Banks Only Love You for the Fees You Generate

Posted on March 4, 2010
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After a public outcry about the ever-escalating overdraft fees charged by banks, the government has taken some steps to crack down on these practices. Well maybe “crack down” is too strong – more like “curb”, at least until the banks figure new ways to circumvent the new rules.

Banks make billions of dollars in penalty income from folks overspending on their debit cards. Up til now they never had to ask your permission, they just did it and then charged a fee for it. Sounds useful on the surface, but lots of people would keep spending and rack up hundreds of dollars in daily fees. Isn’t it comforting to see how our banks are always looking out for us?

ATM Card However, starting this summer, banks must get consumers permission first by getting them to agree to “opt in,” to any service covering purchases on a debit card when there is not enough money in their account. Same goes for withdrawals at ATM’s.

So get ready for the aggressive marketing blitz as our friendly banks try to cajole, allure, and even threaten us to accept this service. Lest one think threaten too strong a word then how should we view this except from a Chase Bank letter to it’s customers:

“Your debit card may not work the same way anymore, even if you just made a deposit. Unless we hear from you,” the message, emblazoned in large red type, warns. “If you don’t contact us, your everyday debit card transactions that overdraw your account will not be authorized after August 15, 2010 — even in an emergency,” with “even in an emergency” underlined for emphasis.

Also cited in the same recent NY Times article was the experience of a Bank of America customer visiting his branch to turn off overdraft protection on his debit card, and being told that if he did, “a gas station might place a hold on his account and he might not be able to fill up at all, even if he had enough money in the bank to cover a full tank”.

None of this should be surprising with the vast amounts of money at risk for banks. Long gone are the days when they were content to utilize our savings and charge a modest fee for checking. Now it’s all about fees for everything, and complicated financial products that have proven so useful as of late – can anyone say “subprime meltdown” or financial crisis and “too big to fail”?

But that’s a story for another day. There is actually a simple solution for this overdraft fee issue and it doesn’t involve the bank at all. It is for consumers to quit spending money they don’t have. Wow, what a novel idea that we should pay attention to our bank balance, never spend more than we have, and even ensuring there is a cushion for emergencies.

Back in the day, banks helped in this because they wouldn’t give you the money if you didn’t have it available – but then they figured out they could make a tidy profit by encouraging people to be irresponsible. And once they started, they never looked back.

Remember the “Chase What Matters” campaign by Chase Bank? It was simply a blatant marketing campaign promoting instant gratification and financial recklessness. What a joke. But the really sad part was how so many people couldn’t see it for what it was.

Never believe for an instant that your bank has your best interest as its goal. It is simply out to maximize profit. If you don’t care about you, no one will. Overdraft protection is vastly over-rated and is mostly a scare tactic to separate you from your money. Why not solve the problem through discipline instead?

Fresh Legislation Turn Arounds For Credit Cards Help Consumers

Posted on January 22, 2009
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In July of 2010 there are going to be some changes in the rules dealing with how interest rates are handled with credit cards. This legislation is supposed to help the American consumers; however after reviewing them closely it appears more like a public relations stunt than something to truly assist the American consumer.

These are some of the most profound law changes that we have witnessed in decades and they come as a result of over sixty thousand complaints to the Federal Reserve over the past couple of years. The complaints are over when people suddenly find themselves getting their interest rates greatly raised on their credit cards.

One of the most beneficial changes is that debtors will no longer get their interest rates bumped up on existing balances when they go a day or two past due. Instead the interest rate hike would be put on future purchases not the existing balance like the creditors do today. However if the late payment goes past thirty days then the interest rate increase will be applicable to the existing balance as well. Credit card companies say in their defense that the reason for bumping up the rate is because these consumers are a higher risk of non payment.

One more change made is that the creditors must issue a 45 day warning to the fact that the interest rate is going to be jacked up; they can no longer just bump it up overnight without warning the consumer.

Personally I think this is too little too late! How come we have to wait until next year for these changes to take effect? In addition if you still go over thirty days late than you would still see the high interest take affect on your previous balance. And many consumers fall behind way more than one month, especially with today’ economy and employment market.

Furthermore these new laws will only take effect on the cards issued from July 2010 and forward. So anyone who has a card under a different sign up agreement will still fall victim to the creditor’s scummy tactics. People trapped with high credit card debts should really figure out how to get out of debt as soon as they can.

One of the more reasonable methods in which consumers have been accomplishing this is through debt settlement companies; a method in which the consumer will save a lot of cash and become debt free within a couple of years. Getting you the correct credit card debt relief should be a top priority.

Five Reasons You May Be Refused Credit

Posted on November 22, 2008
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Being turned down for a credit card or a loan can come as a bit of a shock, especially as banks and credit cards have been slammed recently for irresponsible lending and really pushing loans on everyone.

However, as the credit crunch tightens its grip, banks are beginning to get a bit more fussy about whom they lend to, keeping the best deals for those that have exemplary credit records.

So what happens when you apply for a loan or credit card? Well, the lender will apply the details from your application to their credit scoring process, mix that with the information that they get from your credit file and calculate a credit score for you. If you attain a certain pre-determined score, you will get the loan. Each lender calculates the score differently, but the following five reasons as to why someone is turned down are common amongst all lenders.

You have no previous credit history as you have never borrowed before

This may seem a bit strange, but if you have never borrowed before, you will have no track record for paying back debts. Lenders would prefer a borrower to have a history of debts that they have repaid diligently. If you have no credit history, they have no idea how you will repay a debt in the future. Because of this, you will be marked down on their credit score, as they have no evidence that you can manage credit well.

If this is the case, try to build up some history by putting a small amount of money on a product that is easy to obtain, such as a store card, and make sure you pay it off regularly and on time.

However, if your circumstances mean that you have had no previous need for credit – you may have paid off your mortgage years ago – then explain this to the lender.

You don’t fit the lender’s profile

As mentioned above, you don’t have a single credit score – different lenders will use different ways to work out their scores. Some lenders may target a specific group of borrowers and you may not fit their profile at that particular time. For example, they may want a particular age bracket or demographic group.

Too many previous searches on your credit report

Whenever you apply to a lender for credit, the lender will do a search on your credit report. This leaves a ‘footprint’ on your credit file. Therefore, if you apply for credit from several lenders in a short space of time, it may appear you are building up too much debt, even though you aren’t actually taking out the loans.

Future lenders could interpret this as meaning that you are desperate for cash, overburdened with debt and even a fraudster using another person’s identity to build up credit.

A good way to overcome this is to apply through a loan broker. They will have access to a variety of lenders and will be able to access all the cheap loans on offer from them, saving you time and hassle. They will also be able to evaluate your credit worthiness with just one search and then put in touch with the lender most suited to fund your requirements.

You have had financial difficulties in the past

Missed credit repayments stay on your record for three years, so while you may be financially fit today, lenders may take a dim view of your past. If you have had serious financial difficulties and have a County Court Judgment against your name, that will be held on file for six years, while bankruptcy restrictions can remain on your file for up to 15 years.

Credit reference agencies do allow consumers to add an explanation of circumstances to missed payments in their report. For example, you may have lost your job, or you were going through a divorce or had an illness that affected your ability to pay.

You are not on the electoral roll

This is one of the most common, and easily remedied, reasons why people are turned down for credit. Lenders use the electoral register to check you are who you say you are and that you live where you say you live.

For anyone not on the roll, the solution is simple – register at once and ensure that you have been taken off the electoral roll at any previous address.

Small Business Credit Cards & Unsecured Business Line Of Credit

Posted on September 25, 2008
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The market for distributing credit lines for businesses nowadays has grown. After all, most entrepreneurs know that owning a sufficient credit line can give a business a lot of advantages. The bigger the company gets, the more useful a credit line becomes.

Small Business Credit Cards & Unsecured Business Line of Credit
For anyone trying to put up a business, choosing which financing option is best can get a little intimidating especially since credit lines available for businesses come in different varieties. Two of the most commonly compared forms available for business credit are the small business credit cards and unsecured business line of credit. Knowing the difference between the two and which is best for the nature of your business can greatly help you in your decision.

Small Business Credit Cards

A small business credit card is basically a credit line catered especially for companies who are just starting out. This type of resource offers a lot of flexible options for businesses, which may include discounts and other penny-pinching benefits that could greatly assist companies especially new ones.

Small Business Loans Despite Bad Credit
These are also quite easy to get, and a lot of suppliers in the market today readily accept payments done through these business credits. And so, if you are trying to start a new business and you still do not have much of resources or the long credit history, then this type of credit line would be ideal for your company’s use.

On the contrary, as ideal as this type of financial resource may be, it does have its setbacks. And if you are not careful enough with your credit usage, you might end up damaging your business as well as your personal credit score. The thing about most credit card companies offering small business credits is that they would require a personal-liability agreement for the business owner to certify.

And so, your company’s credit report may appear in your personal score even if no expenses were done for your private use. On the other hand, there are lenders who do not necessarily comply with this contract, so if you are afraid to risk your personal credit score, then looking for credit cards that do not require personal-liability is highly suggested.

Unsecured Line of Credit

As your company grows, having a bigger credit line would certainly prove to be more practical. For companies that have large expenses or need to purchase goods at bigger bulks, then having an unsecured line of credit can offer your business much more flexibility. This particular financing resource can give the same services as small business credit cards, but with much lower rates of interests and a higher credit limit. And unlike secure credit cards, no collateral is needed to secure your debts.

But, then, your company is required to have an excellent business credit history in order to be given an unsecured credit line. And if you are still starting out, most lenders will probably not recognize your personal credit score. If your company is interested in acquiring this credit line, then you must first build up your business credit. This type of credit resource is usually best for companies that have already established themselves, and may not be the best option for those just starting out.

Build Up Your Business Credit
Choosing a credit line for your company is just the initial step. Pick out which financial resource can best suit your company’s needs at the moment and make sure to build a very good credit score to enjoy all the financial aids and benefits that your business may need from lenders.

How To Find The Best Credit Cards For Students

Posted on September 21, 2008
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Owning a credit card in today’s world is a luxury. Credit cards are a great convenience, meaning that you don’t need to worry about cash when making a purchase. There are a lot of manufacturers that are giving both high school and college students the chance to get their own credit cards, although some credit cards have strict requirements. Although they do come with certain restrictions and limitations that other credit cards normally don’t have, student credit cards can be used the same way as a traditional credit card.

As a form of collateral or insurance, it is normal for companies and banks that offer student credit cards to require a co-signer. Should the student be unable to pay the bill, the person who signed the loan with the student will be the person the company falls back on for payment. Parents or guardians are the frequent choice to co-sign for student credit cards, as issuers consider it to be back up and a peace of mind should they have to count on the co-signer with good credit to pay if the student can’t. It is important to carefully compare student credit cards to be sure you are choosing the best student credit card for your situation.

Normally, the APR or interest rate is higher with student credit cards, which helps to minimize the risk for the company. The spending limit is also different with these credit cards, as most are between 250 – 800 dollars. The reason for this is because most students have not established any credit, and therefore won’t have a great credit rating. Students will still be able to establish credit with the help of these cards, even though these cards obviously have lower spending limits than other credit cards.

Planning a large purchase from using student credit cards can benefit students greatly. A student credit card can really help out to make large purchases – as you’ll need really good credit. You can establish a good credit rating by using these credit cards as a stepping stone to building credit. If you can get your credit rating high with your credit card, you’ll then be able to be approved for much higher loans in the future.

Students can gain a sense of responsibility with the help of student credit cards. The spending limit is much lower, although the card works just like any other credit card.
Once the student has mastered usage of the card, he or she can manage money much better later on in life. Students can be taught lifetime money skills by having these great cards. Just like traditional credit cards, students should also know that student credits cards can be dangerous. Pitfalls such as overspending may occur, although these are great cards to have. Their credit will be affected if the students spend more money than they have coming in, because they will be unable to pay their credit card bill. As well, the credit of the co-signer could be affected if the company goes after them to pay the bill. Therefore, having a budget in mind before students start using their credit cards is a good idea.

All in all, student credit cards are great to have. For high school students or college students, these credit cards are a means of freedom, and a way to teach responsibility. A reason to invest in them is that they come in handy during emergencies. Finding the best student credit card for your child is something you should look into if your son or daughter is in school right now. Helping to establish your child’s credit will benefit them – and this will take them farther wherever they go in life.

Improve A Credit Score Quickly

Posted on September 18, 2008
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Your credit score is a number between 300 and 850 that shows lenders how risky a borrower you will be, based on your past history. In the overall breakdown of that credit score number, 35% is based on your payment history, 30% is based on how much credit you’ve been offered but haven’t taken, 15% is based on how long you’ve had a credit history, 10% is based on the amount of debt you’ve accumulated over the last year, and 10% is based on what kind of credit you have, such as installment vs revolving and secured vs unsecured. There are many ways to improve low credit scores, although it does take time and capital.

The history of identity theft shows us that criminal activity can cause a bad score but the most common way people get poor credit scores is to miss a credit payment or to pay late. At the time you may think, “Who cares if it’s just a few days late? They’re still getting their money.” However, once that lateness or missed payment is reported, a credit score can drop as much as 100 – 150 points according to one leading credit repair attorney and will take 24 months to be fully restored. To remedy the situation, be sure you bring all your credit accounts current, paying off late payments and always paying at least the minimum monthly fee, rather than waiting to pay it all at once. For many people, paying automatically through debit or setting a monthly cell phone reminder a week in advance are the best ways to ensure bills get paid on time.

Experts say there are three types of good debt that can actually improve a credit score, if approached wisely. One is a mortgage with a 20% down payment, which typically remains fixed and stable, while showing your ability to manage a big financial commitment. Another is a school loan, which often has guaranteed low rates and no interest payments due until graduation. Putting down 10% or more on a car loan also shows that you are responsible. Remember that a closed credit card account will still show up on your report, so it’s best to keep that account open once it’s paid off. Just make small charges and timely payments on it, such as using it to fill up your car with gas. Soon, your credit report will be seeing an influx of positive reports coming in, which can help counter-balance the negative reports.

The most recent activity will weigh the heaviest on your credit score. For example, 40% of a credit score is based on the last year, 30% on the last 13-24 months, 20% on the last 25-36 months and 10% on the last 37-plus months. The good news is that the negative credit will not stay on your report forever. After 7-10 years from the time your accounts are closed or satisfied, the information will be removed. Good credit, by contrast, will remain indefinitely on your profile. If you think you cannot make the adjustments yourself, then you may want to hire a credit counselor to go through your credit report, make the necessary adjustments, bring your files up to date and set you on a path to success.

Non-profit Consumer Credit Counseling

Posted on August 29, 2008
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There are many people that have a lot of debt that they have no idea how to get rid of. Knowing how to get rid of your debt is very important because when you have debt you know that your life will be much harder than it is for someone that doesn’t have any debt. So, learning how you can get rid of your debt can help to change your life for the better. Some things that you need to check into are debt consolidation and consumer credit counseling. There are many benefits that you need to know so you can see why this is a good idea for anyone that wants out of debt.

These two things go hand in hand. Many people are realizing that they have to get their debt taken care of now if they don’t want future problems with debt. So, how exactly can consumer credit counseling help you get rid of your debt? Basically, you will be able to get all of your debts drawn together into one monthly payment that is affordable for you.

Consumer credit counseling will help you realize what your options are and will help you find a budget that fits you. The step that needs to be taken with debt consolidation is a review of all your debts. This is very important because it will form the basis for the debt management program for your future, plus it is confidential. The credit counselor will be able to help you come up with a budget for your future and they will discuss a good debt repayment schedule for you.

Another benefit to consumer credit counseling will help you reduce the interest on your credit cards or it might get rid of it altogether. Debt counselors are definitely going to be a big help to you and will be your ally because they will be able to stop your creditors from charging you late fees or over-limit fees as you begin making payments through the program. These few benefits will give you a start at catching up on your debt repayments.

You don’t have to do a debt consolidation but if you have a lot of debt then not doing it will mean that you may never get out of debt. If you are smart enough to do this so you can be debt free then you definitely need to make sure that you find a consumer credit counselor to help you. There are many benefits, besides the ones that are above that you need to know about. The best way to find out these benefits is to contact a credit counselor and talk to them or get a quote. You will be very glad you did when you are finally able to see a way out of your debt.

Higher Education Financial Liabilities: Paying Everything Off Beyond Graduation

Posted on August 23, 2008
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As if college weren’t hard enough, getting out of those hallowed halls may be the lesser of your worries. Once you leave the grounds you are faced with the challenge of finding a job – or starting a business – in your new career path.

This is much easier said than done since most companies want experience and, unfortunately for you, most college training does not count toward that so-called “real world experience”. It’s a problem because now that you’ve completed school you have something that is common among a majority of college students: debt.

The Struggle for Financial Freedom

You struggle to create a life for yourself, and the moment you are out the starting gate you’re confronted with an immediate hardship. You’re most likely well aware of debt by now in this stage of the game, but credit cards and some utilities aren’t even a comparison to the possibly of several hundred thousand dollars in school loans. Without a job you certainly can’t repay it in a timely manner.

Though you may figure it can wait, your college debt is not going to disappear, so there is no good reason to postpone the process of repayment. It’s important to realize the critical nature of debt repayment.

It’s also smart to be aware that many companies have added a policy to check potential employees’ credit records as part of their pre-hire considerations. So beginning to pay off that loan is in your best interest.

Repayment After Graduation

Student loans are typically deferred for at least six months upon graduation. This can unfortunately motivate the proliferation of “professional students” who are afraid to complete college, fearing the financial trap of their loans despite running up even more charges.

Don’t continue in school simply to postpone debt management and the repayment of your college loans. Have you begun to pay it or rather, like most, looked at it then casually discard it into the “I’ll pay this later” pile?

Granted, having no job means paying is hard if not impossible. However a college debt, as well as your other loans or credits, impact your credit rating. So even if you can only pay $20, do so. It’s a start.

Develop a Plan

The simplest way to get to that debt is to develop a budget plan. Make a list of all your fixed bills like car loans, rent, personal loans, etc. and add to that list your variable debt like credit cards. Prioritize the list and compare it against any income you may have.

For some bills, you can briefly postpone them or work with a creditor to lower payments over time or even ask them to temporarily stop charging you interest. Whatever money you have left should be allocated, at least partially, to your student loans.

Unfortunately the time to pay the loan without hardship may be long past. If you’ve ignored your college debt for too long, claims can be filed against you. It would then be prudent to seek alternative methods of paying off your debts, such as a personal loan. The interest will tend to be lower and the bill will get paid.

Don’t Put it Off

You need to repay your debts – college included – as soon as you can. You should practice debt free living at every step of your life. Think about simple things like extra clothing, trips, dining out and movies – all of which can be scaled back, if not eliminated, to help repay your loans.

Before purchasing such items, consider whether you really need them. If not, at least defer the expenses to later. Make the elimination of debt your higher priority.

Poor Credit: Does It Really Matter?

Posted on August 14, 2008
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Many times when people feel that their poor credit is in tatters, they give up all hope of ever trying to apply for anything again. What these people may not know is there are still programs available to help them achieve the things they want without having to worry about credit issues.

Each creditor will set their own standards for deciding whether or not you are eligible to be approved, and their views on your credit history will vary. There are some that will only look at your record from recent years, and some will be more lenient with giving you credit if it appears that your payment history has steadily improved. A good way to determine whether or not you will qualify with a company is to call the creditor directly and discuss their regulations with them. The worst that could happen is that you could be denied, and even though this may be an incredible blow to your ego, you will not be any worse off than before you made the phone call.

Many creditors are open to working out a repayment schedule. However, you should only consider this option if you are unable to work out a schedule for yourself but you feel like you can work under the deadlines of a creditor’s budget. There will be no good result if you waste someone’s time making them find the best option for you, and then fall behind on your payments again. There are also credit organizations as well as non profit companies that are dedicated to helping people get on schedule with their payments, but try to research these companies before enlisting their help because they are not always trustworthy. You should also make sure that you learn about all of their fees upfront whether they are higher than average or hidden fees. Also, just because a company is non-profit, it doesn’t mean that you have to make a contribution. If you were in a position to give money away, you would not be requesting their help. If you are going to get help from a management company, make sure that you find one that will conduct their services in person as opposed to the Internet.

Bankruptcy is a word that frequently gets tossed around and too often people think that it is an easy way out of a bad situation. The truth is that it isn’t. When you file for bankruptcy your financial life can be put on hold for as long as seven years. When you declare bankruptcy you are telling your creditors that they will not be getting their money. This will place your goals of buying a car or a house further out of reach. Back in October of 2006 an amendment in the bankruptcy laws had been put into place that made going for credit counseling mandatory within six months of filing. You might be better off going for the counseling and learn how to properly manage your credit score rather than filing for bankruptcy.

A few mistakes on your credit history won’t ruin it forever; there are ways around it and ways that you can re-establish good credit. Don’t give up, there is still a chance that you will have that home or car. The best thing to do is to make an honest attempt to fix your mistakes. Talk to your creditors and find out what you can do to fix it and maybe with a little hard work you can get your creditors to forgive you and offer you the opportunity of a second chance.

Discussing Debt Consolidation Loan

Posted on August 13, 2008
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make money online
Learning about multiple streams of income can be a challenge. Their are lots of companies out there these days that will help you with this challenge however. You don’t have to nor should you really do it alone. Individuals often use several experts to manage their money to assure that their not giving one company all the power over their finances. This is actually a great way to manage your money because your diversifying just like you should do in your investment portfolio! When you deal with your finances you should never just put full control of your finances in the hands of experts, you need to be a part of every transaction so you know what’s going on.

credit card
Talking about credit cards, too many individuals are seeing their disposable income eaten away to cover their credit card debt. It is quite easy to use a credit card for anything we desire, but almost impossible to get it paid off once we begin accumulating a balance on a regular basis. Credit card company’s make it very simple to pay a low monthly payment, but if you try to examine at how long it is going to take you to pay them off you will certainly want to pay them more. Take a closer look at the cost of the interest you will pay on those credit cards and you will be blown away. Before you spend much from your credit card, think on how do you pay for this.

debt consolidation loan
When we talk about nonprofit debt consolidation, it can be extremely hard to do away with bad credit even when you have a debt consolidation plan, especially when you still use your credit cards improperly. To succeed with a debt consolidation plan, you are going to have to avoid using your credit card too much. A lot of people fall into the false sense of security that a debt consolidation loan give and may end up using more cash on their credit cards.

It is essential that you consult a debt consolidator expert on the best way to consolidate your debts if you are thinking of doing so. A debt negotiator expert is one who is totally skilled at bargaining and negotiating debt terms. A good debt negotiator will give give assurance that you walk away with the best debt consolidator deal.

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