Sure, if I had no debt and had no plans or acquiring new debt, my credit score wouldn’t matter…

Or would it?

I was reading Parade magazine this week and was reminded of a very important reason to keep up those scores – employment. Employers are using credit scores as another way to narrow down candidates. In this rough job market, that’s the last thing you want to worry about.

My current employer ran a credit check on me prior to offering employment. I had been unemployed for 2 months but had managed to pay my bills. Had my credit score fallen, I likely would have been passed over.

Congress is considering blocking this practice but right now, it’s very legal.

Do you think credit checks are a fair way to judge potential employees?

You can read the article at Parade.com/creditscore

Rather than let the issue drop, the man has turned into an activist for consumers. His website, though not updated regularly, gives some good information on important issues such as the Credit Card Bill of Rights and consumer lending laws.

If you’re having a slow day, check it out:

www.newcreditrules.com

On a side note, I think he has a good idea and his dedication is admirable but wouldn’t it be easier to not be taken advantage of if you get rid of the credit cards entirely? It seems like the site should read, ‘You are all VICTIMS’ at the top. Activism on consumer protection is necessary BUT so is consumer responsibility.

*Warning* I can’t verify the validity of his claims but he has been all over our local news stations and on Good Morning America and they are far better at fact checking than I am.

Thanks. Now I’ve got THAT to worry about.

In all my sitting at home time – most of which is spent in complete misery – I am able to squint open my eyes and read some of the daily news. I stumbled upon this headlining article at AOL…

http://autos.aol.com/article/cash-for-clunkers-greenwash

I found two quotes particularly eye opening…

‘Three revealing line items in a separate CNW survey noted that the drain on the family coffers would be offset by reducing the pay-down of credit card debt, deferring home improvement and removing money from non-targeted savings.’

and

‘Other critics groused that Cars for Clunkers took $2.8 billion from the general roster of 300 million citizens and handed it tax-free to a small group of 700,000 citizens.’

What are your thoughts?

I was angry since we had just paid off our card – and because we’ve been burned in the past when we allowed others to use our credit.

Just as I expected, there were problems… but not the kind of problems I had guessed. Not only did the guys pay before they left, they overpaid by $20 each (we’re giving it back).

Our credit card still took a hit from my husband (I’ll talk about the REAL expenses of a cruise in a later post) but we’ll be able to pay it off before it rolls over and starts to accrue interest. We won’t be able to pay extra on the auto loan but at least we’ll be heading into October without credit card debt.

Would I loan money again on my credit card? Even though it actually worked out this time, I’m still SOLIDLY on the no side.

My husband is attending a bachelor party this weekend and the event required one credit card to book the trip for all five attendees (the bill could not be split). Most of our friends know about our recent credit card payoff (maybe shouting that fact from my roof and breaking into song was a clear sign) and naturally suggested that since we ‘had the room’ on our card (as if it were free), that my husband pay for the entire trip and be reimbursed later.

I’m not going to lie. I am upset.

Perhaps I’d be more trusting if this hadn’t happened before with concert and event tickets and in the end, we were always short. People conveniently ‘forget’ to pay or promise to pay later and then get annoyed when reminded. Plus, the credit card will be kept on file in case there are damages to the room or if alcohol is consumed.

When I asked why someone else couldn’t pony up a credit card, he told me it was because everyone is nearly maxed out but us. Um… isn’t that a good reason NOT to loan these people our credit card?

My husband and I rarely fight but this is a sensitive issue for me and I feel like we are opening ourselves up to a lot of potential debt.

Am I overreacting?

My score is up, but only slightly. The credit card payoff has not yet hit the reporting agencies (of course, if I had missed a payment, it would have likely been reported the same day). I hope to see a bigger jump in four more months.

If you decided to check your credit report with me and follow my once yearly free report check, this time I used:

Equifax

Dave Ramsey suggests paying the extra amount on your lowest debt (which would be the student loan) but the minimum payment on our truck is more 4 times higher than the student loan. Plus, the interest rate on the truck is twice as much.

Another good reason to pay more on the truck is to quickly rid ourselves of the hefty payment. In the event of job loss, a student loan can be deferred due to financial hardship – auto loans are not nearly as forgiving.

We’re hoping to have the truck paid off in 10 months or less.

Here we go!

We paid off our credit card last week.

We’re still working on my husband’s truck loan and the student loan but we promised ourselves little rewards for each payoff. It’s a good way to stay motivated when finishing a long stretch before starting yet another long stretch.

Surprisingly, my husband suggested a night out (surprising because I expected him to suggest something more along the lines of a macho flat screen TV or a beefy new grill). We purchased tickets to see Spamalot at the Civic Theater downtown. The tickets were $17 each (we sit in the nosebleed seats) and with dinner, we’ll likely spend a total of $100.

We get a one night break and it’s off to frugality again.

OUR CREDIT CARD IS PAID OFF!!!!

We decided to use the rest of our extra paychecks to pay off the remaining balance. The checks didn’t cover all we owed but my husband worked some overtime and we were able to clear the rest.

We set aside some money for the bachelorette party in Vegas and the secretly located bachelor party. I would have probably opted not to go to Vegas but the bride is my soon to be sister in law and well… who can say no to Vegas?

A COLLECTIONS AGENCY!

‘This message is for Rebekah’s husband [obviously they stated my husband’s full name], we have an urgent matter to discuss with you. We’re calling from Blankety Blank Collections, please call us immediately!’

I called my husband in a panic. ‘Honey, you’ve got something in COLLECTIONS! Can you call them the second you get home!!??’

I dialed again.

*ring*

‘Hon, don’t give them your Social Security Number!’

*ring*

‘Hon, don’t give them your credit card number!’

*ring*

‘Tell them we want something in writing or an office address!’

To which he finally said, ‘Sweetheart, I can’t call them unless you stop calling me.’

Oh. Oops.

A few minutes later, he called me back and said…

‘Same name, wrong person.’

Hey Collections folks, thanks for making not only people with who can’t pay their bills miserable but also everyone else who shares their name.

I can only hope they won’t be calling back.

My first summer out of college, I flew to visit my sister living in Ireland. I had no money and no job, but this was my first opportunity to see my sister who I hadn’t seen in a few years.

We drank pints of Guinness in dodgy bars, ate Irish/Chinese food, explored the entire island, and somehow crashed her car into a fence. We sat on the edge of the Cliffs of Moher while David Gray sang ‘This Years Love’ from our cheap speakers. I had just started dating someone new (I later married that same fabulous man) and couldn’t imagine a world happier than mine at that moment. I had the most memorable trip of my life… and my MasterCard footed the $1,500 bill.

I know there are many more memorable trips in my future (trips I will save up CASH to pay for) but I don’t regret that ‘foolish’ spending. As I’m paying down my credit card, I try to remember that at least part of that payment is going toward one of the best times in my life. It takes a little bit of the angry bite out of those payments.

Is there something you don’t regret pulling out your Visa buy?

…
So who’s to worry
If our hearts get torn
When that hurt gets thrown
Don’t you know this life goes on
And won’t you kiss me
On that midnight street
Sweep me off my feet
Singing ain’t this life so sweet
…

I am very disappointed.

This event led to the following changes:

1. More involvement by both of us. Often in relationships, one person manages the finances. When things don’t go well and money is too tight, this person feels the stress, the pressure, and the responsibility for the mess. We have both decided to dedicate and hour each week to review each transaction. Now we have more checks and balances on each others spending – otherwise, we’ll have another bad month.

2. We are refocusing our goals and setting rewards. Our next payoff is still a ways away and we’re getting frustrated and bored. We decided to give ourselves something to look forward to after our next payoff. It’s nothing huge, maybe a dinner out or a trip to the theater, but rewards between payoffs has become something we need to stay motivated.

3. Reconsidering our numbers. We went back to make sure our numbers were working for our ever changing budget. We’ve been underspending on gas and overspending on miscellaneous necessities (car repairs, house repairs, etc.). We decided to adjust our numbers and perhaps pay a little less on our credit card so we can stop panicking when things aren’t balancing. Leaving the numbers the same would be great, but it’s obviously not working and it’s causing frustration.

4. We have decided to spread our focus. It’s easy to let finances consume our thoughts and lives. Rather than let this stress grow, we decided to let ourselves enjoy other things in life. Running, swimming, yoga, gardening groups, and organizing the garage help to keep our mind free of the finance clutter in our brains.

When there are long distances between payoffs, it’s important to work at what is frustrating you. You can’t solve everything, and it will be painful, but taking steps to at least reduce stress will help to prevent burnout. I’d rather take things a bit more slowly than give up entirely.

What have you done to motivate yourself and prevent burnout?

We argued about who should pay for groceries, who should pay for dinner, and who should pay for everything in between. I hated asking him for his half of the rent each month. He was my husband – not my roommate. It finally came to the breaking point when he couldn’t afford rent and we had to clean out our savings and use our credit card to get by. We opened a joint checking account the very next month.

We learned to work beside each other and the arguing stopped.

We made our mistakes – financing nice cars, charging vacations to credit cards, and remodeling our bathroom on credit – but now that we’re working to become debt free, we are partners in the fight. I wish someone had told me early on that working together as a couple was a necessity for a good marriage and good financial health. As I listen to my co-worker talk about his wife ‘owing’ him money for tires on her car, I couldn’t help but think… ‘No wonder he’s on his third marriage.’

So how do we do it? We each get a $3 daily allowance in cash each week. I don’t care what he spends his on, and in return, he doesn’t care what I spend mine on. We usually spend the money on work clothes or a bi-weekly dinner out together. This week, we split the cost of a silly $15 video game we both would enjoy and a $25 set of solar lit pavers for our garden. (And yes I know, $3 may be more or less than you spend, but it works for us)

My husband and I rarely argue about money now that we’ve enacted the $3 daily allowance rule, but we still fight about very serious issues… like the direction of the toilet tissue.

Do you keep your money separate? Or do you have a joint account? And how much do you allow each other to ‘blow’ each day?

I’ve been debt free before.

There was a moment, for about 3 days, in college when I had no debt. My car was paid off, my credit card had no balance, and I didn’t have a mortgage.

Then, I came close again after we closed on our house. We had been saving for a year and the money returned to us from escrow was used to pay off my husband’s credit line.

That credit card debt freedom lasted a few weeks before we decided to remodel our master bathroom and take a trip to Hawaii.

My finances are like a yo-yo diet. Sure I’d love to eat healthy all the time but rolled tacos with Mexican guacamole? I can’t resist.

Just like weight loss, a diet is silly. The only real option for permanent results is a lifestyle change. Staying thin requires eating less than or equal to what you need – staying financially healthy means spending less than you make. Sure it looks easy on paper, but only those who have suffered through it (and continue to suffer through it daily) know how hard the struggle can be.

This is the longest I’ve been on a financial diet – and I know I’ve got what it takes to keep the ‘weight’ off.

Yeah, the change is lame – but the results… those are what I’m grinning at each month when the credit card statement arrives.

One day… it will say…

$0

Which is harder for you: Losing weight? or losing debt?

Not only does this prevent your credit from being misused, it also gives you a clear picture of where you stand financially.

If you’d like to join me, next on the list:

Trans Union

I’ll remind you again in four months! Happy Credit Score!

Update: I forgot to say where to go for the free reports. Please visit http://www.ftc.gov/freereports for the only TRUE free credit reports. Thanks L!

I read through the fine print carefully with each offer that we did. Every balance transfer we did was specific in saying that as long as you were in good standing you would lock in that low interest rate. It appears that Chase had similar wording with one of their deals, but decided to change the terms:

Last November, Chase notified about 400,000 people with these low interest cards their minimum monthly payment would more than double and a $10 monthly service fee would be added.

[Via MSNBC.com]

I would be so upset if one of our cards did that to us. I would definitely feel like it was a bait and switch. According to the article, there is a class action lawsuit pending. I think this lawsuit is one to watch as far as special offers from credit cards. It will set a big precedent.

Citibank’s move is just the latest in a flurry of reward program cutbacks. Nearly every major issuer has altered their reward offerings over the past year in some way: attaching more strings to membership, limiting cardholders’ earning ability, scaling back reward offerings or inflating redemption levels.

Via Yahoo Finance Article

We don’t have too much that we can redeem for. We have used our cards quite a bit, but some of them were used before a reward system was in place. But anything back from our credit cards is better than nothing so I’ll be doing some rewards shopping this weekend.

“With defaults on the rise, credit-card issuers are employing all sorts of tactics to persuade consumers to reduce their balances and, ideally, close their accounts.

[Via Yahoo Finance]

Some are giving out gift cards or cash back. One bank (Chase) unfortunately is adding a $10 monthly fee for accounts with large balances. It doesn’t appear to be happening with all accounts – just a select few.

I don’t like what I’ve heard about the way Chase is handling things. One customer in the article says, “They’re trying to renege on the deal [he had].” Citibank and American Express are using the gift cards or the cash back. I think those are a great idea although someone is paying for these incentives down the line.

Have any of you been offered an incentive like that?

I haven’t requested it so I do find this increase odd. The only reason they gave for the increase was that we were great customers. Hmm…it really is odd timing. About a week ago I found myself starting at the LCD TVs again and found one that was really pretty. Maybe they were spying on me and the credit limit increase is to try to lure me into buying one LOL.

Or, they noticed that we used to have a balance and only paid the minimum. Maybe they are trying to get the “great customer” back.

All I know is that I am going to be so glad when it’s time to start closing some cards. It’s not because of temptation, it’s just because I’m tired of them. They are no longer the friends they used to be.

The Consumerist shared a story from a Chase customer who happened to set up his automatic payment incorrectly after transferring a balance to his Chase credit card. The customer was at fault and he admitted it. He wrote a letter (full text is at the Consumerist) and they reinstated his rate!

I think this one should definitely be bookmarked:

Consumerist Article: Nice Letter Gets Chase to Reinstate Man’s Promotional APR

Wow. That’s awesome he got the promotional APR back – and I am thankful that he shared his letter with everyone!

Since I started blogging, I have come to realize that whenever you get a credit card through another avenue than the credit card company itself, someone is making money from selling that card to you. The same rings true for web sites and blogs that have links to credit cards. It can be a profitable business – the one time I looked at it, some companies were paying up to $50 for every person that signed up for a card.

Thinking back to the displays at my old college, there were always college students manning the booths. I figured that student organizations were the ones behind the applications. But according to the New York Times articles, the colleges themselves can get a very lucrative deal. In some cases, it pays for the college to have a student go into debt and have a balance on their card at all times. Another scenario is that that college receives a percentage of every charge a student makes. Makes my stomach do a little flip – they sure got me!

The contract [for Michigan State University] calls for a $1 royalty to the university for every new card account that remains open for at least 90 days, $3 for every card whose holder pays an annual fee, and a payment of a half percent of the amount of all retail purchases using the cards.

[Via NYTimes.com]

So…some colleges are not only allowing the credit card booths on campuses – they are encouraging them! They get a lot of money by doing so. The colleges mentioned in the article say that the revenue is important and sometimes used for scholarships. It doesn’t make much sense to me. And selling student information so credit card companies can market to them? Ugh. I get those alumni credit card offers. I guess my alma mater got a deal as well to sell my information.

I don’t mind colleges making money. But it seems like there could be a better way than targeting young adults with credit card offers. It’s like raiding the young adult cradle.

If interested, here is the link to the entire Debt Trap series at the New York Times.

New York Times Article

I’ve known that credit card companies had shady practices. For some reason, we had (and still have) more credit limit available to us than our annual income. That doesn’t compute in my mind. Even if we have cards from different companies, they all have the ability to check a credit report to see limits. They were definitely enablers when it came to our credit card debt. We still used that available credit to the max, so we do take most of the blame.

I agree 100% with the anonymous executive when they say that there should be an opt-in number versus and opt-out number. Opting out doesn’t even work all of the time and I’m sick of all the wasted paper. Not to mention the electricity to run our paper shredder.

Thanks, Dasha for the tip!

This article from MSN made me smile:

Expect Less Junk Mail as Marketers Cut Back

Not only are credit card companies scaling back, so are some other companies that send out catalogs. That makes me happy because so many catalogs received just go in the trash upon arrival without even looking through them. We’re in debt – we don’t need to look at them! Especially those catalogs with neat doohickeys that look so cool but would probably only be used a few times and then collect dust.

Although I love getting mail every day, we were getting way too much junk in our mail. It was becoming too wasteful and getting off their lists was sometimes impossible.

In order to pay off our debt as quickly as possible, we had to slash those finance charges and have more of our payments go toward the principal and not interest. In five months, we reduced our finance charges from $400 to around $100. Sixteen months after that, we were able to reduce our finance charges to $0/month. That’s where they sit right now and I love it! Every dime we pay towards our credit cards is now going towards the principal balance and not interest.

It took some work and it took some time. Here’s how we did it.

1.) Called our credit cards to see if they would lower the interest rate

This is the one piece of advice that you hear over and over again – call all of your credit cards and ask them for a lower interest rate. I did that a few times. Did it work every time? No. But did it work at least once? Yes. For a few minutes of your time, it’s worth a shot. If it doesn’t work the first time, try again a few months later.

2.) Attacked our credit card debt

Being $37,000 in the hole didn’t make us very “good” customers. Our cards were almost maxed out and we were only making the minimum payment. To show our credit card companies that we were serious, we had to attack our credit card debt. We worked overtime. We sold stuff. We lived frugally. If we had extra money, it went towards our credit card debt. We attacked our debt.

3.) Worked to increase our credit scores

Increasing your credit score can sometimes turn into a hot topic. Some people think that your credit score isn’t important. I think it is, especially since we needed a great credit score because we may be looking for a new mortgage in a few years. There isn’t much that we did here except pay bills on time and pay off as much of our debt as possible. Reducing our debt decreased our credit utilization ratio which increased our credit score. Since February of 2006, my credit score has increased from 711 to 763 (although it was 800 at one point – more about that later).

4.) Transferred balances

I started reading through every balance transfer offer we received instead of shredding them without a second glance. I was looking for a great balance transfer rate with no balance transfer fee. We were able to use a free balance transfer when one of our cards raised their interest rate. Recently, a 0% offer that we obtained expired and I wasn’t watching those offers as much as I should have. By looking at available offers online, I was able to see that one of our cards did have a great balance transfer rate (0%) with a 3% balance transfer fee. After running numbers, it was a good deal for us even with the fee.

5.) Obtained a loan from Prosper.com

Prosper.com is becoming well-known as a place to go to try to consolidate your debt on your own terms. Everyday people go there to lend and borrow money. When I first heard of it, Prosper was fairly new but I decided to give it a shot to try to reduce our interest rates. It worked. Thirteen lenders bid on my $3,500 loan request and they reduced my interest rate from 13% to 9.9%. Another note about Prosper loans – they have a fixed interest rate! No more worrying about that interest rate magically increasing.

6.) Used our cards strategically

I have my own credit cards and my husband has his. We used this to our advantage. For a while, all of our debt was split evenly between our cards. We had a goal of getting a 0% credit card offer, so as soon as we could we shifted all of the credit card debt to my husband’s cards. My credit score shot up to 800 and I was easily able to get a 0% offer because our credit card debt was no longer attached to my name. I should have checked to see what it did to my husband’s score, but I didn’t think about it at the time. I’m sure it took a temporary nose dive.

7.) Applied for a new credit card with a 0% balance transfer offer

Once all of our debt was on my husband’s credit cards, I found a good no annual fee 0% balance transfer offer and applied for it. I was only given a $4,000 credit line, but as luck would have it, the card I applied for had the same parent company as one of my other cards. I was able to transfer some of the credit line from the old card to the new card and voila! All of our credit card debt was now at 0%. From what I’ve heard, not all companies will shift credit limits around so some good fortune did help us out with getting all of our credit card debt at 0%.

We were were able to pay off $29,000 of our credit card debt so far thanks to some slashed finance charges. If all goes well we will be credit card debt free next year. Reducing our finance charges took some time but it was worth it.

As it turns out, the answer was right in front of me but I didn’t see it. I checked all of our cards for balance transfer offers, or so I thought. There was one that I forgot about so I looked into their offers. I couldn’t believe it when I saw the 0% balance transfer offer in front of my eyes. There was our answer. Woohoo!

I started the process of the balance transfer and hit a roadblock. I needed the card number from the company I was transferring from. I checked my usual credit card hiding spot. It wasn’t there. I checked other places I have hid them. Not there either. I hid our unused cards so well I couldn’t find them. Of course, I started wondering if I hid them in a piece of furniture that we recently sold.

Then, it hit me. I should check one more place. There they were. Whew. So I logged in last night and completed the transfer.

There is a balance transfer fee of $240. I’m not thrilled about that, but the finance charges would run close to $100/month if we kept our debt on the current card. Since it’s unlikely that we will be able to pay off our debt in a few months, the fee is worth it to have our debt at 0% until mid next year.

As for our cards, I put them back where I found them. It’s a pretty good hiding spot. But I should remember next time where they are LOL

This is unrelated to your post, but I wanted to pass this information on to you. I’ll try and keep it short!

My credit card information was compromised via US Mail approximately 1 week ago. I immediately called my credit card company, they froze my account, and issued me a new card. I am fortunate that no fraudulent charges went through. However, I would not receive my new card for 7-10 business days (I wasn’t willing to pay an express shipping charge).

I use my credit card for all purchases and pay it off each month. Without my credit card, I was left with the only “liquid” money I had, which was in my brick-and-mortar bank account, and I could access it with my debit card. I don’t keep very much money in there since I transfer much of my salary into my ING Savings account. Luckily the amount of money in my brick-and-mortar bank account was plenty to cover several unexpected expenses that occurred the past week, but it easily might not have! It was an eye-opener for me that I either need to keep more money in my brick-and-mortar bank account (can be accessed virtually immediately), or I need to have a back-up credit card!

Just thought I’d share my experience in case it might help you or someone else reading this!

Sherri is right. It is important to not have all of your eggs in one basket, so to speak. Thanks for sharing your experience and glad to hear there were no fraudulent charges!

First things first, we do have a collection of cards that we are not using but are still open. I checked out all of the available balance transfer offers on those cards and noted them. There are no 0% offers, but there are some offers between 5-8%. That is better than the 10.9% we are facing with our current card.

Next up, I did a little bit of shopping around for a 0% credit card. Quite a few bloggers have handy lists of 0% offers so that is where I go. I always review Jim’s list since he keeps it updated regularly (plus he’s a nice guy to boot). There are some very nice offers on there. But do we really want another card?

The last option is to just pay the darn credit card off as quickly as possible and pay the finance charges. This is definitely the less confusing option, but would likely cost more in the long run.

One thing I always try to do is look at the options and think about them for a little bit. I think about our situation and what is the best thing to do right now. Do we really need one more credit card to track? What about paying a little bit in finances charges for the last bit of credit card debt? How would getting a new card affect our credit rating? Could I swallow some pride and pay some finance charges for a while?

I am still undecided as to what route to take. I can’t help but be so thankful there are options. Way back when we started this journey, we didn’t have many at all. I’ll think about it for a few days and then make a decision.

Well, I just read about a low-tech scam out there where thieves are trying random credit card numbers and when they find one that works, they cut out the numbers from an old card to form the working number and glue them onto a new card. They scratch the magnetic strip on the back so clerks have to punch in the number.

Yahoo.com Article

My concern with our old cards was that our number was out there at previous places we have shopped at and that the number could get stolen that way. So on the cards we are not using, I placed email alerts on them and I also signed up for Mint.com. They give me a financial summary every week of our credit card balances. So far, I like this system since it helps me to keep a watchful eye on those credit cards we aren’t using.

But pretty soon…it will be time to cut up almost all of the cards. I’m really looking forward to that

I dug through all of our old paperwork and started logging each credit card statement and finance charge into a spreadsheet. If I didn’t have a statement, I contacted my credit card companies to see if I could get copies. Some had it where you could request copies online which was very convenient, but you could only request so many copies at once. Since I was going back to the beginning of it all (1995), it took a while to get everything together.

I tend to be a perfectionist when it comes to numbers. I like my numbers to be exact. Try as I might, I couldn’t get an exact number because one of our old cards was a store credit card. The company went out of business and there is no way to contact them (that I am aware of). I didn’t keep those statements. Probably because we did end up paying the card off and we closed the account. Then there was another account where it cost money to get copies. I didn’t want to do that, so I only included the statements I could find.

I thought about it, and I need to get this off my chest. I don’t have an exact number, but I am 100% sure of the following…

We have paid over $10,000 in finance charges!

It makes me sad that we didn’t realize how much we were paying and didn’t put a stop to our credit card debt a long time ago. Looking at my spreadsheet, some months seemed pretty innocent, especially in the beginning. $20 here…$40 there…it didn’t seem like too much at the time. It all adds up!

Right now, all of our credit card debt is at 0%. It will remain at that rate for a few more months and then the “normal” interest rate will apply (whatever that will end up being). Yes, it is definitely time to kick into high gear with our debt reduction.

Earlier this year the Federal Reserve proposed new rules for credit card companies. The major issuers immediately spoke out against the proposed rules, claiming that they would result in less competition, higher prices, and less choice for us the average consumer.

So what do these proposed rules mean for you? It first of all means that banks will have less opportunity to make changes to your account for arbitrary reasons. Some of these fundamental changes are as follows.

• Banks wouldn’t be able to hit you with a higher interest rate on debt you already owe.
• Prohibits “two cycle billing.” This is a practice that computes finance charges based on previous billing cycles.
• Banks would have to apply at least a portion of payments toward higher-interest rate debt. In the past issuers put payments consumers made toward cheaper debt, like balance transfers that generally had lower rates.
• Banks would have to provide consumers a reasonable amount of time to make payments.
• Credit Card Holds. The proposal would prohibit banks from imposing a fee when the credit limit is exceeded solely because a hold was placed on available credit. This can occur where the final dollar amount of a transaction was not known in advance (for example, when a consumer checks into a hotel, a hold is placed for the expected cost of the stay).

This potential rulemaking is a huge step in asserting consumer rights in the area of credit. Many at the fed believe this is a necessary step toward recovering the credit market. Will this limit some of the credit available to consumers? Absolutely! Over the last 9 years credit was made so readily available to individuals, that could not afford it, it has become a major contributor to today’s economy. These rules will tighten lending to those who can afford to pay it back. While that may seem more restrictive it is more in line with consumer sentiment.

The Federal Reserve needs your help. Public comments are being requested before August 4, 2008. I plan to post mine. I believe that interest rates should be capped at prime plus 12%. This will allow those in debt to recover, while still allowing banks to make money. As consumers get out of debt, they will have more disposable income, and spend more (cash I hope). If you agree I hope you will make your voice heard.

Go to federalreserve.gov and click on “consumer information” at the top of the page. Then click on “Proposed Rules for Credit Cards and Overdraft Services” and scroll to the bottom of the page. Look for Regulation AA and click on submit a comment.

Direct link here.

Thanks, Family Man for the guest post!

Discover is the new cheerleader for penalty APRs and plans to asses rates of 31% on top of their $39 over-the-limit fee. Other creditors are rushing to get in on the action, too.

[Via Consumerist.com]

Make sure you read the comments on this one. You’ll read about credit card companies lowering credit limits to just above how much you have charged on it. If you do not catch it, and pay extra next time, the finance charges they charge you may just put you over your credit limit. Scary!

Always check your statements!

It’s one of those things that none of us like to talk about, but unfortunately for many families not talking about it can lead to undue stress and complications should the unexpected happen. The subject we are talking about is death – and sooner or later it will affect every one of us. Unfortunately, for many families, they find out during this time of immense grief that the sudden death of a loved one or family member has brought about another unforeseen burden – credit card companies wanting to know who is going to be responsible for the deceased’s debt.

It’s almost unimaginable to think of – you are dealing with the death of a spouse or other family member and the phone rings with someone from the deceased’s credit card company wanting to know how you plan on settling the bill. The sad fact is that many companies try to take advantage of people during periods of grief to make decisions without understanding what they are doing. Know the facts to help you protect your family from credit card debt after a loved one passes away.

First and foremost understand that you are [generally] not responsible for a family member’s debt unless you:

• Co-signed for the credit card
• It was your spouse and you live in a community property state.

These are the only two ways, despite what the credit card company will tell you, that you are responsible for the debt of the person who has passed away.

A co-signer is not the same as an authorized user. Authorized users are not responsible for the debt of the deceased. They should immediately report the death to the credit card company and cease using the card, but their obligation stops there. Despite what the credit card company may tell you, you are not obliged to repay the debt if you were an authorized user.

Co-signers on the other hand are responsible for the full amount of the credit card debt. They become 100% liable for the debt at the time of passing of the deceased. Essentially you agreed to be responsible for the debt in case the original borrower could not pay it back – and this situation, unfortunately, qualifies as one in which they can’t pay it back.

If the deceased was your spouse and you live in a community property state you should also be aware that under state laws you will be responsible for the debt of your spouse (whether you were a co-signer, authorized user or not) at the time of their passing. Community property states [as of March 2008] are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

You should also be aware that if you held any joint accounts or real estate with the deceased that a portion of those accounts become part of the estate of the deceased and will or no will, the creditors will get their money first. The only financial asset that is protected from creditors at time of death is life insurance policies.

Don’t leave your family in a financial nightmare should you pass away unexpectedly. Take some time to go over your debts and financial assets with your spouse or significant other. Know the laws of your state and consult with a family lawyer to make sure that your credit card debt won’t haunt your family long after you are gone.

Thanks Jonathan for the guest post!

Now here’s some inspiration from Pants In a Can. He has paid off ALL of his credit card debt. How much? $28,000! Congrats!

Bjefferies is finding that it’s easier for him to reduce debt than lose weight. I’d have to agree. My thought is that with paying off debt you see that total go down immediately. It can take a little while for that scale to go down from eating healthy and exercising.

Arduous has an awesome list of changes she has made since starting her blog. There are quite a few things on her list that I’d like to try.

Tomorrow…I am going shopping for a pair of jeans

I also plan on finishing our taxes and working on our will. My life sounds pretty exciting…doesn’t it LOL?

Here’s a few articles that caught my eye this week:

My Money Blog has a cynical review of Maxed Out (movie about credit cards). I guess you can watch the movie for free online. When I get a chance I hope to watch it.

Gather Little by Little explains why he thinks peer to peer lending is a bad idea.

Blunt Money explains how you are standing in your own way. I agree that great things can happen when you change your attitude.

1.) My credit card didn’t increase my credit limit as quickly as I thought they did. I always thought they were quick to increase the limits when I was near the limit. In fact, in the beginning it took them a while before my very first credit limit increase. Once I get all the data assembled, I’ll have more on that.

2.) We spent a decent amount of money after we purchased our house. I knew we spent some to buy carpet and some furnishings. But my memory was fuzzy and I didn’t realize exactly how much we put on credit.

3.) I’ve had a few “binge and purge” shopping trips. I almost flipped when I saw a $900 charge to Walmart and then I felt a little better when I saw that money come back with a refund. I couldn’t remember what it was, but my husband did. I bought a laptop and then returned it. Yikes!

4.) I went a little charge crazy when we lived a few months in a bigger city. Target and Meijer were my favorite stores. I remember finding some great deals in those stores, but I didn’t remember the two page long credit card statements. If we move to a bigger city with more stores, I will have to be very careful not to go deal crazy.

My memory can be fuzzy at times, and it turns out that it was pretty fuzzy when it came to our past credit card spending. I’m glad that I am taking some time and reviewing old statements. Now it’s fresh in my mind how we got into the situation we are in and I can work to make sure it doesn’t happen again once our credit card debt is paid off.

For one, it really shows how much money we aren’t spending. We are doing something right to have that much money as “extra” money. Secondly, I can give a “take that!” to my credit card. That always feels a little good.

I’m happy to report that we have broken down below the $14,000 mark. Our credit card debt is now at $13,699.

It’s hard to describe how I feel right now. I think one of my favorite quotes helps to sum it up:

“What this power is, I cannot say. All I know is that it exists, and it becomes available only when you are in that state of mind in which you know exactly what you want, and are fully determined not to quit until you get it.”

- Alexander Graham Bell

I’m in that state of mind. I want our credit card debt paid off!

Hi, it’s Kim Palmer from the alpha consumer blog (www.usnews.com/alpha). For an upcoming article, I am looking for credit card users who recently experienced fee or interest rate increases. If you are willing to be in the story (and for me to use your name and experience), please email me at alphaconsumer@usnews.com.

If you feel like sharing your story and perhaps even venting a little to Kim, shoot her an email.

The biggest culprit? Bank of America.

Bank of America spokeswoman Betty Riess confirms some bank cardholders could be receiving rate increases for reasons other than declines in credit scores, such as running higher balances with their Bank of America cards or with other creditors. She says the increases are part of a “periodic review” that assesses customers’ credit risk.

[Via AOL.com]

Businesses do have a right to make money. But does this sound fair?

The bank [Bank of America] said it planned to raise the interest rate on her credit card from about 13 percent to 24.99 percent. Fishkin, 60, couldn’t figure out what she’d done to incur the higher rate. She had never been late on a credit card payment, just refinanced her home at a lower interest rate and just been rewarded by her credit union with a lower rate on her credit card there, she said.

[Via Star-Telegram.com]

Fishkin tried to get an answer on why her rates were increased but couldn’t find an answer. With $12,000 on her card (due to recently relocating), the additional 11.99% in interest is going to hit hard.

I don’t think I have to elaborate on how upset I would be if my credit card decided to raise my interest rate. I’ve been trying to keep credit lines open to help our credit score right now, but if they raised my interest rate more than a few percentage points, that would be the last straw. I’d complete the paperwork to close the card and pay it off under the current agreement. That generally appears to be an option if this happens to you.

In letters that were seen by or described to The Charlotte Observer, Bank of America told customers that they could lock in their current rates if they requested it in writing and agreed to not use the card and paid down the balance. If they wanted to keep using the card, they’d have to agree to the higher rates.

[Via Star-Telegram.com]

I guess I just don’t get it. If a person has been paying their credit card as agreed at 13% – why raise it to 24.99%? Wouldn’t that make it more difficult for the person to pay the debt and they would be more likely to default? That is a huge change in the interest rate.

Or…are they hoping that those who have been responsible with paying their cards will still pay responsibly with the higher rates?

I’d love to hear your thoughts.

Thanks to Anne and Tracy for sending me links to the articles!

According to the next month’s statement, I paid $80. Not quite paying the balance in full, but not paying the minimum payment ($20), either. But I turned around and charged an additional $215 on the card. By the end of December 1995, the card was basically maxed out with $22 left in available credit.

Three months was all it took.

Oh…what I would tell my 18 year-old self if I had a chance. I’m not sure it would have done much good, though. I should have known better. I like math – I should have realized what an 18.15% interest rate meant.

Anyways, what’s done is done. I never want to max out another credit card again.

I don’t remember what that first charge was, but with a little digging I was able to find a copy of my very first credit card bill. In all, during that first month I charged $125 and my card had a $500 limit.

So what was that very first charge? Did I go bonkers and treat my friends to Pizza Hut? Did I go on a clothes shopping spree?

I…paid…a…bill! My telephone bill at the dorm!

I thought for sure my first purchase would have been something very irresponsible for an 18 year-old with a new credit card. I have to admit – I am very surprised.

But wait – eight days later, the shopping spree began. The next two charges were to a local card shop. I know exactly what those charges were for…Magic the Gathering cards. I spent quite a bit of money on those cards and so did the people I played the game with.

The next charge was for a little over $30.00 and was made at K-Mart. I probably bought some clothes. Another charge for my telephone bill and a charge to the campus bookstore for some supplies rounded out the rest of my very first credit card bill.

I plan on digging up more old statements and taking more trips down debt memory lane. As I come across interesting tidbits, I’ll share them here. I think Cleverdude is right about writing your autobiography through spending.

In a way, I’m a little nervous to look through the old statements. I often think that you need to let go of your past mistakes and move forward. But I have a strong urge to dig into our past spending. I almost wonder if it is because we are getting closer to paying off our debt and I want to make sure that history doesn’t repeat itself once our cards are paid off.

My first article was published today and it illustrates what can happen if you choose to pay a fixed payment to your credit cards versus only paying the minimum. It was sobering after looking at the graphs I made because for many years we used to only pay the minimum payment on our cards. I think if I saw the total amount we have paid in finance charges for the past 12 years I would go into shock. I’m sure it’s a lot.

Anyways, there are quite a few great bloggers writing over there, so you might want to check out the Prosper blog. While people-to-people lending is discussed quite a bit, there are also articles about general personal finance.

The information was on a backup computer tape that was discovered missing last October. It was being stored at a warehouse run by Iron Mountain Inc., a data storage company, and was never checked out but can’t be found either, said Richard C. Jones, a spokesman for GE Money, part of General Electric Capital Corp.

[Via Yahoo.com]

On the bright side, social security numbers were only listed for about 150,000 of the 650,000 affected. On the not so bright side, it seems like this is happening too often

That debt is at 0% right now. Something that I could do is to use the extra money that I would be paying towards our credit cards and put it in our savings account. That way, the money could earn some interest. Before the end of the 0% balance transfer term (which is a year), I’ll take the money out of the savings and make a large payment to our credit card.

I’m on the fence as to what to do, so I thought I would open up the floor and ask your opinion. If you were in my situation, what would you do and why?

I ended up having the credit card company send me a balance transfer check for $20,000. I deposited it into my personal account and I distributed it to the three companies that make up our credit card debt (one credit card, my Prosper loan and our IRS debt).

At first glance, it seems like an easy enough decision. Putting all of our credit card debt at 0% interest makes sense mathematically. But personal finance decisions aren’t cookie-cutter. There are other things to consider besides the math behind it. Here’s a few examples of what went through my mind:

• Does this card have a universal default clause? (No.)
• Does this card have an existing balance? (No, it’s a brand new card.)
• Can we handle a huge payment due at one time since it will be on one card? (Our debts now are all due around the same time of the month so we can handle it. We could also choose to send payment twice a month or even weekly even though it is due monthly.)
• If something happened to me with all of the credit card debt in my name, would that impact my husband negatively? (Well, as far as I can tell, in Michigan it will affect my husband regardless.)
• How much of the balance could we pay off before the balance transfer period is over? (I’d love to say all of it, but I’m really not sure how much we’ll be able to pay.)
• If we can’t pay the entire balance before the period is over, how bad will the interest rate be? (The rate on the balance after the balance transfer period will be around 15%.)
• Will there be options after the balance transfer period to transfer the balance again for a lower rate? (I hope there will be since we will have a few cards with zero balances. But you never know.)

After thinking about all of these things, I decided to go ahead and transfer all of our credit card debt. According to this nifty calculator, I see that I will easily save over $1,000 in a year by doing this move.

Things could go sour and after a year we could have our entire credit card balance at 15%. Or, things could go well and all of our credit card debt could be paid off (which could happen if my husband got that job we are still waiting to hear about). With life, you never know what is going to happen. So in the end, I decided to go for it and save over $1,000 and go from there.

On Tuesday, I received a call but I was unable to catch it before the answering machine picked up. It turns out it was someone claiming to be from my credit card company and he needed to talk to me. He gave a number to call him back.

First thing I did was look at the caller ID. It came back “Unknown.” Hmm…

There are some scams out there that hope to get you to call back. So I didn’t. Instead, I took my credit card out and called the number on the back. I have to say, I’ve been having great luck lately with very helpful customer service representatives.

I explained to the woman that I had received a call and was given a number. I also told her how I am hesitant to call the number and I would like to see if she knew what it was about. I thought maybe it was because of my call a few days before when I requested to be taken off their marketing list.

The representative didn’t see anything on my account about them trying to contact me. So she asked me for the number I was given and she and put me on hold. She was going to try to look it up really quick. After a few minutes, she came back on and told me she couldn’t find it right off bat, but that doesn’t mean it wasn’t a number from their company. She said that their directory is many pages long. I believe it.

I asked her if there was anything that I can do to try to ensure that when I call the number, I am dealing with the actual company. She gave me some pointers:

Always get the representative’s name and their department. Asking for this information can narrow things down if you still feel uncomfortable about the call and want to call the number on the back of your card again.

The representative should be able to answer your question about your current balance and due date. If you are wondering about the validity of the call, ask the representative to tell you your current balance and your due date. They are allowed to give out that info, and it should be correct. If not, a red flag should go up.

By law, the company cannot give you your personally identifiable information over the phone. This is why they always ask you to verify your name and address. They cannot give you that information. You have to provide it to them. That said, they should not be asking you to verify your social security number.

Calls from their company (and likely many other credit card companies) will come up on a caller ID as “Unknown.” The representative explained to me that their phone system is complicated and it doesn’t show a number on a caller ID.

If you are still concerned, call the number on the back of your card and give them the information you collected. They will look into it and possibly report the incident to their security department.

In my case, the call I received was valid. As soon as I asked what department, they told me that it was for new card application division. I had just applied for a card, so it made sense. To seal the deal, I asked them what card I applied for. They got it correct. Continuing with the call, they knew my credit limits for the other cards I had with that company so I knew I was scam-free with this call.

It took me a few more minutes to question the call, but I found out some good useful info that I was able to share with you

The 0% balance transfer credit card that I applied for called me yesterday. Now, there aren’t to many zero percent offers out there, so I applied for one with the same parent company as the other two cards I discussed yesterday. They said I was approved, but I had maxed out my available credit. What they could do is give me a card with a $500 limit. Or, they could take some of the credit limit I had from my one card and transfer it to the new card.

First thing out of my mouth after she said that…”And then I can use the zero percent balance transfer offer using the credit I just transferred over?”

She said yes!

I went through a little bit of deja vu with asking this operator similar questions as the one from the other day. But I had to make sure I wasn’t going to get in trouble with this deal and not be able to take advantage of it. I decided to go ahead and transfer over some of my credit limit.

I now have the ability to get all of our credit card debt at zero percent for a year. I haven’t decided yet whether I will transfer all of our credit card debt or just a portion. I still have the 3.9% for life offer available. A lot of my decision will be based on some news that I am waiting on. Hopefully I will hear about that no later than next week.

This call brought about an interesting conversation I had with a customer service rep. I’ll share what I learned with you tomorrow. I ran out of time to finish it tonight.

EDIT: I may not have been clear when I let everyone in on what is happening with the 3.9% offer. That card does not have an existing balance. None of the cards that I am discussing right now have one, because I shifted all debt to one of my husband’s cards almost two months ago. It’s sitting there at 9.9%, except for about half that is at 5.9%. Sorry for the confusion.

I was feeling a little frisky, so I flat out told the guy that I have a huge balance I wouldn’t mind transferring to my card, but the offers available were not good enough. All of them had huge balance transfer fees and were very short durations. He asked me to hold on a second while he checked on something.

Ever have that feeling like you might be getting somewhere? You have a dazed look on your face that is a mixture of being surprised and not believing what is happening? That’s what it was like. After the longest few seconds on the phone, he came back and said I have an offer of 3.9% for the life of the balance with no balance transfer fee.

I was in shock. That was a pretty darn good deal and one of the best ones I’ve seen in a long time.

I was brought back into reality when he told me the offer was for my other card with a small balance. I told the operator that my credit limit with that card is so small that it’s not worth it. Then he dropped the bomb…

I could shift some or all of the available credit from my higher rate card to the lower rate card. It would take about 30 minutes for the transfer request to get through their system. Then I could take advantage of the 3.9% offer and have a higher credit limit to work with.

I feel silly because I never knew for certain that you could shift credit limits around like this. I first learned about the possibility of shifting credit limits a few days ago from another personal finance blogger. He wasn’t sure if I had to close one of the cards, though. But after my call, I found out that I can shift as much of the limit around as I wanted to and I can keep both cards open. And it’s all because both cards were issued by the same parent company.

Back to the telphone call, I wrote everything down and repeated it back to the operator. I wanted to make sure I got everything right. The poor guy really wanted to seal the deal, but I told him I have to think about it some more before doing anything. That’s a big rule I have. When it comes to credit cards, I make sure I think about what I am doing first!

After hanging up on the phone, I felt a little twinge in my stomach. Why? Because I had just applied for a 0% offer the day before. Applications can take a while to process and there was no guarantee I would get the card and get a suitable credit limit. What should I do?

Whenever I don’t feel comfortable about things that are happening, I wait. Maybe I just sleep on it or maybe I wait for a few days to see if anything else happens. In any case, I am super glad I didn’t go ahead with that balance transfer offer because I ended up with and even better offer.

I’ll tell you about that tomorrow, and also share some interesting tidbits that I learned from a credit card operator.

0% Balance Transfers Are The Bait, Understand The Trap

Nothing in life is free right? So why are credit card companies so eager to offer a 0% balance transfer to you? What does a mouse see when he sees a cheese laden mousetrap? He sees the cheese. What he doesn’t see it the bone-crushing striker panel that will flip whenever he snatches up the juicy piece of Cheddar he smells. What does someone in debt see when they are offered a wonderful 0% balance transfer? They see 12 months of interest free breathing room, where their payments go towards principal, and a little respite against the daily battle. I’ll help you see the rest of the trap.

Trap #1: Fees
If you aren’t careful, the 0% balance transfer offer may come with a balance transfer fee of 3%, which will cut into how awesome of an offer that is. In fact, while some companies do have caps on the fee, others, such as some Chase cards, don’t have a cap. Read the fine print very very carefully because if you apply for a card with a fee and then don’t use the transfer, you might be tempted to use it anyway because your credit score already took a hit for the new card. Don’t put yourself in that situation!

Trap #2: Interest Rate After Promotion
You probably know your aggregate interest rate this very second… so how does the post-promotional rate of the credit card compare? Does it make sense? If you have a 9.99% interest rate for life on a loan, it may not make sense to get a 0% interest rate for a year and then have it spike up to 19.99% afterwards… especially if you plan on taking more than a year to pay it off. However, if you think the 0% will let you pay down the debt so fast that you can get rid of it within the promotional time period… then it’s definitely a good deal. You need to do the math and figure out if it’s really the right decision for you.

Trap #3: They Trust You To Fail
Let’s be honest… you’re in debt for a reason, you spent more than you earned. While it’s not the worst thing in the world, it’s something the credit cards depend on. They depend on the fact that the probabilities are telling them that offering you a 0% balance transfer is going to earn them way more money than it is going to save you. What you need to do is to make sure, before you take on the offer, that you can change your previous behavior so that you don’t become profitable for the credit cards. They are counting on you to make yourself poorer, that’s the biggest trap of all.

There you have it, the three headed monster that stands behind each and every 0% balance transfer. Now that you are aware of it, it’s up to you to look at each of these offers in a new light and see them as more than free cash.

Note from Tricia: Often, on financial blogs, you will see links for credit card offers. These are usually referral links. The above links will take you to Jim’s sites where he has credit card offers listed. He makes a commission on each sale. As a blogger, I know about this, but I wanted to make sure you were aware. I don’t endorse obtaining new credit, but if you are going to do it anyway, the lists that bloggers like Jim produce can be very helpful in helping you select a card to apply for, since they often list the particular perks of each card and their offers.

Yahoo Story

All I can say after reading this story is how did this happen? Thank goodness both boxes made it to the correct destination. ExxonMobil is looking into they mix-up, and hopefully their response makes the news because it will be interesting to read.

I ended up transferring our credit card debt to one of our credit cards. The transferred balance now has a rate of 9.9%.

I haven’t even looked yet at the possiblity of transfering that balance to a new card to take advantage of a low balance transfer percentage. Something is telling me to hold off for a little bit.

That’s the weird thing about me. If I get a feeling about something, I usually listen. Yes, it may cost us a little bit in interest to wait and who knows if my feeling may be right or not. But I listen.