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The high cost of credit card debt.: An article from: Bank Marketing

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CREDIT CARDS AND BANKRUPTCY: OPPORTUNITIES FOR REFORM

Credit card companies will not allow just anyone to get a credit card debt settlement, but if it is necessary, it is possible. Credit card companies will accept a payoff of a certain percentage of your credit card debt as a whole if the circumstances are right and the criteria is met. Here are a few conditions you have to go by before you can get a credit card debt settlement.

A credit card company will look at your credit report and how well you are doing with your credit. If you have bad credit and are not in a position to continue paying your bills, you have made several mistakes on your payments that have racked up your interest rates to a ridiculous percentage, and if you already have several previous late payments, they will probably allow you to pay a percentage of your overall debt to get it paid off. Because of this, you are less of a risk to them, and they will probably, in the long run, be getting the most money out of you that they can.

The reason they will allow or even offer you a chance to get your credit cards paid off with a debt settlement just by looking at how disastrous your credit history is, is because they don’t want you to go bankrupt. By getting you to pay a percentage of your debt off and forgiving the rest, they at least get some sort of payment from you. If you file for bankruptcy, you are left with no debt, and they are left with no money from you. So because you are at high risk of filing for bankruptcy, they determine that they are doing the best thing for their company by having you pay at least a percentage of what you owe altogether.

Going bankrupt is a bad thing for the creditors, unless of course, before you do so, they decide to take your case to court and sue you for not making your credit card payments. In this case, they may deny your request for a percentage payoff, depending on your income and assets. If they do not believe they are going to get much of value out of you by suing you, they won’t do it, and they will probably accept your appeal for a settlement. The credit card company will always go with the option that will get them the most amount of money possible.

Believe it or not, a lot of people that are into their focused career wanted to go back into college and change the way they used their credit card. Credit card companies are set up all over campuses and are targeting kids without jobs and uninformed kids. In the long run, the companies are hoping that the child doesn’t read the terms or services and racks up a hefty balance, so that they are paying it off for life.

A credit card is only a danger if your child isn’t informed on the issues. Like drugs and alcohol, you must inform your child the importance of paying off your student credit card. If they’re not informed on the issue, you may find them racking more debt than you could ever imagine. This is why it’s important that you inform them.

A few key notes that you should supply to your child before they are head off to college are the importance of the APR rate, what bankruptcy can lead you to, and how important your credit score is. If you emphasize these three important factors to your child, he/she may be more informed than half of the college he/she is attending.

The biggest mistake most college students today make is that they have the mindset that they can pick up a credit card and spend, spend, spend, and not have to worry about paying off the bill for a while. They assume that they can pay it off a little at a time until they get a well paying job that will pay it off in full. What they don’t realize is that these credit card interest rates add up very quickly. Every dollar that isn’t paid off in full, the interest rate will be applied to that unpaid balance. So, if you have a $5,000 unpaid balance your interest rate of 20% or so will be applied to this total.

With most student credit cards, the interest rate will usually be a little higher than most credit cards. This is because it’s a child’s first credit card and he/she has to prove that they are responsible adults. If they’re not responsible with their money, they will find that their future will soon lead to bankruptcy.

In the long run, a parent must inform their student that a credit card isn’t necessarily a danger but they should inform them how important it is to pay off their credit card. They must enforce that they should only spend what they can afford and to treat the card as if it were cash. If these steps are applied, a parent and child can sleep well at night.

Handling Debt Consolidation

The biggest concern of the US today is its ever-increasing credit card debt, which now tops over $1trillion. According to ARA, the average American carries about $8500 in debt on credit cards. Numerous sites now provide free personal credit card debt consolidation services to enlighten the consumers about the looming danger of debt and help them to get out of their credit card debt. The goal of these sites, some of which are state sponsored, is to eliminate credit card debt and create a debt free nation.

All unsecured debt consolidation qualify, for consolidation of credit card debt services. Debts created on credit cards, store cards, lines of credit, medical bills, judgments, taxes, collection accounts, charge offs, personal loans and old due utilities are some unsecured debts. It is always easy to bring down your credit card debt by refinancing your house. However, this way you will put your house at risk. Look for the safest alternatives to free services credit card debt, bankruptcy and foreclosure.

The credit card industry has widely disparate interest rates, which means that consumers spend thousands of dollars annually just to pay interest on debts incurred on credit cards. Consumers who are carrying a huge amount of debt on their credit cards or even those with modest credit card debt at high rates are turning to companies like Finance Box. This company helps consumers to consolidate their debt into lower and fixed rate loans.

The Internet is providing fast, convenient and solutions that really work well. Numerous companies like Finance Box work with thousands of lenders on the net. Consumer information received by the company drives through company search engines, which evaluates consumer needs, and match them to a lender, who meets the specific requirements of the borrower. This gives these consumers an edge over the ones who deal with a handful of lenders on their own. Consumers save a lot of time and money spent on many phone calls or personal calls. This process fast tracks the process of free credit card debt consolidation, and the consumers normally receive a call from the matched lending company within 24 to 48 hours.

While some people may think credit cards are not the way to go when you are trying to repair your credit, it is important to realize if they are used in good taste, they are an excellent way to fix your bad credit. You see, even if you have poor credit, if you ever want to build and repair your damaged credit you have now, you will need some sort of credit to show creditors that you have learned from your mistakes and are on the road to recovery.

The problem is finding someone who is willing to give you a new start. This is where the Centennial Gold Credit Card comes in handy. This credit card is specifically for those looking to repair their credit. This credit card comes with a lower than usual APR, especially when it comes to cards for people with poor credit. However, there are penalties of course, as with most credit cards. If you were to default on your payments or not make a timely payment twice within six months, you will face a stiff penalty. The general APR is fixed at 9.9%. However, if you default twice, it becomes 19.9%.

Furthermore, the Centennial Gold Credit Card comes with a variety of fees and charges during the first year of use. For example, you will be charged a fee of $48 annually and to set the card up you will be charged a $29 fee. Then you will be access a fee monthly, called a participation fee, which costs $6, and a $95 program fee.

However, fees aside, it is the perfect credit card for those wanting to fix their bad credit. Your credit line will continue to rise as you prove yourself credit worthy over time. The card also comes with a variety of benefits such as security and protection against fraud and internet services. However, the greatest benefit is being able to get back on the right financial track after experiencing a set back with bad credit.

Many Americans are asking about a stimulus program to help the average citizen. People today need help with their rent and mortgages. Even keeping food on the table has become a challenge with grocery prices skyrocketing over the past year.

Previous economic stimulus packages have sent rebate checks directly to taxpayers. Most of this money paid directly to the people was simply forwarded onto creditors to pay down debt. So the previous attempts at stimulating the economy simply sent money into the pockets of the banks and credit card companies. The current stimulus plan does not contain any provisions to send money directly to the people, and the debt balance for most people continues to grow.

For a person with overwhelming debt, any stimulus received would be used to pay down that debt. Without the government’s help, many people are finding that they can create their own personal stimulus package by completely eliminating 100% of their debts from credit cards and personal loans. Instead of waiting for help, they are taking responsibility for their own financial future. Of course, personal responsibility is what this country was founded on.

Without debt, and without the monthly credit card payments, hundreds of dollars per month are saved on principal, interest and other fees. For some people, this can be thousands of dollars per year in savings. It could also be the difference between financial comfort and bankruptcy.

A debt elimination program is not applicable to secured debts such as mortgages and auto loans. Student loans and medical bills also do not apply. But without the credit card payments, extra money would be available to help pay for other obligations in life.

The debt elimination program is not for everybody. It is imperative that some time be set aside to understand just how and why the debt can be wiped clean. An elimination program is not bankruptcy, consolidation, or a home refinance. Having a basic understanding of the premise of the program will also remove any fear that someone has in regards to proceeding with this debt relief method.

A person does not need to become a lawyer to understand this process. You just need to be open to some unfamiliar information. This is time well spent considering the thousands of dollars of debt that can be eliminated. There is also no cost to obtain this understanding, for this is not secret information, just hard to find. You will not be spoon-fed this knowledge from our main information sources, such as television, newspapers, co-workers, and our parents.

By taking control of your debt, you will initiate your own personal economic stimulus plan. And you don’t need an act of congress to accomplish it. A little knowledge can set you free.

The Dinners Club credit card gave consumers limited credit
that, at times, even surpassed the personal savings of some
participants. It allowed them to buy items they usually
could not afford if they were to make a straight cash
purchase. It also provided the convenience and safety of
not having to carry large amounts of cash.

On average, American households possess 4 credit cards or a
total of 13 payment cards if debit cards and store cards
are included. There are, actually, 1.3 billion payment
cards of assorted types in circulation in the United States.

But, if you think that credit cards have made the lives of
modern American consumers easier, you may be wrong…

Statistics show that the average credit card debt for each
household in the U.S. is $4,800 per month. Also, there were
1.3 million credit card holders declaring bankruptcy in the
year 2003. This figure is almost guaranteed to decrease
since the change in bankruptcy law. A filer is required to
pay back a portion of their debt if they are financially
able. There are many other changes, mostly for the benefit
of the credit card industry and you can find more
information at:

http://credit.about.com/cs/legal/a/040601.htm

And if you still consider yourself unaffected by credit
card debt, then consider this: upon retirement, most
Americans can only expect to receive about 37% percent of
their annual retirement income because of prior debt
payment. This will leave many individuals depending on the
government, family and charity for economic survival.

These are some scary facts. So before you find yourself in
a position of economic uncertainty, it might be wise to
evaluate your spending and current credit card debt.

If your credit card debt exceeds what seems to be a
reasonable level, you may want to consider credit card debt
consolidation.

So what is credit card debt consolidation?

In a nutshell, credit card debt consolidation is taking all
your credit card payments and consolidating them into one
monthly payment. This way, you don’t have to worry about
managing the payments individually. Aside from this
advantage, it may also provide you with the following
additional benefits:

- Reduce interest payments
- Waive late and overtime fees
- Reduced monthly payments
- Debt relief in a shorter time
- Credit improvement
- Save more money in the long run

There are actually two major types of credit card debt
consolidation…

You may want to consider a Credit Card Counseling firm.
They assist consumers by consolidating all their monthly
payments into one single payment and then dispersing this
to the creditors on behalf of the consumers.

The other type is through a home equity loan or other
secured loan. This is done by exchanging an unsecured debt
(such as
credit card debt) for a secured debt (a debt backed by
specific assets such as real estate).

Now, credit card debt consolidation isn’t a magic balm that
will drive all your credit card debt malaise away. But, it
will make paying all your debt easier and might save you
money in the long run. Definitely an alternative worth
considering…

Even though the language used on credit card documents is complex, it is important that you understand it. It is something you agree to, and you don’t want to agree to something you don’t understand. Most credit card companies don’t have your best interests in mind, and this is why it is important to protect yourself. Most people are under the false assumption that credit card companies will only raise interest rates when you are late making your payments. Unfortunately, this is far from the truth.

With the average American family owing $10,000 in credit card debt, the industry is one of the most profitable in the world. As the minimum monthly payments are increased, this will insure that the credit card industry earns billions of dollars each year. The new bankruptcy law making it harder for people to get out of financial trouble will insure that the losses suffered by the credit card companies will be greatly reduced.

Many credit card companies will look at your credit report for any negative information. If they find it the interest rate on your credit card will be increased, often without your notification. Unless you read your bill carefully, you will probably not notice. Negative things on your credit report could be far more than just late payments. Bankruptcy or other problems may also be used as a pretext to increase the interest rate on your credit card. Your interest rate could be raised for something as frivolous as having too many accounts, or having too high of a balance.

This is unfair to the customer. Your interest rate shouldn’t be raised for something that has nothing to do with your credit card. If you find yourself in this situation, the first thing you want to do is call your credit card company and demand that the interest rate be lowered. If you are making your payments on time, the company has no reason not to lower it. If they refuse you should switch to another company. The market is highly competitive, and you shouldn’t have to stick with a company which raises the interest rate for any reason.

You should also check your credit report on a regular basis. It may have errors on it which can cause your interest rate to increase. It is also important to carefully read your credit card statement each month. If you see something which looks strange, immediatley call your credit card company to ask about it. When you apply for a credit card, read the contract carefully and ask about the interest rate and what causes it to increase.

Credit card companies make large amounts of money from people who don’t read their bills or contracts. It is your responsibility to make sure the information on your bill is accurate and correct. Credit card companies are prone to making mistakes, and will put clauses in their agreements which allows them to earn more money from their customers. It is important to check your information carefully to make sure there are no errors.

The best approach to adopt to eliminate credit card debt is to have your excessive debt discounted. Sometimes, credit card companies accept about 50% or less as payments for the debt if they are convinced that you are heading towards bankruptcy. So write a letter to the credit card company explaining your situation and how you intend to pay off the credit card debt. Including the point that you plan to file for bankruptcy, and intend to settle with willing creditors will compel them to agree with you, lest they be left with nothing!

When paying yourself out of debt, it is always better to pay the high-interest credit cards first. This means that if you have three credit cards, you could pay the minimum for the two cards with lower interest rate. If you allot $300 per month for paying credit card dues, you could pay $60 for two cards as minimum payment. You then pay $180 for the remaining high interest card. Then once one of the lower interest credit card debts gets covered, you pay only $60 to the remaining of the two and $240 to the high interest credit card. This way, you can pay off credit card debt quickly.

Switching to a credit card with a lower interest rate is a great way of eliminating credit card debt. There are many low interest credit cards in the market nowadays; some also offer introductory 0% interest for your first twelve months. Once you open an account in such a credit card company, you have to switch your balance to this 0% bank account. There will be no interest incurred in this account, and so the money you used to pay for interest could be used to pay the actual debt you have with the credit card company. These regular payments will help reduce your debt faster.

There is no point in only making minimum payments to your credit card payments. You have to pay part of the principle, and not only the interest when paying monthly installments. The more of the principle you pay, the lesser your interest turns out to be. You will feel the difference when you see your reduced credit card bills.

If all these fail, you can always turn to a credit card debt consolidation loan. Here you take a debt consolidation loan that will cover all your credit card loans. The credit card debt consolidation loan is usually of a lower interest rate, and can be paid over a longer period. The consolidator will first assess your financial position, and approach your creditors to negotiate for lowered interest rates, and a longer period to repay the loan.

The credit card company usually obliges to this as they prefer a small payment against no payment! Instead of you paying all the credit card companies their monthly payments, you just have to make a single payment to the debt consolidation company. It is up to them to disperse the money to your creditors. With this, you rid the hassles of facing your creditors every month.