How to Negotiate A Debt Settlement With Your Credit Card Company

Credit card debt is one of the most common ways people get in financial trouble. In the worst cases, card holders might turn to bankruptcy to regain control of their finances. However, credit card debt can be taken care of before it becomes overwhelming, even if you cannot afford to pay off the entire debt. Your credit card company may be willing to negotiate a settlement for less than what you owe to recoup at least some of the money.

Instructions

1

Determine how much you are going to offer. Decide the maximum settlement you can afford and minimum you will pay. This "low-ball" amount will be your starting point for negotiations, but don't make it too low of the credit card company will not take your negotiation seriously.

2

Call the credit card company at the phone number on your billing statement or other correspondence the company sent you regarding the debt, such as a collection letter.

3

Provide any requested information to confirm your identity, such as your name, date of birth and account number, and ask to speak with a representative about settling your debt. You probably will be transferred to the collection department or an account management supervisor.

4

Tell the representative that you experienced financial hardships that did not allow you to keep up with your payments but now want to settle your debt. You do not have to go into detail about your financial trouble.

5

Make your "low-ball" offer. Often, the representative declines this first offer and requests full payment or a higher amount. In these cases, offer your maximum amount and tell him that it is the best you can do for the forseeable future.

6

Tell the representative if you are contemplating bankruptcy to deal with your debts. Card companies are more willing to accept settlement offers if they think they will not be able to collect at all once you file bankruptcy.

7

Request the settlement arrangement in writing. The card company is not obligated to honor verbal agreements and it may renege on the settlement once it receives your money.

8

Make the payment by money order so you have a paper trail of the payment. Send it by certified mail and request a return receipt that lists the date and time the card company received it. This serves as further proof that you made the payment.

9

Contact the company in five to seven business days to ensure they payment was received and credited to your account properly. If the account was reported to the credit bureaus, request an update of the entry to reflect the paid debt.

Read More

How to Get All Credit Card Debt Combined Together

Consolidating all your credit card debt into one account could leave you with a lower overall monthly payment and perhaps a lower interest rate. You will still have the same amount of debt, but some of your accounts will be showing a zero balance. You can then close the paid-off accounts to prevent any possibility of charging on them again. Another option is to just keep one or two cards for emergencies and cancel the rest.

Instructions

1

Get billing statements showing all of your credit card debt. Calculate the total.

2

Apply for a bill consolidation loan from your bank or credit union for the amount of money that you need. Or use an existing line of credit such as a home equity line of credit, or balance transfer options on one of your existing credit cards.

3

Mail checks to each of your credit card companies for the full balance, using the proceeds from the bill consolidation loan or your home equity line of credit. Or, if you are consolidating all the balances to one credit card, call the card company with the balance transfer option. Confirm that you have enough available credit, and then instruct the representative to send checks to pay off the other accounts.

4

Get updated copies of all your credit card statements when they become available online, or wait for them to arrive by mail. Confirm that the accounts have been paid off and that the balances have been consolidated into your new line of credit or on one of your credit cards.

Read More

Disadvantages of Teenagers Having Credit Cards

Helping your teenager get a credit card can help him establish a credit history early. Building credit early allows him to buy an automobile or finance a mortgage sooner. But while credit cards have certain advantages, these accounts involve a high level of responsibility. For this reason, it's not always advantageous for teenagers to have credit card accounts.

Lack of Budgeting and Money Managing

Using cash or writing checks for purchases can teach teenagers money management skills and help them budget their money properly. With credit cards, teens can simply pull out their plastic and make purchases without considering whether they can actually afford them. When teenagers are forced to rely on their own cash for purchases, they can develop a routine of balancing their checkbooks and waiting until they have cash before making a purchase.

High Debts

Due to the convenience of credit cards, it's easy for teenagers to accumulate high debt balances early in life. Credit cards aren't bad if teens pay off their balances in full each month. However, if unable to afford their monthly purchases, teenagers are likely to submit only the minimum payments to creditors. Heavy credit card use accompanied with minimum payments increase the odds of maxing out the credit card or keeping a balance close to the credit limit.

Lower Credit Score

While credit cards can help build a good credit history -- if used responsibility -- maxing out a credit account can have the opposite effect and actually reduce a teenager's credit score. What's more, if a teenager isn't responsible enough to make payments by the due date, this can also lead to a lower credit rating. The amount owed to creditors make up 30 percent of credit scores, and payment history makes up 35 percent of scores, according to the myFico website.

Options for Teenagers

If contemplating getting your teenager a credit card, start with a secured credit card offered by a bank or credit union. These cards are useful for teenagers because acquiring a secured card first involves opening a savings account with the bank and depositing a security deposit into this account. The amount deposited into the account equals the credit limit on the card. For example, if applying with a $500 security deposit, your teen receives a credit card with a $500 credit limit. Once a teen demonstrates that he can successfully manage a low-limit secured card, he can then apply for an unsecured card in the future.

Read More

How to Get Help With Financial Burdens

In today's economic crisis, many people are experiencing financial burdens and don't know where to turn for help. There are many things that can increase your financial debt, such as a long illness, college tuition, large monthly mortgage payments that are unaffordable and a host of other issues. Take the following simple steps to help you alleviate your financial burden.

Instructions

Process

1

Take about an hour or two out of your schedule. Sit down with your spouse or a trusted friend. This exercise will teach you how to be accountable. Write out all your debt obligations. Include personal items such as food and entertainment at the bottom of the list and add up everything. Subtract the total from your combined or current income. If you are in the negative, then you are in trouble and need help.

2

Contact the National Foundation for Credit Counseling to find a certified company. NFCC is a nonprofit organization that has a certified list of reputable credit-counseling services in your area. Use the search engine to find the "National Foundation for Credit Counseling," website and phone number.

3

Make an appointment and discuss how you will pay off your debts. The counselors will work out a payment arrangement that ensures all creditors are paid, and that you still have money for living expenses.

4

Arrange to start making payments within 30 days of your visit to the credit-counseling service. This will give you enough time to get your finances in order. Let the credit-counseling representative know the exact date that you will begin paying off your debt.

5

If your financial burden is salvageable and does not require extreme measures, try to get a temporary loan from a family member or friend. Work out a payment plan that is easy for you and that will keep your relationship intact.

6

In the April 29, 2006 issue of "Money Central online newsletter," Liz Pulliam Weston, notes that sometimes credit counseling may not be the answer. Bankruptcy, even though detrimental to your credit, may be your only option. Make an appointment with a lawyer to discuss your options. This should be your last resort.

Read More

Credit Reporting by Debt Collectors

Often, creditors will choose to use debt collectors to attempt to collect outstanding debts. These debts will often be sold directly to the debt collectors or the debt collectors will be hired on commission, with compensation coming in the form of a percentage of the amount of money they successfully collect. As with the original holders of the debt, these debt collectors will typically report the status of the debt to credit reporting agencies.

Credit Reporting

Credit reporting agencies, which compile information in a person's credit report---the dossier of information that forms the basis of a person's credit score---that is collected from both public records and from information provided by creditors. When a loan is issued, credit reporting agencies will generally be notified. As the debt is paid off or becomes delinquent, credit reporting agencies will be notified of this, too.

Credit Reports

When a debt is given to a collector, it will be recorded on the debtor's credit report as being "in collection." This designation means that the creditor believes that the debtor is not meeting the requirements of the loan contract and is seeking the collection of the debt through the use of a collection agency. This designation will lower a person's credit score, as it indicates the loan is currently in default and may not be paid off.

Debt Collectors

As debt collectors seek collection of the money that debtors owe, they will generally continue to report the status of the debt to credit reporting agencies. For example, if the debt collector collects half of the money owed or the individual settles with the debt collector agency, then the collector will request an update of the person's credit report. Sometimes, debt collectors will use a change to the person's credit report as a factor in negotiations over payment of the debt.

Considerations

Sometimes, debtors will seek to have a debt collect report the status of a debt in such a way that minimal harm is done to the debtor's credit score. For example, instead of reporting a debt as "settled," the debt collector may report the debt as "paid as agreed," which will boost the debtor's score higher. Sometimes, debtors may agree to pay back a debt in return for the debt collector reporting the debt in a particular way to credit reporting agencies.

Read More

What Are the Costs and Pitfalls of Using Credit Cards?

Credit cards can be a useful tool in establishing credit scores used in making substantial loans and lowering interest rates. However, there are many implications that come with using credit cards. The major benefits of credit cards soon become drawbacks if the cards are used improperly. Credit cards may increase financial power, but it is more important to know how to control this power.

Zero Percent APR

Many credit card companies offer a zero percent Annual Percentage Rate (APR) rate to entice new customers. The APR is the interest normally paid on a credit card; a zero percent APR effectively means that the customer can freely borrow money. However, this is a pitfall because these rates are typically introductory. After the introductory period is over, the interest is usually raised to a significant rate. This is particularly important for balance transfers -- transferring one credit card balance to another card; if the customer is unable to pay off the entire balance before the introductory period ends, he may end up paying more interest than for his previous credit card.

Cash Back

Credit card companies award customers a certain percentage of their purchases as cash back every time the credit card is used. For example, a $100 purchase on a 1 percent cash back would make the total charge $99. Some credit cards may even offer more significant percentages on purchases made with partner companies, such as airline or home furnishing companies. Credit card companies use cash back offers to promote spending and create consumer debt, effectively increasing profits from interest rates. Moreover, increased cash back rates may encourage spending for items that the consumer wouldn't have purchased normally.

Cash Advances

Cash advances are transactions that take out money from a credit line for cash. These are not normal credit card transactions; interest immediately begins to accrue as soon as the cash is taken out. According to Brigham Young University's Marriott School, the interest rate for cash advances is typically higher than credit card purchases. Additionally, there typically is a cash advance fee of 2 to 4 percent of the original cash amount; some credit card companies may require paying off the initial balance prior to the cash advance fee to gain more interest on the transaction.

Payments

Missing payments is a primary profit engine for credit card companies. Banks justify significant interest rate increases, additional fees and higher minimum payments on missed payments. This could also lead to difficulties in getting loans and future credit line increases. Credit card companies usually do not give notices for due payments and may change dates and policies at their discretion, so it is in the consumer's best interest to monitor the monthly charges on her account.

Read More

A Checklist of Documents to Shred

Identify theft is a problem in our world. According to the Consumer Sentinal Network, more than 273,000 consumers filed identity theft complaints in 2009. Another 721,000 filed fraud charges that included credit card fraud, benefits fraud, bank and loan fraud and employment fraud. According to the Federal Trade Commission, you can take steps to protect yourself. One way to protect your identity is to shred certain documents before they go into your trash.

Employment Documents

Shred pay stubs you don't keep. This includes pay stubs from an old job you no longer need to keep for IRS purposes. Shred any other documentation you receive from your employer that contains identifying information.

Social Security Statements

The Social Security Administration sends out an annual benefits report with your name and the amount you might expect to receive each month once you retire. If you don't keep this document, shred it.

Charge Card Receipts and Bills

Charge card receipts may contain your credit card information. The information on the receipt may help a thief gain access to your credit card number. Shred the receipt even if the card number is incomplete.

Bills from utility companies, credit companies and other sources may also compromise your identity or allow someone to access your account.

Healthcare Documents

Documents from your health care practitioner may contain enough information to identify you and reveal information you would like to keep private. Your name, the treatment you received, the diagnosis that determined your treatment, your insurance information and more may be included on the documents. Shredding the documents not only protects you from identity fraud, it may protect others from gaining access to information about your health.

Insurance Documents

Insurance forms may reveal your private medical information. Your old medical insurance card may provide someone with information that could allow them to charge their health care to your account. Many consumers get new insurance cards each year or when their insurance changes at work. Shred the old cards and insurance forms you no long need. Car insurance forms may include enough information to allow someone to fraudulently access your information. You may want to keep your car insurance card in your wallet or purse, rather than in the car. When the new cards are issued, shred the old ones.

Banking Documents

Bank statements and canceled checks include account information, name, address and phone. This information could allow someone to access your account and remove funds. It might also supply them enough information to apply for credit using your name and financial information.

Credit Documentation

Even if the card is no longer valid, shred it or cut it up to prevent someone from attempting to use it fraudulently. If you apply for credit, properly dispose of the application by shredding it. Shred credit card invitations even if you don't fill them out. Many of these come prescreened with preprinted information on them and could be used to obtain credit through fraud. You can opt out of prescreened credit applications by calling 1-888-567-8688.

Read More