Eliminate Credit Card Debt

High credit card debt? Wait till '06

2005-12-26T08:00:00.000-08:00

Next Christmas, when it comes time to pay off holiday shopping charged to your credit card, there's a good chance you'll be sending money to Bank of America's Wilmington-based credit card unit. And, according to some consumer advocates, there's a good chance you'll be paying higher interest and fees.

delawareonline � The News Journal � High credit card debt? Wait till '06

USATODAY.com - A holiday spending budget can help avoid debt hangover

2005-11-27T11:36:00.000-08:00

"The holiday sales have started. But don't blow that wad of hard-earned cash on gifts and other holiday spending without having a budget."

USATODAY.com - A holiday spending budget can help avoid debt hangover

The Morning News :: Opinion Page

2005-11-19T13:22:00.000-08:00

"Friend No. 1 is a young mother. Friend No. 2 is a young but accomplished golfer. Friend No. 1 thought it would be a nice idea to give Friend No. 2 a subscription to a golf magazine, and did. Within days of the first issue's arrival arrived an invitation for Friend No. 2 to obtain a bank credit card, a Visa.

Friend No. 1 is my daughter. Friend No. 2 is my granddaughter. Friend No. 1 is 30-something. Friend No. 2 is -- 8."

The Morning News :: Opinion Page

3 approaches to paying off debt

2005-11-05T06:59:00.000-08:00

"Paying off a debt completely is very satisfying and can make a person feel that progress is being made toward becoming debt-free. In addition, consumers who are overwhelmed by the sheer number of payments they have to make every month, and the accounts they have to keep up with, might like to go with this plan."

3 approaches to paying off debt

The right way to be good about credit - Oct. 21, 2005

2005-10-22T15:57:00.000-07:00

MONEY Magazine: The right way to be good about credit - Oct. 21, 2005

"NEW YORK (MONEY Magazine) - No fuss, no muss, very Zen. That's my credit-card life. I've got one card and only one card, which I pay in full and on time every month.
You may assume, as I did until recently, that such Girl Scout behavior automatically makes me a stellar credit risk. But as it turns out, practitioners of the dark and complex art of credit scoring don't necessarily give me -- or anyone else who handles their credit simply but responsibly -- too many props for prudence.
Yes, good behavior generally boosts creditworthiness. But when you're trying to qualify for low-cost credit, there's a right way and a wrong way to be good. "

Fix my mix: Debts undo a saver

2005-08-21T14:10:00.000-07:00

""I really want to learn more about investing," says Johnson, who is single and earns nearly $100,000 a year. "My goal is to be in a solid financial position by the time I'm 35."

Standing in the way of that goal, however, are a handful of beginner mistakes that have opened her up to more risk than she realizes."

Debts undo a saver

Credit card companies getting tough

2005-08-14T14:21:00.000-07:00

"Juliet McIver says the interest rate on her bank card nearly tripled because of someone else's mistake.

Another creditor, a retailer, lost one of her payments and temporarily dinged her credit report. Her downgraded credit rating pushed the Los Angeles resident into the high-interest-rate category on her bank card.

When the retailer later found the payment and admitted the error, her bank card issuer refused to pull her interest rate back down from the stratosphere."

Credit card companies getting tough

Buffalo News - Rising credit card fees are costing consumers billions

2005-07-17T15:57:00.000-07:00

"Rising credit card fees and policies that some observers call abusive are raising the ire of consumers - and watchdog groups fear the latest industry mergers will only make matters worse.
Consumer activists have become increasingly vocal in denouncing credit card practices, calling them deceptive, unfair and even predatory. They're demanding action by regulators and lawmakers, and their cries are being heard."

Buffalo News - Rising credit card fees are costing consumers billions

Restarting via bankruptcy will be getting a lot tougher - 07/05/05

2005-07-16T13:03:00.000-07:00

"Bankruptcy professionals predict a busy summer as filers scramble in anticipation of new federal rules that will make it harder and more expensive to erase debt and start anew."

href="http://www.detnews.com/2005/money/0507/16/C02-236383.htm">Restarting via bankruptcy will be getting a lot tougher - 07/05/05

Debt's other edge now being sharpened

2005-06-25T15:57:00.000-07:00

"In Steven Spielberg's epic "Into the West" the Lakota Indians stampede a great herd of buffalo over a cliff. Watching these great beasts hurtle to their demise, I was reminded of how often people follow this same herd instinct to their financial demise."

Debt's other edge

12 questions to ask about balance transfers

2005-06-22T17:51:00.000-07:00

"Those low-interest credit-card balance transfer offers showing up in your mailbox almost daily -- some going as low as 0% -- are hard to resist. But read the fine print before you leap. You could end up paying more than you would have if you'd just stayed put."

12 questions

Fed may tighten credit card rules

2005-06-19T14:20:00.000-07:00

"WASHINGTON - Growing consumer unease with credit card practices is fueling a call for action as lawmakers and regulators debate making changes."

Fed may tighten credit card rules

Bob Wallace: The Super-Duper Magic $13,000 Credit Card!

2005-06-12T08:11:00.000-07:00

Back then, part of me said, "Hey, look, let's play the robber robbed. The Fed has robbed the American public of 99% of the value of the dollar in less than 100 years, through inflation. I should spend up to the limit on those cards, buy about $10,000 worth of gold, several other things, and declare bankruptcy. The Fed and the government has screwed me and everyone else, so why shouldn't I return the favor?"

Bob Wallace: The Super-Duper Magic $13,000 Credit Card!

Students heed parents on credit card advice

2005-06-11T06:23:00.000-07:00

"Parents are by far the primary source of information and advice for traditional college students as regards credit card usage. Furthermore, the more information provided by parents, the lower the credit card debt incurred by their college age children, a Penn State study shows."

Parents on credit card advice

Beware Of Teaser Rates On Card Shifts - Yahoo! News

2005-05-29T19:00:00.000-07:00

"Low-rate offers often have traps. You won't know them unless you read the fine print in the issuer's agreement. Break any of the rules, and you can incur costly fees and penalties. You can even lose your low interest rate and get hit with a sharply higher new rate."

Beware

Credit Card Debt disaster lurks in the fine print

2005-04-30T15:01:00.000-07:00

"The practice of one creditor penalizing an account holder for paying another bill late has been around awhile, but now nearly one-third of all card issuers do it, experts say."

Credit Card Debt

The card companies: Give them no credit

2005-04-24T15:27:00.000-07:00

"Most every day they come in the mail, the credit card come-ons. They remind me of the barkers in front of the strip joints on Bourbon Street in New Orleans. "Come on in! Everything's beautiful!"

Sweet temptation, credit cards and strip joints. They show you a little leg and promise oh so much more."

The card companies: Give them no credit

How Credit Card Companies Make You Fool

2005-04-24T12:12:00.000-07:00

"Super low interest rates aimed at getting consumers to buy mortgages, cars, computers and skinny, big-screen TVs are encouraging a lot of people who really can't afford those slick TVs to whip out their credit cards.

"Low rates make you want to put more purchases on your card. It makes it seem like you have more money," says Sister Veronica Catherine Ann George of Westin, Mo."

Credit Card Companies

Freedom from debt

2005-04-18T18:54:00.000-07:00

"The Federal Reserve reports that consumer debt is at an all-time high: $2.1 trillion. Cardweb.com, a payment card information source, said that total average household credit card debt in April 2005 is up to $9,205 - a considerable jump from $4,200 in 1994.

Perhaps most startling is this: Each year, Americans pay credit card companies $80 billion in interest alone. On top of that, consumers pay an additional $31 billion a year in credit card fees, said "CBS Marketwatch."

Freedom from debt

Cash rebate credit cards not so rewarding after all

2005-04-17T12:58:00.000-07:00

Cash rebate credit cards

"With cash rebate cards, consumers can get something for nothing, but it's hard to spot the best deals unless you read the fine print. Moreover, charging purchases to get cash back is only a good idea if you can afford to pay off your monthly balance in full.

If you carry a revolving balance, you'll almost certainly pay more in interest than you will get in cash rewards. "

Bankruptcy law and Credit Cards

2005-04-12T20:09:00.000-07:00

"American families are not suffering from "irresponsible consumerism," as Senate sponsor Chuck Grassley claims, but from the effects of a stagnant economy and fraying social supports. Faced with declining real wages, job insecurity, long-term unemployment, and rising costs, American families have turned to increasingly available - and expensive - credit in order to make ends meet. The resulting rise in bankruptcies is an inevitable outcome for households struggling to keep up while the lending industry charges outrageous fees, high interest rates and capricious penalties. American families would be well-served if Congress addressed the widespread economic insecurity facing households, rather than close the door on this option of last resort."

Bad Law

Perry Miller got his first credit card when he was 16.

2005-04-01T16:32:00.000-08:00

"A long credit battle proves valuable for a mortgage career
Posted: March 31, 2005
Miller's history serves him surprisingly well in his current career. He's a senior mortgage consultant at USB Home Mortgage. Miller's a rainmaker. He brings in the business. He's doing well."

A long credit card battle proves valuable for a mortgage career

Debt Slavery: What The Bankruptcy Bill Could Do To You

2005-03-31T17:17:00.000-08:00

What The Bankruptcy Bill Could Do To You

"The U.S. Senate has passed a dream bill for credit card and financial service companies that, if passed by the House, will land millions of American families in debt slavery. Rather than being able to file for Chapter 7 bankruptcy and make a difficult new start, families and individuals will be placed on long-term payment plans to credit card companies, companies that will take their houses, their cars, their child-support payments, and their paychecks."

For information about eliminating Credit Card Debt click on the Link at the top of the column on the right!

A new development in the credit card world

2005-03-30T17:59:00.000-08:00

a new development in the credit card world

"Here's a new development in the credit card world that many may see as a bad thing: Some card issuers, such as Bank of America (NYSE: BAC - News) and Wachovia (NYSE: WB - News), are hiking the minimum monthly payments they charge their customers. The increases are generally from 2% to 4%. Those might not look like big numbers, but consider that:

It's essentially a doubling of the amount owed. If you normally owe $100, you'll suddenly owe $200."

Credit-Card-Crusher - illustrates the real cost of carrying high-interest debt.

2005-03-29T04:30:00.000-08:00

"Credit-Card-Crusher is a simple freeware learning tool which illustrates the real cost of carrying high-interest debt. Just fill in your current credit card debt, Crusher will analyze your debt burden — in terms that are concrete and meaningful. Specifically, it will show you just how much house, how much car and how much retirement you are forsaking for the privilege of enriching your bank."

Credit-Card-Crusher

Consumers Dive Deeper Into Credit Card Debt

2005-03-27T17:44:00.000-08:00

"When you try to open an account at Wells Fargo, they work up a customer "profile" and try to figure out how to sell you every financial instrument under the sun, from company loans and house loans to higher fee checking accounts. And that's all before they take your fingerprint, which is now apparently required at all Wells Fargo branches (thumbprint, actually, which sounds less incriminating than "fingerprints")".

Banks Rake In Profits

Plastic promises can be costly

2005-03-26T20:39:00.000-08:00

"CREDIT card providers have used incentives such as travel insurance, extra purchase protection and cheap balance transfers to attract customers. But these little extras are starting to disappear, and if people are relying on credit cards to provide free cover for trips abroad, they need to ensure the offer is still in place."

Plastic promises

Unpaid balance on your credit card can really hurt your finances.

2005-03-25T20:31:00.000-08:00

"Most people know that if you make only the minimum monthly payment on your card, it can take you months -- or even years -- longer than you had intended before you can finally pay off the balance."

Credit cards

2005-03-25T20:28:00.000-08:00

Taking the Mystery Out of Your FICO Credit Score

2005-03-24T21:02:00.000-08:00

"Credit scores are one of the leading factors creditors use in making lending decisions. FICO credit scores range from 300 to 850 and are calculated from a host of criteria from consumer credit reports that can be broken down into five categories: a consumer's payment history, amounts owed, length of credit history, new credit applied for or taken out, and types of credit used."

Taking the Mystery Out of Your FICO Credit Score

Credit card debt remains a problem for young and old

2005-03-23T17:58:00.000-08:00

" PBS Online Forum at the time quoted one expert who said, “Many Americans will never pay off their credit card debts because of the high interest rates and because, when you use plastic instead of cash, you spend more because you don’t register emotionally.’”
"

Credit card debt

If You Ain't Broke, Congress Has Fixed It

2005-03-22T19:18:00.000-08:00

"Members of Congress, who continue to run up record budget deficits with their big spending ways, wagged a finger this month in the collective face of the American consumer and said, "Learn to live within your means, or else.""

If You Ain't Broke, Congress Has Fixed It

Americans Flunk Credit Score Test

2005-03-22T19:13:00.000-08:00

"A credit score is three little digits that can determine whether you get a loan or a credit card and the interest rate that you'll be charged.

A new survey indicates that many people are clueless about credit scores.

Executive director Stephen Brobeck with the Consumer Federation of America said 49 percent did not realize that the scores measure whether you're a good credit risk."

Americans Flunk Credit Score Test

Seniors drowning in credit card debt

2005-03-21T17:18:00.000-08:00

"Seniors and aging baby boomers are struggling with growing credit card debt - and experts expect the numbers to rise as retirement funds fall short and the cost of living spirals ever higher.
``We see a lot of older folks on fixed incomes who are finding retirement funds are not sufficient to keep up with everyday living,'' said Andy Liles of American Credit Counseling Service Inc. ``They go into credit-card debt trying to pay for their meds.'' "

Seniors drowning in credit card debt

Newsday.com - Business: Long Island and New York City

2005-03-20T19:20:00.000-08:00

"The shifting landscape in the world of credit cards promises to become more treacherous for people in debt.

Even as card issuers compete for customers with alluring deals for low interest rates and special rewards, they increasingly count on fees and penalty or default interest rates for a chunk of their profits. Their path has been cleared by court decisions that enabled them to raise interest rates - sometimes with little warning - to heights that critics say are more typical of loan sharks than banks."

Newsday.com - Business: Long Island and New York City

Bankruptcy reform more sickly Washington legislation

2005-03-19T16:06:00.000-08:00

"Don't get sick.

That is the message that Americans are taking away from a recent Harvard University study and new federal bankruptcy reforms.

Earlier this month, the Senate passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The bill, which was mostly drafted by the banking and credit card industry, will make it harder to file for Chapter 7 bankruptcy, which allows consumers to walk away from debts without paying very much.

The new law will force more bankruptcy filers to seek Chapter 13 protection, a debt restructuring program that allows creditors and debtors to work out a payment plan."

Bankruptcy reform more sickly Washington legislation

Credit scores: They can cost you money

2005-03-19T15:51:00.000-08:00

"Anyone who uses credit ought to know what a credit score is. And surveys show that most people do.

But many still don't know what information is used to come up with their credit scores, according to a new survey by the Consumer Federation of America and Fair Isaac Corp., developer of the FICO credit score used by most lenders to evaluate consumers looking for credit."

Credit scores: They can cost you money

Experts warn against growing use of credit cards to pay taxes

2005-03-19T09:54:00.000-08:00

"NEW YORK - As more Americans file their taxes electronically, they're also more likely to use credit and debit cards to pay the taxes due.

Many consumers find that using plastic is convenient and also boosts their rewards points. On the other hand, credit experts worry that the trend suggests more people are digging themselves deeper into debt. "

Experts warn against growing use of credit cards to pay taxes

Credit card companies target students

2005-03-17T16:36:00.000-08:00

"An offer from a credit card company promising low interest rate credit accounts is a familiar item in the mail for most college students. Prudent students quickly toss these tempting propositions away. Others find themselves lured in by assurances this card can only improve your life, not destroy it by forcing you into debt at a young age."

Credit card companies target students

Times Community Newspapers - Editorial/Opinion - 03/15/2005 - Bill would hurt consumers, help credit card companies

2005-03-16T20:38:00.000-08:00

" Politicians talk a lot about supporting the troops and protecting families, but they've been proving all their talk is just talk.

The Senate is almost certain to pass a bill called the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" (Senate Bill 256), which is nothing more than a giveaway to credit companies. "

href="http://www.timescommunity.com/site/tab2.cfm?newsid=14154075&BRD=2553&PAG=461&dept_id=506071&rfi=6">Bill would hurt consumers, help credit card companies

Bankruptcy bill could be debt of us

2005-03-15T19:08:00.000-08:00

"Imagine the kind of person who might accumulate $50,000 to $100,000 in credit card debt.

That person might be out of work for a year or more. He might be sick and in the hospital. She might have a gambling problem.

Or the person might be a member of the House of Representatives, earning about $158,000 a year plus full health benefits, plus travel expenses and a small stipend for housing."

Bankruptcy bill

Complete Debt Relief - Stop Making Payments Immediately

2005-03-11T07:54:00.000-08:00

"If You Are In Debt, You Are Not Alone:

In the United States, it is now estimated that over 90% of family income is now being used to pay back consumer debt! Because of financial problems, mostly from credit card debt, approximately one in four families struggle to pay bills on even basic necessities such as mortgage, food and utilities.

There is over Two Trillion Dollars in unsecured debt in this country; enough credit cards to average 8 cards per U.S. household. Millions of people are desperately searching for a fresh start."

Eliminate Credit Card Debt

Glance: Working After Retirement

2005-03-09T15:27:00.000-08:00

"Some facts and figures about older Americans, their efforts to stay in the work force and their views on retirement."

After Retirement

Credit card debt goes up while consumers pull back on card usage

2005-03-09T08:06:00.000-08:00

" Consumer credit card indebtedness is growing at the same time that the proportion of consumers who don’t use a credit card in a given month is growing, according to the latest Cambridge Consumer Credit Index. Since credit cards are the primary means of payment for online retail goods and services, credit card usage trends are of importance to online retailers.

45% American cardholders are making only minimum or no payments on their outstanding credit card balances, up from 42% who did so in 2004, the Cambridge Consumer Credit Index reports. 37% paid less than half but more than the minimum payments, down from 39% in 2004, and 17% paid more than half the balances due, down from 19% last year. 39% paid their balance in full, the same as last year but down from 43% in 2003. 33% did not use a credit card in the month prior to the survey, up from 29% in 2004 and 26% in 2003.

At the same time, though, more than half of consumers who are revolving a balance are doing so because they are confident they can pay it off: 53% in 2005, up from 51% in 2004 but down from 56% in 2003. Those not paying off the balance because they didn’t have the money represented 47% of revolving balance holders in 2005 vs. 49% a year ago and 44% in 200"

Credit Card Penalties, Fees Bury Debtors

2005-03-08T08:39:00.000-08:00

By Kathleen Day and Caroline E. Mayer

Washington Post Staff Writers
Sunday, March 6, 2005; Page A01

"For more than two years, special-education teacher Fatemeh Hosseini worked a second job to keep up with the $2,000 in monthly payments she collectively sent to five banks to try to pay $25,000 in credit card debt.

Even though she had not used the cards to buy anything more, her debt had nearly doubled to $49,574 by the time the Sunnyvale, Calif., resident filed for bankruptcy last June. That is because Hosseini's payments sometimes were tardy, triggering late fees ranging from $25 to $50 and doubling interest rates to nearly 30 percent. When the additional costs pushed her balance over her credit limit, the credit card companies added more penalties.

"I was really trying hard to make minimum payments," said Hosseini, whose financial problems began in the late 1990s when her husband left her and their three children. "All of my salary was going to the credit card companies, but there was no change in the balances because of that interest and those penalties."

Punitive charges -- penalty fees and sharply higher interest rates after a payment is late -- compound the problems of many financially strapped consumers, sometimes making it impossible for them to dig their way out of debt and pushing them into bankruptcy.

The Senate is to vote as soon as this week on a bill that would make it harder for individuals to wipe out debt through bankruptcy. The Senate last week voted down several amendments intended to curb excessive fees and other practices that critics of the industry say are abusive. House leaders say they will act soon after that, and President Bush has said he supports the bill.

Bankruptcy experts say that too often, by the time an individual has filed for bankruptcy or is hauled into court by creditors, he or she has repaid an amount equal to their original credit card debt plus double-digit interest, but still owes hundreds or thousands of dollars because of penalties.

"How is it that the person who wants to do right ends up so worse off?" Cleveland Municipal Judge Robert J. Triozzi said last fall when he ruled against Discover in the company's breach-of-contract suit against another struggling credit cardholder, Ruth M. Owens.

Owens tried for six years to pay off a $1,900 balance on her Discover card, sending the credit company a total of $3,492 in monthly payments from 1997 to 2003. Yet her balance grew to $5,564.28, even though, like Hosseini, she never used the card to buy anything more. Of that total, over-limit penalty fees alone were $1,158.

Triozzi denied Discover's claim, calling its attempt to collect more money from Owens "unconscionable."

The bankruptcy measure now being debated in Congress has been sought for nearly eight years by the credit card industry. Twice in that time, versions of it have passed both the House and Senate. Once, President Bill Clinton refused to sign it, saying it was unfair, and once the House reversed its vote after Democrats attached an amendment that would prevent individuals such as anti-abortion protesters from using bankruptcy as a shield against court-imposed fines.

Credit card companies and most congressional Republicans say current law needs to be changed to prevent abuse and make more people repay at least part of their debt. Consumer-advocacy groups and many Democrats say people who seek bankruptcy protection do so mostly because they have fallen on hard times through illness, divorce or job loss. They also argue that current law has strong provisions that judges can use to weed out those who abuse the system.

Opponents also argue that the legislation is unfair because it ignores loopholes that would allow rich debtors to shield millions of dollars during bankruptcy through expensive homes and complex trusts, while ignoring the need for more disclosure to cardholders about rates and fees and curbs on what they say is irresponsible behavior by the credit card industry. The Republican majority, along with a few Democrats, has voted down dozens of proposed amendments to the bill, including one that would make it easier for the elderly to protect their homes in bankruptcy and another that would require credit card companies to tell customers how much extra interest they would pay over time by making only minimum payments.

No one knows how many consumers get caught in the spiral of "negative amortization," which is what regulators call it when a consumer makes payments but balances continue to grow because of penalty costs. The problem is widespread enough to worry federal bank regulators, who say nearly all major credit card issuers engage in the practice.

Two years ago regulators adopted a policy that will require credit card companies to set monthly minimum payments high enough to cover penalties and interest and lower some of the customer's original debt, known as principal, so that if a consumer makes no new charges and makes monthly minimum payments, his or her balance will begin to decline.

Banks agreed to the new rules after, in the words of one top federal regulator, "some arm-twisting." But bank executives persuaded regulators to allow the higher minimum payments to be phased in over several years, through 2006, arguing that many customers are so much in debt that even slight increases too soon could push many into financial disaster.

Credit card companies declined to comment on specific cases or customers for this article, but banking industry officials, speaking generally, said there is a good reason for the fees they charge.

"It's to encourage people to pay their bills the way they said they would in their contract, to encourage good financial management," said Nessa Feddis, senior federal counsel for the American Bankers Association. "There has to be some onus on the cardholder, some responsibility to manage their finances."

High fees "may be extreme cases, but they are not the trend, not the norm," Feddis said.

"Banks are pretty flexible," she said. "If you are a good customer and have an occasional mishap, they'll waive the fees, because there's so much competition and it's too easy to go someplace else." Banks are also willing to work out settlements with people in financial difficulty, she said, because "there are still a lot of options even for people who've been in trouble."

Many bankruptcy lawyers disagree. James S.K. "Ike" Shulman, Hosseini's lawyer, said credit card companies hounded her and did not live up to several promises to work with her to cut mounting fees.

Regulators say it is appropriate for lenders to charge higher-risk debtors a higher interest rate, but that negative amortization and other practices go too far, posing risks to the banking system by threatening borrowers' ability to repay their debts and by being unfair to individuals.

U.S. Bankruptcy Judge David H. Adams of Norfolk, who is also the president of the National Conference of Bankruptcy Judges, said many debtors who get in over their heads "are spending money, buying things they shouldn't be buying." Even so, he said, "once you add all these fees on, the amount of principal being paid is negligible. The fees and interest and other charges are so high, they may never be able to pay it off

Judges say there is little they can do by the time cases get to bankruptcy court. Under the law, "the credit card company is legally entitled to collect every dollar without a distinction" whether the balance is from fees, interest or principal, said retired U.S. bankruptcy judge Ronald Barliant, who presided in Chicago. The only question for the courts is whether the debt is accurate, judges and lawyers say.

John Rao, staff attorney of the National Consumer Law Center, one of many consumer groups fighting the bankruptcy bill, says the plight consumers face was illustrated last year in a bankruptcy case filed in Northern Virginia.

Manassas resident Josephine McCarthy's Providian Visa bill increased to $5,357 from $4,888 in two years, even though McCarthy has used the card for only $218.16 in purchases and has made monthly payments totaling $3,058. Those payments, noted U.S. Bankruptcy Judge Stephen S. Mitchell in Alexandria, all went to "pay finance charges (at a whopping 29.99%), late charges, over-limit fees, bad check fees and phone payment fees." Mitchell allowed the claim "because the debtor admitted owing it." McCarthy, through her lawyer, declined to be interviewed.

Alan Elias, a Providian Financial Corp. spokesman, said: "When consumers sign up for a credit card, they should understand that it's a loan, no different than their mortgage payment or their car payment, and it needs to be repaid. And just like a mortgage payment and a car payment, if you are late you are assessed a fee." The 29.99 percent interest rate, he said, is the default rate charged to consumers "who don't met their obligation to pay their bills on time" and is clearly disclosed on account applications.

Feddis, of the banker's association, said the nature of debt means that interest will often end up being more than the original principal. "Anytime you have a loan that's going to extend for any period of time, the interest is going to accumulate. Look at a 30-year-mortgage. The interest is much, much more than the principal."

Samuel J. Gerdano, executive director of the American Bankruptcy Institute, a nonpartisan research group, said that focusing on late fees is "refusing to look at the elephant in the room, and that's the massive levels of consumer debt which is not being paid. People are living right up to the edge," failing to save so when they lose a second job or overtime, face medical expense or their family breaks up, they have no money to cope.

"Late fees aren't the cause of debt," he said.

Credit card use continues to grow, with an average of 6.3 bank credit cards and 6.3 store credit cards for every household, according to Cardweb.com Inc., which monitors the industry. Fifteen years ago, the averages were 3.4 bank credit cards and 4.1 retail credit cards per household.

Despite, or perhaps because of, the large increase in cards, there is a "fee feeding frenzy," among credit card issuers, said Robert McKinley, Cardweb's president and chief executive. "The whole mentality has really changed over the last several years," with the industry imposing fees and increasing interest rates if a single payment is late.

Penalty interest rates usually are about 30 percent, with some as high as 40 percent, while late fees now often are $39 a month, and over-limit fees, about $35, McKinley said. "If you drag that out for a year, it could be very damaging," he said. "Late and over-limit fees alone can easily rack up $900 in fees, and a 30 percent interest rate on a $3,000 balance can add another $1,000, so you could go from $2,000 to $5,000 in just one year if you fail to make payments."

According to R.K. Hammer Investment Bankers, a California credit card consulting firm, banks collected $14.8 billion in penalty fees last year, or 10.9 percent of revenue, up from $10.7 billion, or 9 percent of revenue, in 2002, the first year the firm began to track penalty fees.

The way the fees are now imposed, "people would be better off if they stopped paying" once they get in over their heads, said T. Bentley Leonard, a North Carolina bankruptcy attorney . Once you stop paying, creditors write off the debt and sell it to a debt collector. "They may harass you, but your balance doesn't keep rising. That's the irony."

Credit Card Offers Create a Vicious Cycle

2005-03-02T11:25:00.000-08:00

"Direct mail apparently works -- when it comes to credit card offers, that is. A recent article from eMarketer reports that 53% of card holders surveyed said they found out about their latest card through a mailing. The next highest percentage, just 11%, learned about the card from someone in a store.

The impact of these credit card offers is placing consumers at risk of having to pay a much higher, overall true cost of money (interest on credit card debt) for the merchandise they buy and put on a credit card."

Carrying credit card debt becomes a vicious circle

Stop Credit Card Payments Today!!!

Good debt vs. bad debt

2005-03-02T11:15:00.000-08:00

"There can be a wide gulf between having wealth and looking wealthy."

"If you have many of wealth's trappings but are drowning in debt, you might want to check yourself for "debtabetes," says Jon Hanson, author of "Good Debt, Bad Debt: Knowing the Difference Can Save Your Financial Life" (Penguin, $21.95)."

"Not all debt is bad, he argues. It's like cholesterol: There's one kind that improves your health and another kind that makes you sick."

Good debt vs. bad debt

Akaka wants plainer warnings on credit bills

2005-03-02T11:09:00.000-08:00

" Sen. Daniel Akaka (D-Hawaii) has proposed legislation to make credit companies tell you exactly what the consequences are when you pay the minimum each month."

"Akaka introduced Tuesday an amendment to the Credit Card Minimum Payment Act, which he said wouldn't give consumers enough plain information as it stands."

Warnings on credit bills

‘Rate tarts' put 0% credit card deals in danger

2005-02-26T15:52:00.000-08:00

"Credit card providers are considering withdrawing zero per cent deals, in a sign of their growing exasperation with “rate tarts” who switch cards as soon as they have to start paying interest on their borrowing."

"Credit card companies believe that increasingly savvy consumers are shifting between different types of credit credit cards, personal loans and mortgages to get the best deal."

0% credit card deals in danger

How to tell when you're too deep in credit card debt

2005-02-26T15:41:00.000-08:00

Friday, February 25, 2005

Credit card debt is often a result of costly food and grocery purchasing habits

Here's how to tell when you're too deep in credit card debt: if 15% or more of your monthly income goes to pay your credit card bills, you've triggered one of the many warning signs that your credit card debt is out of control. There are other triggers, too: paying the monthly payments on one credit card by taking out a cash advance on another credit card.

If this scenario describes your financial habits, you're not alone: some 39% of credit card holders pay only the minimum payment, practically guaranteeing a lifetime of debt if they don't change their credit card habits. So what's the solution?

The solution is to get your spending under control. Easier said than done, right? But most people waste an enormous amount of money on recurring expenses that could easily be made more affordable. One of the more obvious areas is groceries: people use grocery story coupons to buy brand-name breakfast cereals and other items, thinking they're saving money. In fact, anyone using coupons is actually wasting money, since coupons are only printed for items that carry an outrageous markup to begin with. Buying brand-name processed foods is a sure way to eat yourself into further debt. Your health will suffer, too, since processed foods offer very poor nutrition.

Another big money waster in the food category is soft drinks. They're not only terrible for your health (their main ingredient, high fructose corn syrup, has been linked to diabetes and obesity), but they also gobble up your budget. Drinking straight water (filtered, please) can save you as much as $50 / month.

If you're too deep in credit card debt, take a look at your food purchasing habits, and be sure to review your restaurant and fast food expenditures, too, since that's a huge expense for many people. By altering food choices alone, most people can dramatically reduce their level of credit card debt and improve their level of health at the same time.

Overview:

Or you're waking up at night worrying about the bills.
Or you're taking cash advances on one creditcardto pay the minimum due on another.
All are signs of getting too far into debt,credit counseling experts say.
These "debt triggers" should be the cues for consumers to take stock of where they are financially so they can get spending in check and begin dealing with debt.
A recent survey by the Cambridge Credit Counseling Service found that more than one-third of consumers pay their credit card bills in full each month.

Source: http://www.denverpost.com/Stories/0,1413,36~33~2123183,00.html

Bankruptcy bill puts credit firms on easy street

2005-02-26T15:33:00.000-08:00

Bankruptcy bill puts credit firms on easy street

By the Dayton Daily News

Next week the U.S. Senate begins debate on a bill that would place credit card companies' bottom line far above the interests of the growing number of families experiencing financial ruin.

The legislation is moving forward as credit industry profits grow at astounding rates, fueled by exorbitant interest charges and unconscionable fees. The firms have invested millions in lobbying efforts designed to avoid even reasonable regulation and to tilt the marketplace in the industry's favor.

The debate also comes at a time when bankruptcy law enables once-great corporations, sometimes in the aftermath of scandal, to abandon once-sacred obligations — canceling employee pension plans, dumping retiree health-care benefits. The bill, however, mostly would affect middle-class and lower-income consumers. Its impact would be felt here because Ohio has been leading the nation in the growth of personal bankruptcies. Between 2000 and 2003, the rate grew from 4.6 to 7.1 per 1,000 people.

As more evidence of lenders' abusive practices, home-foreclosure rates have doubled in the state between 1998 and 2003. Indeed, a Mortgage Bankers Association survey revealed that more than 10 percent of "subprime" home mortgages in Ohio were in default during the first quarter of 2004. (These loans are especially high cost and are loosely regulated.)

Bankruptcy filings in the court district that includes Dayton grew from 5,203 in 2000 to 8,132 in 2004. Credit card debt is a major reason for consumers to resort to bankruptcy, followed closely by unpaid medical expenses.

Harvard Law School Professor Elizabeth Warren offered a national perspective on personal bankruptcies in testimony before the Senate Judiciary Committee. She noted that serious illness has contributed to more than one million people filing for bankruptcy in recent years.

Families with children are nearly three times more likely to face bankruptcy than single people or married couples with no children. Indeed, she reports, more children now live through bankruptcy than divorce.

The rights and dignity of these families — and their ability to get into court and get a fresh start — would be significantly curtailed under the bill. It would tighten standards for bankruptcy eligibility and narrow the definitions of debts that can be forgiven.

Beleaguered people seeking bankruptcy protection would be placed on an obstacle course with new and higher hoops and piles of paperwork.

Proponents of the bill say it would stop people from heedlessly running up debt and using the bankruptcy court to evade their responsibilities. The real effect, though, would be to beef up the credit industry's power to exact debtors' last dimes.

If the industry keeps having its way, only consumers will be expected to behave responsibly. As Professor Warren pointed out, the industry now targets minors — who quickly and easily can get in over their heads financially — as an "emerging" market. Meanwhile, credit card companies have admitted that "for every dollar they claim the customer borrowed, they are demanding two more dollars in fees and interest."

Even in the face of fair criticism, the companies aggressively fight any attempt to require basic consumer disclosures — such as how many years it takes to repay credit card balances while making the "minimum payment."

Ohio Sen. Mike DeWine is leaning toward supporting the bill. Sen. George Voinovich is undecided.

When the roll is called, either they will be giving the credit industry free rein or they'll be looking out for Ohio consumers. There's no middle ground.

Buyer Beware: Credit card two-cycle billing

2005-02-24T09:30:00.000-08:00

"Gerri Detweiler is the author of the Ultimate Credit Handbook, "Credit card interest is tough to understand no matter what type it is. And, two-cycle is even more confusing.""

WIStv.com Columbia, SC: Buyer Beware: Credit card two-cycle billing

Credit Card statistics

2005-02-22T07:00:00.000-08:00

How statistics deal with you, when you cant afford it but you still buy
Source : Credit Management Tips - Khalsa News Network
Publish Date : 2/22/2005 1:02:00 PM

Well its seems that, its difficult to understand but the question is simple �" why are we ready to spend much-much more than the required amount over an "desired possession" which when, will be freed of debt, will really be ready to thrown into the junkyards?"

Well a recent AP compilation of statistics gathered from recognized sources, strongly announces the fact that we have been lulled into a false sense of security. A false sense of security and its we who have got to break that security, for no one else is going to do it for us

Here are the facts.

-The Federal Reserve Board statistics state that the national balance on credit cards, auto, and other non-mortgage loans rose to a new record figure in April 2001 at $1.58 trillion. Mortgage debt figures equal an additional $5.2 trillion.Debt payment accounts for 14.3% of take-home pay, the highest since 1986.

-Delinquent credit card payments (30 days past due) has risen 0.7% in the last year to new high of 5% delinquency. Standard and Poor's reports that the credit card industry wrote off 6.7% of balances as uncollectable which is the highest in years.

-Mortgage Bankers Association of America states that in the last quarter of 2000-mortgage delinquencies rose to 4.5%, which is the highest delinquency rate since late 1992.

-But the worst indicator of all is the 17.5% increase in bankruptcies filed in the first quarter of this year. The majority of the 367,000 filings for the quarter was consumer versus business bankruptcy. The figures indicate another record year for personal bankruptcies.

Two examples here shall give you an insight into what really happens when you buy something, which is financed at whatever interest. A $2000 sofa financed at 19.8% interest with minimum monthly payments will take 31 years and 2 months to pay off and you will pay more than $10,000. The interest alone robs you of $8,202 that you sweat for decades to earn. In fact, you will have to earn about $12,000 gross to net $8202 for the interest just so you can have your $2000 sofa. What could possibly be worth paying 5 times its value? But it gets worse. If you were to put that same $8202 of monthly payments into just a 10% mutual fund over the same 31 years, it would yield $45,540 in personal wealth. And you are giving it all up just so you can get that sofa a little sooner.

Look at a second example. Let's say you regularly buy a new car and pay $300 per month. If you do that for just 1/2 of your working life or twenty years, you will be giving up money, which if invested at 10%, would build to $227,810.65. That amount would generate $1,936.39 per month for the rest of your life.

Let's be very clear about this. You are giving up nearly $2000 a month automatic, never-ending income so that you can spend $300 per month on payments now! It just doesn't make any sense except to the finance company--- to them it makes terrific sense!

As seen above, interest is far more than the little bit your "friendly" creditor requests for the use of their money. But we do it every day. And this we have got to move away from because otherwise we�ll never produce any wealth for our families or ourselves.

Your creditor says zero percent: Be aware, be careful! Even zero percent interest is bad. Why? Zero percent interest is no good because as soon as you make any purchase through credit, regardless of the interest rate, you have just given away future income and hope of future wealth.

Not only are you giving away future dollars that you don't even know will exist in your future, but also you are giving away the potential use of that money. Now what is it that you can do to stay away from all this false sense of security? What you can afford, don�t buy just yet. Wait till you gather the cash yourself instead of taking loan for that lingering desire. You�ll be lot happier, when you buy it with your own earned cash and with more dollars in your hand than you, feeding your creditor�s bank balance.

Credit card companies don't allow you to pay back your debt in small amounts out of the kindness of their hearts.

2005-02-22T06:50:00.000-08:00

Why would it take so long to pay that little debt you have
Source : Credit Management Tips - Khalsa News Network
Publish Date : 2/22/2005 7:24:00 PM

Maybe, you have as little as $5000 in balance debt, and you think this can be paid off in couple of years. Well, it may take you 30 years to pay off your credit card balance. How can this be, you ask? The credit card company wouldn't let you take so long to repay them, would it? The answer is: yes, it would.

This should make you face the hard facts about how credit card companies make cash for themselves. And also it should make you lose some sleep over it. Well, its you who is making money for them by taking money from them, and most when you pay it back in small amounts.

It's important to understand that the credit card companies don't allow you to pay back your debt in small amounts out of the kindness of their hearts.

How credit companies make their money. Paying the minimum payment (usually around 2% of your balance) each month, guarantees that you will be filling the credit card company's cash coffers with your hard-earned money for many years to come.

When not to buy on credit: You should be absolutely unwilling to pay only the minimum balance on your credit cards each month. If you can't afford to pay more than the minimum balance, you can't afford whatever it was you charged to the card in the first place.

Why it would take so long: Your payments include both interest and principal (the amount you borrowed). When you pay only the minimum payment, most of it goes towards interest, which is why it takes so long to pay off the original debt. You wouldn't pay $7,000 for an item that is clearly marked with a $2,000 price tag, would you? Yet that is exactly what you're doing when you buy it using a credit card with an 18% interest rate and then only pay the minimum balance each month. No wonder you feel like you just can't get ahead!

If you need to buy on credit, at least do it with your eyes wide open. If you're already in debt, use these tips to get out and get ahead:

--Don't get any deeper into debt. Save the credit card with the most favorable terms and cut the rest up. Put the one you saved in a safe place (not in your wallet) and use it only for emergencies (not to include a big sale at Macy's!)

--Pay more than the minimum balance. Much more.

--Shop around for cards with low interest rates, but beware of come-ons that offer a low introductory rate and then take a big jump. The Internet makes choosing a credit card easy, but be sure to read ALL the fine print.

--Move balances on cards with high interest rates to cards with lower interest rates.

--Use your savings to pay down debt. It makes no sense to earn 1 to 3% interest on your savings account while paying 12 or 15 or 18% interest on credit cards.

--Come up with a written plan for reducing your debt systematically.

--Add up all the money you spend each month on credit card payments, and think about what you could do with this money if you weren't paying it to the credit card company.

The best methods of systematically paying off your debt is: List your debts, including the balance and the interest rate for each one. Each month, pay the minimum balance on all credit cards except the one with the highest interest rate. Pay as much as you possibly can on this card each month until it is paid off. Then start paying as much as you possibly can on the card with the next highest rate, while continuing to pay the minimum balance on the others. Keep doing this until they're all paid off. This is the only time you should ever pay the minimum balance on any card.

Are you a credit card addict?

2005-02-22T06:35:00.000-08:00

"Anything can be addictive when its usage is beyond a limit. It's all in our hands and many of us don't even know it!"

"By using credit card unwisely one maybe getting a high for short term but as the time passes by it's a pain �� wherever, you want to define it. It gives a dream of having lots of money, what happens when you wake up from the dream. Then even your reality seems to be more shattering; as you live with less as each month a portion of your income is siphoned away paying past credit debt."

Credit Management Tips

Just say no to bank's increased credit card finance charge

2005-02-20T11:57:00.000-08:00

Dear Debt Adviser: I have a large balance on a credit card that I have been paying down faithfully every month. I've never been late and stopped using this card about seven months ago.

Last month I paid $2,000 on this card. I just got this month's bill and the bank has increased my finance charge from 10.99 percent to 30 percent!!!

When I called them, they said they reviewed my credit rating and noticed I have other debt. I can't pay this card off at this huge interest rate. This is a purely greedy action on their end.

Do you have any advice on how best to deal with this? -- Linda

Dear Linda: Don't despair. The cardholder agreement or contract that binds you as the cardholder to pay as agreed also binds the issuer of the card, in this case your bank, to the original terms of the contract.

The catch is that there's a clause in most cardholder agreements called "universal default." This allows the issuer to change the rules midstream unless you say no. If you do say no, the issuer then has the right to close the account while you have the right to pay off the remaining balance under the terms of the original agreement.

In your bill this month or perhaps in a separate mailing, you may have received some type of written notification of the change in your account agreement (the increased interest rate) along with instructions on how to contact the issuer to let them know if you do not accept the new terms.

You do not have much time to contact them regarding your non-acceptance of the new terms of your cardholder agreement. Typically you must respond in writing within 30 days of the notification by the issuer of the cardholder agreement revisions.

Simply write your bank a letter stating you wish to continue under your original cardholder agreement. I would send it via certified mail, return receipt requested.

Because the account will be closed, you will not be able to use the account to charge any new purchases, but it doesn't sound like you need that card, nor do you need to be adding anything to your debt anyway.

One other possible negative of closing the account is that closing lines may affect your credit score if this causes the debt-outstanding ratio to the credit-available ratio to change past what is considered optimal.

For example, if you have $10,000 of available credit on several credit cards and owe a total of $1,000, you have used 10 percent of your available credit. However, if you close accounts with $9,000 of available credit, you now have used 100 percent of your available credit, and that isn't good for your credit score.

Don't feel that you are being targeted for this type of treatment from your bank. You are not alone. Complaints are growing from cardholders who have paid amounts due faithfully and on time only to have their interest rates increased dramatically because of their payment history on a different line of credit.

Unfortunately, "universal default" is here to stay, so paying your bills on time is even more important than ever. An unintentional late payment to your utility company could end up costing you hundreds of dollars in interest payments on your credit card accounts.

Big Brother is watching! Good luck.

--Steve Bucci is president of CCCS Credit Advisors. Visit http://www.creditcounseling.org or call 1-877-311-2227 for additional debt advice. The Debt Adviser is a weekly feature of bankrate.com. Distributed by Scripps Howard News Service.

Are Home Equity Loans A Good Idea?

2005-02-20T11:34:00.000-08:00

By Ed Teachout
and KATU Web Staff

Portland, Ore. - You have no doubt heard the ads - trade in that high interest credit card debt for a low interest home equity loan.

The offers sound great, but you might want to be careful about what you get yourself into.

Home equity loans are sold as a great way to pay off high interest credit card debt with a low interest loan that you can write off on your taxes.

Jason Hillman's company, Mortgage Design Group, sells thirty different kinds of home equity loans.

"There can be multiple benefits to it," he says.

However, you have to be careful, he warns.

"You have to understand the long-term implications and have a goal in mind, like when do we want to have this second mortgage paid off that we used to consolidate with," Hillman advises. "We see people who consolidate and then go back out and run their credit cards up."

Jason Reynolds with the Oregon Consumers League says equity loans are all right, except in certain circumstances.

"Most of these loans are OK unless you get sick, lose your job, get into an accident or lose your business," he says. "And things like that happen to people."

For example, if you cannot pay off credit card debt, the bank loses and you get stuck with bad credit, but if you can't pay off a home equity loan, you lose your home.

The bottom line is do not be afraid to use the equity you have in your home to improve your finances, just make sure you have a plan in place to pay the debt off.

Pitfalls to avoid:

# Pre-payment penalties - penalties for paying the loan off early
# Balloon payments - payments with huge payoffs after a few years
# Hidden fees
# 100% equity loans - loans worth as much or more as your house

Reference

Politicians offer lecture on high debt

2005-02-20T10:11:00.000-08:00

"For nine years, Congress has been trying to rewrite bankruptcy laws to make eliminating consumer debt such as credit card balances more difficult."

"The latest attempt — pushed hard by credit card issuers — is winding its way through the Senate, and this time there may be enough support to pass it."

HoustonChronicle.com

Credit where credit’s doo-doo

2005-02-20T09:40:00.000-08:00

DEPT. OF EVIL GENIUS
Credit where credit’s doo-doo
BY CATHERINE TUMBER

Have credit-card troubles swept over you in recent years — seemingly out of nowhere, like a bat? Perhaps you’ve been paying off your minimum in good faith, only to find your balance climbing astronomically. Or maybe you’re regularly slapped with huge late fees, though you could swear you’ve been sending in your checks on time. You may have been seduced by a "0% financing" solicitation, only to find that before long you’re paying 29 percent. Or perhaps you’re a victim of that charming little device known as "universal default," which allows a credit-card company to jack up your interest if you’re late paying another debt, say, your phone bill. It’s enough to make you want to go out and engage in a little retail therapy.

As it turns out, help may be on the way from a most unlikely corner: the Federal Reserve Board, and they want to hear from you.

You probably didn’t know it, but your credit-card company must abide by rules set by the Fed’s "Regulation Z." It sounds like something out of The Manchurian Candidate, and it’s almost that old. Established in 1969 to implement the Truth in Lending Act, which was designed to protect borrowers from deceptive practices, Regulation Z hasn’t had a major overhaul since 1982. 1982! In that time, the banks have been deregulated, and financial institutions have won a slew of victories in the courts. Lenders now have much greater freedom to charge high interest and draconian late fees, to merge their various businesses to form bloated monstrosities, and to whittle away the authority of individual states to regulate banks within their borders. Over the past 22 years, there’s been a revolution in the way financial institutions are run, and Regulation Z has been just sitting around playing video games. With a few notable, if ineffectual, exceptions, so has Congress. (When, oh when, will the Democrats figure out that economic populism should be at the moral center of the party?)

Take matters into your own hands, and write to the Federal Reserve. Tell them how shadowy credit-card-company practices are making it difficult to stay out of debt, and what you’d like to see changed. On the Fed’s Web site, you can read what others have written. One woman begins her communication with "I am outraged by the deceitful practices of the credit card industry," and concludes with "Do something before this country is ruined by this industry." If you think the industry is doing a fine job, we suppose you could tell them that, too. If you insist.

Go to the page below and Click on "Proposals for Comment" and scroll down to "Regulation Z — Truth in Lending [R-1217]." There you can both type a note and read other people’s thoughts. You also can e-mail regs.comments@federalreserve.gov; be sure to include "Truth in Lending [R-1217]" in the subject line. And while you’re at it, why not send a copy to your congressional reps? Deadline is March 28.

Click here to go to the Federal Reserve Web Page

Getting Out Of Credit Card Debt

2005-02-20T09:35:00.000-08:00

"-- Although millions of Americans are drowning in debt, . . . there are some simple things people can do to pay off their credit cards -- and get rid of bad debt for good."

Getting Out Of Credit Card Debt