A lot of people talk of the topics of debt consolidation against debt negotiation because both of these alternatives suggest the opportunity for financial freedom. Identifying which alternative is best will depend on the person’s situation. Every of these decisions have pros and cons. Both must begin with a cautious research of the personal financial case. The customer must decide what kind of service, what they are able to pay and what the entire consequence will be for the credit report. Consolidation and negotiation will be represented in a different way depending on whom the person speaks to and what their favors are. Consolidation organizations will take the view that debt consolidation against debt negotiation is not actually two various things. The majority of companies can and will provide both services. Not only will they consolidate debts into one paying but they will negotiate with lenders for lessened interest rates and annulment of fees. They will help with consolidation and payment of the debt but this is not actually negotiation. It is crucial for the person to comprehend exactly what service is accessible and how it will be used to make credit grow and lessen the debt.
When considered from the negotiation part, this debate can be seen as something entirely dissimilar. Negotiation draws into the bargain with lenders for a smaller repay amount. The majority of lenders are able to settle for a lessened amount if the amount is repaid in entire sum. Negotiation services will work with the customer to find the compromise. This can be a long proceeding, taking as long as half a year to a year. Once a customer identifies what they can essentially repay, the organization will make an offer for the person to lenders. The customer must have the finances in the bank waiting when a settlement is achieved as repayment is required instantly.
Because these several alternatives are very dissimilar, they will have dissimilar effects on a credit report. Negotiation may not fix credit but it will represent that the customer has repaid the liabilities in entire sum which can go a long way with future lenders. Consolidation has customarily an impact on a credit report after counseling. Some lenders view this as a good step, specifically since timely repayments are settled. They may shift all bad information once the customer has finished a consolidation program, but this depends on lender. Reviewing the impacts on the credit report is just one of many approaches that the debt consolidation against debt negotiation discussion can be considered. This subject can be discussed from another point of view. Some individuals may feel it is perfect to repay off everything that they have to, which is only reached through consolidation. Others think that things like interest and fees are not inevitably valid liabilities that must be repaid back. Regardless which party of the discussion an individual take, it is up to the person to come to a final decision about expenditure habits.
Today one must know how to select the credit repair companies that really “deliver”. Too many of the credit repair companies are fighting to get you as their loyal client, but of course not all of these companies are ready to really assist you with repairing your credit. More info about credit repair companies.
Customer debt settlement suggests an approach for debtors to lessen or eliminate unsecured liabilities through negotiations with credit card organizations and other personal credit lenders. If one takes complicated, unsecured liabilities through charge accounts and other personal credits, there are a lot of settlement organizations that can assist in a legitimate and positive way. Customer debt settlements can be reached by professional sources you can find in the web. A customer debt settlement has become a favored option for a lot of people who have remarkable personal liabilities and are not capable to meet their payment amount.
The majority of Americans who are thinking of consumer debt settlements, find they are in immoderation of ten thousands of dollars of unsecured debt through credit card charges alone. A huge number of households are repaying between eighteen to twenty four percent money charges on charge accounts and refuge to repay the interest charges every month without taking the principal. A customer debt settlement alternative may offer the relief required. For those who are experiencing financial difficulties through many unexpected circumstances such as illness, divorce or unemployment, utilizing a company can offer a welcome alleviation. Organizations, law companies and non-profit companies provide alternatives for personal, financial decisions. Some options contain consolidation credits and conversion an individual budget. But for those who require financial management, debt settlement is an approach to repay off all financial liabilities and start to fix credit history without using bankruptcy. A confident, credit counseling organization can offer a professional judge who can negotiate with creditors a lessening of all liabilities to repay off. Sometimes securing as much as a sixty percent entire debt lessening, meets the creditor’s needs.
Sometimes, if one is not capable to agree to pay up to eighty five percent of a customer debt settlement, credit card and other creditors will accept to report a balance with them paid as agreed. This will eliminate individual’s credit report immediately and credit history can be fixed. Customer debt settlements that are made for less than eighty five percent are harder to settle a positive repay off status, nevertheless not unreal. An experienced professional may sometimes be capable to settle an agreement for a paid as agreed repay off status for a lessened percentage. It depends on the lender’s capability. These decisions can be efficient because most creditors are happy to get some repay off as opposed to nothing. Another alleviation alternative suggested is negotiations for more crucial financial circumstances. Customers who have met with unforeseen, financial difficulties can find assistance through organizations that can negotiate with lenders on behalf of customers. Through professional judges (arbitrators), consolidation services debt settlements can be secured that can lessen a customer’s entire debts by as much as sixty up to seventy percent in some situations.
By far not all credit repair companies are created equal. And though credit repair market is flooded with credit repair companies offering their services, you need to be smart to choose the best.
Learn more about credit repair sales here.
If you are behind on bills, you might be getting notices that you are facing “Charge Off.” Do you know the difference between a Charge Off and a Collection?
“Charge Off” means that the institution that loaned you money is virtually “saying Uncle” and giving up on you ever paying the money back. They take it as a tax write off (loss) and move on. ”Cost of doing business…” Does that mean you’re off the hook? Nope.
Many people mistakenly think when a debt has been charged-off that it’s been cancelled by the creditor. This is not true. You are still responsible for paying off the debt. However, you will not be able to use your credit card to make purchases, because when a company “charges off” the debt you owe them – they are FOR SURE going to cancel that card!
An account is usually charged off after 180 days, or six months, of less-than-minimum payments. The charge-off will remain on your credit report for seven years from the date it was charged-off. If you pay the debt, it will be updated with a status of “Charged-Off Paid” or “Charged-Off Settled.” Either is better than a simple “charge-off” status, but are still undesirable.
Even though the creditor has acknowledged your debt as a loss in its financial records, you don’t get away free. Your creditor will add a negative entry (a charge-off) to your credit report and continue to attempt to collect on the debt.
Normally, the folks who loaned you money (creditor) will then turn the debt over to a Collection Agency… they will file a COLLECTION on your credit report. This means you will have a Charge-Off AND a Collection hurting your credit score for the same debt!
But WAIT… it can get WORSE! If you don’t respond to the Collection Agency, they can “sell” your collection to another agency who will try to collect it… and it will reflect as a NEW Collection!
The only way to remove a charge-off, or collection from your credit report is to wait the seven-year period (plus 180 days from the time it was reported to the Agency – so really 7.5 years) or negotiate with the creditor to have it removed after you pay the account in full.
If you are considering a mortgage loan to purchase or refinance, please contact Steve and Eleanor Thorne, First Financial Services, Inc Raleigh, NC 919-649-5058
Trying to improve your credit scores so you can purchase a home? One of the first things you can do is pay off credit card debt. If you have several accounts, which one are you going to pay off first?
Most people would tell you to pay off the account with the highest interest rate. “The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20% head knowledge and 80% behavior.You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.”
See the idea is to get into a habit that you can continue. If you have other questions about paying off credit card debt (which really is one fo the fastest things you can do to raise scores) contact Steve and Eleanor Thorne, First Financial Services, 919-649-6068.
Credit card companies are the great part of the financial market. People are looking for the good credit card offers as nowadays it’s essential to have the credit card. Even if you prefer to pay in cash in order not to get in debts, you still need a credit card as there are products and services you can buy with the credit card only. The credit card is also great in case of emergency if you don’t have enough cash with you at the moment. It might even save your life. Of course, not all people are able to manage their finance in the right way and keep under control the use of the credit card. The interest rates the credit card companies offer are usually more high than the average value in the financial market. Therefore the excessive use of the credit card might result in the growing debts. In order not to follow this way the customer should remember the terms and conditions of his credit line and follow the rules strictly. It’s necessary to make the monthly payments on time and pay all the necessary fees. This will not only save you money but also add some good records to your credit history. This is the simplest way to improve your credit values such as the credit score and rating. These values are the most important factors when you need the personal loan and the bank you apply for makes the decision on the approval of your application.
When you look for the new credit card, you will see that the number of different offers is great. They vary not only with the credit conditions but also with the specific options the credit card companies offer to their customers. However, it’s also necessary to take care about the fees. Make sure that you don’t have to pay something special.
The credit card options are very different. The most popular one is cash back and the customers find it very profitable. This is the good advantage for those who have good credit score. In order to apply for the cash back program it’s necessary to check whether the credit values are high enough. If not, your application is very likely to be rejected. The cash back programs are usually called the reward programs. The common concept of them is the following. When you pay with the credit card, the definite amount of money is sent back to your credit card and in this way the purchase is cheaper. This amount depends on the price of the product or service you buy and the definite credit card program.
The reward is another incentive to spend more. You need to be very careful with this option. Note that the cash back credit card programs often have higher interest rate. This is the way the credit card companies benefit from this credit card type. They don’t offer anything for free.
Although your credit card has lots of great options, it’s good idea not to use it too much.
This simple rule can save you big money in your everyday life: never rush to fill out any credit card applications, before researching the niche.
Surely sometimes credit card applications are the only way to get access to the numbers about quotes. In this scenario your actions make sense. In all other cases – do not hurry up. Visit this blog and learn the useful tips about how to choose proper credit card applications and how to act
accordingly.
Working on your credit scores so you can purchase a home?
If you are not behind on payments, and you think you can manage the payments as they are (without closing accounts)… let’s talk about one of the most important things you can do to raise your credit score.
Take out your wallet… Look at the Credit Cards; and find the ones that have the name of a STORE on them (these are just examples):
Rooms To Go
Belks
Victoria Secret
Apple
Lowe’s
Sears
Pottery Barn
Radio Shack
Bank of America
Wells Fargo
CitiGroup
American Express
Capital One
Provident
American Airlines
So, when you have an extra $50, which ones do you pay down first? Well, our suggestion is that you pay OFF the first stack as fast as possible. Not just down to 50% balance versus Credit Limit… these are the ones you really ought to cut up and close. Do NOT use STORE credit cards if you can help it! It’s not worth the discount to defer payments on Rooms To Go if you care about your Credit Score! Listen to Dave Ramsey and buy the furniture when you can afford to pay cash!
With the other two stacks— work to get rid of the Capital One, Provident, “B” Tier cards as quickly as possible and cut that card up. You might not want to cancel the account, having the limit there is okay with a zero balance—but they are difficult to deal with and charge very Large Fees.
Once you have THOSE cards paid off, start working on the “Bank” credit cards. Pay each one down to at least a 50% balance. If you do this—you will have a GREAT credit scores! That’s the GOAL! Right?
If you have questions about buying a home, or want specific information about your credit – please call Steve and Eleanor Thorne, First Financial Services! 919-659-5058
Nine months later, the Credit CARD Act of 2009 is finally going into full effect. We’ve seen banks slowly react to the new laws by working the loopholes, rather than complying ahead of time, but come Monday February 22, 2010, all the provisions of the CARD Act will be law. Here are a few of the key changes to the law that matter to consumers:
Credit Card Disclosures
Credit card issuers must now give you 45 days notice before making changes to your rates or fees. This includes:
- Interest rate hikes (for fixed APR credit cards)
- Doesn’t apply to variable rate cards
- Doesn’t apply for changes after an introductory rate expires
- Doesn’t apply for defaulted accounts
- Change annual fees, cash advance fees or late fees that affect your card
- Make other “significant changes” to your terms
If you don’t like the changes, you have the right to close your account. Closing your account will let you opt out of the changes and you will have a minimum of five years to pay off your balance. Note: this could mean that your minimum payment will go up.
Credit card companies must tell you how long it will take to pay off your balance. A new section will be added to your bill that tells you how long it will take to pay off your credit card with the minimum payment as well as how much you will end up paying in interest. Also, your bill must show you how much you will have to pay to eliminate your credit card debt in three years and how much interest you will pay in that scenario.
Billing and Payments
Credit card companies must deliver your bill at least 21 days prior to the due date.
Credit card bill due dates must be the same each month.
Payments sent prior to 5 PM on the due date are considered on time.
If due date falls on a a holiday or weekend, credit card companies must accept payments as “on time” on the following business day.
Credit card payments apply to highest interest balances first. For example, if you have a cash advance balance at 20.99% and a normal purchase balance of 13.99%, your payments pay down the cash advance balance first. This does not apply to purchases for deferred interest plans. If you wish to pay down the balance on deferred interest, you must request that extra payments be applied to that balance. Otherwise, your credit card company will begin applying payments towards the deferred interest 2 billing cycles prior to the end of the deferral period.
Double-cycle billing, otherwise known as two-cycle billing, has been banned.
Credit Card Fees, Rates and Limits
Credit card issuers cannot increase your interest rate in the first 12 months after signing up for a card. There are the usual caveats to this rule, however:
- Does not apply to variable interest rate credit cards.
- Introductory rates can still be offered (for a minimum of 6 months)
- Does not apply if you are over 60 days late on a payment
Increased rates will only be applied to new charges. For example, if you have $5,000 in debt at 13.99% and the credit card company raises your interest rate to 17,99%, you’ll still pay 13.99% on the original $5,000. Subsequent balance accrued will be financed at 17.99%.
Cardholders must opt-in for over-the-limit protection. Otherwise, your card will simply be denied if you are maxed out. If you do opt-in for over-the-limit protection, your credit card company can only fee you once per billing cycle for going over-the-limit.
Credit card fees are capped at 25% of the initial credit limit. This only applies to annual feels, application fees, etc. and does not include penalties.
Consumers under 21 must have a co-signer or show proof that they can make payments.
With all that being said, it’s important to note that the CARD Act doesn’t cover everything. Be sure you’re aware of what’s not in the CARD Act. After February 22, credit card companies will still be able to do the following:
What’s Not Covered by the CARD Act
Credit card companies can raise your interest rate after 12 months without cause. All they need to do is notify you, pursuant to the above rules. This will apply to your future purchases.
There is no cap on interest rates. This is something that consumer advocates fought hard for but didn’t get into the bill. Credit card companies can still charge you sky high rates if they want (and if its commercially viable). But of course, you can always close your account if this happens.
New fees are fair game. The CARD Act made the mistake of specifying the fees that it was restricting. The new kids on the block – stuff like dormancy fees, paper statement fees and foreign transaction fees – are still on the table. Read more about new credit card tricks in the post-CARD Act era.
Your credit limit can still be reduced. Issuers can still cut down on your rates or even close your account without the 45 day notice. Be sure to call and ask why if this happens, since it can be hell on your credit rating.
Variable rates still suck. While efforts have been made to protect your fixed rate APR from getting jacked up, variable rate credit cards, by nature, can still go up and up for essentially no reason.
How do you feel about the new changes thanks to the CARD Act? Do you feel safe as a credit consumer? Or do you feel like it’s too little, too late? Sound off in the comments.
Image: SEIU International
Related posts:
- Watch Your Back: 8 Up and Coming Credit Card Fee-Creep Tricks
- Credit card bill on the way… (We hope!)
- New Rules for February: College Students Won’t Be Receiving Any Valentines from Credit Card Companies in 2010
Credit cards are far from one size fits all and the big names in lending know it. That’s why they’ve devised each credit card to target a specific demographic and income level. Whether it’s so you can get the most rewards out of the credit card or it’s so the credit card companies can get the most profit from you is debatable. Either way, it’s interesting to see the vast differences between luxury credit cards and plastic for the poor, unemployed and possibly even bankrupt. Check out some of these outliers on either side of the spectrum.
Luxury Credit Cards for Big Wigs and High Rollers
The American Express Centurion (aka the Black AMEX)
Centurion, literally, means an officer in the Roman army. In other words, one of the most powerful individuals amidst one of the most powerful empires in history. And that’s exactly the message that the Black AMEX means to convey. This invite only luxury credit card is the engimatic credit card of the rich and famous with numerous high bars to keep the riffraff out, including a $2,500 annual fee. To even get on the radar, you have to spend $250,000 annually on an American Express Platinum Card, another exclusive invite only card that requires you to first rack up a big bill on your American Express Gold or American Express Green card. There are approximately 30,000 to 100,000 people out there who’ve jumped through enough golden hoops to wield this monocle-dropping piece of plastic including Simon Cowell, Beyonce Knowles, Kanye West, Jerry Seinfeld and Lindsay Lohan.
Visa Black Card
Barclay’s Bank came up with this “me too” card in early 2009 and are trying to build a mystique and prestige comparable to the AMEX Black Card by stating that the card is available only to 1% of the U.S. population. However, with an annual fee of $495 and the ability to apply online, the Visa Black Card is clearly the poor man’s luxury credit card. Still, Visa goes to great lengths to make you feel like a sultan even if you’re nothing but a lowly princeling by offering 24/7 “world class concierge” service, meaning they’ll do everything for you from coaching you on business meeting protocol in Japan to booking you a tee time or hunting down a rare, out-of-print book.
Citi Chairman Card
The Citi Chairman Card was designed to pamper C-level executives of global moneymakers at the dizzyingly high standard of luxury that they are accustomed to everywhere else they go. Originally catered towards clients of Smith Barney, the Citi Chairman card offers 24/7 concierge service, sweet deals on private chartered jets and ample insurance for pretty much any little thing that can go wrong at home or abroad, all for a $500 annual fee.
Credit Cards for the Poor
Visa ReliaCard
“Just because someone doesn’t have any money doesn’t mean you can’t make money off of them” was probably the rationale behind U.S. Bank’s ReliaCard, a debit card designed for the unemployed. For those out of work but still covered by unemployment insurance, you can choose to have your paychecks from Uncle Sam loaded directly onto your Visa debit card so you can use it just like any other piece of plastic. It’s actually kind of a win-win situation, especially for those who don’t have bank accounts: you avoid the exorbitant fees of seedy check cashing joints, the government saves on paper and the card issuer gets interchange fees.
Bank of America Secured Visa
A secured credit card is about the best route you can go when rebuilding your credit card after a bankruptcy or credit rating misstep. But they are becoming harder and harder to come by. That’s because they aren’t hugely profitable for credit card issuers since there is little to no risk of defaulting, overdrawing or incurring a late fee. For example, the Bank of America Secured Visa’s credit line is commensurate with the amount of collateral you put up and it can be as low as $300. The card only has a $29 annual fee and is really more like a credit card with training wheels for people looking to rebuild their credit.
AccountNow from Visa or MasterCard
The Visa AccountNow and Mastercard AccountNow are kind of like a payday loan joint and a prepaid credit card all rolled up into one. You can have your paycheck deposited directly into your AccountNow card and then use it like any other Visa or Mastercard. You can also wire cash to your card through MoneyGram or Western Union (making it great for Nigerian scammers, I guess). But the really whiz bang thing about the AccountNow card is the ability to get a little bitty loan from time to time. You can do so by requesting and advance by phone or online and then the money is put onto your card. You have to borrow in $20 increments and your charged an upfront advance fee of 12.5%. After that, iAdvance automatically takes a cut of your direct deposit paycheck to pay off your debt.
Of course, you should really, really crunch some numbers before deciding if this card is right for you. In fact, iAdvances own website says: “You should carefully consider the costs of iAdvance. Alternative forms of short-term credit exist that might be less expensive and more advantageous to you as the borrower.”
Know of any outrageous luxury credit cards or credit cards geared towards low income consumers? Tell us about them in the comments.
image by infrogmation
Related posts:
- Dreaming Big: The Luxury Credit Cards
- The Business of Credit Cards – Part I
- A Primer: Secured Credit Cards
Are you considering a Home Purchase??? Many of us realize that credit scores are the Holy Grail—the one thing you do not want to screw up… and if you have, it’s the one thing you want to figure out how to FIX… FAST!
We talk to people all the time who have been laid off, or had an accident, or got sick, or relocated and then hit hard times. The first thing you need to do is GET OVER IT! Get past the anger and the sleepless nights trying to juggle everything, and start making a plan.
All too often people could increase scores and save years of problems if they asked for help EARLIER. We recommend talking to a Consumer Credit Counseling Service (NON PROFIT) before you get behind on bills. They can get credit card rates lowered, past due and over limit fees dropped, and your total monthly payments managable. Once you’ve made 9 payments into these Services, you will probably see a positive difference in your Credit Score!
Again—you want to make sure to talk to NON-Profit Consumer Credit Counselors. They will typically keep only a very small fee for distributing the payments.
Are you trying to improve your score so you can purchase a home?? Contact Steve and Eleanor Thorne at First Financial Services, Cary, NC 919-649-5058
Every six months or so it’s important to take a peek at your credit report. Look for accuracies, and make sure no one else is using your credit! The Fair and Accurate Credit Transactions Act of 2003 (FACTA) made it possible to look at your credit for FREE from Equifax, TransUnion and Experian (the three main repositories).You can go to http://www.annualcreditreport.com or call 877.322.8228. If you use ANY OTHER service, you will get charged. So be careful if you are just “Googling” Free Credit report – you probably will end up on a page that requires a subscription.Also, know that getting your free credit report will NOT give you your credit score. If you are considering purchasing a home, you will want a credit score OVER 620.To get prequaified, please call Steve Thorne 919-649-5058
