AMEX Paying Customers to Pay off Balances

American Express, in a move to lessen their liability load, is offering select customers $300 to pay off their remaining balance and close their card accounts. This is not surprising, considering the extreme moves AMEX took in 2008 to scale back borrowers' credit lines.

A number of small business card holders reported that AMEX dramatically reduced their lines of credit in 2008. One small business owner reported his credit line being reduced from $165,000 to $5,000 in one month, in spite of the fact that he never had any delinquencies and had been in good standing for the entirety of his account.

AMEX is running scared in these days of financial turmoil. And ironically, they are punishing small business owners, whom the Federal government desperately needs to keep injecting capital into the economy.

One of the major problems resulting from the collapse of the credit markets is that both small and large businesses are being forced to scale back their operations and fire employees. This creates a domino effect of people losing jobs and not being able to spend money, which creates even worse economic conditions. Rather than indiscriminately punish card holders who have been responsible and paid their debts on time, creditors like AMEX should be thinking of ways to reward small business owners that have historically been good customers.

Do you have an American Express card? Have your lines of credit been reduced? Leave us a comment.

The Recession is a Good Time to Re-Negotiate Debt

In spite of the fact that many credit card companies have been increasing interest rates and significantly reducing credit lines, the recession is proving to be a great time to re-negotiate your credit terms.

Credit card companies are desperate these days and will go to great ends to keep you as a customer. Keeping in constant and direct contact with your creditors could end up saving you a great deal of money.

The first step is to write down what you want; lower interest rates, waived late fees, and even settling card balances for less than you owe. Next, call your creditors and tell them what you want. At the end of the day, you have absolutely nothing to lose and everything to gain.

For example, Bank of America, among the biggest card issuers, stepped up efforts to waive fees and lower interest rates for distressed cardholders in 2008, spokeswoman Betty Riess said. It modified nearly 700,000 credit card loans last year. [sun-sentinel.com]

"We would evaluate any pricing decision based on the individual customer's performance with us as well as external credit risk factors," she said. "We understand that many of our customers are struggling to meet their financial obligations and our objective is to help customers who are experiencing financial hardship."

If you are struggling with credit card debt, pick up the phone and call your creditors today. Every moment you wait is another dollar you lose.

Have you re-neogiated your credit card debt recently? Leave us a comment and tell us about your experience

The Facts on Secured Credit Cards

A secured credit card is a way for borrowers with poor or no credit to obtain a credit card without undergoing a credit check. These cards require a cash collateral deposit that becomes the credit line for that account. For example, if you put $500 in the account; you can charge up to $500. Therefore, you are using your own money, not credit, and simply running it through a bank. This allows the borrower to rebuild credit because the transactions are run through the lending bank, which is then reported to the credit reporting agencies.

Depending on the issuing bank's fees and policies, this can be a good deal for borrowers in the process of building or rebuilding their credit. However, consumers should be aware of the hidden fees and restrictions some secured credit cards impose.

CASE STUDY: NEW MILLENNIUM VERSUS AMERICAN EXPRESS BLUE SKY

The New Millennium Bank of N.J. issues the New Millennium Credit Card, a popular secured credit card.

In addition to having to secure the card with your own money, New Millennium also charges an annual fee of more than $50 and interest of 19.5% on all purchases and cash advances. Other terms include an applicant processing fee of $70 and zero grace period to repay either your purchases or your cash advances before a finance charge is imposed.

All of these fees and restrictions equal a bad deal for you the consumer. You're better off stashing your money in a plain old savings account.

The American Express Blue Sky secured card offers customers a chance to repair their credit without the burden of excessive fees. There are no annual fees, 0% APR up to 12 months on purchases, and 1 reward point earned for each dollar spent. Reward points can be used on hotels, car rentals, and airlines, among other purchases. Reward points are a big advantage for consumers, because you earn money as you spend it.

If you are thinking of applying for a secured credit card, you should read the fine print closely and also read about other customer experiences beforehand. Depending on your needs and personal situation, it could be a good deal, allowing your to get your credit back on track and conveniently make purchases that require credit cards. However, consumers should not make the assumption that secured credit functions similar to unsecured credit.

Do you have or have you had a New Millennium Card in the past? What was your experience?

Credit Repair Tip

If you are in the process of rebuilding or repairing your credit, you should apply for a credit card (notice the singular use of credit card) that reports to all three of the major reporting agencies (Experian, Equifax, and TransUnion). This ensures that all of the agencies will be updated as you continue to improve and build your credit.

Providian's High Interest Rates

Providian, which is owned by Washington Mutual, has received a flurry of complaints regarding excessive interest rates hikes. Customers cite that their rates increased dramatically shortly after WAMU acquired Providian in 2007. [my3cents.com]

A number of consumers claim that the interest rates on their Providian credit cards were increased by more than 10% despite the fact that they had not missed any payments and had overall good credit. In addition, there are a number of reports of Providian luring new customers in with low APR rates and then arbitrarily increasing those rates immediately after the customer signs up. This is quite an ironic turn of events, considering that WAMU presents itself as a bank that strives to help consumers save money by not charging excessive fees.

If you are considering a Providian credit card, read customer reviews at www.consumeraffairs.com before applying for the card.

Do you curenntly have a Providian card? What has your experience been?

USAA Scores High Ratings with Customers

Consumer Reports National Research Center did a study of credit card companies to determine which ones provide consumers with the best experiences. They interviewed more than 36,000 people about more than 61,000 credit cards. The winner across all of their studies was USAA Federal Savings.

USAA, which issues both the American Express and Mastercard brands, is a credit union for military, retired military personnel, and their families. The company earned a medium 95 out of a 100 possible points from consumers. USAA typically offers interest rates between 9 and 11 percent, which is significantly lower than the 17%+ interest rates charged by many of its competitors.

While the USAA card is limited to members of the military, there are a number of very good credit unions that are open to anyone. Credit unions tend to have lower interest rates and better customer relationships.

"Credit unions are run by members, so they have a vested interest in providing credit at very low rates," says George Overstreet, a University of Virginia finance professor who studies credit union operations. "And they are more focused on keeping their members happy, while banks have to worry more about keeping their investors happy." [Money @ Aol.com]

Credit unions such as 1st Advantage Credit Union and Financial Center Federal Credit Union were rated at the top of the Top 100 CU.com list.

What has your experience been with USAA?

Do you prefer working with Credit Unions or Banks?

Capital One Class Action Lawsuits

Capital One, once considered the leader in low-interest rate credit cards, is now battling several ongoing class action lawsuits for excessively increasing customers interest rates.

One high-profile case involves a man who had emergency open heart surgery. Due to his illness, Capital One received his payment one day late. Capital One subsequently increases his interest rate from about 7% to 21%.

Has Capital One recently increased your interest rates? How much has your interest rate increased?

Being Proactive About Debt Reduction

Are you pro-active or passive about reducing your personal debt? If you fall into the latter category, here are a couple of suggestions for aggressively taking steps to debt elimination.

1. Pay off any credit cards that you can and cancel these accounts.
If you have any credit cards with small balances, get rid of them and pay off these debts as soon as possible. For example, I had a small Macy's account that was lingering for years. I made the decision last week to get rid of it once and for all and check one more debt off my list. Even though the debt was small in comparison to some of my other debts, it was a mental relief to get one more debt out of the way.

2. Contact your credit card companies and try to negotiate lower interest rates.
In today's dismal economy, you'll be surprised at how many creditors are willing to re-negotiate your credit terms.

3. Start a savings account.
Even if you can only manage $20 bucks a month, taking the proactive step to start saving your money will make you feel better and will get you in the habit of putting money aside every month. And eventually, even small amounts of money begin to accumulate into a sizable savings fund.

4. Figure out what excess expenses you can cut out of you life.
If you buy lunch every day, start taking your lunch a few days out of the week and save this money. If you live close enough to your local grocery or pharmacy, start walking instead of driving and save gas. If you find yourself at home with every light and television on, turn things off and try to reduce your energy bills. If you really start analyzing how you spend money, you'll find countless small ways to save and reduce your debt.

5. Look for coupons and bargains before you shop.
You would be amazed at how many coupon offers there are available at any given time, both online and from traditional brick and mortar retailers. Whenever I shop online, I first go to Google, type in the vendor's name and then "coupon codes" to see if there are any discounts available. I have found amazing coupons for everything from pizza to digital cameras in the past week. There are also numerous discount sites like Retailmenot.com and Couponboutique.com which feature discounts and specials on a daily basis.

Negotiating IRS Debts

People often wonder if it is possible to negotiate IRS debts in the same way that you can credit card debts. The answer is yes and no. You can directly contact the IRS and attempt to negotiate a payment plan with them, which they are usually very flexible about. However, if you are looking to re-negotiate your total debt and pay significantly less than you owe, this is more difficult and most people are turned down by the IRS. If you try to take action without an agreement in place and completely stop paying your IRS installments, the IRS will likely garnish your income, place a hold on your bank accounts and re-posses your personal effects. Unsecured debtors, like credit card companies, cannot take these sorts of actions. At most, they can file a law suit, which most companies try to avoid because it is costly and time consuming.

If you do decide to negotiate your IRS debt, you should definitely consult an attorney first. If you owe over $10,000, you may qualify for an "Offer In Compromise". Visit the IRS website for more information. The IRS may accept less than you owe based on your ability to pay. They take a look at everything you own and your future earning power to determine if you can pay or not. Two things to remember are that the IRS has up to two years to decide whether or not to accept your offer and they say "No" over 85% of the time. If after researching the Offer In Compromise, you believe that you may qualify, contact a CPA or EA in your area that has experience with these.