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New offers options to American consumers who need an effective debt reduction plan. We have settled over 150 million dollars worth of unsecured, credit card debt while saving clients thousands of dollars. AmeriGuard believes it is important to make an informed decision especially when it affects your financial health. Understanding your options can be overwhelming; that’s why we offer experienced, knowledgeable guidance along the way. provides the information you need to participate in creating a better future..

Sunday, January 31, 2010

Buying a Private Plane

Maybe it's the security lines at airports that have you frazzled. Or you see more of the airline personnel than your own family because you travel so much. Whatever the reason, you are seriously considering buying your own private airplane. Here are a few things you need to consider before making such an important decision.

Types

    You could buy a Cessna 152 for about $10,000. It's barely flyable. Or you could fly more safely if you spent $20,000 to $50,000 on a more modern Cessna 172. Maybe you want to move up in class to a Cirrus-22 that goes for a cool $250,000 or find a Beechcraft Bonanza for about $3/4 million. Or, if you are a high roller, hold out for a Gulfstream at $40 million or a Boeing Business Jet for about $100 million. Oh, lest we forget, gas, maintenance and a pilot or two will add about 50 cents to every dollar you spend.

Considerations

    There are several things to consider when purchasing an airplane. Typically, the term can be up to 20 years, because most aircraft have a life expectancy of at least that long if the plane is well maintained. Like a mortgage, you will pay to have the title checked because, in most cases, sales are made of used aircraft. You can expect to pay interest that exceeds that of a car loan because the lender is taking more risk. The purchaser of the airplane must guarantee that the airplane undergo routine maintenance depending on the hours that it is in the air. Also, the lender must be able to see the aircraft within a period of time set out in the loan agreement.

Effects

    If owning an airplane is something that's appealing to you, you first must decide what type of plane to buy. If you have a jet in mind, understand that it will be more expensive to buy and maintain, even though it is a much faster aircraft. Then you must consider whether you are going to buy a new or a used airplane. While used planes often cost less, they do have more mechanical problems that will increase your expenses long term. Balance that with the fact that most general aviation aircraft are over 20 years old. Then you'll need to decide whether you will buy a home-built aircraft or a popular brand. Home-built aircraft are lighter, faster and more economical but can be a challenge to build.

Identification

    While your lender may require it, you are strongly urged to have a certified mechanic inspect your plane before you buy it. Your mechanic should be able to confirm that the maintenance is up to date and that all work done is current and well documented. The cost of such an inspection can run as high at $1,000 or more because you will need to find a mechanic that is familiar with the aircraft you are purchasing.

Warning

    Once you have signed the papers, it's too late to decide if you can afford the aircraft. Before you proceed, factor in all the costs associated with owning an aircraft, which fall roughly into the following categories: financing costs, insurance, storage, operating costs and maintenance. As a rule of thumb, consider your ongoing costs to be about 50 percent of the purchase price of the plane.

How do I Get a Credit Report for Renting a House?

How do I Get a Credit Report for Renting a House?

Credit health is a crucial part of financial health. If you want to have access to low-cost loans and home financing, you need to stay on top of your credit score and payment history. Fortunately, in the United States--after the passage of the Fair Credit Reporting Act (FCRA)--all citizens are entitled to free credit reports. You can use this credit report to determine your creditworthiness. This could help you when you look for places to rent.

Instructions

    1

    Collect all of your current account statements--including any bank account information. Annual Credit Report is the government-mandated site for free credit reports. However, to access these reports, you must answer some very specific questions about your accounts.

    2

    Log on to annualcreditreport.com. Choose the credit report you wish to view. There are three main credit bureaus--TransUnion, Experian and Equifax. You can get a free copy of each, if you wish, but you must obtain them one at a time.

    3

    Review and answer the security questions. There will likely be about ten questions. These questions will deal with current account balances, payments, names of lenders, last payments and total credit line. You must answer all of these questions accurately.

    4

    Review your answers. You could get locked out of your report if the system recognizes inaccurate answers. Submit the form. Your credit report will populate on the next screen. (You must pay for a FICO credit score. This is not free. FICO scores range from 300 to 850. Scores over 700 are excellent; scores below 600 are poor.)

    5

    Review the credit report for inaccuracies or fraud. Contact the credit bureau if you find any erroneous information.

    6

    Look at the credit report and FICO score as a potential landlord would and use it as a tool for persuading the landlord that you are a good risk. A landlord is essentially looking for financial responsibility--which will likely indicate your ability and willingness to pay rent on time. Things that may give a landlord pause are: a trend of delinquencies on any account (especially secured accounts like car loans), public records (judgments, tax liens or medical liens) and any accounts in collections.

    7

    Make sure that you have documentation or sound reasoning to support any negative marks on your credit report. A landlord may be willing to rent to you--even with credit problems--if you can reasonably explain the negative marks on your report. This reasoning will be legitimized with paperwork--unemployment checks, disability statements or letters from doctors.

How to Get Guaranteed Approval for a Credit Card

How to Get Guaranteed Approval for a Credit Card

Guaranteed approval on credit cards is possible, with most credit card companies eager to add more customers to increase profits. Card companies have different requirements for various credit cards they offer, and few people are guaranteed approval for all types of cards. People seeking guaranteed approval must make sure their background qualifies them for the card. For example, a college student seeking a credit card normally reserved for people with high incomes is unlikely to receive guaranteed approval. However, the student may easily qualify for a card marketed to college students.

Instructions

    1

    Review your credit report and score. Obtain your credit report for free from the Annual Credit Report website (see Resources). The site is authorized by the Federal Trade Commission to offer free reports under the terms of the Fair Credit Reporting Act. View and print the report from the website. Follow instructions included with the report to order your credit score separately for a fee.

    2

    Compare your credit score to accepted standards for credit. Credit scores are a thee-digit number ranging from 350 to 850, with scores of 720 or higher usually leading to guaranteed approval on credit cards and other forms of credit. Scores below 720 may qualify for guaranteed approval or may require a certain form of collateral for approval.

    3

    Apply for a standard, bank-issued credit card such as a MasterCard or Visa if your credit score is above 720.

    4

    Apply for a secured credit card for the easiest guaranteed approval if your credit score is significantly less than 720. Secured cards require a deposit into a savings account, which is held as collateral, making approval easy.

    5

    Start the application process for a secured credit card by contacting banks and credit unions offering the cards. Find banks offering the cards by starting with your own bank or credit union and also visit other banks. Tell the bank representative you are seeking guaranteed approval on a secured credit card account and you are willing to make an immediate deposit into a savings account.

    6

    Follow directions offered by the bank representative to open the savings account and receive guaranteed approval on the secured credit card.

Saturday, January 30, 2010

The Right to Get a Free Credit Score

While consumers are legally entitled to free annual credit reports, the credit reporting companies are not obligated to offer free credit scores, though they all will provide them for a fee. You are entitled to one free credit report each year from the three major credit bureaus, Experian, Equifax and TransUnion.

Credit-Reporting Agencies

    Each reporting agency calculates your credit score using its own data; therefore, you can have three different credit scores, one from each of the three agencies. Your credit report includes information your lenders have reported about you, such as your credit limits and payment history. By reviewing your credit reports, you can take steps to improve your scores by appealing to the companies to remove inaccurate negative information.

AnnualCreditReport.com

    Go online to AnnualCreditReport.com and request your free credit report. AnnualCreditReport.com is the only website sponsored by all three bureaus. You do not need to purchase services or pay a fee to obtain your annual free credit report, but you generally do have to pay to see your credit score. The site provides information for ordering reports online, by mail or by phone. The website also includes information on whom to contact at each of the three credit reporting agencies to dispute a claim on a report.

Warning

    Before ordering a credit report from a website, check the website address, to verify you are on AnnualCreditReport.com. The Federal Trade Commission reports it has received numerous complaints from consumers complaining about websites offering free credit reports but requiring the consumer to pay for a product or service. If you need an additional report from a single agency within a 12-month period, you will have to pay for the second one.

Advantages

    By taking advantage of your right to receive the free credit report, you can take steps to improve your credit reports. Higher credit scores make it easier to borrower money. In general, consumers with low debt and high credit, as well as strong payment histories, will have the highest credit scores, though each bureau uses a different model to compute credit scores. Scores influence what you pay in insurance premiums, and employers and potential property managers often look at credit scores when making decisions about a promotion or rental application.

Repairs

    If you find false information on a credit report, you can request the item be removed from your report by petitioning the credit bureau. Doing so does not affect the other credit bureaus, so if there is similarly incorrect information on another bureau's report, you must write that company to remove it as well.

Debit & Credit Card Problems

Debit & Credit Card Problems

Debit cards and credit cards can help make for easier financial transactions for many consumers. Credit cards may function as emergency reserves for sudden medical costs, car repairs or other financial challenges. In some cases, consumers receive greater protection from theft when using debit cards and credit cards. But these perks come with some serious disadvantages that can cause financial headaches for consumers. Understanding problems related to debit and credit cards may help you avoid them.

Overdrafts

    Using debit cards routinely without making sure that checking accounts hold enough funds to back purchases can result in overdraft fees. Banks may cover overdrafts by fronting the money to cover the purchase or cashed check, but consumers may pay hefty penalties for each overdraft fee, no matter the size of the initial purchase. For example, a customer may overdraft a checking account when purchasing a $3 cup of coffee, which the bank covers before assessing a $35 overdraft fee. Unwary consumers who swipe their debit card several times through the course of the day before realizing that they've overdrafted may accumulate three or four $35 fees in one business day.

Liability

    While credit cards offer protection against thiefs using cards to make major purchases, debit cards don't always offer that protection. Consumers have greater liability when thieves access their debit cards (or debit card number and expiration date) to make purchases or withdraw funds from bank accounts. While you're working to resolve the problem of a thief having drained a bank account using your debit card, checks may start bouncing and automatic online payments declined, resulting in additional woes.

Debt

    Credit cards can create major debt problems for consumers, particularly for customers unaccustomed to the responsibility of using cards wisely and immediately paying down balances. Problems compound when large debt loads accumulate steep interest, annual fees and penalties for late payments. As consumers make multiple high-dollar payments toward credit card debt each month, this can begin to create financial problems in other areas of their life, such as missed payments to other agencies for student loans, health insurance or mortgage payments.

Credit Rating

    While wise usage of credit cards, including making payments in full and on time, can lead to good credit, missed payments and high balances can create problems for consumers leading to poor credit. If consumers become unable to make credit card payments, their lenders may turn over accounts to collection agencies, creating financial anxiety and leaving negative marks on credit histories. In a worst-case scenario, consumers may decide to file for bankruptcy because of an inability to pay down credit card debt.

Friday, January 29, 2010

Statute of Limitations for Credit Card Charge-off in Texas

A credit card charge-off occurs when the card issuer believes an account is beyond collection and reports the debt as a loss for the applicable tax year. The Texas statute of limitations on credit card debt applies to the timeframe in which a creditor can sue you for delinquent debt. In either case, the debt remains valid, but the statute of limitations does limit a debt collector's rights regarding court-ordered garnishments, liens and bank levies.

Timeframe

    Under Chapter 16.004 of the Texas Civil Practice and Remedies Code, the statute of limitations on credit card debt is four years after the cause of action accrues or when the debt is in default. Making a payment or setting up a new payment plan with the original creditor or an outside collection agency restarts the clock on the statute of limitations. The law prevents creditors from suing you for credit card debt beyond four years; it does not eliminate the debt.

Debt Collection Process

    Once you default on a credit card, the issuer will attempt to collect through an in-house collection department. If a payment plan cannot be reached, creditors may employ an outside collection agency or write the debt off as a loss. Creditors generally charge off delinquent debts after 180 days. Creditors may attempt to collect after the charge-off or sell the account to an outside collection agency for much less than the original debt. The new collection agency then attempts to collect the debt, but the transfer does not reset the statute of limitations on lawsuits.

Credit Reporting

    The four-year statute of limitations does not apply to your credit report. A charge-off will appear on your credit report as paid, settled or delinquent for seven years. The seven-year period begins 180 days after you default. You may contact the original creditor and request that a paid charge-off be removed from your credit history, but creditors are not obligated to do this. Selling or transferring debt does not change the original credit reporting timeframe.

Considerations

    Barring a court order, a collection agency may attempt to collect on an outstanding debt indefinitely. However, debt collectors must abide by the Fair Debt Collection Practices Act. The Act prevents a debt collector from suing, threatening to sue or otherwise claiming action they cannot legally take. Adversely, if you are sued, do not assume the creditor or the court knows the account is beyond the statute of limitations. Ignoring a lawsuit may result in a default judgment against you.

How to Estimate Probability of Default

How to Estimate Probability of Default

The probability of default is similar to credit scoring and is taken into consideration by lenders before extending credit. Estimating the probability of default involves reviewing the applicant's financial history. Knowing how to estimate the probability of default will help a credit applicant determine if a lender will approve their application.

Instructions

    1

    Review a recent credit report. The credit report will show how an applicant usually repays debt. Check the number of debts on a credit report that have gone into default. Look for recent credit inquiries to get an idea of how much credit an applicant is trying to get.

    2

    Check the length of the applicant's credit history. Search for the oldest account on the credit report that is still open. This gives the lender an idea of how much experience the debtor has with paying credit accounts.

    3

    Search public records in the applicant's current or past states of residence. Some public records are found on credit reports, but if an applicant makes payment on judgments quickly, the information might not show up on a credit report. Check for judgments such as evictions or charges for writing bad checks or other financial related trouble. Perhaps most importantly, search for bankruptcy petitions.

    4

    Check an applicant's ability to repay their debt. Review recent payment stubs and bank statements to verify an applicant's income and available resources. Ask a credit applicant to provide a list of monthly bills and use the information to determine how much income the applicant has available each month after paying those bills.

    5

    Take the economy into consideration. It is not always possible to guess the ups and downs in the local economy, but the ability to anticipate economic changes helps with long-term probability of default estimates. Preparing for changes in the economy that may lead to unemployment or other financial difficulties is important when considering mortgage applications and other long-term loans.

Thursday, January 28, 2010

Ways to Help Clear Credit Card Debt

Ways to Help Clear Credit Card Debt

Your credit card debt seems to grow larger even when you pay the required amount each month. Unfortunately, it will take you the better part of 30 years to pay them off since the interest charges are almost as much as your payments. Fortunately, there are ways for you to pay them off faster. All that's needed is planning and perseverance.

Lower Your Interest

    Look at the statement of your credit cards and determine which one charges the lowest interest rate. If you have not maxed out that card, transfer part or all of the balance from the account that charges the most interest. You will save a load of money if, for example, you can transfer money that you owe on a card that charges 22 percent to one charging 10 percent less interest.

High Interest First

    Arrange your credit card statements, starting with the one charging the highest rate. Make required monthly payments on all but that one. For that account, you should make the largest payment you can afford. You'll be surprised how fast you will pay it off if you are disciplined. Once you have made your last payment on that account, go to the one charging the next highest interest and begin doing the same. That's called snowballing and it's one of the most efficient ways to pay off your credit cards.

Take Them Up on Their Offer

    You probably receive offers to transfer an existing credit card balance to a new card for a low introductory rate of interest. If you can transfer a balance from an account that charges 22 percent to a new one at six percent, you should probable jump at the chance. Using that scenario, if you transfer $1,000, you could save upwards of $160 the first year. But check the new card's fine print. Some cards will convert to its highest rate if your payment is late, even by a day. Other credit cards will charge their regular rate, retroactively, if you don't keep your account open for at least a year.

Negotiation

    Before an account becomes a problem, many credit card companies are open to negotiation. If you're having difficulty paying your credit card bills each month, they are likely to help if you explain your situation. They may adjust your scheduled payments if that's more convenient. In many cases, they will reduce either the interest rate or the balance of your account to make the payments more manageable.

Wednesday, January 27, 2010

Does Settling Credit Card Debt Hurt Your Credit?

Does Settling Credit Card Debt Hurt Your Credit?

Settling credit card debt may seem like the only way to salvage your credit and keep you afloat in a sea of debt. Settling credit card debt can have an immediate negative affect on your credit. Fortunately, the impact is only temporary, in most cases.

Behind on Payments

    Settlement negotiation processes typically mean you have missed monthly payments. Each late or missed payment will lower your credit score, according to MyFICO.

Settlement Reported on Your Credit

    When settlement negotiations are complete, and your credit card account is paid, the bank will report to the credit bureaus. The account will note that you dealt with the debt, but you paid less than the original amount owed, says MyFICO. Even though a settled account will not boost your score as much as if the account had been paid in full, any settled account is better than a delinquent account or charge-off on your report.

Settling Old Debt

    When it comes to settling old credit card debt, arranging to pay can actually lower your score, cautions MSN Money. Be careful when it comes to an old delinquent account. Inquiring about an old debt, or arranging a payment plan, may restart the statute of limitations in some states. Creditors may even be able to sue for the past-due debt. The statute of limitations for collecting debt typically expires in 3 to 6 years, says creditreport.com.

Do Charge-Off Accounts Have a Zero Balance?

A charge-off is an internal accounting term and doesn't reduce your credit account to a zero balance. MSN Money reports that it is common for people to assume that they no longer are obligated to pay debts that have been charged off. That simply isn't true, as you remain legally and ethical responsible for the debt. The creditor can continue collection attempts or send your account to a debt collection agency. Eventually the creditor or debt collector could file a lawsuit against you if you continue to refuse to pay.

Timeline

    After six missed payments a creditor will list your account as charged-off -- a move that allows the creditor to receive a tax break worth about 35 percent of your balance, according to MSN Money. From there the creditor may sell your account to a debt collection agency for as little as pennies on the dollar. The debt collector then owns the account and has the legal right to seek the full balance from you. Or the creditor may assign the account to an internal collections team or place it with a debt collection agency on consignment. The debt collection agency is paid a commission if it collects from you.

Credit Report

    After the charge-off your credit report is updated to show the account as charged-off, along with the date. This causes your credit score to drop. Also, the debt collection agency inheriting your account is allowed to place its own negative entry on your report, increasing the damage to your credit score. The result is two negative entries -- one labeled a charge-off, and the other a collection account.

Credit Repair

    The negative entries will remain on your credit for seven years, and generally only the passage of time will help your credit score. Paying the charge-off before it is assigned to a collection agency results in the charge-off being updated to a "paid charge-off" on your report. Or a collection account could be updated to show as a "paid collection account." However, neither update reverses the initial damage done to your credit score. Making steady on-time payments on your other accounts and paying down your overall debt will repair your credit over time.

Pay-for-Delete

    Some people try to minimize the damage by offering to pay the balance in full in exchange for charge-offs and collection accounts being eliminated from their credit reports. Creditors and debt collectors have the authority to make the changes to your credit report, but they are under no obligation to agree to such an arrangement.

Free Online Credit Card Debt Advice

Free Online Credit Card Debt Advice

If you have credit card debt and are looking for advice, you should first determine what your goal is concerning your credit card debt. Online advice runs the gamut, so it's beneficial to narrow your focus when searching for free credit card advice. Consider things such as whether you want to reduce your credit card debt, find out how credit card laws affect you or learn how your credit debt affects your credit score.

Considerations

    Government websites can be a good source for unbiased information on credit card debt since they're not affiliated with creditors and they don't have credit card ads on their sites. For example, the U.S. Federal Trade Commission (FTC) site lists things consumers should expect if they choose to work with a debt-settlement company. However, the FTC also cites other options people have for settling their credit card debts if they're having trouble making their monthly payments. Options include contacting card issuers yourself to negotiate a settlement instead of paying fees to a debt-settlement company to do it for you.

Laws

    The U.S. Federal Reserve Board has established a website that explains how credit protection laws affect consumers. The Credit Card Accountability, Responsibility and Disclosure (CARD) Act is one law that limits credit card fees that add to consumers' debt. With some exceptions, the CARD Act disallows charging cardholders a late-payment fee that exceeds their minimum monthly payment. Furthermore, credit card companies can't charge cardholders inactivity fees for not using their credit cards.

Function

    Some financial magazines provide information concerning how credit card companies operate, including how they determine interest rates. A "Smart Money" magazine article titled "10 Things Credit Card Issuers Don't Say" notes that a card issuer may decide to raise your interest rate if your recent credit history shows late payments reported by another creditor. Credit card companies see late payments as a sign that customers are at high risk for defaulting on their accounts, so they raise rates to protect their company from anticipated losses.

Potential

    A section of the Bankrate.com site is devoted to credit cards. Among other things, the section includes tips on how credit-card debt affects credit scores. The debt-management section of the website also provides information on how to organize credit debt, including balance transfers. Bankrate warns cardholders to determine whether transferring the balance of one card to another to get a lower interest rate will be beneficial. Some balance-transfer offers include a low introductory interest rate that could eventually increase to a level that's higher than the previous card's rate.

Effects

    "This Week in Credit Card News" is a feature on the Forbes website. It includes current information that could affect your credit card debt. For instance, one article on the site notes that credit card offers from some retailers have interest rates as high as 29 percent. The site also lists the weekly average for credit card interest rates based on offers from more than 1,000 issuers.

The Pitfalls of Debt Consolidation

The Pitfalls of Debt Consolidation

Ideally, debt consolidation improves a person's financial situation by combining multiple debts into one loan with a reduced interest rate, thereby lowering monthly payments. However, debt consolidation does have its pitfalls, including taking on more debt, consolidation scams, lower credit ratings and even loss of property. There are no guarantees with debt consolidation, and individuals should investigate a company with the Better Business Bureau prior to taking out a consolidation loan or agreeing to a debt management plan.

Cost

    Debt consolidation companies and banks charge interest on a loan just like any other lender. Ideally, the interest rate is lower than your current rates. However, debt consolidation companies also charge fees for their services. Individuals looking to consolidate debt through a third party need to make sure that they are not taking on more debt when consolidating.

Credit Score

    Debt consolidators may negotiate with creditors in an attempt to reduce the debt and lower interest rates. They often do this by stopping all payments to the lender for months, then offering a reduced lump sum payment. This tactic does work sometimes. However, stopping payments to creditors will hurt your credit score if you were current with payments prior to consolidation. Additionally, your credit report will show that you're working with a third party on a debt repayment plan, which may hinder future credit offers.

Additional Debt

    If debt consolidation involves a negotiation and a repayment plan, lenders will usually close or freeze the account as part of the agreement. However, if an unrestricted consolidation loan is used to pay off debts, it frees up open lines of credit. Individuals may fall into the cycle of running up accounts or credit cards, leaving them in a worse financial situation than they started with.

Secured Consolidation Loans

    Consolidation loans requiring collateral put homes, vehicles and other property at risk if payments become delinquent. Banks, credit unions or consolidation companies will put a lien on properties to ensure payment.

Disreputable Companies

    Unfortunately, there are companies that prey on individuals with financial problems. Some are unreliable companies that disappear with your money, while others lock you in to less than favorable contract terms. Individuals who feel they have been victims of unfair business practices should file a complaint with the Federal Trade Commission on their website or by calling their toll-free hotline at 877-382-4357.

No Guarantee

    Guarantees that seem to good to be true, such as promises to eliminate debt, usually are. There is never a guarantee that creditors will accept lower payments, reduce interest rates or otherwise work with a consolidation company. This still leaves the consumer responsible for the debt, and creditors may take legal action to get paid.

How to Pay Off Debts When You Don't Know Where to Pay

How to Pay Off Debts When You Don't Know Where to Pay

Debt can be frustrating and can easily get out of hand for even the most organized people. When you finally decide to get your finances in order and pay off debt, it can seem overwhelming to figure out what you owe, how much you owe and where payments should be sent. Don't be intimidated because the hardest part is deciding to get organized. Once you've made that decision and committed yourself to paying off debt, finding out what you owe is relatively easy, and with time and patience, you too can be debt free.

Instructions

    1

    Gather all of your financial paperwork. This includes credit card statements, mortgage agreements and loan papers. Sometimes just getting everything into the same spot can jump start your debt repayment process.

    2

    Make a list of all the debts you are responsible for that you can remember. Write down what the debt is for (such as car payment), how much you owe and the interest rate if you know it.

    3

    Obtain a copy of your credit report. Everyone in the U.S. is entitled to one free copy of their credit report from each of the three credit bureaus every year. Sometimes there can be items shown on one bureau's credit report that will not be shown on the other two, so its best to order all three at once. You can get your free credit report by calling (877) 322-8228, or by going to the website listed in the resources section of this article.

    4

    Examine your credit report. A large majority of credit reports contain errors, so if you see something you don't recognize, follow the instructions on the report to file a dispute.

    5

    Use the information in your three credit reports to complete your list of debts owed. Include amount owed, monthly payment information and interest rates.

    6

    Contact creditors if necessary. For any accounts shown on your report to which you have not been making payments, contact the creditor to work out a payment agreement. The creditor may offer to make a deal with you so that it will be more likely to receive payments.

    7

    Get organized. Use a calendar to mark due dates for each of your monthly payments. Send your payments off in time each month so that they are on time, which will help you to avoid late fees and interest rate increases.

What Costs Are Involved With the Use of a Credit Card?

What Costs Are Involved With the Use of a Credit Card?

Plastic money is a fast, convenient and hassle-free way to purchase groceries, shop online and pay bills. Credit cards makes buying easier and more secure. According to Curtis E. Arnold in the book "How You Can Profit from Credit Cards," there were approximately 1 billion credit cards in the United States in the year 2008 alone, with around five cards for each American. Credit card usage is linked with various costs--besides those associated with the cost of goods purchased--and many users find themselves plagued with excessive credit card payments that put a considerable dent in earnings.

Interest

    Credit cards issued by companies have different interest rates---the primary means by which the credit card issuing company generates revenue. Credit cards offered by the same financial institution can also differ wildly in interest rates, depending on the services offered and the functions of a particular credit card. According to Don Chambers in the book "Money Basics for Young Adults," interest rates typically fall into four main categories: teaser rate, never late and always paid in full rate, never late but minimum paid rate and once late on a minimum payment rate. The teaser rate usually ranges between 7 percent and 14 percent, and lasts for six months from the time of purchase of the credit card, after which it changes to the never late and always paid in full rate--between 14 percent and 18 percent. The interest rate on never late but minimum paid rate ranges 18 percent to 22 percent and that on the once late ranges between 22 percent and 29 percent.

Fees

    Credit cards are associated with numerous fees---some known and many hidden. Some credit card companies charge monthly fees while others charge annual fees. Typical fees include application fees, cash advance fees, transaction fees, late payment fees, balance transfer fees, finance charge, penalty fees, over-the-limit fees and annual fees. Some credit card companies also provide fee-charged overdraft protection, which can cost as much as $30 every time a customer applies for overdraft.

Annual Percentage Rate

    The APR reflects the total of all the charges, fees and the interest rate to be paid on a particular credit card. It is defined as the true or effective interest rate being charged, according to Robert A. Brechner in the book "Contemporary Mathematics for Business and Consumers."

Tuesday, January 26, 2010

Tips on Negotiating Credit Card Debt

Negotiating credit card debt can be an intimidating process. Many people choose to use a credit counseling firm. If you choose to do so, ensure that the credit counselor is a Not-for-Profit 503(b) certified credit counseling agency that is independently accredited by a third party accrediting company (such as the National Foundation for Credit Counselors or the Council on Accreditation). However, it is possible to negotiate debt yourself.

When Should You Negotiate Debt

    You should only negotiate debt as a last resort before bankruptcy, when you are unable to pay your credit card bills any other way. Prior to settling or negotiating debt, you should try to consolidate debt to lower your payments and/or speak with your creditors to see if you can lower interest rates. Negotiating debt, or paying less than you owe, can have a strongly adverse impact on your credit report. Although it is better than a bankruptcy, you typically must have late payments before a creditor will agree to negotiate, and the debt will also be reported as "settled" as opposed to "paid in full." Both of these things can cause your credit score to fall and it may take seven to 10 years to recover depending on the extent of the damage done.

How To Negotiate Debt

    Credit card companies generally will not negotiate with you to settle debt for less than what you owe unless you are in danger of defaulting (paying nothing). When you are "current" (making payments on time), creditors have little incentive to negotiate. A phone call to a creditor to ask them to lower your interest rate might be effective if you are good customer, and/or if you explain to someone with decision-making authority that you are having trouble making your payments. However, this will not happen in many cases.

    For most creditors, the incentive to negotiate is to avoid sending a credit account to collections. When a creditor gives up hope of you paying your debt, they typically sell the credit account to a collection agency for pennies on the dollar. Rather than doing this, creditors would prefer to negotiate directly with the consumer to get more than the value they would get from the collection agency, even if it is less than the full amount owed. Creditors usually sell debt to a collection agency when you are six months behind on payments, so the best time to settle debt is after you are at least 30-90 days late on payments, but before six months has passed.

    When you are ready to negotiate, get everything in writing. Do not send any money until you have an official letter from the creditor stating the terms of the settlement, and how it will be paid. Creditors usually prefer and are more amenable to settling if they are offered one single lump sum payment, but will sometimes agree to a payment plan. The letter should also state which debts will be settled, and for how much. After you have all the terms in writing, send a check or money order--do not give creditors access to your bank accounts.

Taxes

    Be aware that you may be taxed on the amount of forgiven debt as income. This means you will receive a 1099 listing the amount of forgiven debt, and you will need to enter this is "miscellaneous income." In some cases, this can have a dramatic impact on your taxes and push you into the next highest tax bracket, depending on your income and how much debt is forgiven. Even if the "miscellaneous income" does not cause you to change tax brackets, you are still generally charged higher on "1099" income than on income from an employer, because you have to pay your own social security taxes on "miscellaneous" income, while employers subsidize and pay a portion of this tax under normal circumstances.

Monday, January 25, 2010

Credit Counselor Programs

Credit Counselor Programs

Credit counselor programs can help you get started in a career that is expected to grow through 2015. With the increase in foreclosures and loan defaults, people are in need of financial advice more than ever. As a credit counselor, you'll be able to help people straighten out their credit problems and assist them in creating a plan that will give them hope for a secure financial future.

National Association of Certified Credit Counselors

    The National Association of Certified Credit Counselors offers two certifications, a Credit Counselor Certification and a Senior Credit Counselor Certification. The Credit Counselor Certification self-study manual, Keys to Success, covers such topics as the proper use of credit cards, debt collection, the psychology of spending and how to reduce or eliminate debt. Review questions are included at the end of each chapter. You'll also find three appendices in the manual: Ethics for the Credit Counselor, Consumer Resources and Consumer Protection Legislation. At the end of the course, you'll take a 100-question certification exam administered online and overseen by a qualified credit counselor. The Senior Credit Counselor Certification self-study manual, Credit Counseling: An Integrated Approach, covers such topics as senior housing and retirement income. The certification exam consists of 50 multiple-choice questions.

    National Association of Certified Credit Counselors
    209 6th Avenue
    Indialantic, FL 32903
    321-725-3497
    naccc.us

Credit Counseling Education Association

    The Credit Counseling Education Association (CCEA) offers a certification for credit counselors and for debt-management professionals. The online course allows you to complete the training at your convenience. The Uniform Debt Management Services Act passed in July 2005 requires that anyone being paid for credit counseling must be certified, and upon completion of the CCEA course, you should have the skills to assist clients with their debt, budgets and financial goals. The CCEA has a simple process for registering and completing the program. After filling out the online application, you'll be able to log in and get access to the reading material. Once you complete the100-question exam and pass with a grade of 70 percent or better, you can print out your Credit Counseling Certification Certificate.

    Credit Counseling Education Association
    5838 Edison Place, Suite 215
    Carlsbad, CA 92008
    760-448-8081
    creditcounselingcertification.org/

Association for Financial Counseling, Planning and Education

    The Association for Financial Counseling, Planning and Education (AFCPE) offers an Accredited Financial Counselor (AFC) program for those who have already had some experience with credit counseling. Requirements to enroll in the program include having 1,000 hours of experience in one-on-one credit counseling, educating clients and other counselors in financial matters, working as a teacher in a credit counseling organization or supervising other counselors. You also must submit three reference letters---one each from a supervisor, colleague and client---stating your professional abilities and experience. Acquiring the accreditation will allow you to advance your counseling career. You'll use your certified skills to offer clients expert advise in such areas as sound financial principles, reducing and eliminating debt, modifying spending behavior, establishing financial goals and developing self-esteem in regard to their financial situation.

    Association for Financial Counseling, Planning and Education
    1500 W. Third Avenue, Suite 223
    Columbus, OH 43212
    614-485-9650
    afcpe.org

Information on Credit Bureaus

A credit bureau is an agency that collects and sells information about an individuals creditworthiness. Their clients include mortgage lenders, credit card companies and banks. The information the credit bureau collects is used to screen potential clients for loans of all types and credit cards. The more you know about credit bureaus and their role when it comes to your credit, the better off you are.

Facts

    The three major credit bureaus are Experian, TransUnion and Equifax. Even though there are three, the information they keep on their records is different. They also have their own credit score for individuals. The credit bureau will have many facts of an individuals personal information on the file: name, date of birth, Social Security number, current and previous addresses as well as employment history.

Significance

    Whenever a person applies for a loan or any type of credit, his credit report is pulled from one of the three credit bureaus. If the credit history listed by the credit bureau is less than stellar, it can impact whether or not someone receives a loan, gets a job or even insurance. Furthermore, a poor credit report can result in a higher interest rate on a loan or a credit card.

Features

    A variety of information gets reported to credit bureaus and ends up on your credit report. If you have a bank loan, the bank reports to the credit bureau if you are on time or delinquent. Lenders report this every 30 days. Information about your mortgage, car loan, student loan and even credit inquiries are listed on your credit report. Each credit bureau will show who made the inquiry and when. If there are too many inquiries in a certain period, it can affect your credit rating.

Terminology

    There are terms that you should be aware of when dealing with credit bureaus. Charge-offs means accounts receivable that will likely remain uncollectible and will be written off. A secured loan is a loan in which you had to put up some collateral for the loan. An unsecured loan is a loan that didn't require collateral. Credit bureau risk score is a credit score based on data stored at the major credit bureaus. It provides a glance of a consumer's credit risk at a particular point in time. It also rates the likelihood that the consumer will repay debts as agreed.

Prevention/Solution

    To ensure that the credit bureau has accurate information, you should order your credit report at least once a year from each of the credit bureaus. You can order the credit report online through annualcreditreport.com . If there is any incorrect information on your credit report, take the necessary steps to dispute the information. Annotate it on the credit report, make a copy for yourself and then return the report to the credit bureau so the agency can make the corrections and send you an updated report.

Identity Theft

    If you have been the victim of identity theft, each credit bureau can place a fraud alert on your credit report upon request. When you have been a victim of identity theft, repairing and restoring your name in the credit arena can be a lengthy process. Placing a fraud alert on your credit report can prevent any further activity.

How to Trade a Honda Civic With Negative Equity

How to Trade a Honda Civic With Negative Equity

When you purchase a car, you usually pay at or near the fair market value. As time passes and the vehicle accrues mileage, its value depreciates. Normal wear and tear also lowers its resale value. If you financed the initial purchase of the vehicle, you may eventually find you have negative equity, which means you owe more on the vehicle than it's worth. This is common when you finance the entire purchase price of the vehicle or receive a loan with a high interest rate. If you provided a substantial down payment during the initial purchase, then you are more likely to retain equity in the vehicle even though it depreciates. You can still trade in a vehicle with negative equity for a newer or different model car; however, your original lender has a lien on your current car. In some states, a lien is merely a burden on the title; in other states, a bank with the lien actually owns the car. In either case, before the bank will remove the lien and allow you to trade your car for another vehicle, the initial loan must be paid in full.

Instructions

    1

    Obtain the trade-in value of your current vehicle, which is the amount a dealership may credit toward the purchase of another vehicle. You can get a rough estimate of the trade-in value using the Kelley Blue Book, the Black Book or the N.A.D.A. car guide. These guides determine trade-in value based upon make, model, year, mileage and condition of the car. Dealerships often use one of these three guides in their valuations, but trade-in value is subjective. You will not know the definitive trade-in value of your car until you take it to the dealer where you plan to trade your vehicle and ask for a trade-in quote.

    2

    Determine the payoff balance for your current car loan. The payoff balance is often available on your most recent statement, along with an expiration date. The payoff amount listed on your statement is only good until the next application of interest. You can also call the lender and obtain a payoff quote.

    3

    Calculate the equity in your vehicle. The equity is the difference between the value and the payoff balance. For example, if your vehicle has a trade-in value of $10,000 and your payoff balance is $8,000, your equity is $2,000. But if your value is $10,000 and your payoff balance is $12,000, you have negative equity of $2,000.

    4

    Look for a new car with rebates or cash incentives. Sometimes a dealership may offer cars with rebates or cash incentives of $500 to $5,000. You may find a vehicle with a rebate large enough to cover your negative equity, which would allow you to step into your new car loan without the remaining balance of your original car loan.

    5

    Save enough money to pay off the remaining balance. If your trade-in value is $10,000 and your payoff balance is $12,000, bring $2,000 as a down payment on the new vehicle to cover the negative equity.

    6

    Consider financing the negative equity along with your new car purchase. Some lenders will lend you more than 100 percent of the value of the new car so that you can trade in your vehicle and make the purchase. For example, if the new car you want to purchase is worth $15,000, your new lender may lend you $17,000 to cover the negative equity on your trade-in as well as the cost of the new car. However, this creates negative equity in your new vehicle from the start of the loan.

Sunday, January 24, 2010

What Is the LIBOR in Loans?

You might not realize the interest rates big British banks charge each other directly affects your debt payments, but that's what happens if you have a loan based on LIBOR. In the United States, LIBOR is most commonly used with adjustable-rate mortgages, but it also may be associated with other loans, such as credit cards.

LIBOR Defined

    LIBOR is an acronym for the London Interbank Offered Rate and sometimes is written as Libor. LIBOR is a commonly referenced indicator of international economic conditions. Simply put, it's the average interest rate that major banks in London are offering one another for short-term loans denominated in U.S. dollars. The British Bankers Association compiles the LIBOR and updates it daily.

Loan Indexes

    In the United States, LIBOR frequently is used as an "index" for variable-rate loans. These are loans in which the interest rate rises or falls based on the general direction of the credit markets, as opposed to a fixed-rate loan, in which the interest rate stays the same for the duration of the loan. The rate on a variable-rate loan typically consists of two elements: the index and the margin. The index is some underlying market-derived interest rate, such as LIBOR. The margin is an extra amount the lender places on top of the index. For example, a rate on a loan might be defined as "the six-month LIBOR plus 3 percentage points." In that case, the six-month LIBOR is the index, and the margin is 3 points. If the six-month LIBOR rate was, say, 3 percent, then the loan rate would be 6 percent. If the LIBOR went up to 4.3 percent, then the loan rate would become 7.3 percent.

Types

    The British Bankers Association publishes four LIBOR rates, based on the length of interbank loans: one-month, three-month, six-month and one-year rates. According to Mortgage-X, which tracks indexes for mortgage loans, the six-month LIBOR is the most common LIBOR index. When taking out a loan based on LIBOR, you should make sure the loan documentation makes clear which index is to be used. Also make sure it says how you can find the index yourself. Many financial news outlets publish LIBOR numbers, and the figures published in "The Wall Street Journal" are often the "official" figures used by lenders.

Alternatives

    LIBOR is just one possible index for variable-rate loans. Others include the federal funds rate; the rates on certain U.S. Treasury bills or certificates of deposit; the 11th District Cost of Savings Index, which reflects interest rates paid to depositors by savings institutions in three Western states; and the Wells Fargo Cost of Funds Index, which takes into account certain rates paid by that bank's subsidiaries. In general, an index should reflect overall economic conditions, but some are quicker to move than others or react more strongly to certain events.

Student Credit Guide

Student Credit Guide

Acquiring your first credit card as a student can help you establish a good credit history. Young adults typically get credit in order to qualify for other types of financing in the future such as auto loans or mortgage. Unfortunately, some students make serious credit mistakes, and instead of building a good history, they acquire a low credit score. If considering getting your first credit card, consider tips for managing your credit.

Start with a Secured Credit Card

    Students not accustomed to paying bills may consider starting off with a secured credit card. This requires first opening a bank account, saving money for a deposit (about $500) and then applying for a secured card with their personal bank. There are good reasons for establishing credit with a secured credit card. These cards are easier for students to acquire with no credit history because they require a deposit or collateral. Credit limits are low in the beginning but gradually increase as students submit timely payments and demonstrate the ability to manage credit and debt.

Check Finances Before Making a Purchase

    Young adults enjoy shopping and entertainment, and with a credit card in-hand, it's tempting for students to shop impulsively or purchase items that they cannot afford. Credit cards are not meant to buy every item on a wish list. Ideally, it's best to save credit cards for emergencies only. Using credit is key to building a good credit history. However, students should only charge what they can afford to pay back.

Managing Debt

    Careful budgeting and spending is key to keeping debt balances to a minimum. Yet, some students shop to the point of maxing out credit cards. High credit card balances can hurt a credit rating, and this isn't the way to build a good credit history. Credit scores increase as debts are paid down. Along with only buying affordable merchandise, students need to develop a habit of paying off their credit cards in full each month to avoid heavy debts.

Knowing Your Credit Profile

    Acquiring and using credit aren't the only two ways to build a good credit history. Taking time to review credit profiles also help improve credit scores. Credit profiles or credit reports outline the names of current and past creditors, balances on credit cards and the status of credit accounts. Creditors update reports regularly. But sometimes, reports include mistakes or inaccuracies. Students who start a habit of checking their profiles at least once a year can avoid credit problems that result from inaccuracies. Annual Credit Report is the source to get a free copy of reports from all three bureaus.

Saturday, January 23, 2010

How Can I Consolidate My Loans?

When you have multiple loans, you can simplify your finances by consolidating them into just one loan. After you get a consolidation loan, you only have to make one payment each month. In addition, you might get a lower interest rate, a lower monthly payment than you had before and tax benefits, depending on the method you use to consolidate.

Home Equity Loan

    If you own a home, one of the least expensive ways to consolidate debt is to take out a home equity loan. Because the home equity loan is secured by your property, you get a lower interest rate than with most types of unsecured loans. In addition, you can deduct interest paid on up to $100,000 of home equity debt if you itemize your deductions. Meet with a mortgage lender to determine whether you qualify for a home equity loan, how much it would cost you to open the loan and what your ongoing payments would be. Be aware that if you fail to make payments on a home equity loan, the lender could initiate foreclosure.

Student Loan

    Consolidate multiple student loans into just one loan through one of several methods. Consolidate federal student loans with a direct federal consolidation loan through the Department of Education. This loan averages your weighted interest rates so your overall rate will not change, but you can choose an extended repayment period and simplify your finances with just one payment per month. With private student loans, you need to apply for a consolidation loan with a private lender. The lender bases your new interest rate on your creditworthiness and the market conditions at the time. Another option, if you own a home, is to consolidate student loans into a home equity loan or line of credit. Although this might help you get a lower interest rate, it does not have as much flexibility as student loans because you cannot defer payments if you return to school.

Other Consolidation Options

    If you have a steady job with a 401(k) plan, you can borrow from your account and pay yourself back over time. However, if you lose your job, you have to pay yourself back immediately or face penalties. Another option is to get an unsecured personal loan from a bank or credit union. The interest rate on this type of loan is higher than most secured loans, but it might be lower than that of your credit cards. If you are consolidating credit card debt only, one method is to open a new credit card with a low introductory interest rate on balance transfers and move all of your balances. Before doing this, consider the balance transfer fees and what the interest rate will be after the promotional period ends.

Considerations

    When you consolidate your loans, you are committing to a specific monthly payment for a fixed amount of time. Before consolidating, assess your finances and determine what monthly payment would be affordable for you. Lengthening your repayment period leads to a smaller monthly payment, whereas using a shorter repayment period helps you get out of debt more quickly and pay less interest. Ideally, your total monthly debt payments, including housing, should be less than 36 percent of your gross monthly income.

Friday, January 22, 2010

How to Find an Annual Interest Rate

How to Find an Annual Interest Rate

An annual interest rate, also commonly referred to as the "annual percentage rate," is the percentage of a principal loan amount that a borrower is charged on an annual basis. If you are unsure of the annual interest rate that you are being charged on a credit card, car loan, mortgage or other personal loan, you can find the annual interest rate by performing a few simple math equations.

Instructions

    1

    Determine the amount of interest that you have paid in one month. If you are searching for a credit card annual interest rate, look at your last monthly statement and see how much your finance charge was. If a finance charge is not listed on an alternative loan statement, take note of the previous month's balance, your previous payment and your current balance. Subtract your previous balance from your previous payment amount. Next, subtract your current balance by the difference. This computation will tell you how much you paid in interest for the month.

    2

    Divide the amount that you paid in interest for the prior month by the outstanding balance left on the loan to find the monthly rate of interest. For example, if you paid $150 in interest in the previous month and had an account balance of $15,000, you would have paid 1 percent (150/15,000 =.01) of your payment as interest for the month.

    3

    Multiply your monthly interest rate by 12 (since there are 12 months in a year) to find the annual interest rate on your loan. For example, if you paid 1 percent for the prior month, you would pay 12 percent of your $15,000 balance, or $1,800 for the year, in interest payments.

Importance of Financial Responsibility

Financial responsibility is important because it impacts your future. Making the right decisions early in life concerning your money, can help you become financially independent and live a comfortable life during retirement.

Time Frame

    When you are starting out in life, it's a good idea to understand how money works. The earlier you start to save, the more compound interest works in your favor. You earn interest on top of interest.

Effects

    Make sure you pay yourself first out of every paycheck. Strive to save 10 percent of your savings. If this amount is too difficult, start at a lower percent and work your way up.

Benefits

    Many people have a substantial amount of credit card debt. Credit cards should be used for convenience and emergency purposes only. If you can pay off the balance when you receive your statement, you can keep from accumulating debt and paying finance charges.

Planning

    Talk with a financial planner or adviser and try to find ways to make your money grow and work for you. There are a number of avenues for investing you can explore.

Prevention/Solution

    Avoid the spur-of-the-moment expensive purchases, especially if you think it may be difficult for you to make monthly payments. Understand the distinction between needs and wants or necessities and luxuries.

Warning

    When you don't exercise financial responsibility, some of the difficulties you could encounter in life are bankruptcy, consumer credit counseling, collection agencies, collection accounts, eviction, legal action, judgments and foreclosure. Some people need to work well beyond their retirement years because of no financial discipline.

Thursday, January 21, 2010

How do I Quick-Sale a Mortgage?

A quick sale of your mortgage means you're trying to sell the home quickly -- and get rid of the mortgage in the process. A quick sale is not to be confused with a short sale. A short sale allows you to avoid foreclosure by selling the house for less than what is owed to the lender. A quick sale is a home that sells very fast, perhaps within 30 days of being placed on the market. Ideally you will have enough equity in the home to sell it at a significant discount and still realize a profit. Some people eager for a quick sale are willing to take a loss on the home so they can move on.

Instructions

    1

    Hire a licensed real estate agent. Direct the agent to create an aggressive plan for selling your house within 30 to 60 days. Also ask the agent to determine the value of the house by comparing it with similar homes in the neighborhood that recently have sold.

    2

    Price your house significantly below the current market value if your finances will allow it. If a similar house across the street has an asking price of $325,000, price your house for $295,000 or some other significantly lower amount. Work with your real estate agent to make sure the lawn and house have been spruced up before officially putting the home up for sale.

    3

    Advertise the home widely with free ads on online classified sites, through your social networks and by placing notes on community bulletin boards in grocery stores and coffee shops. Play up the fact that you are pricing the house well below market value for a quick sale and that this isn't a troubled short-sale in any way.

    4

    Schedule open house showings several days a week for the first few week as you prepare to sell the home in a quick sale.

How to Eliminate Credit Card Problems

How to Eliminate Credit Card Problems

Credit cards are quite useful to many people, but they can be disastrous if used irresponsibly. Credit card problems can put people into massive amounts of debt and completely ruin their credit scores. Many people struggle with putting credit card problems to rest, and they find themselves in financial turmoil. Knowing how to eliminate credit card problems helps keep those problems from multiplying.

Instructions

    1

    Stop constantly using credit cards, especially if you already owe thousands of dollars on your credit cards. Continuing to add to the problem only digs a bigger hole.

    2

    Set up a personal budget. A credit card budget allows for comfortable living, because it separates the money you want to spend from the money you can spend. Setting up a budget for groceries, entertainment, clothes, and so forth allows you to keep your credit card spending under control. Set the budget to only what you can afford to pay.

    3

    Use cash instead. Credit card problems often arise from buying impulsively. Instead of paying with a credit card for most purchases, pay with cash. People often associate credit cards with little value, but a $20 bill holds value. Signing a receipt to conclude your purchase can feel like nothing, but giving away a $50 dollar bill can feel far more intense.

    4

    Get a better rate. Apply for a credit card that has low interest or 0 percent APR balance transfers. Transferring your debt to a low-interest card allows you to pay it off quicker. These rates typically last for six months to one year.

    5

    Pay off the highest interest rate first. Put all of your extra money to paying off the highest-interest debt, and then work your way down from there. This keeps debt with high interest rates from growing out of control.

Wednesday, January 20, 2010

How to Structure Payday Loans As Low Interest Loans

Payday loans are extraordinarily high-interest, short term loans that are issued by non-bank lenders. If you have no means to repay the loans in cash, restructuring them with a lower interest loan can be a wise decision that may save you a great deal of money and reduce your stress. Credit cards, unsecured personal loans and secured personal loans are all excellent methods for restructuring high-interest payday debt.

Instructions

    1

    Repay as much of the payday loans as possible using a credit card, even if it may mean that you'll be one to two months late making the minimum payments. If you have a card that still has a low introductory rate, you'll save even more money by shifting the debt to it. Credit card lenders usually are much less aggressive than payday lenders in pursuing collections. Payday lenders often start out by immediately withdrawing funds from your bank account. If the lender doesn't accept credit card payments, get a cash advance on the credit card and use that to repay the loan.

    2

    Apply for a secured loan to repay your payday loans. A secured loan is a personal loan that uses some significant asset as collateral. Home equity, a vehicle, valuable artwork or jewelry can be used to secure a personal loan. These have lower interest rates than ordinary personal loans and are easier to get approved as long as you have some significant asset to offer.

    3

    Apply for unsecured personal loans from banks and other lenders. These loans require a reasonably good credit rating to be approved, but they have much lower interest rates than those charged by payday lenders. In addition, they usually are issued for periods longer than five years, giving you plenty of time to repay them.

    4

    Go to a pawn shop and ask for a secured loan if all other attempts have failed. Pawn shops will accept jewelry, electronics, artwork and just about anything else with a resale value as collateral for a loan. These loans will have higher interest rates than those offered by banks, but lower ones than payday lenders. This may enable you to get a reprieve from payday lending collectors while you get your finances back in order.

Is a Home Sale Reportable Income to the Unemployment Office?

It is not necessary to report the sale of a home to the unemployment office -- or the state agency responsible for determining continued eligibility for unemployment benefits. Workers earn unemployment benefits and after applying receive receive them if they meet certain criteria. Income from assets such as the sale of a house do not affect a person's status for receiving the benefits.

Other Income

    Income from a job can affect benefits. All states require unemployment benefits recipients to look for a job each week and to report any earnings from working. Income from a job -- even a part-time or temporary position -- can lead to a reduction in unemployment pay. People who fail to report income risk losing their benefits.

Considerations

    It is not unusual for people receiving unemployment benefits to sell assets to make ends meet. Unemployment benefits are usually only a fraction of the recipient's former salary, making it difficult, possibly, for the recipient to continue covering daily living expenses. The United States Department of Labor notes that the only official reporting responsibility for the person receiving benefits is to list money earned from working during biweekly periods, along with reports of job offers or refusals to accept work. The reporting usually takes place online.

Duration

    Unemployment benefits initially are for 26 weeks, but extensions are possible in states with high unemployment. Also, extensions are sometimes possible with assistance from the federal government, which sends money directly to states. With extensions, a worker could receive unemployment benefits for more than a year.

Planning

    People selling their homes because of their unemployment status can seek free counseling from credit counselors certified by the U.S. Department of Housing and Urban Development. With unemployment benefits not affected by a sale, credit counselors can take a look at the homeowner's household budget and offer a second opinion on whether a sale of the home is necessary. Credit counselors are available in communities around the country, with referrals available from charitable organizations such as the United Way.

Relocation

    People who do choose to sell their house usually are free to move to another state, if they wish, and continue collecting their benefits. However, even after moving to another state, recipients must continue reporting back to the state providing the benefits about their job search and any income from new employment.

How to Pay a Past Due Speeding Ticket

Every city and county government has its own procedures for paying speeding tickets but your ticket normally becomes past due if you fail to pay it within a month of the issuance date. In many municipalities, you cannot pay a past due ticket online. Instead, you have to make an in-person visit to the courthouse or make a payment to a collections firm. A court can assess penalty fees and even suspend your license if you pay your speeding ticket late, all of which adds to the cost of settling the debt.

Instructions

    1

    Locate your speeding ticket and contact the city or county court listed on the ticket. Provide a clerk at the courthouse with your name, speeding ticket number, vehicle registration number and any other relevant information that the clerk requests. Ask the clerk whether your ticket has been sent to a collection firm or remains with the record keeping division at the courthouse.

    2

    Go to the courthouse in person to make your payment if the record keeping department still holds the debt. In cases of late payments, many courthouses only accept payment in the form of credit cards, debit cards, official checks, money orders or cash. Personal checks are not typically accepted for late payments.

    3

    Ask the clerk how much you owe including any late fees and fees necessary to reinstate your license if the state suspended it on account of your failure to settle the debt. Pay the ticket and ask for a receipt. If the court turned the debt over to a collection firm, then you must obtain payment information from the courthouse but make the payment to the collection firm directly. Remember to ask for a receipt from the collection firm and take your receipt to the courthouse to have your license reinstated.

Tuesday, January 19, 2010

About Consumer Debt Counseling

If you're drowning in debt, receiving calls from creditors or debt collectors, or just concerned that your debt is getting out of control, consumer credit counseling can help you take control of your finances and understand how you got into debt in the first place -- and how to get out of it.

However, debt and credit counseling can land you in more debt trouble than you're already in if you do not choose the right counselor.

Credit Counseling

    The goal of credit counseling is to help you understand how to use credit wisely. Sessions with a credit counselor should include information that addresses making a budget, living within your means, setting financial goals, paying off existing debts and taking on new debt carefully. This information can come in the form of classes offered by the credit counseling agency, online tutorials or printed materials.

Debt Management Plans

    Depending on your financial situation, you might be offered a debt management plan by the credit counseling agency. When you agree to a debt management plan, the credit counselor works with you and your creditors to create a payment arrangement that gets you out of debt without leaving you penniless. Creditors usually agree to a lower monthly payment or reduced fees and interest rates for the duration of the debt management plan, which typically lasts three to five years. While enrolled in the debt management plan, you pay the credit counseling agency the combined amount of your monthly debts, and the agency makes the payments for you. A reputable credit counseling agency will charge a nominal fee for a debt management plan.

Bad Business

    As consumer debt has grown, so has the consumer credit counseling field. So, too, have the number of credit counseling agencies that make a significant profit by charging fees for their services.

    The Federal Trade Commission's website warns consumers to "Beware -- just because an organization says it is 'nonprofit' doesn't guarantee that its services are free or affordable, or that its services are legitimate."

    Predatory credit counseling, in the form of nonprofit organizations that claim to be able to repair your credit instantly, or settle your debts for pennies on the dollar in exchange for high fees has become so widespread that the FTC, IRS and other organizations have issued alerts warning customers against these agencies.

Choosing a Counselor

    To avoid being ripped off by credit counseling organizations, do your homework before setting up a phone or in-person appointment. Check the National Foundation for Credit Counseling's website (see Resources) for a list of reputable credit counseling agencies in your area. Then, call your state attorney general's office to check whether any complaints have been lodged against the agency you choose.

    If you agree to a debt management plan, contact each of your creditors yourself for something in writing stating that they agree to the debt management plan. Call each month to ensure that your bills are being paid.

Debt Relief

    Credit counseling and debt management plans can help those who are overwhelmed with debt get back on solid ground financially and avoid bankruptcy, which can affect your ability to get credit for up to 10 years. Reputable credit counseling agencies aim to increase your financial knowledge, helping you to make better decisions about money and debt in the future.

Monday, January 18, 2010

Effects on a Spouse's Credit Score of a Credit Card Default Because of a Wife's Death

A wife's death is certainly a traumatic event. In addition to emotional grief, funeral expenses and related issues may cause financial problems, including default on a credit card owned by the spouse. Although the situation is terrible, the spouse is fully responsible for the defaulted credit card and must accept damage to the credit score.

Contacting Creditors

    Creditors should be notified about the wife's death if she had credit obligations entirely in her name. Arrangements must be made to resolve the debts through her estate. Debt settlement is also a possibility. Settlement allows full payment of credit cards and other unsecured accounts for less than the existing balance. An experienced estate lawyer can offer advice on resolving debts after a spouse's death.

Hardship Plans

    The surviving spouse should immediately review the impact of the wife's passing on remaining financial obligations. This is critical if the wife earned the majority of the income, and the family had a high debt-to-salary ratio. Credit card companies and other creditors may offer special payment plans to provide the surviving spouse with time to adjust. These plans are sometimes called hardship plans and significantly reduce monthly payments for up to a year. Information on the plans is available by calling creditors directly.

Credit Counseling

    Nonprofit credit counselors can also help. Counselors certified by the U.S. Department of Housing and Urban Development offer debt management plans for handling excessive debt. Multiple credit card defaults, charge offs and court judgments are a sign that finances are out of control. Credit counselors also assist with credit repair following a decline in credit score. Referrals for local credit counselors are available through charities such as the United Way.

Credit Score

    It is impossible to say precisely how credit scores are impacted by a credit card default. All situations are different. Someone with an excellent credit score of 705 may experience a 75-100-point drop after a default, while someone with a 450 credit score may lose just a few points. Credit scores ranging from 350 to 850. People at the top of the scale tend to suffer much larger credit score drops than people at the bottom when negative information is added to credit reports.

Rebuilding

    On-time payments while paying down debt is the best way to rebuild a sagging credit score. Resolve the defaulted credit card by calling the credit card company. Explain the situation leading to the default and offer to pay the full balance in exchange for removal of the default status and related negative information from your credit report. Pay off the card, even if the card company will not agree to the arrangement. Or make payment arrangements if you cannot pay a lump sum.

Fast Debt Recovery

Fast Debt Recovery

Debt is a major hassle, and accumulating thousands of dollars of credit card debt can lower your FICO credit score, and reduce your buying power when purchasing a home or car. Fortunately, tips and tools are available to help you reduce your debt burden. A solid plan to tackle your debt can help you recover faster and put more cash in your pocket.

Preparing a Monthly Budget

    Debt recovery requires a budget, or a way to track how much you spend each month. Preparing a budget isn't complicated. Simply write out your monthly expenses and subtract this number from your monthly earnings. Bear in mind, expenses for your budget ought to include only the essential recurring expenses such as rent/mortgage, your auto loan, fuel costs, debt payments and utilities. Cut extras, such as hair appointments, entertainment and shopping, from the budget. A budget helps you assess how much you have in disposable income each month.

Use Extra Income Wisely

    Having an extra $500 a month after paying your bills doesn't give you permission to blow it on restaurant food and shopping. Get smart. Use this money to get out of debt faster. Think about this -- if you owe $2,000 on a credit card, you can get rid of the debt in four months.

Interest Rate on Credit Cards

    Take charge of your credit card debt and get creditors to lower your interest rate. There are huge benefits in paying less interest. This reduces your minimum payment on the card, and when you make a payment, more of the money goes to your principal. Several techniques can help you persuade a creditor to reduce your rate. You can call up your creditors and simply ask for a rate reduction, or you can get a new card, with a better rate, and transfer the balance.

Home Equity Loan

    There are clear benefits to using your home's equity to quickly recover from debt. Once approved, with funds in hand, one check can quickly wipe out your high interest credit card debt. The downside is that home equity loans use your property as collateral, and if you can't repay a home equity loan, you lose your house to the lender. On a more positive note, interest rates are typically lower on home equity loans. This creates lower, affordable monthly payments.

Sunday, January 17, 2010

How to Cancel a Credit Card by Mail With a Letter

How to Cancel a Credit Card by Mail With a Letter

You can cancel a credit card with a letter sent to the credit card company. You have the right to cancel your card for any reason, and you're not required to list the reason in your letter. You may be canceling because of a new card with a lower interest rate, or as part of a strategy to reduce your amount of available credit.

Instructions

    1

    Get the address for your credit card company. Check your billing card statement for the address or call the customer service number on the back of your card.

    2

    Confirm that you have paid off any remaining balance and that there are no pending charges. Call the customer service number for the most up-to-date information. Alternatively, check your billing statement or log into your account on the card company's website. You cannot close the account with a remaining balance because as long as you owe money, the card company will continue charging fees such as annual membership fees and monthly finance charges. To completely end the relationship, pay the balance first.

    3

    Write your letter. In the letter, ask the card company to close your account and cancel all cards associated with it. Ask that the card company instruct the credit reporting bureaus to update their records to show that the account was "closed by request of cardholder."

    4

    Ask for written confirmation from the card company that the account was closed at your request. Include your address and telephone number.

    5

    Sign your letter and send it by certified mail to document its delivery, or send it by standard mail. Await a response from the card company.

Saturday, January 16, 2010

How to Make a Payment for a Stafford Educational Loan

The federal government offers Stafford educational loans to many students who are pursuing higher education. When you borrow the money, you usually don't receive much information about how to make payments. However, you can make payments on your loan at any time. About six months after you drop below half-time enrollment in school, you will have to start making regular monthly payments in addition to any voluntary payments you have been sending. The process for making payments is fairly easy once you know where to send them.

Instructions

    1

    Find out the name of the company that services your Stafford loan. This is the U.S. Department of Education for most Direct Stafford loans issued recently, but older loans might be serviced by different companies. You can look up the information at the National Student Loan Data System website.

    2

    Go to the website of the company that services your Stafford loan. Log in using the requested personal information to make a payment online.

    3

    Enter your bank account number to make a payment from your checking account. You usually need the routing number and account number, both of which appear at the bottom of your checks.

    4

    Look around the website to find the mailing address for the billing department to send a payment by check.

    5

    Write a check for your payment amount. Make sure your name and address appear on the check. Mail it to the address you found on the website.

    6

    Call the Stafford loan servicing company if you are having trouble finding the mailing address on the website or have problems logging in to make a payment online. The customer service representative can provide the required information to complete the payment process.

Friday, January 15, 2010

How to Stop Shopping for Credit-Card Debt

How to Stop Shopping for Credit-Card Debt

Chronic overspending for one in 20 American adults is a serious mental health condition, according to a Stanford University School of Medicine report. Many of us are prone to occasional shopping splurges, but chronic overspenders shop for more than bargains; compulsive spenders seek emotional and psychological satisfaction. If you suffer addictive spending, take action with the following therapeutic strategies.

Instructions

    1
    Eliminate credit card temptation

    Cancel unnecessary credit cards and shred the physical manifestation of your debt-liest sins. Compulsive buyers are more than four times as likely as their money-savvy counterparts to make only the minimum payment on credit-card balances, according to the Stanford study. But you can change that. Pay off bills with the highest interest rates first.

    2
    Calculate credit card payoff

    Use free online calculators like those offered at Bankrate.com to determine how long it will take you to pay off your credit card, then learn how much more money you need to pay each month to erase the debt sooner.

    3
    Use financial software

    Arm yourself with the right tools. For much less than you'd spend on a pair of designer shoes, you can easily improve financial-fitness with a budget-planning software package like Quicken. Or, if you use Microsoft Office, check your document templates easy-to-use budget worksheets to better survey spending missteps.

    4
    Does spending money make you feel sexy?

    Practice money mindfulness. Focus on how your mind and body react to spending money any given moment. Does spending make you feel stronger or sexier? Trace those feelings so you can recognize what it is that drives you to overspend.

    5
    Hide the credit cards; blog away your debt

    Start your own overspending-anonymous blog (and earn AdSense dollars to pay off debt) on Blogger, Movable Type or TypePad as you clickclack away at the keyboard, waxing poetic your financial insecurities. Upload a few motivating pictures that reflects your true aspirations and not something that will set you off on an online-buying binge.

    6
    Break the overspending cycle

    Break the spending cycle. Not unlike the way in which we sometimes gravitate toward unhealthy foods to feed emotional hunger, the chronic overspender shops to compensate for whatever she feels she is lacking in her personal life. Fill that void instead with low- or zero-cost activities: Start a knitting circle, join a book club, "shop" for a volunteer opportunity or kick off a new workout routine.

    7
    Get credit counseling and emotional support

    If all else fails, seek professional help from reputable debt-counseling organizations such as those listed in Resources. Several, such as Debtor's Anonymous offer overspenders a chance to discuss perhaps for the first time their addiction in an intimate group setting. Meanwhile, Debt Consolidation Care's community website provides visitors private debt-consultation and forums for virtual support-group sessions.

How Long Is an Account Closed to Further Purchases With a Balance on a Credit Report?

How Long Is an Account Closed to Further Purchases With a Balance on a Credit Report?

A credit account, such as a credit card or home equity line of credit, is only available for purchases as long as the account remains open. You have the option to close a line of credit at any time. Doing so, however, does not absolve you of your responsibility to pay off the remaining balance you owe. Credit providers also sometimes close consumer accounts, but, typically, only do so when the debtor misses payments or otherwise disregards his original agreement with the creditor. Closing an account does not eliminate it from your credit records.

Time Frame

    The federal government regulates how long a closed account can remain on your credit report. If you closed the account voluntarily, and the account was in good standing, it will appear on your credit report for seven years beginning on the date you closed it. If the creditor closed your account due to nonpayment, the Fair Credit Reporting Act stipulates that the reporting cannot begin until 180 days after your most recent payment. Because of this, the account can remain on your credit report for 7.5 years. The balance you carry has no impact on how long a given entry can remain on your credit report.

Credit Impact

    Payments you make to your creditors have a more significant impact on your credit scores than any other factor. Missing payments prior to an account closure leaves your credit damaged. Your credit suffers further when the creditor charges off the debt and closes the account.

    Yet another factor that influences your credit after closing an account is the remaining balance you owe. The amount of credit available to you versus the debt you owe is known as your "credit utilization ratio." When you close an account, the spending limit you previously enjoyed vanishes -- causing a higher credit utilization ratio and lower credit scores.

Connected Information

    If you leave the account unpaid, your creditor can either sell it to a collection agency or sue you for payment. Collection agencies report collection accounts to the credit bureaus. Collection accounts indicate a history of poor payment and negatively influence your credit. The FCRA notes that, like the original creditor's report, a collection account remains on your credit report for 7.5 years.

    Consumers often believe that the reporting period for a collection account begins when the debt collector first reports the debt to the credit bureaus. This simply is not the case. Like the original creditor's report, the federal reporting period for collection accounts begins 180 days from the date you stopped paying the debt's original creditor.

Judgment Records

    A judgment record on your credit report notes that a previous creditor successfully sued you in the past. Unlike missed payments and charge-offs, the credit bureau deletes judgments based on how long the judgment remains valid. Once the judgment expires, it will vanish from your credit file. For example, in California, a creditor has ten years to enforce a judgment -- resulting in the judgment appearing on a California debtor's credit record for ten years. An exception to this rule exists for states that maintain a short enforcement period. If judgments in your state remain valid for less than seven years, the credit bureaus use the standard seven year reporting period used for missed payments and charge-offs.