Author Archives: financialman - Page 10

Getting Out Of Charge Card Account Debt

Posted by on May 29, 2011 No comments

Debt is the hottest topic on personal finance blogs around the world. Why? I would venture to guess it is because so many consumers are drowning in it. The unfortunate truth is that few consumers care to read about debt until it has already had a negative affect on their financial situation. This can make the final solution to their debt problems even more difficult to hear about.

I’m no stranger to debt. I had been managing school loans, vehicle loans, and a few small charge card account payments since I was 19, and I was successful in keeping a clean credit record. Then a few poor life choices left me responsible for over $30,000 in charge card debt at age 24. With nothing tangible or memorable to show for my efforts, I could have become bitter. Maybe I could have filed for bankruptcy (this was before the laws changed considerably.) Ultimately, however, I chose to consolidate, reduce the rate, and pay those debts off early.

Why am I telling you all of this? Two reasons: (1) It lends credibility to my view on debt and repayment. (2) To keep you from throwing things at me when you read the next paragraphs:

The number one question I hear from people in debt is NOT: “What’s the best way to pay this off?”

It is usually: “How do I get out of this debt?”

Note that in their wording, they are usually implying that they are wanting to get out of their obligation of the debt, though not necessarily through repayment. Google searches for popular debt-related terms bring up scads of results for help in “Getting out of debt” — all of which seem to give a quick and easy way out. A few clicks and some reading will tell you, however, that the scheme is all the same, and repayment is almost always involved.

So to answer the question of “What is the Best Way to Get out of Debt?” — my answer is simple: Whatever way is quickest, easiest, and costs you the least amount of cash, while at the same being perfectly legal and moral. Ditching your financial obligations by having a cousin co-sign while you walk away is NOT the best way. Making a conscious decision to default when you could be paying something (anything) is NOT the best way. Looking for answers from the sky for a way for you to not have to repay a debt (when you could if you wanted to) is NOT the best way.

I am saying this with the full understanding that someone reading this will have a unique situation that warrants blowing off a loan. I will guarantee that a handful of others will insist that they had no choice. I am, therefore, not talking to you, specifically. The $30,000 in debt that I repaid gave me zero benefit. It was the product of putting my name on a few accounts that were taken advantage of in the most grievous of ways. It would have been easy to say, “It wasn’t my debt,” default and start over 7 years later, instead of taking almost 6 to pay it all back. For this reason, I am speaking to the majority of those suffering from excessive debt who may not feel the benefit of their spending, realized they spent more than they could truly afford, or who simply got the short end of the debt stick. A loan is a loan, which is almost always best to pay back. Period.

I realize that if everyone paid back their loans, small claims courts would shut down, and debt collectors would lose jobs. Search Engine Optimization would change dramatically, and books on finance would lose their place among the Best Seller’s List. Thankfully, there will always be those who won’t pay up. But for the rest of us, there is still one answer to the debt problem: Make payments – no matter how small. As painful as it feels right now, no amount of money can buy the integrity and honor of making good on a loan.

This article is brought to you by www.JEMCreditCards.com – Not Just Credit Cards, We Create Financial Stability! compare credit cards including Discover cards, Chase credit cards and much more!

Credit Cards Have Dirty Little Secrets Too.

Posted by on May 28, 2011 No comments

The average American has around 8 credit cards and is carrying roughly $9000 in credit card account debt. If that’s not bad enough, the charge card account companies are involved in what can only be described as a conspiracy to keep Americans in debt, permanently.

I watched an incredible PBS documentary online last night called “Secret History Of Credit Cards”. You can watch the 5-part eye-opener here at your leisure. But if you don’t have an hour to spare, here are some of the biggest dirty secrets for you. You may want to sit down for these.

Dirty Secret 1 – Minimum Payments = 35+ years of repayments.
The minimum monthly payment used to be 5%. That caused a problem for the charge card issuers. Folks were being forced to pay off their balance too quickly, PLUS the cost of that 5% minimum made people wary of running up high bills. The solution was genius. Institute a 2% minimum payment. Not only will consumers splurge more because they have to pay less back each month, but it adds thousands of dollars in interest and increases the repayment time by DECADES. Sneaky doesn’t even cover it.

Dirty Secret 2 – A late payment to ANY creditor can skyrocket your interest rate.
I’m not talking here about just your charge card account payment being late. If you miss a car payment, mortgage payment, cell phone bill, in fact any payment, your APR can automatically increase to the massive default interest rate, which is usually 25-35%. Even if you’re ON TIME with your credit card payments, a late payment anywhere else can instigate this penalty. It’s known as the “Universal Default Clause.” Supposedly, it protects the charge card issuers from folks who are credit risks. Like these multi-billion dollar companies need protection from the little consumers.

Dirty Secret 3 – There is NO LIMIT put on late payment charges.
This is something no other industry could get away with. You’d think there would be some kind of law preventing the banks from charging loan shark penalties, but there isn’t. Be just one hour late for a payment and instead of a $5 or $10 fee (which, prior to the 1996 Smiley vs. Citibank case, was the limit), you’re looking at least $30. Mine charges $36. Many financial analysts believe that with no cap on these fees, they will easily rise to $50-$60 in the next year. And remember, when you’re late they’re also killing you with a huge APR. Double whammy.

Dirty Secret 4 – There is also no federal limit on APRs.
Don’t you find it odd that in a time of very low interest on anything from car loans to mortgages, charge card companies can hand out interest rates that embarrass loan sharks. Well, it’s not unusual to see 34.99% annual percentage rates, especially as a default rate, and the reason is simple. Most credit card account companies reside in states like South Dakota or Delaware. States that have very weak or even no “usury laws”. So, there’s no cap on interest. By law, there’s nothing to stop them charging whatever interest they want. Here’s a map that links to the locations of top 10 credit card issuers.

Dirty Secret 5 – You can often pay interest TWICE in one month.
This one’s called “two-cycle billing” and it’s also a completely legal loop-hole. Let’s say you pay off the balance of your card in full at the end of one month, say April. But in May, you don’t pay off your complete balance. Boom, some charge card issuers will charge you for two months’ worth of interest. Aren’t they lovely?

Dirty Secret 6 – Grace periods are getting shorter…or being eliminated.
Remember the good old days, when you had 25 days to pay off your balance without incurring charges? Well, those could soon be a distant memory. Some banks have already shortened the grace period to 20 days. (Do you know what yours is? It may have changed.) And other banks are doing away with grace periods completely. That means you’re paying interest on anything you buy, the second you buy it, even if you pay off your balance each month. The clock is running folks.

Dirty Secret 7 – Cash advances hit you twice in the wallet.
First, as I’m sure you know, you’ll get a different, higher interest rate applied to your money advances. But you also get hit with a transaction charge, around 2.5%. Even credit card accounts that confidently announce “no finance charges” can still bill you for transaction charges.

Dirty Secret 8 – The fine print is a web of deceit.
Let’s be honest, these days you need 2 hours and a law degree from Harvard to understand the mumbo-jumbo in the fine print. But try and read it if you can. Because this is where the charge card issuer can hide a whole bunch of nasty surprises. The biggest is scarier than Godzilla on crack. Basically, the charge card issuer can change your interest rate at ANY time, as long as they give you 15 days notice. No reason required. Imagine if any other industry worked that way, like your mortgage? While you’re reading the fine print, also check for things like purchase protection, lifetime warranty coverage and travel discounts. These may end when your introductory rate ends. And speaking of that, what does your introductory rate become after the teaser period? It could be more than you bargained for, especially if it’s a variable APR.

Dirty Secret 9 – Good payers are called deadbeats!
Deadbeat – it’s what charge card companies call those folks who are responsible and pay off the balance each month. They don’t like those consumers, not one bit. That’s because they make little to no money off of them. No, charge card companies like you to carry a nice hefty balance and pay only the minimum each month. If you’re one of those people, known as ‘revolvers’, you’re part of the crowd that contributes roughly 90% of the credit card account company’s income. What a crazy upside-down world credit is.

Dirty Secret 10 – You can demand, and get, a better deal.
APR too high? Hate the annual fee? Want a longer grace period? It turns out your charge card company may just have to do your bidding. See, the fees they charge are not considered a necessary cost of doing business, so you can request, firmly, that they be reduced or eliminated. Now, imagine what would happen if we all did that? No wonder they want that one kept secret. And remember, if all else fails, find a lower cost interest rate card and transfer your balance. You have at least that going for you.

This article is brought to you by www.JEMCreditCards.com – Not Just Credit Cards, We Create Financial Stability! compare credit cards including Discover cards, Chase cards and much more!

Judgements That Lead To Become A Landlord

Posted by on May 28, 2011 No comments

There are some things to consider if you are thinking of jumping into the market of being a landlord. Being a landlord can provide you with extra income but does not come without hassles. If you have a property that you are considering leasing out to tenants there are some aspects to consider:

Listing with an agent or advertising yourself

There are many advantages to using an agent. An agent is someone you will hire and who agrees to a certain amount to advertise and maintain your property. He can also help you in finding best home loan Australia so you can make your home valuable. For those who do not live locally, this may be a desirable option. A real estate agent will:

- Advertise and show the property to potential renters
- Prepare any necessary documents/lease agreements
- Ensure that the terms of the agreements are being met
- Collect rental payments
- Arrange for repairs
- Deal with issues, such as noise problems
- Conduct inspections
- Clean and inspect the unit after lease expires

You will need insurance on the property

You will need to take out an insurance policy on the unit in the event that a renter causes serious damage. Insurance companies can offer policies that cater to landlords. These policies can protect you from things such as:

- Lack of payment from the renter
- Damage inflicted by the renter to the structure of the home
- Theft
- Damage to any appliances or fixtures provided by the landlord

The tenant typically will provide insurance for the contents of the unit, which will cover personal belongings or anything with which they entered onto the premises.

Things to consider when deciding on tenants

Landlords can develop a form for potential renters that will provide necessary information. Landlords can ask for the following information:

- Identification
- Income
- References
- Previous housing accommodations
- What is the anticipated length of stay in your unit
- Possibly occupants
- Contact information

It is strongly suggested that, as a landlord, that you contact any references given and discuss your possible tenant to determine if they would be suitable tenants. You can ask questions along the lines of:

- How long have you know this person/family
- Have they been timely in previous rental payments
- Are they capable of keeping your unit in acceptable condition
- Do you believe they would be able to continue to make timely rental payments
- Are there any other details you should be made aware of?

A landlord needs to be careful not to discriminate. You cannot exclude possible renters based on:

- Age
- Marital status
- Children
- Gender
- Disabilities
- Pregnancy
- Race
- Sexuality

A landlord must also realize that you must keep up your property whether you have a tenant or not. Payments on the property will have to continue to be made and if you go for a length of time with no tenant you would be a double mortgage payment – one for the home you live in and one for the rental property and you must be very picky to get a best home equity loan whenever you need.

There are also costs associated with travel expenses, if you do not use a real estate agent, to and from the unit to do inspections, collect payment or make repairs to the property. Repairs can be expensive, especially when carpets or appliances need replacing. The unit will most likely need to be repainted after a tenant departs.

Owning a rental unit can be lucrative, especially if you are able to maintain more than one property but you also need to consider if the hassle involved in caring for these properties is a challenge you are willing to take.

For those who are searching Internet for more information about the niche of forex trading online, then please check out the URL which is mentioned right in this paragraph.

How To Avoid Credit Card Cancellation

Posted by on May 28, 2011 No comments

Some people like to have their credit card available for emergencies — either at home or while traveling abroad. Be careful: that card might not be available to you, just when you need it the most. This article explores the various reasons why your charge card could be canceled on you, along with some tips to help avoid having your own credit card account canceled — possibly without notice.

I speak from experience: while traveling in Australia, I found out — the hard way, in the throes of an emergency — that my credit card had been canceled without notice, months prior.

I’m still here to tell the story though, so my emergency was not life-threatening. But I can’t possibly express the various shades of red I saw when I found out what had happened, and spent countless hours and days on overseas phone calls trying — unsuccessfully — to reinstate the card and rectify the situation.

True Horror Stories

A woman is vacationing in Europe when she discovers that her reward miles charge card is on the fritz. She is stranded and spends hundreds of dollars in cell phone calls to the charge card company and the banks, trying to get out of this bind. There is no retribution granted from the charge card account company who had canceled her card outright. To make matters worse, she loses out on the free companion ticket she had just earned with her rewards.

How about the person who finds that the gas pump won’t take their card? Nothing is amiss: they are in their home town, use their card regularly and responsibly, and maintain an excellent credit score too. But their charge card account is also canceled, without notice. The reason cited? “Something” on their credit report was amiss. However with a spotless credit record, the real suspected reason is that their account wasn’t profitable enough for the credit card account company to keep them on board.

What Gives? Reasons Charge Card Account Companies Will Cancel Cards

With the ability to change the terms and conditions at any time, credit card companies can cut loose card holders who aren’t making them cash, especially the ones who pose additional risk or are a financial drain to the company. And when times get tough financially, charge card companies tighten their belts along with everybody else. Here are some specific reasons why the credit card account company could cancel your charge card account.

Non-Use

This is the most prevalent of reasons why your card will be canceled, and also the most avoidable. Charge something to the card every few months (even something very small), pay it off right away, and you can largely avoid this pitfall.

Don’t settle for a phone call to the charge card account company. I had a special note put in my file that I was abroad and would only use the card rarely, in an emergency. The customer service rep I spoke to said that would not be a problem. Two months later, the card was canceled. My suspicion was that my card got canceled by an automated system and not a human being, so the preemptive phone calls and special notes in the file were worthless.

Your Credit Score Dropped

If your credit score has taken a hit, your credit card account account could be flagged.

Your Debt Increased

If you just took on a large amount of debt such that your credit utilization ratio is teetering, the charge card account company can make sure you don’t get in over your head — by canceling your card and eliminating the chance. (Ironically, this further increases your credit utilization ratio.)

Your Credit Increased

If you just applied for a line of credit or other credit vehicle that increases the overall credit available to you beyond a threshold that the credit company is comfortable with (regardless of whether you actually use that credit), they’ll take themselves out of your equation.

Market Conditions

Anything from house values dropping, to unemployment rising can affect your ability to hang on to that credit card.

Anything Else

Charge card companies like to keep their game faces on, and won’t always reveal the true reason why they are canceling your charge card account. That’s probably how our friend above had their card canceled due to “something” on the credit report, despite their spotless credit record. Ultimately, it boils down to their bottom line. Hey — that’s business. Let’s face it: owning a charge card account is a privilege, not a right.

Your Rights

Credit card account companies are required to give you 45 days notice for making significant material changes to the terms — such as a change in interest rates.

However, canceling cards isn’t actually considered a significant material change, and cancellation without notice is still allowed.

How it affects your Credit Score

More than an inconvenience, the cancellation of your charge card can negatively impact your credit score in a few ways.

Increase in Credit Utilization Ratio

If your credit card is canceled and you are carrying debt elsewhere, then that debt becomes a larger percentage of the overall credit available to you, thus increasing your credit utilization ratio. This decreases your credit score.

Decrease in Credit Longevity

Longevity of your credit vehicles is important; 15% of your credit score is attributed to longevity. If you have a charge card account that is 10 years old and others that are only a few years old, the cancelation of your 10 year old card will have a more detrimental effect on your credit score than the cancelation of one of the newer ones.

How to Prevent Cancelation

Once your charge card account is canceled, talking your way into having it re-activated requires a minor miracle. So knowing what we’re up against, here are a few preventative measures you can take to increase the chances that you aren’t stranded at the gas pump (or in a distant land), idle plastic in hand.

Use it or Lose it

Avoid cancelation due to inactivity by using the card every couple of months. The size of the purchase is irrelevant, and you can pay it off immediately too.

Pay Attention to Ratios

Maintaining a credit utilization ratio below 25% will keep your credit score high.

Focus on Longevity

If you have multiple charge card accounts, pay special attention to the ones you have had for a long time. Losing them will be the most detrimental to your credit score.

Please note that you can do everything right and still end up a victim of credit card cancelation. But hopefully these preventative measures will keep you out of the spotlight and off the top of their cancelation list.

What to do if your Credit Card is Canceled

If the deed has already been done and you’re looking for retribution, here are a few things you can do.

Check Your Credit Report

Order a copy of your credit report from one of the big three credit bureaus (Equifax, TransUnion, and Experian). You are entitled to one free report from each of the bureaus every year. You can also use a free service like Credit Karma. Make sure there aren’t any incorrect postings in there that have affected your credit score through no fault of your own.

Call Them

Nothing is lost (save for some time and possibly a chunk of your patience) by trying to call the charge card company. Who knows — they might take a look at your account and decide you’re worth keeping after all. You never know what you can get unless you ask. (A word of advice: be polite and friendly, and ask for the manager if you aren’t getting anywhere).

I’ve typically used one credit card account for all my expenses, keeping a second card in reserve for emergencies or when my regular card isn’t accepted. (When living abroad, charge cards aren’t infallible to dodgy local systems or tricky time zone glitches.)

But just because I’ve fallen victim to having a card canceled without notice (leaving me in the lurch no less), I’m not going to eschew the conveniences and benefits of charge card accounts that I’ve become accustomed to. To do so would be to shoot my own foot based on principle and anger, and I’m not into self-mutilation. Instead, I’ll make sure to use my backup card regularly and continue to pay the balance off each month. I’ll pay closer attention to the rules and fees, and be sure to stay on the same game page as the credit card companies from now on.

This article is brought to you by www.JEMCreditCards.com – Not Just Charge Cards, We Create Financial Stability! compare credit cards including Discover credit cards, Chase cards and much more!

Dealing With Charge Card Account Debt After The Holidays

Posted by on May 28, 2011 No comments

Here we are about a month after Christmas, and the first charge card account bills from the holiday season are starting to arrive. Many consumers are experiencing a little sticker shock at the extent of their overspending. According to Consumer Reports, shopping with charge cards during the holidays often leads to overspending by an average of 16%. This is part of the reason that the same Consumer Reports survey revealed that 13.6 million Americans were still paying off holiday purchases from 2009 in November of 2010.

The cost of charge card account debt is often a hidden expense, particularly for consumers who are juggling multiple charge card accounts. It is easy to overlook the total interest expenses when they are spread across three, five, or even seven credit card accounts.

But credit card interest expenses add up quickly. Having an average monthly balance of $3,000 may not seem like much, but at a 15% APR, it can cost you $450 a year.

Now is the time to assess the situation and make a plan to pay off the debt.

3 to 24 Months: Transfer Your Balance

If you know you can’t realistically do it in two or three months, seek out a credit card that offers a 0% balance transfer. With a balance transfer, you pay a small transaction fee, typically 3%, to move your high-interest debt to a card that charges no interest for anywhere from 12 to 24 months.

During this time of no-interest repayments, all payments you send to the charge card will reduce your debt directly. This will help you pay off the holiday debt faster than sending a minimum payment each month and paying interest all year long.

Balance transfers are a good option for consumers with good credit, but these offers should be used with caution. Refrain from running up new debt when you transfer the balance to a new card — and focus on paying down what you already owe.

The best way to deal with credit card debt after the holidays is not to have any. Many consumers find themselves digging for a credit card during the holidays. However, the consumers that come out ahead are the ones that only spend what they know they can pay off by the end of the month! Remember improper use of credit cards can lead to severe financial hardships including bankruptcy so it is important to use credit cards responsibly even during the holidays!

This article is brought to you by www.JEMCreditCards.com – Not Just Credit Cards, We Create Financial Stability! compare credit cards including Discover cards, Chase cards and much more! Don’t need a credit card? Enjoy our free open to community blog where you are free to read and write articles on the personal finance topic!

A Few Tips To Help Consumers Get The Most From Credit Cards

Posted by on May 28, 2011 No comments

No amount of credit card reform is going to help if you don’t spend the time to make your credit card accounts benefit you. As with many things, credit card accounts can be wonderful if you are disciplined, but they can also backfire and create a huge financial hole for you to dig out of. (If the latter is more likely for you, may I suggest measures such as freezing your charge card?) Here are six ideas for how to benefit from your credit card.

1. Eliminate Annual Fees

You likely looked into this before you applied to your current card of choice, but is your charge card account still free to own? Many institutions started charging annual fees, and there’s a chance that yours does now as well. With companies likely adding the annual fee as a line item on one of your monthly bills, it may go unnoticed — so double check to make sure. (See also: Credit Card Fees: Hidden and Otherwise)

2. Pay Your Balances Off Each Month

I contemplated whether to put this one in, because it’s obvious. But it’s so important that everyone needs to hear this again and again. Don’t use a charge card unless you can pay it off each month. Got it? Now go read it again, and follow the rules.

If you don’t believe that it’s possible to live without borrowing, just remember that consumers were fine before the invention of debt! If you can’t afford it, just don’t buy it. (See also: How Much Does Your Charge Card Debt Cost You)

3. Stick With Cash-Back Rewards

There are zillion different ways to redeem your charge card rewards, but it’s probably best to stick with getting cash (or perhaps a statement credit) unless you were going to need to use it anyway. For example, getting a free airline ticket is good if you were going to buy the exact same ticket for the exact same price, but getting a $50 gift card and ending up buying $73.28 worth of useless junk is not worth it.

4. Know All the Benefits You Are Getting

It’s always a good idea to know every benefit that your card is providing. In addition to reward points, some cards get you into airport lounges, while others will double the warranty of a product. By knowing all the benefits, you won’t be paying extra for something that you can get for free. For example, one of my charge card accounts provides rental car insurance.

5. Write Down Why You Applied for the Card in the First Place

A good way to remember all those benefits is to actually write them down in simplified form somewhere, so you can look at it once in a while to refresh your memory. I know it is a bit of work, but I applied for one of my cards eight years ago. Would you remember all the details from eight years ago? Or let’s say you applied for a 0% balance transfer credit card. Now that the introductory 0% interest rate period is over, do you still need to keep it?

6. Use Charge Card Accounts Whenever Possible

This is only for those who can pay off the balance of course, but remember to use your credit card every chance you get! I know there are many people who like to make fun of those who use charge card accounts for the smallest purchases, but did you know that it is actually easier (and faster) for both the buyer AND the seller when small purchases are paid using a charge card account? When you don’t even need to sign for a purchase at some of these stores, using a charge card account is a no-brainer.

There are many more ways you can save with a charge card, but if your credit card isn’t working for you yet, start with the tips up above.

This article is brought to you by www.JEMCreditCards.com – Not Just Charge Card Accounts, We Create Financial Stability! compare credit cards including Discover cards, Chase cards and much more!

Page 10 of 88« First...89101112...203040...Last »