The news is full of reports of escalating defaults – on home loans and also on credit card accounts.
Credit card issuers are seeing major losses through defaults, and as a result are raising interest rates, lowering credit lines, raising minimum payments, and adding fees in an effort to bring back their profits. In some cases, they’re dropping credit card limits to less than a consumer’s outstanding balance, triggering over-limit fees as well. This is a practice called “chasing down the balance” – but when they chase it to less than your outstanding balance it can cause serious hardship.
Are these adverse actions by credit card issuers really the result of cardholder defaults, or is the rising number of cardholder defaults the result of the credit card issuers’ efforts to make more profits?
A credit card holder who was barely managing to make a monthly minimum payment of $100 is apt to miss the payment entirely when the minimum suddenly jumps to $150.
According to Bankrate.com, a study done by Synergistics showed that two-thirds of the respondents who received a change in terms had difficulty making payments as a result.
Credit card issuers say they will help. Cardholders having difficulty making minimum payments because of financial hardship should call. According to a Nilson Report, 2.7 million cardholders were afforded some kind of debt relief in 2008. This assistance included temporary forbearance, interest rate reduction, settlement, or a payment plan.
If you really are having difficulties, you should call. Numbers can be found on a web site called “Help With My Credit” and you can also find numbers on your card or your credit card statement.
But experts do warn that you should not make the call unless you really do need the assistance. Where once it was wise to call and ask for a lower interest rate just because you wanted it, now you should not.
Any request for a change will trigger a new look at your credit report and your credit scores. The card issuer may also ask for supplementary information, such as your income, job position, time on the job, etc. The combination of this information could trigger the adverse actions on your account that you were seeking to avoid.
The bottom line: keep up at least your minimum payments if possible, but if a change in terms pushes you beyond your abilities to pay, call and ask for help.
The Ace Pink Prepaid Visa® Debit Card not only gives you the safety and security of using a credit card instead of cash, it gives you a way to donate to cancer research every time you use your card – without spending any additional money.
Last year, Net Spend donated $350,000 for breast cancer research – all because consumers used their Pink Debit Card instead of cash.
Since this is a pre-paid card, you run no risk of overdrafts and have no monthly bills to pay, and Net Spend gives you two ways to participate. You can choose month to month service with a fee of $1 or $2 when you use the card for transactions, or you can choose a monthly fee of $9.95 with no transaction fees.
Fees do apply to ATM withdrawals and certain transactions such as telephone transfers, but you can load funds into your card for free by using direct deposit or by making an on-line transfer from another account. You can also load funds into your card at local distributors – however they will charge a fee.
The funds you hold in your account are FDIC insured, and should your card be lost or stolen, you have the same security that is extended to all Visa® Cards. As long as you notify Net Spend within 2 business days, you will be reimbursed for any and all unauthorized withdrawals / debits against your card.
With the Ace Pink Prepaid Visa® Debit Card you can pay bills on line, make withdrawals at ATM’s, and use the card anywhere Visa® cards are accepted.
Although we advise all consumers to take advantage of our free credit report offers and to monitor their own credit with regularity, no credit check is required to obtain the Ace Pink Prepaid Visa® Debit Card. The only requirements are that you comply with the regulations of the US PATRIOT Act.
When the CARD Act goes into effect in February, credit cardholders will see relief from many of the practices that have strained budgets and even sent thousands into default and bankruptcy.
Credit card issuers will no longer be allowed to use “universal default” to raise your interest rate on one card if you’re late on another. They’ll be prevented from raising the interest rate on current balances unless you’re 60 days late in payments. They’ll be required to give 45 days notice before they can raise the rate on future charges or make any other significant changes to your account.
But some practices will remain unaffected by the CARD Act.
For instance, credit card issuers will still be allowed to reduce your credit limit arbitrarily. Further, unless they’ve used credit data to make the decision, they don’t even have to notify you until after the fact.
The one thing they won’t be allowed to do is reduce your rate to an extent that triggers an over-limit fee. Otherwise, they can do as they please.
According to a study undertaken by FICO, 24 million consumers were subject to credit line decreases in the period from October 2008 through April 2009. Another study that covered April 2008 through October 2008 showed 22 million cardholders as having credit limits reduced.
This means that in the year from April 2008 to April 2009, 44 million credit cardholders were affected by credit line decreases. That’s about 23% of the total population for whom credit report files are kept.
They can also close your account without notice. Credit card issuers don’t like to carry accounts that aren’t making them any money, so if you’ve let your account go inactive or if you’re one of the “deadbeats” who pays your bill in full and on time each time it arrives, they could decide to simply close the account. And they don’t have to tell you they’re doing it!
They do have to notify you if the decision was the result of reviewing your credit report, but they do not have to tell you before they do it.
Having a credit card turned down at the checkout counter is embarrassing, to say the least. Thus, consumers who plan to use a credit card on a shopping trip should stop by their computers before they leave the house. Why? They should check in on their credit card to make sure they still have an available balance – and that the dollar amount of that balance hasn’t changed.
The Mango™ Prepaid Mastercard® Debit Card is the perfect choice for consumers who will load at least $500 per month into their pre-paid debit card.
While there is no activation fee and there are no transaction fees, there is a $5 monthly fee – but it’s waived when you deposit $500 per month into your account.
Loading the card is easy. You can arrange to have your paychecks deposited directly, transfer funds from a bank account, or receive money on line from another Mango Customer – all for free. Or you can add funds at thousands of retail establishments such as CVS and Walgreens for a $4.95 fee.
Cash withdrawals carry a $2 fee, plus any fee charged by the ATM owner.
Mango™ is mobile phone savvy. Using YAP mobile financial services, you can check your balance, see your transactions, or receive money for free. Sending money carries a fifty cent charge, plus any texting fee charged by your mobile service provider.
On line account management and statements are free, as are your calls to customer service.
Mango is the perfect way to enjoy the convenience of using a credit card – without going into debt. And the Mastercard® limited liability provisions apply should your prepaid debit card be stolen – so carrying this card is safer than carrying cash.
No credit check is required to obtain the Mango™ Prepaid Mastercard® Debit Card. However, all applicants must comply with the provisions of the US PATRIOT Act.
If you like to do your shopping and bill paying on line, and enjoy using a credit card for everyday purchases, choose the prepaid debit card that you can use for free. Choose Mango™.
Meanwhile, keep working to raise your credit scores. The first step is to check your credit report for errors, so get your free credit report today.
Choosing your cash-back credit card takes a little more study and investigation than you might think, because the features vary from one to another. In fact, some of them that offer big rewards might not pay off at all – ever.
The first thing to watch for is an annual fee. If you have to pay to carry the card you might have to spend quite a bit just to break even. So unless that annual fee offers some other benefit, such as an extremely low interest rate, you probably want to keep looking.
Next is the kind of cash-back. Is it actual cash, or is it points? If it’s points, how many do you have to accumulate before you can turn them into cash?
Some cards offer cash-back but with a combination of expiration dates and payment thresholds that mean you have to spend a lot in order to ever see the cash back. If the threshold is say, $100 and you’re earning 2%, you’d have to spend $5,000 before you get your rebate. And if your rewards expire at the end of each twelve month period, you could have spent $4,900 without seeing a dime returned to you.
You want rewards that roll over from one year to the next, or that automatically pay out at the end of the period, no matter if you’ve only “earned” $20.
Check to see how you go about getting your cash back – will they automatically send a check or credit your account? Will you have a choice of how to receive it? Or will you need to fill out rebate forms in order to get your money?
If you use your card for business and thus charge and pay off large amounts each month, it makes sense to use a card that rewards you. But be careful, some credit card issuers put a cap on how much you can earn. Some cap your earnings at $300 per year.
Look for restrictions. If the card rewards grocery, gasoline, or restaurant purchases, don’t assume that just because you bought groceries, gas, or a meal that the purchase will qualify. Many of the credit card issuers have significant and surprising limitations with regard to which stores, gasoline outlets, or restaurants qualify.
The bottom line is that if you want to get a card that fits your lifestyle, and will truly give the promised cash back, you have to read all the fine print. It isn’t easy – those agreements are filled with legaleze and the print is minute, but reading it all is the only way to know if you really are going to get what you expect.
The Discover® Open Road Card is a rewards credit card for consumers with credit scores of 700 and above.
With no annual fee, a zero percent interest rate for the first 6 months, and generous Cashback rewards, it makes good sense to transfer your high rate credit card balances with your application, and to use this credit card for purchases.
Rewards points are double when you use your Open Road card for gasoline or restaurant purchases, and as high as 20% when you use your card at top retailers through Discover’s® online shopping mall.
Your Cashback rewards can be redeemed for partner gift cards, Discover® gift cards, for merchandise, for credit to your Discover® card account, or by an electronic deposit to your bank account.
Your Cashback rewards count for even more when you redeem them for gift cards or eCertificates from any of Discover’s® more than 100 brand-name partners.
After the introductory 6 months, you’ll enjoy a variable interest rate as low as 11.99%. Your interest rate will vary depending upon your credit scores and other financial information.
Note that only balance transfers made with your application will enjoy the interest-free trial period. All others will be billed at a variable rate of 23.99% Balance transfers made with your application will carry a fee of 3% while later balance transfers will be billed at 5% with a $10 minimum. Cash advance fees are also 5% with a $10 minimum charge.
The late fee is $19 on balances up to $250 and $39 on balances over $250.
You can avoid all interest fees by making payment for the previous month’s purchase within 25 days of the statement ending date.
Before making application for any credit card, consumers should obtain a copy of their free credit report and read it carefully. Finding and correcting errors before obtaining new credit will result in higher credit scores and more favorable interest rates.
A year or so ago credit card issuers were offering incentives to talk you into taking their cards, now some credit card issuers have been offering bribes to get you to give them back!
The offers came with promises of free gifts, interest-free trial periods if you’ll transfer balances, and rewards programs. When you said yes, you were also rewarded with a sheet of pre-printed checks – some of them filled in with figures like $1,000, $2,000, and even $5,000.
Just put that check in your bank account and go have fun!
But all that was last year.
Now, only a few selected consumers get offers in the mail, or “ready to deposit” checks from their current credit card issuers.
Now credit card companies want only those customers who represent low risk and high revenue. So they’ve been closing unused accounts and lowering credit limits, while increasing interest rates.
Some card issuers, while also using those tactics, took an additional step during March and April of 2009: They offered significant “bribes” to current account holders who would agree to pay off their balance and close their accounts.
The bribe consisted of a $300 pre-paid credit card, and it was offered to card holders who their scoring systems identified as consumers who might go into default in the coming months.
Most of us have been led to believe there is just one score: The FICO score. But this isn’t true. Lenders, insurance companies, and others are keeping dozens of scores on each of us. These are the kinds of scores used to predict which card holders pose the greatest risk.
Other card issuers have been offering similar, but smaller bribes to customers who have gone into default. One card issuer offered a $25 pre-paid card to customers in exchange for brining their accounts current.
This is just one more defensive step being taken by card issuers who are seeing near record numbers of defaults and charge-offs.
Closing accounts is, as you may know, detrimental to consumers. 30% of the FICO score is based on the amount of available credit to debt, and when a credit line disappears, the ratio changes – lowering the consumer’s FICO score.
Since high credit scores are required to get the best rates on credit cards, car loans, mortgages, and even retail accounts, consumers should consider their future plans before voluntarily letting go of any open line of credit.
If you’ve read your free credit report and determined that you need to take steps to build your credit scores, the New Millennium Bank Secured Black Diamond Visa® or Mastercard® could be just what you’re looking for.
The only requirements to obtain this card are that you must be a resident of the United States and have a valid Social Security Number, and you must be of legal age in the state of your residence.
When you carry both cards, you can have a secured credit limit up to $10,000 – and since New Millennium Bank does report to all 3 credit bureaus, every time you make payment on time, your credit score improves.
The funds you deposit for security are fully insured by the FDIC, and of course, using a credit card is much safer than carrying cash. If your New Millennium Bank Secured Black Diamond Visa® or Mastercard® is lost or stolen, you’ll enjoy freedom from liability for unauthorized charges as long as you notify us within 2 business days.
In addition, the money you’ve deposited in our savings account as security will earn interest of up to 3%.
The annual fee for this card is $59 and the application fee is $99.95 for one card or $125.95 for both. The APR for both purchases and cash advances is a fixed 19.5%. Interest is charged from the time of purchase.
When you use this card for purchases you’ll be eligible for extended warranty protection, auto rental insurance, and $100,000 in travel accident insurance.