7 Ways to Reduce Credit Card Debt

I ran across this great article on Creditcards.com, 7 bad habits to break and gain control of your credit card debt:

1. Don't keep too many cards in your wallet
The average consumer holds 9 credit cards at any given time. If you fall into this category, clean out your wallet and only bring the 1 or 2 credit or debit cards you absolutely need. By the way, if you have more than 5 credit cards, you should seriously consider debt negotiation.

2. Don't charge when you should pay cash
Avoid using credit cards for basic daily expenses, such as food, gas and other small items. If you find yourself constantly charging these types of items because you don't have the cash to by them, it's time to consider debt negotiation or bankruptcy.

3. Avoiding mail from your creditors
Don't let credit card statements pile up in a corner because you're afraid to open them and see the bad news. You should be fully aware of your debt and promptly read all credit card statements carefully.

4. Using your credit cards like they are ATMs
If you find yourself constantly getting cash advances from your credit cards, then you need to revise your budget and figure out ways to make your cash last longer. Also, every time you get cash advances from creditors, you're spending an additional 2 to 4 percent in APR, as creditors charge more interest for cash advances. If you are constantly getting credit card advances or pay-day loans because your salary does not cover all of your needs, then you should consider debt negotiation or bankruptcy.

5. Losing track of rewards points
This is a no-brainer. Rewards points are like cash. So if you are losing track of them and not spending them as they accrue, you are literally throwing money out the window. Find a way to easily check your rewards points on a monthly basis, such as setting up an online account with your credit cards so that you can regularly log in and check them.

6. Not comminucating with co-card holders
If you have a spouse or family member that you share a joint credit account with, you should be in constant communication with that person about the account. Failure to communicate can lead to disastrous mismanagement of your account.

7. Throwing away sales slips
Many people hate clutter, and immediately toss their sale reciepts after they make a purpose. Don't do this; instead, keep a folder or envelope for your receipts and organize them by year or category. That way, if you are overcharged by a vendor, you can go back and have the ability to dispute a charge.

Capital One Increases Rates by 7%

Capital One, a credit card company that primarily targets low-income borrowers, has increased its interest rates by a whopping 7%.

This will result in some cardholders paying 26.01% on purchases and 29.94% on cash advances, depending on their credit rating.

Capital One defends the rate increase by saying:

“Changes in the credit and lending environment mean that it is now costing us more to lend, and so we are increasing the standard interest rates for some of our customers."

This does not seem like a logical rationale, to further punish customers that are already struggling to make payments and are likely facing a host of other issues, such as unemployment and foreclosures.

Capitol One's decision is yet another reason for consumers with large amounts of debt to consider entering a debt negotiation program and avoid paying unfair and excessive interest rates.

Thanks to The Times UK for the update.

American owe $970 billion in Credit Card Debt

The credit crunch saga continues to unfold as borrowers fall behind on payments, defaults continue to rise, and investors continue to be hammered.

Historically, the credit-card industry has been able to weather economic downturns because of its pricing flexibility. As the economy slows and payments are late, card companies have been able to boost earnings through late fees and higher interest rates, much to the chagrin of consumers like you and me.

These days, however, consumers are finding it difficult to repay any of their debts and are just not paying at all. Now charge-offs, which represents the amount which is still owed but the creditor writes off the account balance as a bad debt, are increasing at a fast pace and beyond what was expected. The losses are estimated to far surpass what companies were hoping to make with extra card fees and higher interest rates.

The net charge-off rate on credit-card defaults might escalate to 10 per cent in 2009; double the average of 5 per cent over the past 10 years, reaching $18.6 billion in the first quarter and US$96 billion by the end of next year, according to Innovest.

As horrible as this is for the national economy, it's actually good news for consumers, because credit card companies are now more willing than ever to re-negotiate debts. Thus, if you're willing to take on the stress of trying to re-negotiate your debt without the help of an intermediary, you are more likely than ever to be able to convince your creditors to significantly cut your balances in half.

This is definitely one of those cup half empty / half full kind of situations. Thanks to Trinidad Express for the update.

Papa John's Rocks

This coupon literally made my mouth water. It's always nice to get the occasional break, especially on free pizza.

When you purchase online from Papa John's, buy an x-tra large specialty pizza & get a free large original crust 1-topping pizza. Delicious!


Don't think there's an expiration date on this. I just went to the site, placed a test order, clicked "Enter Promotion Code" on the top menu, and it worked. http://www.papajohnsonline.com/

Code: AMEX

Frugal is the New Black

I was listening to NPR while driving into work today, and there was a segment about how fashionable it is now to be broke. Later, I read this article on Reuters:

"As the fashion industry recycles silhouettes and colors from past generations, Clarky Davis, The Debt Diva, says revisiting another style trend can help consumers ease the pinch of the troubled U.S. economy. But this style isn't about shoulder pads, wide lapels or hem length, it's about taking a page from your grandparents' or great-grandparents' notebook and saving more than you spend. That's right. Frugal is the new black." (Reuters)

That's comforting to know. At least we can be stylin' when we end up in Bankruptcy Court.

25% off Lenovo Thinkpad x61

This is a pretty sweet deal, if you're not too deep in debt that is.

Save 25% on ThinkPad X61 Tablet notebooks when you enter eCoupon USPULTRAPORTABLE in your shopping cart through January 26.
Click this link -->



The Specs:

Processor1: Intel® Core™ 2 Duo L7500 LV (1.6GHz, 4MB L2, 800MHz FSB)
Operating System: Genuine Windows Vista Home Basic
Display: 12.1" XGA TFT, 2x2 UltraConnect II antenna
Total memory: 1 GB PC2-5300 DDR2 SDRAM 667MHz SODIMM Memory (1 DIMM)
Hard Drive: 80GB Hard Disk Drive, 5400rpm Serial ATA (2.5")
No Bluetooth - Wireless card
Intel Wireless WiFi Link 4965AG (supporting Centrino Pro)
Battery: ThinkPad X61s 8 Cell High Capacity Battery

All Hail the Chief

In the spirit of today's Presidential Inauguration, I've been reading up on how our new president and his vice president plan on dealing with the credit card industry.

Barack Obama has attempted to champion for the rights of the everyday "Joe" (occupation left intentionally unspecified), and has supported increased regulation of the credit card industry. He proposed in June 2008 that the government restore regulation of credit card interest rates. (Undernews)

Joe Biden, however, is a defenders of the credit card industry, and will go to the ends of the Earth - figuratively speaking - to protect the interest of behemoths like MBNA and Citigroup.

Biden's position on dealing with the credit card industry is directly opposite that of Obama. As the senator of Delaware, one of the largest hubs for financial services companies in the world, he has had a very intimate relationship with the largest credit card issuers, namely MBNA. In fact, MBNA was the largest contributor to Biden's senatorial campaigns.

According to ProPublica.com "The senator [Biden] was a key supporter of an industry-favorite bill -- the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" -- that actually made it harder for consumers to get protection under bankruptcy." (ProPublica)

The Times reported, "[Biden] was one of five Democrats in March 2005 who voted against a proposal to require credit card companies to provide more effective warnings to consumers about the consequences of paying only the minimum amount due each month. Mr. Obama voted for it...

Mr. Biden also went against Mr. Obama to help defeat amendments aimed at strengthening protections for people forced into bankruptcy who have large medical debts or are in the military; Mr. Biden argued that the amendments were unnecessary because the legislation already carved out exemptions for those debtors. And he was one of four Democrats who sided with Republicans to defeat an effort, supported by Mr. Obama, to shift responsibility in certain cases from debtors to the predatory lenders who helped push them into bankruptcy." (Times)

It seems that Biden and Obama are on completely different sides of the fence when it comes to regulating the credit card industry. It will be interesting to see how these two compromise on this issue over the next four years.

The passage of the new OTS legislation will make dramatic changes within the credit card industry, primarily in the ways in which these companies are allowed to determine interest rates. However, this law will not take effect until Jan 2010, so consumers will have to perserve through until then.

On the Bright Side...

Americans were in less debt in 2008 than they were in 2007. Consumer debt fell by 3.4% in November '08. However, you have to read in between the lines to understand what this statistic really means.

Consumers were in less debt in 2008 because they were forced to be. Credit card companies dramatically increased interest rates and creditors substantially reduced lines of credit. Therefore, debt reduction was not a choice, but a reality.

Thanks to creditbloggers.com for the update

Credit Card Bill of Rights

I ran across this awesome tool today on Billshrink.com. It's called the "Credit Card Bill of Rights" and identifies which credit card companies are already in compliance with the Office of Thrift Supervision's recent legislation. It's a great way to find out which credit card companies operate fairly and are mindful of consumer rights.

Save 15% at Enterprise Car Rental

For all of you debt-burdened car renters, check out this new Enterprise deal, good for another 7-8 weeks or so.

15% Off Weekly Rates

The Fine Print: Discount applies to vehicles reserved in advance for six days or more at participating North American locations. Rates are as posted at enterprise.com or by calling 1 866 482-5298. Rental must be for 26 days or less.

Is Your Credit Report Correct?

It’s estimated that over 90% of the reports maintained by the 4 major bureaus, Tran Union, Equifax, Experian and Innovis contain inaccurate information.

A study released by the U.S. Public Interest Research Group in June 2004 found that 79% of the consumer credit reports surveyed contained some kind of error or mistake. However, in 2007, the Consumer Data Industry Association, which represents the credit bureaus, testified that less than two percent of 52 million credit reports had data deleted because it was in error. (wikipedia) Somehow, it is not surprising that their report would dispute the Public Interest Research Group.

The federal Fair Credit Reporting Act (FCRA) helps consumers protect and restore their credit. The F.C.R.A. states that any information contained in your report must be 100% accurate and verifiable or it must be *deleted*. According to the F.C.R.A., if the bureaus cannot verify an item within 30 days, they must delete it from your file. It's worth every consumer's time to contact their local credit report agency and obtain a free copy of their credit report.

Here is a directory of state credit reporting agencies.

Here is a link to a sample credit card dispute letter.

Thanks to (blog.budgetpulse.com)

New Rules for Credit Card Companies

The FED and the Office of Thrift Supervision (OTS) announced new rules for credit card issuers in December 2008. The rules do not go into effect until July, 2010, which feels like a pretty long ways away.

The key changes that the new legislation will require are:

Elimination of Double Cycle Billing – Double Cycle Billing allows credit card companies to charge interest on both the previous and the current month's balance. If you are a person that occasionally has a balance, but often does not, then you will pay much more in interest charges than you should. Cardholders with revolving balances aren't affected as much, unless their balance fluctuates dramatically from one month to the next.

45-Day Mandatory Notification of Interest Rate Increases – Lenders will no longer be able to increase the interest rate on existing balances except in special situations, like delinquent or default accounts. After the new law passes, any existing balance will have to be billed at the original interest rate. This in itself is a major achievement for consumers and will significantly reduce the amount of interest unfairly paid to creditors.

Fair Payment allocation – Lenders will have to apply any amount paid beyond the minimum balance due to the portion of the balance owed with the highest interest rate. Currently, most lenders apply these payments to the amount owed with the lowest interest rate. Again, this will reduce the total interest consumers pay credit card companies.

Elimination of Universal Default – Currently, credit card companies can increase a consumer's interest rate if she or he defaults or misses a payment on another bill. One of my fellow colleagues had a Bank of America credit card go from 6% to 30% because they were late on an unrelated bill. In my opinion, this has been one of the credit card industry's most unscrupulous tactics and I am overjoyed that legislation will stop this insanity.

The Right for Consumers to Institute Credit Limits - Consumers will be able to set a fixed credit limit, which they cannot exceed. This will prevent credit card companies from being able to charge over-limit fees.