As Americans continue to struggle with the economy more and more evidence of the toll it has taken on families is showing up in bankruptcy courts all across the country. While most of America has been trying desperately to handle their debt consolidation problems with many even seeking the resources of debt management programs through credit counselors, it is more and more often leading to the last resort of bankruptcy.

There is some new hope being offered for those struggling with credit card debt through the new legislation being introduced by two Senate members. In January Sens. Sheldon Whitehouse, D-R.I. and Richard Durbin, D-Ill., introduced a bill seeking to give financially distressed consumers another source of intervention that would wipe out credit card debt for those that are forced into bankruptcy.

Consumer advocate groups that have been lobbying congress aimed at the FTC to crack down on the predatory lending practices of leading credit card companies and banks were successful in getting new legislation passed. The bad news is that they will not go into effect until next year for reasons that are not clear to consumer advocate groups who lobbied for more stringent reprimands and immediate actions.

The bill is aimed at the credit card companies who raise the interest rate higher than the 18.5 percent currently allowed, through increased penalty rates and fees, which is seen by congress as pushing more people into bankruptcy. The bill is meant to give consumers who are struggling to avoid bankruptcy more leverage with their creditors, as they would have their credit card debt wiped out if they are forced into bankruptcy and therefore creditors are more apt to make reasonable settlement agreements with the consumer.

Under the current bankruptcy laws for those filing Chapter 7 or Chapter 13 you would still be obligated to pay your credit card debt as well as your secured debt. This bill would eliminate that provision in the law that mandates that consumers who meet a certain income requirement must file Chapter 13 (instead of Chapter 7 which requires them to use only their liquidated assets to pay off debts), which requires them to agree to using their future income to pay off their debts. With this provision gone credit card companies would certainly be more prone to working with their customers rather than to see the account go into bankruptcy, where they could receive little or no payment at all.

Send your emails in support of this bill to The Federal Trade Commission, the Office of Thrift Supervision and the National Credit Union Administration or the Senate Judiciary subcommittee regarding the measure that would wipeout credit card debt for people filing for bankruptcy sponsored by Sens. Whitehouse and Durbin.

Tips on Credit Cards, Part 1

In today’s society, charge cards are used not only for necessary items and needs, but also to keep up with the Joneses. Although this was not their intention, so long as you continue to make your payments, the banks will encourage you to keep spending on anything and everything that you want in life. Because most people have misused these, credit cards are also one of the easiest places to save money. We don’t know if there is such a saying but there should be one for “if you want to save money, stop spending money”.

Thus the first way to save on your credit cards is to stop using them. Do not carry them with you. Cut them up keeping only one for emergencies. Only carry that one with you when you are traveling and might have an emergency such as a car problem. It is too easy to see something you think you want, know you should not spend the money on, and charge it anyway. If you do not have that card with you, you will have to think longer about whether you really want to drive all the way home and back to get that item or not. And, do you want to use the extra gas to drive back and forth?

However, you still need to work on the outstanding amount you owe on your cards. First, make a list of each card with its present monthly minimum payment (assuming you will not use the card again), the remaining balance to be paid off, and the interest rate. The way to get out of debt and save money at the same time is to work on paying off the card with the highest interest rate because that card is costing you more. Thus, each month you will make a minimum payment on the other cards and pay whatever additional amount you can on the highest rate card.

Do not consider consolidation loans. They may look good in the commercials but you are only getting a smaller monthly payment for all of your bills while paying a higher interest rate and for a longer period of time. If you want to get out from under your debt, instead of just living with it for the rest of your life, you must get them totally paid off. Consolidating your loans usually will not help because if you reduce your monthly payment but then charge on those cards again, you have just created a larger debt to payoff. Consolidating your loans only covers up the real problem of spending too much money. It is better to work at paying off those cards. Credit card debt is no fun. Look out for part two of this article soon.

Debt Counseling Services – Signs its a Scam

Whether someone is offering you debt consolidation services, debt management, a credit card application or just trying to get you to sign up for a free credit report its important that you pay attention to the details. Here are a few different scenarios.

• The ad assures you that there will be no credit check. Any legitimate company is going to want to see your credit report, even those that lend money to people with less than perfect credit.
• You have to call a 900 number to apply.
• The ad absolutely guarantees that you will be approved. No legitimate company will do that. This is a double warning sign if the ad specifies that you are absolutely approved for a large credit limit such as $2,500.
• The card is offered by a company that claims to be in the business of credit repair, especially if the name implies that it’s a not-for-profit operation. The real credit repair agencies are more interested in getting people out of debt, not into debt.
• Any offer that prompts you to say, “Wow! That sounds too good to be true.” You know the old saying about that. This is another one of those situations in which you should listen to your gut.

Even legitimate credit companies sometimes offer useless services.

For example, some companies offer “credit insurance,” to protect your card in case it gets stolen. The offer assures that you would not be responsible for any bogus charges if you notify the company right away. Sometimes, the company will offer this service free for three months but then charge you a monthly fee, which it will helpfully take by hitting your credit card automatically.

The problem is that under federal law, you are protected in the event someone steals your card for any purchase over $50, if you notify the company right away. Many companies will forgive that $50 anyway.

Another worthless service is credit disability insurance. Again, the idea sounds good. If you are disabled, your minimum payments are covered until you can get back on your feet.

Once you do get some credit, use it wisely. Resolve to never again get in the position of waking with cold sweats or letting the answering machine pick up because you have no way to pay your bills. Debt consolidation or debt management companies will be wanting to speak with you soon.

Your best friend right now is your good common sense. You know now how easy it can be to get in over your head. You know that nothing you buy on a whim will bring you more pleasure than a savings account and little or no debt.

I’m reminded of that great Jimmy Buffett song, “Permanent Reminder of a Temporary Feeling.” He was talking about things like tattoos, but he could just as well have been talking about having huge credit card balances with nothing to show for them. You know from your own experience how easily that can happen and how stupid you feel later on. If you’re not careful you could find yourself calling a debt consolidation company to help resolve the thousands of dollars in debt you have.

Great ways to avoid credit card debt

Credit card debts are becoming the most common forms of debts today. The process of settling the credit card debts is much simpler and hence should be settled faster.

Debts and credit cards

Credit cards are the most essential financial tool provided to consumers today. Immense competition in the world of banking and financial tools has resulted in easy availability of the same. Having multiple credit cards is no big deal with 0% charges and no balance prerequisites for getting a credit card. But this facility is often used in the wrong way by consumers. The benefit of paying later and buying now is an appealing prospect but leads to high interest payments with bills piled. Credit cards are used for payments of utility bills, medical bills, grocery bills and all kinds of bills. These pile up and result in debts. If not paid on time the high interest rates can make the financial situation worse. Hence avoiding debts of credit cards is the best way out.

Avoiding credit card debts

The best way to avoid debts on credit cards is to limit the use of the same. Also reducing the number of credit cards is another way out. Generally if card has overdrawn its limit then another card is used. This results in a repetitive chain of debts which are never ending. Hence by reducing the number of credit cards and trying to make payments by cash are the best ways to avoid debts on the credit cards.

Settling smaller bills

The credit card debts result in poor credit rating which can be a problem for future financial investments and loans. Credit rating can be improved through the settlement of smaller bills. Usually the smaller bills are piled on because they are less in amount and the general conception is to settle these all together. But by settling smaller bill amounts the credit rating can be improve and also unnecessary interest charges on these bills can be saved. Settlements of smaller amounts of bills are the best ways to avoid credit card debts.

Negotiations for credit card settlements

Even though avoiding debts are the best way out of credit card debts there are unavoidable circumstances like illnesses and loss of employment which leads to the same. In such circumstances negotiations are the best way out to avoid further debts. Negotiations can lead to reduction of the credit card debt. The amount can sometimes be reduced to almost 50% which is a benefit only on credit card debts. It helps to improve the credit rating and the remaining amount of the debt can also be paid in installments.

Using common sense is also always a very good option.

Avoid Credit Card Debt - Consider Hidden Credit Card Costs

The Fixed-Rate Credit Card That Isn’t: When you take out a fixed-rate mortgage, you know what the rate will be for the entire life of the loan. When you take out a fixed-rate car loan, you know that the interest rate will be the same on the first payment as the last. When you take out a fixed-rate credit card, it’s an entirely different story. Severe credit card debt can be avoided if you’re careful.

Variable-Rate Cards: Just like with mortgages, a variable rate means the interest rate is tied to another interest rate in the economy, and will change if that interest rate changes.

Every card issuer that offers a variable-rate card is free to decide how it’s going to compute the rate. One, for instance, may determine the rate by adding 5 percent to the prime rate as listed in the Wall Street Journal. Another may choose to tie the rate to the federal discount rate.

Most variable-rate cards change rates quarterly but some do semiannually-it is up to the card issuer to decide. Information about how the variable rate is determined, and when it changes, has to be disclosed up front in applications and solicitations. According to CardTrak.com, most variable-rate cards have interest rate “floors” below which the interest rate cannot go, even if the index rate goes lower. If rates dip very low, as they did in 2001, consumers may be better off getting a lower-rate card elsewhere than sticking with a bottomed-out variable rate.

Tiered-Rate Cards: A few credit card programs offer tiered rates: The interest rate depends on the balance on the card. For example, a tiered card may charge 17 percent on balances up to and including $1,000, and 13 percent on balances above $1,000. This rate structure is designed to reward higher balances and make more money off lower balances. Tiered-rate cards are usually not good deals because they “reward” customers for going deeper into debt.

Different Rates for Different Balances: Many cards now charge different rates for different balances. There may be a lower rate for the balances you transferred from another card during a promotion, for example, or another rate for cash advances. If you have balances subject to different interest rates, your issuer will print an “effective” rate on the statement, which is basically an average of the different rates you are paying.

A caution: All issuers allocate payments to the lowest-rate balance first. That means you’ll be wiping out the cheapest balance first. This is directly contradictory to the most common advice for paying off debt, which recommends you pay off your highest-rate balance first. Consider yourself forewarned.

Teaser Rates: 5.9 percent or even 0 percent interest sounds great. And it can be. But remember: Card issuers would not continue to offer teaser rates if they weren’t profitable. Many teaser rates just don’t last that long. Six months sounds like a long time, but by the time you’ve completed the transfer (which can take a few weeks), you may not benefit from the new rate that long. And if you don’t find a new card or negotiate a better deal, you may be stuck with a higher rate than you need.

So which do you choose: a fixed-rate, variable-rate, or tiered-rate card? It really doesn’t make a difference whether you choose a fixed-rate or variable-rate card, since neither is completely stable. So far, there have been no studies that tell whether fixed or variable-rate cards change rates more dramatically. We think it’s a matter of finding a bank that has a general reputation for charging low rates (fixed or variable) and hoping they don’t decide to suddenly change their marketing strategy. Whatever you choose, you are taking something of a chance. The exception are cards from Arkansas banks, where state law keeps rates very low. If you can get one of these cards, you know the rate will be good as long as that law’s in place!

When Your Account Changes Hands

It’s true that the big banks keep getting bigger-at least in the case of credit card issuers. Credit cards are so profitable for banks that “do it right” that many of the larger banks want to get more and more customers. Sometimes, they’ll just buy them from other issuers.

Card issuers have to give you fifteen days’ advance written notice before changing the terms of the credit card. This is also true if a bank buys another bank’s cards and raises any of the costs. In addition, individual states may have laws that cover banks located in that state.

If, for instance, your new credit card issuer is located in Delaware or New York, you will have extra protection against a sudden rate hike. Delaware and New York laws require issuers to give customers thirty days’ advance written notice before raising the rate, and also require banks to give customers the opportunity to pay off the card at the old terms and surrender the card.

Online solutions for non profit credit card consolidation

There are options like non profit credit card consolidation online and through regular services also which help in eliminating all credit card debts. All of these services have one common goal; to essentially save a consumer money.

Online credit card consolidation

There are various companies which provide online non profit credit card consolidation so that debts can be settled and the consumer can get good credit rating. These companies function through online modes and the entire process from application to the settlement of debts is done online. Contacts are made through email and personally when required. These non profit companies check the credentials of the clients like their home addresses, employment status and other verifications and then begin the process of consolidation.

Benefits of online consolidation of credit cards through non profit companies

The online option of settlement of debts and credits is a very useful option. This process is much faster than the regular consolidation companies. The verification of the company and comparison of the services offered can be done in minutes and that too in the comfort of the house or office. There are more options to choose from and the time taken for the same is very less. Moreover these non profit credit card consolidation companies also give the benefit of free services like credit counselling which helps in better management of debts. There is no fees charged for the service and the users in dire strait can avail these services to get out of debts. Consolidation of debts against the credit cards is done with the same benefits like low interest rates and monthly repayment options.

Other non profit options for settling credit card debts

Apart from the non profit credit card consolidation there are also options like credit counsellors who help in negotiating with the banks and the service providers. There are expert negotiators who settle debts for their clients and also help in reducing the amount of the debts. Through these negotiations the debts on credit cards can be reduced to almost 50% in many cases. The reduction is done because of many debtors become defaulters and don’t pay any amount of their debts. In such cases the banks have little options left except legal battles. Hence with negotiations they have the chance of getting back a good amount of their money.

Selecting an online service

While selecting an online service for non profit credit card consolidation comparison and research on the companies is required. The services should be non profit with no hidden charges in their terms and conditions. Accreditations are also a vital factor while selecting online credit card consolidation options. It is common for these services (even though they are a non-profit) to have some minimal monthly service fee. If they didn’t charge something they wouldn’t be able to afford to continue the service. In most cases the fees are minimal. Any company that asks for a service fee that seem either too high or too low should be scrutinized carefully.