December 31, 2008 | Author: admin | Category:
Credit
Many times we look at the debt accumulated by so many American’s and think that they have just been irresponsible with their credit and their money. In essence, that is not really the case. Many American’s were hooked into too much credit by the companies themselves who provided low income people with credit that well exceeded their annual income, with no regard for how they would ever be able to catch up if they actually charged on all their cards. Unfortunately, the games that credit card companies have been playing for many years, were just being ignored as more and more people were going under with debt. Now finally, at the directive of the general public, the Federal government is now going to be setting stricter guidelines for these companies and making it tougher for them to get over on people. Although these laws will not be fully in effect until 2010, most experts believe that the credit card companies will begin to get the ball rolling on these changes soon, so that they can find new ways to begin making us pay, just legally and within the law. The following is the list of the changes in the credit laws that will coming soon as stated by experts on the “CBS Early Show”:
Ban raising rates on existing balances unless you’re at least 30 days late paying the minimum due
“They’re not gonna raise the interest rate if you’ve been less than 30 days late. In the past, if you were three days late (for instance), they would hit you. That’s not gonna happen anymore. So that’s a really, really good thing.” Payments won’t show up on credit reports as late anymore until the 30-day mark is hit.
Eliminate the “universal default policy”
“They’re not gonna increase interest rates if your payment is missed on another card. … If you miss on your phone bill or something like that, the credit card companies see it and raise all your interest rates to across the board. That’s what’s called the ‘universal default clause.’ That one’s gonna be gone, too.”
End “double-cycle billing”
“No (more) retroactive interest. This is what’s called ‘double-cycle billing.’ You’ve paid your bill for the last month, but you’re still paying interest, even though you’ve paid it off in the past. It’s outrageous. So, they’re gonna stop double-cycle billing. That’s a really very, very good thing.”
If you pay more than the minimum due, prohibit banks from applying the extra only to the parts of your balance carrying the lowest interest rate
Improve the readability of monthly statements
“Those things have got all sorts of legalese and (are) very difficult (to read). (Banks are) supposedly gonna make it much easier to read, so you understand the interest rates, you understand the late fees and all that, so that, hopefully, should make things a little bit better.”
There will be more bold-face print, and still be a bunch of legalese, but more plain language. Companies will have to be more forthcoming on their policies.
Most experts feel, although these changes will begin moving the credit card companies in the right direction, that they will still find legal ways to get us to pay more like increasing membership fees and so forth. For now keep an eye on the changes and on your statements, because you don’t know for sure when the changes will begin or how other areas of your billing may be affected.
August 05, 2008 | Author: admin | Category:
Credit
Many people remain uninformed about credit card debt and about credit cards in general. When asked about their debt, 35% of American’s said they carry balances on credit cards, and about 5% said they didn’t know. (How do you not know?) Maybe it is just that they don’t want to admit it. Studies by the Federal Reserve and data release by credit card companies indicate that the percentage of households with credit card balances in this country is at least in the mid 40’s. It could be even higher with the economy on the down swing.
In a separate study, nearly 2/3 of more than 1,000 people said they carry a revolving balance on one or more of their credit cards. Another 8% said they didn’t know whether or not they did. And 15% of people with credit cards say that they have experienced at least some amount of difficulty in paying their minimum balances. They continue to do studies about consumer debt which still show that most consumers don’t really understand the whole thing. They have a limited understanding of reading their credit report, understanding their credit scores and in spite of this they say that consumer knowledge about credit is improving. For example, less than a third of Americans understand that a credit score is a number that estimates your likelihood of paying back a debt. A credit score is based on but is separate from your credit reports. The three major credit reporting agencies are Equifax, Experian and TransUnion and the best known credit score is the FICO . The best way to improve your credit score is to pay all your bills on time. The range is about 300-850 and the higher your score the better the credit you can get and the lower the interest rate available to you.
More than a third of American’s were unaware that insurance companies use credit scores to approve your coverage and to set your rate. Less than 3/5 knew that regularly maxing out a credit card, even if paying your bills on time will lower your credit score. In addition, 79% of American’s thought they could get their credit score free once a year, however that is your credit report, not your credit score. You generally have to pay about $15 for your credit score number.
Most people don’t realize that they need to be checking their reports for accuracy every year, and they should check their credit score every few years and before they apply for a mortgage or other large line of credit. Washington Mutual estimates consumers can reduce finance charges by $105 a year on average by raising their scores 30 points.
Knowledge is power and knowing more about credit, how it works, and how we can make it work for us, is an important part of the system. Getting information now about credit, debt, credit score and other credit information, can help us improve our credit score and keep it in good standing. This can open up some major opportunities for you. Just remember it is never too late to start improving your credit rating.