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Archive for March, 2010

The Basic Rules Governing Debt Collection Agencies

Written by Toi Williams on Mar 30th, 2010 | Filed under: collections

With the economy in the state that it is in today, many individuals are having their first dealings with a debt collection agency.  Whether it is because an income earner in the household has lost their job, work hours have been cut, or interest rate increases has made it difficult to pay their bills, these first encounters with a representative from a collection agency can be a frightening and distressing event.  There are some rules that all collection agencies must follow when dealing with an individual that has a delinquent account.

Collection Agencies Cannot Misrepresent Who They Are.
A collection agency is forbidden to misrepresent who they are by claiming to be an attorney or from the credit bureau.  They also cannot misrepresent documents sent to the individual as legal documents if they are not actual legal documents.  In all dealings with the individual, they must state who they are and why they are contacting the individual.

Collection Agencies Cannot Be Verbally Abusive.
Collection agency representatives are prohibited from using obscene or profane language when talking to the individual about the debts that that the agency is alleging is owed. They are also prohibited from threatening violence or harm to the individual as a result of the debt not being paid.  Collection agency representatives also cannot state that the individual will be arrested for not paying the debt.

Collection Agencies Must Provide Written Documentation Of Debt.
If a collection agency representative contacts the individual to tell the individual that the individual owes money to the company, within five days of the initial contact, the collection agency representative must send a written notice describing the debt, listing the amount owed, and disclosing the steps that can be taken by the individual if they believe that they do not owe the debt.

Collection Agencies Must Respect Your Workplace.
The actions of the collection agency are not allowed to interfere with the individual’s employment and this includes calling the individual at work when their boss disapproves of the contact.  If a collection agency repeatedly contacts the individual at work knowing that it could affect their employment, they could face sanctions from the Federal Trade Commission.

Collection Agencies Cannot Contact You At All Hours.
Collection agencies are not allowed to contact individuals after 9 o’clock at night or before 8 o’clock in the morning.  Collection agencies must follow these time guidelines unless permission is given by the individual that they would like to be contacted outside of these times.

You Can Request That The Collection Agency Cease Contact.
People that are being contacted by aggressive collection agency representatives repeatedly can have the contact stopped by submitting a written request to the collection agency requesting that they stop all contact.  Once the request has been received by the collection agency, they cannot contact the individual for any reason other than to tell the individual that their letter has been received and they will no longer contact the individual.  Stopping the collection agency from contacting you does not erase the debt that is owed and the collection agency may decide to sue you in court to recoup the funds that they are owed since they now have no other way of obtaining a payment from you.

How Can I Get The Lowest Credit Card Interest Rate?

Written by Toi Williams on Mar 29th, 2010 | Filed under: credit cards

Getting the lowest credit card interest rate that you qualify for can be a difficult endeavor because of all of the criteria that goes into calculating the interest rate for a credit card.  Different credit card issuers have different qualifications and different interest rate ranges for many of the different types of credit card products that they sell, making it even more difficult for a person to determine whether they are getting the lowest market rate or if they are being taken advantage of by the lender.  There are several criteria that nearly all creditors take into consideration when calculating a credit card interest rate and knowing where you fall within these standards can help you determine whether you are getting the lowest credit card interest rate for your current situation.

Credit History

One of the biggest factors in the credit card interest rate offered to you by a creditor is the information contained in your credit history.  Your credit history can reveal to the credit card issuer whether you are a credit risk and do not pay your bills on time or whether you are responsible with the credit that you have and should be extended additional credit.  The more of a risk you seem to be, as indicated by the information in your credit report, the higher the interest rate charged for the credit card will be.

Most creditors are interested in reviewing the late and missed payments that appear on your credit report for as many as 7 years after the actual event.  A large amount of late or missed payments show that you are having difficulty managing your money properly and have a good chance of defaulting on any additional credit that is extended to you.  Late and missed payments on your credit history will result in a higher interest rate for credit card products.

Credit Score

Another factor that can alter the credit card interest rate offered to an individual is their personal credit score.  A person’s credit score is a numerical calculation that takes a number of different dynamics, such as percentage of credit used and length of time different credit products have been open, to place the person on a sliding scale of financial stability.  Individuals that have used their credit wisely, have made all of their payments on time, and have not maxed out all of their credit products will fall on the higher end of the credit score scale and be offered the lowest interest rates for credit cards.  Individuals that have had trouble making their payments, use most of their available credit, and have racked up high debt levels will have a much lower credit score and will have to pay higher interest rates to obtain the credit cards they desire.

Are Your Interests Placing You Deeper In Debt?

Written by Toi Williams on Mar 27th, 2010 | Filed under: mindset

Everyone has interests that they take pleasure in and being able to take part in these interests is one of the main reasons that they work as hard as they do every day.  Many of these interests can be pretty expensive and can cause a person to spend much more than they intend.  Here are several tips to ensure that your interests do not end up costing you more than you are able to afford.

Choose Cheaper Entertainment

People love many different types of entertainment and will often pull out their wallet to attend events that they think they would enjoy, but there are several different ways to reduce the amount of money that they are spending for their entertainment.  For example, people that like live music may be willing to shell out big bucks to see the biggest names in the biggest arena in the city, but they can save more than 90% of that cost by choosing to hear some local talent in some of the smaller venues in their city.  While a ticket to see a top notch musician may be close to $100, you can generally see up and coming bands for $10 or less.

It is easy to save money on home entertainment as well.  Movies that are newly released often drop in price after they have been on the shelves for a while and choosing used movies from a reseller or a movie rental company can cut the cost of the movie even further.  Watching a movie at home will also save you the cost of the snacks and drinks that you probably would have ordered if you had gone to a movie theater to see the movie.

Switch To Inexpensive Hobbies

Every person has things that they enjoy doing and some people enjoy these activities so much that they make a hobby out of them.  Hobbies can be a fun and interesting way to past the time, but many of these hobbies cost a deal of money to continue.  If you are finding yourself spending a large chunk of your earnings on your hobbies, it may be time to reevaluate your priorities and choose a less expensive hobby to follow.  Choosing an inexpensive hobby is not difficult and often can be adapted to the same interests that caused you to fall in love with the more expensive hobby in the first place.

Do You Know What You Owe?

Written by Toi Williams on Mar 24th, 2010 | Filed under: mindset

Getting out of debt can be a difficult task to accomplish and you will spend a great deal of your time dealing with the issues related to eliminating your debt.  Just getting started on the path to debt freedom can be a chore, but the best way to begin is to figure out the amount that you actually owe.  Determining the exact amount of debt that you are carrying will help you choose the best course of action for paying down and paying off your debts.

Making The List

To figure out the amount of money that you owe to various creditors, you will first need to gather all of your statements related to your debt obligations and make a list of the total amount that you owe to each creditor.  When you are simply paying the minimum amount or a little bit more on each statement when it comes in the mail each month, it is very easy to overlook the total amount that you owe.  Many people are in denial about the actual amount that they owe and only realize how many thousands of dollars in debt they are in when they compile all of these amounts into a single list.

This method is especially effective for individuals that have more than three credit cards, multiple loans, or many monthly payment obligations because it provides an overall picture of their spending habits and a complete total of the money that needs to be repaid.  It will also provide an accounting of the amount that you are paying to carry this debt, including interest charges, finance charges, and fees.  The number will generally be a lot higher than you believed it would be and knowing the total amount that you owe can be great motivation to begin paying off those debts.

 Making A Plan

After you have made a detailed accounting of the amount that you owe to each creditor and the total amount that you owe, it is time to come up with a repayment plan.  Paying only the minimum amount to each creditor will not pay down your account and in some cases may get you deeper into debt as the amount that you are paying is dwarfed by the amount of interest that is being charged to the account.  The goal is to pay down the accounts as quickly as possible without causing yourself financial hardship.

Many people are able to make a budget allowing for the payment of recurring bills while designating a large portion of their disposable income to reducing their debt levels.  Others that do not make a large amount of money or that have high debt totals may need to enlist the help of a professional to create a repayment plan that they can adhere to.  There are many options available for the repayment of debt and paying off your debt will make your future much more financially secure.

A Beginner’s Guide To Credit Cards

Written by Toi Williams on Mar 21st, 2010 | Filed under: credit cards

The frequency of credit card use has risen in recent years and now a high number of individuals carry credit cards in their wallet or purse.  In many cases, it is now required to have a credit card to make certain types of purchases and reservations.  These credit cards issued by banking institutions come with various rates, terms, and rewards, which will be determined by the individual’s credit score and the personal preference of the individual applying for the card. 

Different Types Of Credit Cards

Most banking institutions offer a wide variety of credit cards to individuals throughout the United States.  The most frequently obtained type of credit card is the general purpose credit card, which is used by the card holders to make common, everyday purchases.  The banks issue MasterCard and Visa branded credit cards along with reward cards that allow individuals to earn points towards travel or cash back rewards. 

Some credit cards offer a cash back reward that can be 1% to 3% of the purchases that are placed on the card.  There are some credit cards that give card members 1% cash back on all purchases, except those made at gas stations or grocery stores which earn a higher cash back rate.  This cash back reward can be sent to the card member as a check or as a credit back on the credit card. 

Some credit cards automatically send a check to the card member once the amount of points in the card member’s account reaches a certain number.  Other credit cards allow the card member to accumulate points over time and these accumulated points can be redeemed at any time for a check for the cash back amount, gift cards from participating companies, or travel vouchers.

Using The Credit Cards Wisely

Purchases that are made on a credit card that are not paid off within a 28 to 30 day period will be subject to finance charges and interest payments.  The longer you take to pay off the balance of the credit card, the more money it will cost you in finance charges, fees, and interest.  Credit cards should never be used with the intention of taking a long time to pay off the balance as this is a surefire way to destroy your financial security.  If you must use a credit card to make a purchase, pay off the balance of the card as quickly as possible to reduce the fees that you will pay to the bank for borrowing the money.

Options For Payments

The payments for credit cards can be made in a number of different ways.  Many people choose to make their payments by check, mailing in the payment using the envelope provided with the credit card bill.  Many banking institutions also offer the option to make a payment by bank draft over the phone, but there is typically a service charge billed to the credit card account for using this method. 

Recently some banking institutions have begun to offer methods to make payments online at the bank’s website.  Using this method ensures that the payment will not arrive at the bank late due to delays in the mail or due to sending the payment late.  Making all of your payments in a timely manner is the best way to ensure that you don’t get hit with a penalty interest rate that can be as high as 30%.

Are Convenience Fees Draining Your Cash?

Written by Toi Williams on Mar 18th, 2010 | Filed under: saving

One of the most notorious fees paid by unsuspecting consumers today is the convenience fee.  These fees are charged for a wide range of products and services and in many cases, the person does not even know that they are paying the fees because they are built into the total price of the item.  There are many different ways for a company to charge for the convenience of not having to exert more effort to obtain a product and a person can save a great deal of money by avoiding these convenience fees.

Entertainment Tickets

Many people love live entertainment and purchase tickets for the events that they are interested in, but in numerous cases the person is paying well above the minimum amount they could be paying for the tickets because of the convenience fees added to the ticket price.  This is most often apparent when the person chooses to purchase the tickets from a ticket broker that is available in their local grocery store or online instead of traveling to the venue that is holding the event to purchase the tickets.  These ticket brokers typically charge an additional $5 to $20 per ticket over the venue price for the convenience of the person not having to go out of their way to purchase the tickets that they desire.

Bill Payments

Another insidious way that many companies are obtaining additional money in convenience fees from their customers is charging a fee for paying your bill in a certain manner.  Many companies offer many different methods for a person to be able to pay their bill with the company in order to assure that the company will be paid on time, but some of these methods can trigger an additional fee that is added to the balance of the account automatically when a person makes a payment using this method.  The most common payment methods that trigger additional fees are payments by phone and payments made using the company’s website.

Banking Fees

Banks are notorious for using convenience charges to boost their profits and have come up with more ways to trigger convenience charges than any other industry.  Some of the most common actions that can trigger an automatic convenience charge to your bank account include using a live teller more times than your account allows, using the ATM of another bank, having a payment made when there is not enough money in the account, and transferring money between bank accounts.  By avoiding these actions or choosing a banking institution that does not have these fees, you can save hundreds of dollars every year.

What Should I Look For In A Loan Officer?

Written by Toi Williams on Mar 17th, 2010 | Filed under: loans

Being able to obtain a loan when needed can be a very important part of your financial future.  There are many different types of purchases and debt obligations that require a large amount of money to be paid in a single transaction and the ability to have those funds available when needed is one of the reasons why it is so important to keep your credit in good standing.  When looking for a loan, you will want to find a good loan officer that will be able to advise you on the best types of loans available for your needs. Finding a good loan officer will nor be difficult as long as you remember to keep a few points in mind.

Gives Clear And Concise Explanations

The job of the loan officer is to present and explain the different types of loan products available from the lender that the loan officer is working for.  They are trained to be able to answer any questions that you may have about the different loan products and should be able to point you towards the loans that will satisfy your criteria while providing the best value.  If the loan officer that you are speaking with about the loan products does not seem to have a good grasp of your financial situation or is unable to answer the questions that you have about the different types of loan products offered by the company, you should consider finding a different loan officer that is more knowledgeable.

Paperwork Assistance

A good loan officer will be able to tell you what types of documents will be needed for you to obtain the loan that you desire and will be able to instruct you on the best ways to fill out all of the paperwork that will be needed for the application for the loan.  This will streamline the process and ensure that the application process is not extended due to repeated requests for additional information.  If the loan officer is unwilling or unable to assist you with the application process, then you will need to find someone that is more interested in obtaining your business and helping you through the process.

A Friendly Demeanor

The most important quality in a loan officer is that they are friendly and willing to assist you in obtaining your loan.  Their job is to help you complete the loan application process and they can not effectively do this if they are not friendly and supportive during the process.  If the loan officer is surly, unwilling to speak candidly or answer questions, or is generally unhelpful, then they are unable to do their job effectively and you should look for someone else to help you through the process.

How Can I Determine The Best Credit Cards Online?

Written by Toi Williams on Mar 14th, 2010 | Filed under: credit cards

Credit is very important in today’s economy and many individuals are seeking the best credit card offers for their needs.  One of the easiest ways to search for the best credit card offers is to use online websites to view the features of the credit cards that you are interested in.  To find the best credit cards online, there are several things that you should keep in mind. 

What Are The Features Of The Credit Card?

Not all credit card offers are created equal and the differences can either cost you a great deal of money or save you a great deal of money.  It is important to review all of the features of the credit card, including the interest rate, fees, and repayment options available for the credit card.  The terms and conditions section of the credit card information will contain all of the information that you need to make an informed decision about the suitability of the credit card.  Only websites that provide this information should be included in your search.

The best credit card for you will depend on your financial situation and previous credit history.  It is important to understand that many credit card offers are based on the credit score of the person applying for the credit card, which can vary greatly from person to person.  A credit score is used to determine a person’s credit worthiness and their dedication to repaying the money that they have borrowed. 

What Is The Interest Rate?

The best credit card offer will have the lowest interest rate for the longest amount of time with the highest credit limit.  The credit card with the lowest “teaser” interest rate is not always the credit card with the best interest rate long term.  Many of the credit cards that offer an introductory 0% interest rate will reset to an interest rate that is higher than the industry standard when the introductory period is over.  In many cases, these credit card holders pay an interest rate of 20% or more after the introductory rate has expired. 

What Fees Are Charged?

The best credit cards will offer the highest credit limit without charging a great deal of hidden fees.  These hidden fees are usually disclosed in the terms and conditions of the credit card offer and can quickly add up to hundreds of dollars, all charged directly to the credit card and reducing the available credit limit.  These fees include annual fees, account set up fees, account maintenance fees, and any other fees that the credit card company chooses to charge.  The best credit cards will not require the payment of any of these fees.

Are You In Debt Denial?

Written by Toi Williams on Mar 11th, 2010 | Filed under: collections, collectors, debt relief, mindset

Many people that are facing debt problems are in denial.  They avoid picking up their phones for fear there is a debt collector on the line, avoid opening bills, and do not do anything productive to correct their circumstances.  These people are making the worst mistake in finance – ignoring debt. 

There are many productive things that you can do to decrease debt and improve your credit rating, as ignoring debt obligations will only cause more problems.  Using these methods is not always easy, but they will make a difference in your financial stability.  Following this straightforward guide will help you reduce your obligations and ensure that your credit profile is not damaged further.

Avoiding Lenders Is A Big No-No

Avoiding the problem by refusing to open your bills and refusing to answer calls from lenders is not going to do anything but ruin your credit and increase the amount of debt you are carrying.  To get out of the circumstances that you are in, you will need to know the amounts that you owe to each lender and create a plan for paying each of these financial companies the money that is owed.  There are many different types of financial products that can help you make these repayment plans, including budget log books, financial planning software, internet websites geared towards reducing debt, and debt reduction programs and classes.

Cut Spending

The first thing that you should do when facing debt problems is to cut spending on non-essential items.  If you are having trouble paying your bills, you should not be paying for lattes at the local coffee shop or gym memberships.  Cut excesses from your life and reapply the money saved to your debts.

Talk To The Financial Companies

If you are facing unexpected debt problems, such as the loss of a job or medical issues, talk to the financial companies and explain your current circumstances.  Many lenders have procedures in place to help people facing these types of issues and they can work out an agreement with you to help you until you can get back on your feet and make full payments again.
Avoid Overusing Credit Cards

Many people begin using credit cards to pay for everyday purchases when they are facing a large amount of debt.  Placing purchases on a credit card is not going to solve the issue and the interest rate on the balance carried on the credit card will only drive you deeper into debt.  Instead of using a credit card, you should start paying cash for everything and marking it in a notebook as soon as the money is spent.  This will help you get a handle on your finances and show you exactly what you are spending your money on so that you can make more informed financial choices.

Do You Understand The New Information On Your Credit Card Statement?

Written by Toi Williams on Mar 10th, 2010 | Filed under: credit cards, mindset

If you have received your credit card bill for the month already, you may have noticed some changes when you opened up the envelope.  Due to the rules for credit card companies recently passed by the federal government, credit card companies are now required to disclose more information to their card holders and the way that they have chosen to provide this information to the consumer is to have the information printed on the cardholder’s credit card statement.  There are several new information items that are now included on your credit card statement.

Minimum Payment Information

One of the pieces of information that is now being added to credit card statements is clarifying information about the minimum payment for the credit card.  Previously, the only information provided about the minimum payment required by the credit card company was the actual amount of the minimum payment that would be accepted by the company.  The cardholder was simply informed that they had to pay at least this amount to keep their account in good standing.

Now, more information has been added to the minimum payment section of the credit card statement.  Per the federal credit card rules, the credit card company must now disclose how long it will take to pay off the credit card if only the minimum payment is made each time.  Card holders may be interested to learn that paying the minimum payment on a credit card with a $6,000 balance could take 26 years to pay off the credit card, using an example from a recently mailed statement.

The minimum payment information included on the credit card statement will also show how much you are estimated to pay in total for the balance and interest if you choose to pay off the credit card by making the minimum payment only.  Using the previous example, by making the minimum payment on a $6,000 balance for 26 years to pay off the credit card, the cardholder would end up paying a total of $11, 127 for that $6,000 in purchasing power.  Federal regulators believe that having this information available will help the cardholder make better, more informed decisions about their finances and their use of their credit cards.

3 Year Payoff Information

Another piece of information that has been added to the credit card statements mailed out by credit card companies is what it would take to pay off your credit card in a three year period if no further purchases are made with the credit card.  This information is included just under the section that provides information about the minimum payment for the credit card, allowing for an easy comparison between how much would be paid if only the minimum is paid and how much would be paid if the card was paid off within three years.  In the case viewed for this article, it was striking to see that paying $119 on a $6,000 balance would result in payments for 26 years with over $5,000 of those payments going to interest, while making a payment of $197 – $78 more per month – would allow the credit card to be paid off in three years with a little over $1,000 going towards interest payments.