period of time; usually three to five years.

In particular, Chapter 13 allows individuals to save their homes from foreclosure.

So, the question of whether debt consolidation is better than bankruptcy, or vice versa, will depend largely on the individual’s financial circumstances and needs.

New Places where you can use your Credit Card

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The convenience and practicality of credit cards has hit an all-time high; where once cash was king credit, cards have taken over. Let’s face it: credit cards are incredibly convenient and they eliminate the need to carry around cash.

With that said, here are some of the most unlikely of places you can now whip out your credit card:

• Courts and government offices – From paying fines to paying taxes, most federal offices and courts now accept credit cards as payment.
• Vending machines – Still digging in your pocket for change for the vending machine? You can finally put it away and use your credit card to purchase vending items instead.
• Churches – We used to throw cash into the church plate, but churches now accept credit card payments, thereby making the process of paying your monthly offering easier than ever.
• Salvation Army kettles – This year saw a truly remarkable sight – Salvation Army kettles accepting credit card donations! These specially designed credit card receptacles will help this nonprofit organization – and eventually many others – to accept donations when people don’t have cash on hand.
• Tolls and parking meters – You know the drill: you pull into a metered parking space, only to find that you are lacking the change to put in the parking meter. Newer parking meters, as well as toll booths, are now accepting credit card payments, thereby greatly reducing the amount of stress felt when you simply can’t find any spare quarters under your car seat.
• Fast food restaurants – You need a late-night snack or a quick family dinner and you’re short on cash. No problem: simply head to your local fast food restaurant and enjoy your fast dinner using your credit card. Many fast food restaurants now accept credit cards, even when you’re heading through the drive-through lane.

Although credit card usage has become more convenient than ever, it is still important to remain diligent when paying with a credit card. Only pay by credit card at trusted merchants and always check your credit card bill for incorrect charges.

Can you Negotiate Different Payment Terms with your Creditor?

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Are you one of the millions of people that have been unpleasantly surprised by higher interest rates and larger minimum monthly payments? Are you worried about falling behind on your credit card payments? Are you struggling to pay the minimum payment every month?

If so, then it may be time to consider contacting your credit card company and asking them for payment assistance with your credit cards. Often times, a creditor will respond positively to a customer who recognizes a problem and chooses to deal with it before it gets out of hand. In other words, dealing with your debt problems head on instead of ignoring your mounting debt is not only better for you, but also better for your creditors.

But will your creditor bite?

Maybe and maybe not. There are some credit card companies who simply will not negotiate different payment terms for your credit card bill, while others will work with you to find a plan that will suit both parties. The only way you can find out how your creditor will respond to your request is to simply ask them. After all, you really don’t have anything to lose except a lot of worry over your debt load.

How to Negotiate Changes for your Credit Card Debt:

• Don’t wait until you fail to pay your credit card bills to ask for assistance; instead, make every effort to cover your card’s minimum payment so that you can show good faith on your part. Your creditor will be more willing to negotiate with a customer that has a strong payment history.
• Document all contact you have with your credit card company, including dates and times of phone calls and names of representatives you talked to. Then, ask for a written agreement from your credit card company that details the terms of your new agreement.
• If your credit card company is unwilling or unable to assist you with coming up with more reasonable repayment terms regarding your credit cards, you should seek help through a nonprofit consumer debt agency, who can help you find ways to manage your debt.

Your Options when you Simply Can’t Afford your Credit Card Payments

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During these difficult financial times many individuals across the country are struggling to pay their credit card bills. With rising interest rates and tighter credit restrictions, many of us have found ourselves caught in a serious situation where our income simply can’t be stretched any farther.

Combine that with job losses and layoffs, and it becomes quite clear why so many Americans are struggling to make their credit card payments.

If you simply can’t afford your credit card payments, know that you do have options:

• Contact your lenders and explain your situation. If you recently lost your job or were laid off you can always request that your lender waive your fees, lower your monthly payment or set up some kind of payment plan that will allow you to better manage your debt. Persistence is key when it comes to negotiating new terms with your credit card company. Ask questions and demand to talk to a manager or supervisor if you are having no luck working out alternate arrangements.
• Consider debt forgiveness. If you have no means of paying your entire debt, you can often negotiate debt forgiveness. Debt forgiveness involves paying off your credit card for less than you owe. For example, if your credit card debt is $10,000, your credit card company may forgive half of your debt, thereby allowing you to pay off just $5,000 of that debt. However, it is important to understand that the debt forgiven will be reported to the IRS as taxable income. In other words, that $5,000 worth of forgiven debt will be taxed come tax time.
• Consider debt consolidation. If your credit is still strong, and you recognize impending trouble, you may be able to consolidate your credit card debt into one, easily manageable monthly payment.  You may be able to consolidate onto another credit card, or take out a personal loan to accomplish this. Reconsider using your home’s equity to consolidate this debt, though, as your inability to repay your loan could cost you your home.