Credit Card Debt

A College Freshman’s Guide To Credit Card Debt

When surveyed about the reasons that they first take out a credit card, college students inevitably rank a concern for credit scores as their primary motivation, beating out even convenience and protection in case of emergencies.  To a degree, of course, this is utterly specious, and we would expect our most responsible and ambitious young Americans to underscore the importance of FICO and Vantage figures (highly complicated logarithms guarded zealously by the three credit reporting agencies and only vaguely understood even by seasoned consumer finance professionals) above their desires for late night pizza runs or shopping binges.

All the same, though, it is true that credit card debt payments are an excellent means of creating and then elevating the three digit scores, and, furthermore, the credit bureaus will admit that the length of time that unsecured lines of credit are held in good standing also plays a significant role in the numerical calculations.  Perhaps the rationalizations of teenagers and their parents — who, after all, should bear much of the blame, particularly after 2009 legislation newly prohibited credit card companies from issuing cards to minors without an adult over the age of twenty one co signing — rather disingenuously shies away from true motivations for the proliferation of borrowing privileges, but the usefulness of credit scores within modern society can’t be so easily dismissed.

However, that said, our country’s current credit card debt relief crisis didn’t come about because of faulty FICO ratings.  No, as a society, the people of the United States have become all too used to carrying around enormous debt burdens that would have been unthinkable even one generation ago, and, the earlier that consumers first start borrowing, it simply stands to reason that they’ll become that much more inured to the constant pressures of affording the bills on several cards whose balances only seem to go up thanks to the combined effects of minimum payments and compound interest.

If the young men and women attending our colleges and universities could truly maintain the rigorous discipline and enlightened perspective sufficient to only pump up the balances to levels they’ll be able to reliably satisfy in full every month, the benefits to credit scores could indeed provide untold advantages down the road, but, considering the nature of teenaged consumers first away from home, the risk may well outweigh the reward.

To be honest, economic analysts and financial counselors attempting to slow the tendencies of young Americans to blithely embrace the world of lifelong credit card debt have identified another culprit beyond naïve shopaholics and corporate profit margins.  Ever since the United States Congress enacted legislation designed to prevent former students from discharging their educational loans through Chapter Seven bankruptcy debt relief, kids have had little choice but to think about borrowing in a different light.

Although there were certainly fiscal practicalities spurring the changes to the code — the most vital obligation of the government must be to help the progression of our most capable minds and eager hearts, regardless of their social standing — one has to appreciate the societal repercussions.  Effectively forcing incoming freshmen from impoverished backgrounds or difficult familial situations to assume liability for tens of thousands of dollars for even a single year’s tuition (knowing all the while they’ll have to avoid bankruptcy and debt settlement as possible options should their careers falter) hardly encourages students to beware the evils of monetary obligations.

New Government Watchdog Group Monitors Credit Card Debt Companies

Although the legislation empowering the Consumer Financial Protection division of the federal government won’t formally take effect until the third week of July, the largest corporations issuing credit card debt accounts have already started making changes to their policies in anticipation of the coming industry wide upheaval.  Thus far, while waiting for their formal mandate to begin, the CFP has limited its moves to the preparation of introductory literature and consumer friendly information on how best to avoid bankruptcy and develop a personal credit card debt relief plan that would fit the individual household’s current status.  As well, they’ve already designed a internet portal to be used as a virtual bulletin board for group counseling about credit card debt relief, and, despite little media attention and no advertising this far in advance of the bureau’s technical opening, a small community of aggrieved borrowers has already started posting advise and suggestions.

Still, no matter how informative or congenial – a short welcome video hosted by film director and sitcom icon Ron Howard greets visitors to the site – the public relations aspect may be, most Americans hope that the new department takes seriously its mission to hem in the commercial lending industry.  Far better, after all, to ward off credit card debt from the outset than be forced to invoke debt relief measures afterwards in attempts to minimize the damage.  Once again, bereft of a clearly defined mandate and somewhat thwarted by a bitterly divided political landscape, we are still waiting to see precisely what the CFP’s role shall be and how combative the putative consumer advocates shall behave when confronting the largest lenders.

Although survey after survey reports that Americans view credit card debt relief among their greatest concerns and every piece of economic data indicate that borrowers represent an overwhelming majority of the current electorate, the gigantic multi national corporations that control the lion’s share of credit card debt accounts wield enormous power and influence within the halls of our nation’s capitol.  In one positive sign for the debt relief advocates, the bureau wrote a missive directed toward the upper management of the significant credit card companies doing business within the United States that requested additional levels of discretion and leeway for the families of men and women serving in the military.  Although the verbiage of the letter was hardly antagonistic – and, perhaps, a good deal more conciliatory than would have been wished by many Americans overcome by revolving debt loads and treading water to avoid bankruptcy – the sentiment certainly seemed like a polite but firm warning of further restrictions placed upon lending practices.

One could ask, of course, why the bureaucratic brain trust currently organizing the infrastructure and articulating the mission statement which will guide future actions of the Consumer Financial Protection would so limit the focus.  The men and women of our armed forces spending time overseas may well deserve a certain latitude with regard to the waiver of late payment fees, and there should likely be some provisions in place to prevent the creditors from charging off past due loans or, especially, foreclosing on properties for seizure and auction.  In the same breath, though, what of the countless United States citizens who’ve fallen into similar disputes with defaulted loans but haven’t the military pedigree?  If the government is sincere about supporting debt settlement and credit card debt relief solutions for consumers who’ve lost their way, they should ban all manipulative and suspect lending techniques that could willfully deceive and defraud honest Americans.

Credit Card Defaults Hit New Low

Five out of six major credit card providers in the US have reported further reductions in credit card debt. Overall credit card debt stood at $785 billion at the end of March, according to the Federal Reserve.

Figures for April show only Bank of America with increasing debt balances with approximately 1 in 12 in arrears. Best performing institution was Capital One with a default rate of 3.5%.

This hardly reflects a strengthening of the consumer base since the financial meltdown of 2007/8. The explanation given by most analysts is that the reduction is due to the inability of customers with any payment problems in the past to get new cards.

Nevertheless, there are ways that consumers can widen their choice of card, so click here to browse those on offer.

Banks and other financial institutions have written off billions of dollars over the past few years and have changed their selection criteria for new customers so as to improve the quality of their portfolio. Good news for them and their shareholders, but not for consumers looking for access to credit.

Most financial institutions use credit scoring as the basis for determining whether to accept a new application. Although the actual scoring algorithms may differ, the base data used in calculating the final score comes from common sources.

Everyone has a credit history. This history contains details of all financial transactions in the past plus other data on what type of credit has been used whether it is a card, mortgage or loan. Every payment record is kept giving a profile of how a customer has performed on each financial product.

FICO scores are calculated on a combination of information held in the credit history. Around 35% of the score is based on the payment history, which shows how well financial commitments have been met in the past.

30% of the FICO score is based on the amount owed. That is, if a consumer has a high amount of borrowing versus their income the score will be lower that someone who has a low borrowing relative to income.

So two thirds of the score is based solely on what is owed and payment performance on those obligations. Therefore, keeping up payments and not incurring an overdue or late payment charge can make a huge difference to the FICO score.

Missed payments age so the longer ago they occurred the less important they become. Recent defaults score much more highly.

The remaining 35% of the FICO score is determined by the length of the credit history, types of credit used and any new or recent credit applied for. Therefore, someone with a long satisfactory record of managing payments will score better than someone with a relatively short credit history.

Fortunately, competition for new customers is still strong – especially for those with good FICO scores.

Different companies have different acceptance rates so it is important to check all available offers to see which best suits an individuals needs.

Comparison websites are a great way to both save time and get a summary of the best offers available.

Remember that lenders are selective so making sure that the credit history is in the best possible shape before applying should open doors to the best offers.

New Limits On Credit Card Debt Spending

In this age of credit card debt relief nightmares, when so very many Americans find themselves in the position of begging lenders for debt settlement negotiation just to avoid bankruptcy, it seems a tad silly that anyone would spend time worrying over what they can’t buy through card accounts, but lending banks have increasingly decided to impose odd and arguably unfair restrictions upon consumer purchases.   While helping their clients through eventual debt relief by disallowing otherwise legal expenditures on gambling web sites or casino currency at least makes sense, the largest credit card debt companies are also have expanded the purchasing bans to cover such items as pornography and medical marijuana (currently legalized by more than a third of the United States ).

Representatives of the creditors insist that these sorts of strictures are fully within their corporate rights and, rather than enforcing their notions of morality upon the public, they’re just managing risks a bit more aggressively to counter the added chances of credit card debt default within the modern marketplace.  However, trade professionals speaking for the various retail outlets point to the added difficulty for sales transactions and the likelihood that they’ll inevitably lead to added costs down the road.  Also, consumer advocacy groups are worried that these unilateral demands are just part of a slippery slope.  “Nobody wants the big credit card companies to start prescribing rules about what Americans can and can’t do,” asserts Jim Cowlishaw, President of Free Your Credit.  “As long as what you’re buying isn’t against state or federal laws, the creditors shouldn’t be able to tell you what would be a good use of your money.”

While the extent to which the credit card companies choose to meddle in customer purchasing may differ greatly, Visa and MasterCard (and, to a lesser degree, American Express) do tend to follow one another when embracing policy changes regarding their lending practices, and, although American Express has thus far been the only institution to fully prohibit shopping for erotica over the internet, the others shall probably follow suit now that the gauntlet of consumer privacy has so profoundly been breached.  “The ban on internet porn seems to me thoroughly indefensible,” said Cowlishaw.  “Maybe you could make the argument that borrowing at a gambling casino in order to take out more chips would raise red flags as part of a risk assessment – and, with medical marijuana dispensaries, you could maybe understand why the credit card debt companies want no part of the state versus federal legal battle – but, with adult oriented materials, that’s such a personal matter.”

Of course, in a certain way, the new restrictions are undeniably aiding the central thrust of credit card debt relief: above all else, don’t borrow if you haven’t the money on hand to pay for the goods.  On the other hand, as Cowlishaw notes, the easy availability of cash advances offered by most of the modern banks just underlines the hypocrisy of the entire endeavor.  Since ordinary folks can just plug their card into an Automated Teller Machine and take out the necessary funds to continue with their purchase as originally desired, eliminating direct borrowing privileges from certain types of goods and services will do nothing more than increase the inconvenience of the house bound and facilitate greater fees.

Would New Federal Controls On Credit Card Debt Collection Help Consumers?

As a result of increasing public pressure for governmental support of debt relief measures (spearheaded by the ever more powerful advocacy groups tackling the basest tendencies of the credit card debt industry), commentators and pundits familiar with the goings on around Capitol Hill agree that our elected officials may soon have no choice but to bow to popular opinion and create a wholly separate branch of the Federal Trade Commission specifically designed to constrain the abusive practices of the burgeoning credit card debt collection market.  At the same time, however, the fairly explosive political landscape concerning interest bearing consumer debt loads raises very real fears that the implementation of any substantive changes may actually do more harm than good.

The prospective Department of Consumer Financial Protection (one of several possible titles currently being tossed around Congressional back rooms) would not necessarily effect a notable improvement within the legislative oversight of the creditors, and, according to a certain school of thought among the more progressive observers of the electoral scene, may even damage the dwindling shields that the American people yet rely upon.  So long as the Federal Reserve and the administrators of our central bank hold the purse strings to any enforcement activities, there’s an obvious conflict of interest as the macroeconomic preoccupations of the Fed shall always prioritize the bottom lines of the corporate creditors well above those of the average American family’s credit card debt relief.

For that matter, even if the new CFP bureau attains some semblance of legitimacy and independence with regards to the implementation of regulatory strictures intended to prevent lender strong arm tactics and help consumers avoid bankruptcy, the more conservative arm of the national body politic has increasingly demanded that any such division of the Federal Trade Commission apply for monetary appropriation annually, under the clear threat of denial should their actions interfere with the creditors’ larger concerns.  In other words, if the proposed Consumer Finance Protection agency representatives should somehow manage to actualize any substantial change within the more obviously unjust collection practices of the super banks controlling so much of the country’s wealth through personal credit card debt account balances, our elected officials (at least those tied inextricably to the hip of the brimming coffers of Big Lending political action committees) would effectively kill any further efforts by cutting all funding support.

In the bleakest of all possible scenarios, the more progressive minded legislators may force through the creation of such an organization at the expense of eliminating all of the existing regulations controlling unsecured debt settlement and reclamation only to see the bureau’s powers immediately neutered by the withdrawal of fiduciary resources.  Under such a nightmare envisioning, creditors could essentially do whatever they wanted to force the collection of past debts, and ordinary citizens would not even have the capacity to file a lawsuit for gross misapplication of duress or the most egregious examples of harassment.  To be honest, given the current pro business climate of the political landscape – both sides of the ideological aisle wishing to avoid a return to the recessionary markets as dearly as their constituency wishes to avoid bankruptcy protection for their own credit card debt bills – the national legislature has hardly shown signs of following through with the populist claims of evening out the playing field in favor of the borrowers, and any superficial nods toward governmental debt relief aid must be thoroughly scrutinized for fear things could grow even worse in the coming years.

How to Settle a Deficiency from a Car Repossession

How to Settle a Deficiency from a Car Repossession

Consumers who are searching for credit card debt assistance often have problems with other types of loans as well, including car loans. The unfortunate part of this is that a car can be repossessed by the creditor when as little as one payment has been missed.

Repossession laws vary from state to state, so if you are in this position, read the fine print of your car’s financial contract and do your best to avoid having your vehicle taken from you. Many lenders will be willing to work with you while allowing you to keep the car. However, if it has become apparent that you can no longer afford the car, but you still owe a balance on it, the best option would to surrender the car voluntarily. This will reduce your costs, have a better effect on your credit and enable you to buy the car back in the future if that is your intention.

After the creditor has assumed ownership of the car, they will attempt to sell it through their dealership or at a car auction to recoup their losses. Whether you are informed of this process depends on the laws that are on the books in your state. You may be notified of the auction or given the opportunity to buy the car back through a process called reinstatement. In the case of reinstatement, you would have to pay all missed payments and late fees and then make payments according to the original terms of the contract.

If the creditor sells your car, they must do so at a fair market value. If they do not do this, they may not be entitled to sue you for the deficiency balance, which refers to the difference between the amount you still owe on the car and what it was sold for. If you are sued for a deficiency balance and feel you can’t afford it, you have the right to attain the services of a debt settlement company. They will then negotiate with the creditor to accept a lower payment for the deficiency on the auto loan.

Consolidating Your Credit Debts to Save Money

Consolidating your credit card debt is one of the best moves you can make to save money.  This is a crucial step in improving your credit score for the future and insuring you have enough money each month.  With the numerous advantages for all cardholders who take advantage of credit card debt consolidation, it is a wonder more people do not do it!  There are several reasons you should consolidate your debt.

Why stick with damaged credit and debt you cannot handle when there are simple solutions to save you money today.

The first thing you should do to consolidate your credit card debt is to completely stop using your credit cards.  While this seems like the most obvious thing, people often find it difficult not using their cards.  The best way to stop your debt from accumulating is to not spend until you have paid your monthly bills.  Focus on the important things and set up a budget of your monthly spending.  By doing this you have a visual of what your expenses are and just how much money you have left over at the end of each pay check.  It seems simple enough, but this step is often skipped by many people.

Next you should consider moving all of your credit card debt onto one card.  Do a credit card comparison to choose the card with the lowest interest rate, and consolidate your credit debt onto this one card.  One of the most effective means of consolidating your debt at no interest rate is to change to a 0% interest rate card.  This cycle is a bit time consuming, but saves hundreds of dollars in interest rates at the end of the day and gives you more time to pay off the debt itself.

Lastly, increase your payments on the card you have consolidated your debt to. By doing this you pay your debts off much faster!  If you have managed to move all of your debt to a no interest card, you are paying only on the debt you owe instead of on the interest that debt is accumulating. This is a very important step that can end up saving you time and money in the long run.

Using these three simple steps to consolidate your credit card debt is all you need to do in order to improve your credit and lessen your debt quickly and effectively. Start bettering your future by consolidating your credit card debt today!

Richard Towler is co-founder of – a US based credit card comparison site focused on secured credit cards to help rebuild credit.

How To Be Debt Free

The credit boom and subsequent credit crunch of the last decade has left many Americans with an overwhelming level of debt that they have no real means of ever paying back. And this will no doubt have been a contributory factor in the 20 per cent rise in personal bankruptcy filings witnessed during 2010.

And if you are one of the millions of Americans with a seemingly insurmountable level of debt then there are a number of options open to you that could help to improve your financial situation.

Live the frugal life

This may seem obvious but if you curb your spending habits then you may see a rapid improvement in your financial circumstances. For example, if you have a $2.00 coffee on your way to work every day and then spend a further $5.00 on lunch each day then that amounts to over $150 every month and almost $2,000 per year. And you can save a large portion of that $2,000 by simply cutting back on the morning coffee and preparing your lunch at home and then taking it to work with you. And if you apply this principal to other areas of your life then you can save even more money and may even keep enough money back to put into savings.

However, this will only make a difference if you have a manageable level of debt as it may help you pay it off quicker than expected as you have more money to pay down each month. If you have a larger amount of debt you may have to consider some of the following options.

Debt consolidation

Debt consolidation works by gathering up all of your outstanding debts, such as loans and credit cards, and then offsetting them with another, larger loan that is usually taken out and secured against any property you may own. This could be in the form of a remortgage of your home or a tailored debt consolidation loan that some lenders will offer.

This is a good solution for many as they do not have to worry about various credit lines, which can be confusing and difficult to manage, and it can also offer a lower rate of interest and so you will not pay as much money back in the long term. The downside to this is that you have to be in a position whereby lenders are still willing to offer you more credit and, should you fail to keep up with the repayments, you could lose your home.

Debt management and settlement

If the first two steps do not suit your circumstances then you could enroll in a debt management plan whereby a third party company will contact your creditors in a bid to reduce or freeze interest rates and put a stop to costly default fees and phone calls demanding payment.

This works well as an interim measure for those heavily in debt and may also lead to a settlement plan whereby your debt management planners agree on a compromise figure with your creditors which may lead to you only paying back 50 per cent of what you owe to have the debt settled and written off.

However, this will have a damaging effect on your credit rating, if it not already irreparably  damaged, that could mean that you will struggle to gain credit for up to six years.


This is usually the last resort for many as the Federal courts are involved in liquidating your assets to eliminate your debts and a Chapter 7 bankruptcy order takes into account personal income regulations to determine whether you are eligible. If you have any saleable assets then these will be seized as part of the bankruptcy and the implications for your credit score are severe and could last for up to seven years.

Although you could be discharged from any unsecured debts within a matter of months bankruptcy should never be seen as an easy option as the sanctions and future limitations placed on you are severe. For more information on bankruptcy visit the United States Courts website.

If you are in debt then they are just some of the options available to you and you should always seek professional financial advice before deciding which debt solution is best for you.

Many may be wishing they had a finance degree online, or the equivalent after the credit mistakes that have been made.

Article written by Les Roberts, debt specialist at

Things to consider when applying for a credit card

Things to consider when applying for a credit card

Once you’ve decided to get a credit card, there are many more decisions to be made. While the plethora of different deals, prices and types of credit on offer can be confusing, it’s important to take the time to really understand credit terms and conditions to make sure that you apply for the right card for you and your budget.

There are a number of different credit cards to choose from. Standard credit cards have a set, industry standard interest rate and annual fees, while platinum credit cards generally have a higher annual fee but usually include a range of extra benefits. These can include better rewards programs, complimentary insurance and a range of other services. Another option to choose from is a prepaid debit card, which can be used like a credit card (in machines and online, for example) but uses your own money.

When deciding which credit card suits you it is important to compare the different credit card terms and conditions offered by different banks and financial institutions. To effectively compare credit cards, take these credit card features into consideration.

–          Annual fees. Almost all credit cards have an annual fee, which varies between financial institutions and banks. Usually, annual fees are determined by the credit card limit and the kind of rewards and extras offered.

–          Limit. When you are approved for a credit card, you will be approved for a certain limit that you can spend. You may be approved for differing amounts if you apply to different institutions, so think carefully about how you handle your finances and what an appropriate limit is. The credit card with the highest limit might not necessarily be the best card for you – particularly if the interest rate is high and you have difficulty making payments on time.

–          Interest Rate. Payments made on credit are always subject to interest if not paid off on time, making the interest rate one of the most important factors in your choice of credit card. As a credit card owner, it is important that you are aware of how much interest you are paying on any given amount spent should you not make your payments on time.

–          Rewards. In order to attract as many customers as possible, banks and financial institutions offer rewards programs for their customers. Such programs can wield real benefits for credit card owners. On many cards, every dollar spent on accrues points which can then be redeemed.  Many credit cards are also linked to frequent flyer programs. Cards with higher limits and annual fees usually offer the best rewards for their customers.

There are a number of things to consider when deciding which credit card to apply for and which financial institutions’ services you would like to use. Just as you would comprehensively compare mobile phones or home loans before making any decisions, make sure you consider all factors and options when considering which credit card you will apply for. Sites like can be helpful in showing features side-by-side.

Credit Card Debt Solutions, Ideas to Help Your Household Budget

Have you lately considered the benefits of implementing practical credit card debt solutions?  Regrettably, a lot more people have become victims of tremendous debt that they will in all likelihood never get fully paid. It’s shameful to know that so many sense that they NEED so much yet believe the only way that they could ever have these things is by racking up their credit card debt.  Sticking to a workable household budget as gone by the wayside.

Credit card debt has expanded drastically over the past several years and it does not appear as if a lot folks acknowledge just how big the problem is.  Are YOU scrambling every month, attempting to solve how you’ll have the power to completely pay back your charge card payments on time?  Then you should emphatically keep reading this article.

It is really crucial for you to realize how dramatically ignoring effective credit card debt solutions affects your financial foundation, or lack of it. Plastic debt is among the greatest driving forces of why a person would wind up being forced to file bankruptcy, or take out a loan on their home or take other similar drastic measures. People get so captivated up with trying to purchase things that are just not realistic, not looking at how much it will cost them later because of the tremendous effect of compounding interest rates.

What are some practical credit card debt solutions?  Start today by choosing to trash all of those credit card offers that come in your mail so on a regular basis.  Believe me when I say that you should not take on anymore debt, people! As the credit card bills continue to add up, the next thing you know you are will be skipping over payments.  And once that happen, be brace yourself for an exorbitant bill each month for YEARS.  Now, you KNOW for certain there is absolutely no way you will be able to afford that!

To all of you young adults that have yet to get in severe credit card debt, don’t do it.  Again, I say do not do it.  Do not allow the endless cycle of incredibly expensive debts consume your life. If you are able to start your adult life without the unnecessary burden of debts, you are going to be in a much much more gratifying financial situation … and be a good deal less stressful.

Because of the reality that over spending has become so incredibly out of control, maybe you will start a new movement to help others stay clear from getting themselves into so much debt. Imagine that!  Therefore, begin now by focusing on the positive things to make your life more prosperous.  Once you embark on accomplishing those goals, you will sleep much better at night and experience a more positive outlook when it comes to every aspect of your life.

Take responsibility for your own actions.  If you have captured yourself into a fantastic amount of credit card debt, keep making those payments every month.  If you have to, work extra hours or a second job for a while so that you are able to begin doubling your payments and paying off your debt a LOT sooner.  Get on a workable monthly household budget.  Take head to implement practical credit card debt solutions today and your future tomorrows will be financially better.

David Kimball is a personal financial coach offering many other credit card debt solutions.  Read more household budget ideas on saving money at

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