Discover Debt Freedom!

Many people are finding out that having a credit card is not quite as beneficial as they once believed.  With interest rates skyrocketing, credit limits being reduced, and people having trouble paying off their balances, many people are discovering that they got in over their heads with their credit cards and do not know how to extract themselves from the situation that they are in.  Here are some common problems facing people that own credit cards and some solutions that may help them solve their credit card related problems.

Problem 1 – Too Many Credit Cards
Open up the wallet of the average consumer and you will find multiple credit cards from different credit card companies.  Having multiple credit cards increases the risk of missing a payment date, which can result in a penalty fee of as much as $39 and increase the interest rates on all of your credit accounts to the maximum charged by the credit card companies.  If you have many different credit cards, including ones obtained by different retail stores, it is best to pay off each one and only keep the ones with the longest credit history and highest credit limits that can be used anywhere.

Problem 2 – High Balances On Multiple Credit Cards
If you have high balances on multiple credit cards, it can be difficult to pay the minimum balances of each one and keep track of how you are paying each one down.  If possible, you should transfer the balances of the credit cards to a single credit account so that you only have a single payment to keep track of each month and you can easily see the progress that is being made for paying off the balance.  Many credit card companies are still offering a 0% or very low interest rate on balance transfers, so transferring the balances to a single card may save you money in interest payments as well.

Problem 3 – Reduction In Credit Limit
Because of the credit crunch, many credit card companies are reducing the limits on some of their high credit limit cards.  This often occurs without much warning to the consumer and can have a negative effect on many areas of the person’s life, including decreased purchasing power and lower credit scores as credit rating agencies notice that you are using a higher percentage of your available credit.  The only solution to this problem is to attempt to pay down the credit card to less than 50% of the amount of credit available so that your credit score will return to its higher level and the interest rates on any other loan products that you own will not rise due to a lower credit score.

Problem 4 – High Interest Rate On Credit Card Balance
If you have a credit card that has a high interest rate, you may want to consider transferring the balance of that credit card to a credit card with a lower interest rate.  Another credit card that you currently own may be offering a deal on the interest rates for balance transfers or you may choose to get a new credit card, as many credit card companies are still offering attractive interest rates for new balance transfers.  If you are able to lower the interest rate that you are paying on your high balances by 5% or more, you will be saving hundreds of dollars on the interest payments of the balance.

In today’s consumer driven society, many retail stores have become experts at separating consumers from as much of their money as possible.  Some of the tricks that they are using to entice consumers into their stores and get them to purchase much more than they intended to are very devious and created by consultants that have been paid thousands of dollars to review shopper’s habits and develop ways to squeeze every last dollar that they can from the pockets of these consumers.  The best way to fight against these practices is to be aware of them and not let these retail rip-off artists take advantage of you any more.

Retail Rip-off Number 1 – The “Price Only Good For Today” Sale
Many retailers will send out an advertisement that they have a great deal on their items, but these amazing prices are only good for one day or within a certain time period.  They will have a limited supply of the items that they have offered for sale because the real goal of the advertisement is to get consumers in the door so that the retailer can sell them more items or another item at a higher price.  If you really want the item that has been advertised, go to the store to purchase that item only and resist any attempts by a salesperson to steer you towards another item or a higher priced alternative.

Retail Rip-off Number 2 – The Delay Tactic
Some retailers that sell higher priced items or items that you can negotiate the price on will tell the consumer that they are going to check paperwork or run a price by their manager so that they can leave the consumer to stew in silence alone for long periods of time.  They know that the longer that they can keep you in the store, the more time that you will have invested for purchasing their product and the less time that you will have to comparison shop at other retail stores.  After hours of waiting, you may be so tired of the process that you will sign anything to purchase the item and stop the shopping process.

Retail Rip-off Number 3 – The Wrong Price Ploy
This one is very common in places where a person typically purchases a lot of items at once, like at grocery stores, mass merchandisers, or clothing retailers.  They will advertise a sales price for the item on the shelves but when the purchase is rung up at the register, the price rings up as much higher.  Most retailers are betting that you do not notice until you get home and then consider it too much of a hassle to return to the store to get your money back.  If you do notice the higher price while still at the store, the store will take one of two tactics; politely adjust the price at the register while apologizing or telling the customer that they cannot adjust the price at the register and send you to customer service department, which is often located in a different part of the store, to try and get the price adjusted to the right amount.

Retail Rip-off Number 4 – The “Oh, We’re Out Of It” Tactic
Some retail stores will advertise a desirable item at a low price to draw consumers into the store, but will only have very few of the items on hand, not nearly enough to satisfy the demand that they have created with the low sales price.  When a consumer comes in to buy the sold out item, the salesperson will regretfully tell them that they are all out of that particular item and will try to steer the person to a higher priced item instead.  If you complain enough, they may give you a rain check for the item that you wanted but many stores will have a disclaimer that no rain checks will be given for a sale item that is out of stock.

Retail Rip-off Number 5 – Trying To Scare You Into An Extended Warranty
Some retailers make more money by selling the extended warranty than they do selling the product so they will push hard for the consumer to purchase the warranty, even if it really isn’t feasible for the item being purchased.  In some cases, the price of the extended warranty is much more than it would actually cost to repair the product in the event that something did go wrong, but the salesperson will not tell you that.  If it seems like the salesperson is trying much too hard to sell you the extended warranty or are using words such as “costly”, “regret”, or “valuable protection”, chances are the warranty is not worth what you are paying for it.

Many people around the nation are finding themselves deeply in debt and do not know how to get themselves back on secure financial footing.  As they become more desperate for a solution to their problems, a large number of these people fall for debt elimination scams that promise to eliminate their debt and help them to start anew, but often lead to the person being deeper in debt, sued by their creditors, or even thrown in jail.  Scam artists have become quite savvy at taking advantage of people in dire financial situations, but there are some common indicators that you can look for to determine whether the programs being offered to help you eliminate your debt is a scam.

Scam 1 – Giving You A New Credit Identity
There are a number of companies out there that offer to eliminate a person’s total personal debt by giving the person a new credit identity.  This is typically accomplished by creating a fake social security number and new credit profile for the person.  The company promises that the person will now be able to apply for credit and other types of loans using the new credit profile so that the creditors will not be viewing the person’s bad credit history of the past.

The main problem with this type of scam is that it is very, very illegal.  If you are caught using a made up social security profile to obtain credit under false pretenses, it is considered to be a federal crime and you could be prosecuted and sent to jail.  Obtaining a new credit profile is not worth a felony conviction, jail time, and a potentially ruined life when you are finally released from jail.

Scam 2 – The “This Debt Is Illegal” Ploy
Some of the companies that offer debt elimination services tell their customers that some of the fees that have been charged on the person’s debt are illegal or that there is a fundamental flaw in the credit agreement on the part of the creditor that would make the entire amount of the debt void.  Some of these companies will even go so far as to tell the person that the company has agreed to discharge their debt because of the flaw or that the company has filed a lawsuit on behalf of the customer and for them to stop paying the creditor until the lawsuit has been resolved.

This technique never works because the premise that the company is basing its solution on is not true.  Even if you were able to prove beyond the shadow of a doubt that some of the fees that were charged to the account were in error, you would still owe on the rest of the balance of the account.  People that fall for this type of scam often find themselves much deeper in debt with no legal recourse at a later date or find themselves sued by the creditor for the balance of the account, all related interest payments, and hefty penalty fees for not paying their payments on time.  The person’s credit score will be destroyed and they will not be able to obtain any type of credit account for a very long period of time.

Ask any financial expert in the country what the biggest problem facing the people of this nation is today and they will say that it is the high level of personal debt that many of the people across the nation are carrying.  Since this century has begun, many people have been spending more than they can afford to live a lifestyle funded by home equity loans and credit cards.  Now that the days of easy and plentiful credit are gone and the values of many homes across the nation are plunging, people are beginning to see just how deep the financial hole that they were digging is and are having a great deal of trouble extracting themselves from that hole.

What Happened?

Over the last twenty years, the culture of the nation has switched from a culture of savers to a culture of spenders.  People were told that it was their national duty to go out and spend money because that is what caused the economy to grow and keep moving.  If you did not have the cash to spend, there were no worries because there was always some credit card company that was willing to give you a credit card so that you could spend more money now and could worry about paying it back at a later date.

Commercials for items became more prevalent over time, with companies trying to convince people that they had to have items that they really didn’t need and taught the children of the country that if they didn’t convince their parents to buy them the latest and greatest things, then they would become social outcasts among their peers.  Of course, the parents that would do anything for their loving children put these new expensive items on their credit cards so that their children would have the same items as all of their friends.  This resulted in many middle class children sporting $200 shoes, $150 jeans, and a new cell phone every several years.

Add this to people purchasing larger homes than they could afford without having to document their income or provide a down payment and college kids having credit limits of thousands of dollars on multiple credit cards and you can see why the nation is facing the problem that it is in today.  Now those payments on earlier purchases are coming due, people are unable to take equity out of their homes to pay off their debts, and they cannot support their current lifestyle on the money that they are making at their job.  This is driving people deeper and deeper into debt as interest payments and penalty fees continue to increase the amount that is owed.

The housing crisis has caused many problems for personal finances as well.  Houses are losing their value quickly because of the housing bubble that inflated prices beyond all reason so people that would like to purchase a home cannot afford to buy them at the current prices.  People that need to sell their homes because they cannot afford them cannot find buyers willing to pay a high enough price to cover the amount of money the owners owe on or have invested into the home so they are stuck in a home that they cannot afford.

The problem is going to become worse before it gets better, as more and more people fall victim to the forces of the economy that are against them.  Over time, the economy will stabilize and reason will return to the financial sector of the country, but not before the many excesses of the current decade have been shed and people that have spent more than they could afford either make the sacrifices that are required for them to regain their financial footing or they declare bankruptcy so that they can begin again new, but with a serious disadvantage.  The problems are not too big to surmount, but it will take time and the cooperation of the entire nation.

One of the easiest and fastest ways to lower your interest rates and keep more of your own money in your pocket is to correct any mistakes that can be found on your credit report.  It is estimated that as many as 25% of the credit reports generated by the three major credit card bureaus contain some type of mistake that could have a negative effect on your credit score.  By having these mistakes fixed, you can raise your credit score which in turn will lower your interest rates for credit cards and other types of loan products.

Step One – Check Your Credit Reports
It is very important that you check your credit reports from the three major credit bureaus on a regular basis to look for any mistakes that may have been made on your credit report.  Each of the three credit reports can be obtained for free once per year at annualcreditreport.com per a law passed by the United States Government to protect consumers from fraudulent information being placed on their credit reports.  Reviewing the credit reports on a regular basis will help you find mistakes quickly while they are still easily corrected.

Step Two – Nicely Ask To Have Mistaken Items Reviewed And Corrected
Credit reporting bureaus are required by law to investigate any claims of mistaken items entered onto a credit report if the person requests that an entry be validated.  Calling and harassing the person that you need to help you will only make them less inclined to assist you and may make it even harder to get your credit report corrected.  Talk to the person that is trying to help you in a calm, clear manner and let them know exactly why you believe that the information incorrect and what proof you may have to validate your claim.

Step Three – Keep A Log Of Who You Talked To And When
Although many mistakes that are commonly found on credit reports can be taken care of quickly and easily, in some cases it will take multiple calls to multiple people to have the situation corrected.  It is very important for you to keep a log of who you talked to at what company while trying to take care of the issue so that further down the road you will have an accurate account of the steps you have taken to attempt to correct your credit report.  This will also allow you to sound intelligent as you move up the ranks of the company from the customer service reps to the managers because you will be able to tell them which employees from their company you have already spoken to.

Step Four – Check To See If You Have Any Independent Verification Of Your Claim
Most of the cases of incorrect information being placed on the credit report are a result of a company claiming that they never received a payment that has been paid.  In these cases, you may be able to prove that you have paid the company the money that was owed by producing a bank statement or a check receipt indicating when the company was paid and when the money was taken out of your account.  If an account for you had been opened for an address that you have never lived at, residency documents can prove that you had never lived at that address and the account is fraudulent.

Step Five – Prepare To Argue Your Case In Court
If all other reasonable avenues of dialog with the company have failed, you may need to prepare your case to be taken to court.  This is where records and detailed logs become helpful as you will be able to show the judge that you have done everything possible to have the issue resolved through other means and that you are truly dedicated to having the issue resolved.  For many cases, the company will be willing to settle and fix your account rather than having to prove their case in court, especially when they are the ones that are wrong.