Isn’t it Time?

About a week ago I received a letter from my credit card company informing me that they were raising my interest rate. There was no reason given. Since I don’t carry a large balance, and I always make my payments on time, I knew this wasn’t because of anything I had done.  More than likely, it was the result of what I mentioned in an earlier newsletter-that credit card companies are raising rates on those who do pay in order to cover their losses from those who don’t.

 I had no intention of paying the higher interest rate so I called my credit union to ask about the interest rate they charged on their card because I recalled an email from them that offered what sounded like a better rate. Fortunately, they offered to issue me their credit card at a rate that was over 4% lower than the other card. Since I still occasionally use a credit card, I decided to take their offer.

 In order to get approval for the new card, the bank had to check my credit report.  The woman checking my report said everything looked good, but asked if I knew that I had an outstanding American Express charge for $1. I was surprised to hear that because I haven’t had an American Express card since 1984!

 I had ordered my credit report in December to check, but I hadn’t noticed the American Express information. The first thing I tried to do was call the credit reporting agency, but since my credit report was over 90 days old, I couldn’t get through the automated system. So, I quickly got on line and ordered an updated credit report. Sure enough, there it was- American Express $1. Furthermore, the right hand column stated this would be on my credit report until 2018!

 Before going through the work of filing a dispute with the reporting agency, I decided to call American Express directly and see if I couldn’t get this straightened out. If they thought I owed them a dollar I would certainly send them a buck to get this off my report. I was able to get through to a  customer service person who was very helpful. The woman on the other end explained that the $1 on my credit report was a mistake. She explained that they had recently updated their security codes, and for some reason, information was being imported to reports that should not be passed on. She assured me that she would remove the charge but explained it could take up to 90 days to be removed from my credit report.

 Even though this was a small mistake, it could have been much bigger. What if a couple of zeroes had been added on to the $1 making it a $1000 mistake? I wouldn’t even have known about it if I hadn’t applied for the lower interest card.

 One of the first steps in the process of cleaning up your finances is to get a current copy of your credit report, and go through it to make sure everything is accurate. If you haven’t done this, don’t you think its time? You can get your free credit report once a year from www.annualcreditreport.com. Make sure you get a copy of all three of your reports, and go over each one to make sure the information is correct. This is even more critical if you are considering applying for a home loan or any other purchase that requires credit.

Buyer Beware

With the economic downturn, more and more people are struggling to make their monthly credit card payments. In fact, the number of credit card delinquencies is up over 7 percent.

 

What this means for the credit card companies is that their profits are shrinking. When credit card holders don’t make payments, credit card companies don’t get paid. As you might guess, they don’t like that.

 

As a result, the credit card industry is coming up with other ways to get their money. And, since they are not getting it from those card holders who aren’t paying, they’re finding ways to get their money from those who are continuing to pay.

 

One of the things they are doing to lessen the risk of more defaults is cutting credit card limits on cards. Even more concerning is that sometimes the credit limit is cut below what a cardholder owes. For example, if you owe $3000 on your card and your limit is $4000, your limit could be cut to $2500! If this is the case, your account would be frozen-no more credit.

 

In fact, close to half of the credit card companies recently cut back on credit card limits.  Believe it or not, this is legal. At least it is legal until this summer when the new credit card rules go into effect.

 

Credit card companies are also raising interest rates. If you are a card holder who is considered at “high risk” for defaulting on your payments, you can almost bet you are in line for an increase in your APR (annual percentage rate). You can fall into this high risk category by simply being late on a payment such as a car payment or mortgage payment.

 

So, my suggestion to you as a credit card holder is “Buyer Beware”.  The next time you take out that credit card to buy something, take a minute to think about it. Try asking yourself a few questions such as: Am I close to my credit limit? Can I afford this if my interest rate suddenly goes up next month? Is there a way I can pay cash? Am I able to pay this charge off in full with my next payment?

 

We are living in uncertain economic times. Whether they call it recession or depression, this is not a time to overuse credit. The best thing you can do is make a plan to pay down your credit cards as quickly as possible. You can no longer depend on the credit being there or of the terms that you’ll be obligated to in order to pay it off.

 

In my next newsletter, I’ll share some strategies I used to pay off debt. Stay tuned.

 

 

To Your Prosperity,

Debra

www.DropYourDebtFast.com

 

 

 

 

 

 

 

What You See Is What You Get

  

Around the first of the year, I decided to order a copy of my credit report. Since over a year had passed since my last request, I knew I was eligible again for my free annual credit report.

 

The main reason I ordered my current credit report was to check to make sure that there was no inaccurate information, or mistakes, that had made their way into my report in the past year. Believe me, this can happen. All it takes is for someone to transpose a number on your social security information or type in an incorrect letter in your name. Even though such errors are not intentional, they can have a negative impact on your credit score just the same.

 

These errors can be corrected, but unless you know they are on your report in the first place, there isn’t much you can do about it. That is why I think it is important to take the time to order your credit report and go over each item. If you find an error, you can take the steps to get it removed. This may take a little time and communicating with the credit agency. Since your credit score is determined by what appears on your credit report-whether right or wrong-it is up to you to make sure the information is correct. In other words, in terms of your credit score, what you see is what you get.

 

I should point out that I actually ordered all three copies of my credit report. There are three primary credit reporting agencies (Equifax, Experian, and TransUnion). The credit reports from each of these agencies may include different information so it is a good idea to get each report. By the way, they may have different credit scores too.

 

If you’re looking for a quick way to order all three copies of your free credit reports as well as your credit score, you can simply click the following link.

 

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Otherwise, you can contact www.AnnualCreditReport.com and order your credit reports.

 

One of the many benefits of cleaning up your credit report is that you can save money in interest by raising your credit score. If you are considering buying a new home, refinancing, or purchasing any large ticket item that will require financing, you’ll definitely want to take a look at your credit report.

 

 

 

To Your Prosperity,

Debra

www.DropYourDebtFast.com

Considering a Balance Transfer?

With the economy in trouble and credit becoming harder to get, getting out of debt is more critical than ever. If you are carrying more credit card debt than you can pay off each month, now is the time to dump it.

 

Even if you don’t have the cash to pay off your debt immediately, you can still take steps that will help you pay your debt down faster. One thing you might consider is a balance transfer.

 

A balance transfer might be just what you need to lower your interest rate so you can apply more of your hard earned dollars to the principal. If you shop around, you’ll probably be able to find a credit card company offering a lower rate than what you’re currently paying. You might even be able to find a 0% balance transfer rate for new customers like yourself.

 

Once you find a lower interest rate offer, there are some factors to consider before you sign the dotted line. First off, watch out for what is known as a “teaser rate”. This is a low introductory rate that only lasts for a short time and then jumps to a higher rate. This could leave you with a higher rate than you have now. Make sure you find out how long the low rate lasts.

 

Another thing to look for is whether there is a balance transfer fee or transaction fee. The standard balance transfer rate is 3% even though some credit card companies charge more. Make sure you know exactly what the balance transfer will cost you.

 

You need to be aware that some credit card companies process balance transfers as cash advances. You definitely don’t want that to happen because cash advances usually don’t have grace period which means that the principal is accruing interest daily. So, be sure to ask how they process the balance transfer.

 

Balance transfers can be a smart financial move that can help you pay off credit card faster and pay less interest if you do your homework. Just make sure you avoid all the possible pitfalls outlined above.

 

Oh, and one more thing. If you are able to transfer your entire balance from one card to a lower interest card, make sure you cut up the first card and close the account. That way you won’t be tempted to start using that card again, and you’ll really make some headway toward dumping that debt.

 

If you’re interested in finding out more about the system I used to eliminate 100% of my debt, check out my Drop Your Debt Fast guide at www.dropyourdebtfast.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Debt Danger Zone

 

 

Credit card debt is almost looked on as a fact of life anymore. Having it is the norm rather than the exception. Like most things that become commonplace, having credit card debt is no big deal. Right?

 

Well, maybe and maybe not. The answer is not as simple as it seems because there are many factors to consider. Each person’s particular circumstances are different, and what is excessive debt for one person might not be for someone else. A person might not have what seems like too much debt, but if they suddenly lose their job, that debt might look very different.

 

Even though there are different ideas and opinions about how much debt is too much, there are some guidelines to help you make that determination. The Consumer Protection Agency has come out with eight indicators to determine if you are at risk of having too much debt. The following indicators will help you to know if you are nearing the debt danger zone.  You may be in the debt danger zone if you:

 

·        Have to use your credit card to pay for necessities like food or gas

·        Have a savings account that is depleted with no prospect of adding to it

·        Have only been able to pay the minimum balance on your credit cards over the last six months

·        Are juggling several credit cards to keep up with debt payments

·        Are over 50% of your credit card debt limit

·        Have been using your credit card for cash advances to live from  month to month

·        Are paying an increasing amount of your debt obligations with credit cards

 

If you’re experiencing firsthand a few or more of these, you’re not alone. Many people who are struggling to pay off credit card debt are also struggling to pay their car payments and the monthly mortgage payment.

 

If you’ve determined you’re in the “debt danger zone”, your next step should be to ask yourself what you’re going to do about it. Consider your options and take action.

Have You Reached Your Limit?

With the price of almost everything on the rise, consumers are pulling out their credit cards more often in order to “make ends meet”. A recent report said that revolving credit (that includes credit cards), has seen an 8% growth rate in the past few months. This is the fastest growth rate for credit in seven years.

The result of this increased use of credit cards is that individual credit card balances are growing as well. That means that the required minimum monthly payment, which is based on a percentage of the balance, is going up and putting even more strain on that already squeezed monthly budget.

Understandably, this is why more and more consumers are falling behind on their monthly payments. Credit card companies don’t like this because it impacts their bottom line…profit. Late last month, American Express issued a warning that their customers were falling behind on their payments. This got the attention of the Wall Street people who came out with their own warning saying that credit card companies may have to lower their projected earnings for 2008.

What followed was a move by some of the credit card companies to take action to lower their risks. First, they reduced the maximum amount of credit extended to an individual (Washington Mutual and Wells Fargo recently cut credit limits by up to 10%). In addition, they raised credit card interest rates and began cutting back on the number of balance transfers they would allow.

The credit card companies were strategic in the way they approached this because they targeted those individuals who they thought were most at risk for default. For the most part, they focused on individuals who: 1) Recently made large purchases relative to their credit limit, 2) Live in California, Arizona, or Florida (the states hardest hit by the credit crisis), 3) Own a small business in the real estate industry.

Hopefully, you don’t fall into any of those categories and weren’t impacted. Even if that seems to be the case, I suggest you might want to double check your credit card limit before making any big purchases. Credit card companies have thirty days to notify you of any credit limit cuts. That means you might use your credit card for a purchase without realizing your limit has been lowered. You could end up being hit with extra charges and fees for exceeding your limit.

As the credit card companies continue to struggle to maintian their profit margin, you can probably expect to see credit get tighter and more expensive. You’ll proably also see more restrictions placed on the issuing of credit. As you can tell from their latest actions, credit card companies can “change the rules” to protect thtemselves whenever they think they need to. Just keep that in mind the next time you reach in to pull out that plastic.

 

If you are interested in eliminating your debt for good, check out Debra Moore’s Drop Your Debt Fast guide at www.dropyourdebtfast.com.

Tell Them To Take A Hike

A while back, a co-worker confided in me that she was shocked when she opened her monthly credit card statement.  The interest rate on her credit card had jumped to 28%, and she couldn’t understand why.

I asked her if there was any chance that she had recently been late on any of her other payments.  She thought about it for a few minutes, and then said she hadn’t.

The reason I asked her if she had been late on any of her other payments is because of something called universal default.  Universal default is a term used in the credit card industry that can mean big trouble for the consumer who happens to be late with one or more payments.  It doesn’t matter if it is a utility bill, a mortgage payment, or a car payment.  If you are late on a payment, the credit card companies look at you as being at higher risk for default on your obligations, and they can increase your interest rates.

You may wonder how the credit card companies know you are late on one of your other payments.  Well, the fact is, these companies make a habit of reviewing your credit report on a regular basis.

However, my co-worker’s problem wasn’t a result of a late payment.  A few weeks after she told me about the hike in her interest rate, I ran across an article which shed some light on what had happened in her particular situation. The article was entitled, “A Credit Card You Want To Toss”.  The subtitle read, “Bank of America abruptly notified cardholders in good standing their rates would skyrocket if they didn’t opt out fast….”.  The article went on to explain that Bank of America had sent letters telling cardholders that their rates would more than double-to as high as 28%. Some fine print at the end of the letter informed the cardholder that the letter was an amendment to their original credit card agreement, and it gave an 800 number to call.

Sure enough, when I asked my co-worker which company had issued her credit card, she said that it was Bank of America.

Unfortunately, my co-worker didn’t think she had any options, so she kept her Bank of America card with the 28% interest rate. One option would be for her to transfer the balance to a card with a lower interest rate if she couldn’t pay the card off right away.  A better option would be to pay off the card, close the account, and tell the credit card company to take a hike!

Best Wishes for a Debt Free Future,

Debra (www.dropyourdebtfast.com)

If Not Now, Then When?

Getting out of debt is probably more important now than it ever was.  Why?  For one thing, the value of the dollar is falling.  As a consumer, that means it will take more of your hard earned money to just pay for the necessities.  Your dollars aren’t going to go as far.  This affects everything in terms of your finances.  In addition, the price of many things you buy is increasing.  For example, take the price of gas.  When you’re paying more to fill your gas tank, you have less to pay down your debt.  The money that you use to pay those credit card payments, could be going to other things-including savings.

It is easy to put off tackling your debt.  You tell yourself that you’ll start next month, or you’ll start once you get your tax return.  But, I’m here to tell you that there is no better time than right now to make the commitment to begin paying down your debt.  If not now, then when?

Debra Moore has written Drop Your Debt Fast:  A Guide to Getting Rid of Debt and Achieving Fiancial Freedom which gives a step by step system for eliminating debt.  For more information visit www.dropyourdebtfast.com.

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