Legislation to keep kids away from credit fails in Tennessee
April 18, 2008
NASHVILLE, Tenn. — The proposal failed 3-3 along party lines in the Republican-controlled Senate Education Committee on Wednesday.
Opponents of the bill say students aren’t targeted. But if a card is obtained, they say credit limits are in place to help students avoid debt.
This bill is not drastic, it does not say college kids cannot have credit cards. The proposal was to give students an opportunity to opt out of receiving offers. I think that it’s sad that students cannot choose to opt out of solicitations. They’re not denying the students actual credit cards, just giving them the option to not have it in front of them all the time.
“We think we run a responsible program,” said Hank Dye, spokesman for the University of Tennessee, one of the bill’s main opponents. “We start out with a modest credit limit … of about $300. There are safeguards in place.”
The credit limits only cover what you can spend. A card can easily go over the limit in late fees, overlimit fees, and interest fees. Once you max out one of these $300 cards the interest can put you overlimit, you don’t have a job so you’re going to incur a late fee, and then next month the same thing will happen. One $300 limit credit card can easily go over $1000 in a matter of months from just a little reckless spending up front.
The article goes on to say that of the 2,100 University of Tennesee students only 1.2 percent defaulted on the card last year. What about the rest of them? Did they ask how many had to ask their parents for help? How much in total late fees and overlimit fees were charged to these kids that don’t even have a grasp of bills or money yet?
Of course not. Having statistics like that would not look good for the credit card issuers. It’s a shame to give college-age children the power to make decisions that can really start them on a downward spiral of credit problems that can be lifelong.
Full story available from the Houston Chronicle…
Before You Get Credit
April 14, 2008
With the economy shifts, the problems with getting enough to sustain us and other money problems is what most would think is an easy solution - put it on plastic. Even though most of us are trying to build our credit and are using credit cards as a means of survival, you may want to start thinking before you spend and start driving your debt up.
The number one rule that anyone who is spending money on a credit card should know is related to the ability to pay. Credit cards may seem convenient enough with the capacity to make a minimum payment on the budget that you are on. However, you never want to make just the minimum payment. This is designed to only let you pay off the interest of the card, which will always be rising and will never allow you to actually pay off the card. If you have a minimum payment box, pay at least twice as much as what it says. This way, you are actually paying something off instead of paying the creditors for giving you the bill.
If you want to keep your credit on the good side, don’t get into a credit card that you can’t handle. This always is related to APR. I’ve seen some APRs as high as 25%. Even 7-10% is a little too high. If you start falling behind, it can kill your pocket book, cause the minimum payment to raise, and put you in a complete hole, where you can’t pay off the debt. If you have to get a credit card, make sure the APR is extremely low.
Even more than this, check out the hidden fees. They are always there and are always being tagged on. Even though credit cards come with a ten page manual, all in fine print, read it all before you get involved. Not doing so can be detrimental in the long run, especially if you are trying to build credit on your record. There are hundreds of ways that credit card companies are trying to get your money. If you are going to be paying them, make sure you know what for and why.
The sound advice is to make sure you know exactly what you are going to be using before you do, otherwise it is a lot of money down the drain. With almost any credit card, the design is to keep you paying for 10 - 20 years on various things that are detrimental to you in order to have convenience of being able to get what you need. The motto to follow is, before you swipe, know what you sign.
Eliminate Credit Card Debt Easily
April 7, 2008
Making the decision to improve your credit status is a huge step. Having excessive credit card debt can not only ruin your financial happiness, but it can also cause tons of unwanted stress. Most Americans that experience this type of hardship have a hard time getting out from under this burden. Some think it is best to ignore the problem and pretend as though it’s not here, while others just figure it’s unimportant. Consumers that take steps to control their credit card debt realize that having an unhealthy financial future could minimize their progress.
Make a list- Take the time to write down each and every credit card debt that you have. Not only will this help you identify your problems, but it will also give you the chance to face them as well. List the complete balance, the minimum payment requirement, and the percentage of interest for each credit card debt. Usually, you can locate this information on your credit card statement.
Place in order- Once you have added all of your credit card balances to the list, prioritize them according to interest rate percentages. Place the highest one first and then the others in descending order. Doing this will help when it comes time to make your full payments of each one. You can start with the highest and then eventually work your way down to the least amount.
Create a payment budget- Plan out your financial payments each month. Determine the amount of money you can afford to pay each month. Instead of just making the minimum balance payments each month, try to cut unnecessary expenses for higher payments. The more you pay, the faster you can get rid of unwanted credit card debt. Although you don’t think you can afford it at first, it’s always a good idea to go beyond the minimum.
The best way to free yourself from credit card debt is to face the challenge head on. Cut frivolous spending and start paying off these credit balances. Doing this will increase your credit score and secure your financial freedom. Not facing the fact that your previous spending habits are what got you into this issue would be a large mistake. It may be a slow process, but it will definitely be worth it in the end.
Three Ways to Kill your Credit Score
April 7, 2008
Having a strong credit score in today’s society is a necessity. You won’t be able to purchase a decent vehicle or beautiful home without it. Most consumers never want to think that a credit score can dictate how you live your life. Anyone that has ever been turned down for a loan or even employment because of bad credit will totally understand this. There are a few financial decisions that will cause you to kill your credit score and become hard to recover from.
Late payments- This is the easiest way to hinder the progress of your credit score. Most businesses, banks, or employers will frown on consistently late payments for bills or other accounts. This can easily be looked upon as financial irresponsibility. If you do not have enough control over your finances, then how can someone else trust you enough to control theirs. Start paying your bills on time or even earlier. About thirty five percent of a consumer’s credit score is tied to their payment history.
Non payment- This is another easy way to sink your credit score in an instance. If you don’t pay your bills, then you are not dependable. Most financial institutions will not give you a second look if they see this on your credit report. Creditors feel that they will never see their money, so they charge off your account. Doing this will drastically decrease your credit score status. Despite the fact the account has been charged off, you still owe every last penny of the charges.
A Judgment- This is one of worst ways to have your credit score negatively affected. Not only did you not pay your bills, but the court system had to get involved as well. Having this happen to you is a definite way to sink your credit score. Many financial institutions will consider you as an unreliable high risk. Chances of you getting a loan or new credit is very slim after a judgment has been issued against you.
It is always a good idea to make regular payments on time and don’t bite off more than you can chew. If you can’t afford it now, then patiently wait until you can. Having a high credit score will give you access to many financial pathways in life. Instead of blocking your chances before you get a secure start, think about how your current financial decisions will impact your future life.
Avoiding Store Credit Cards for Engagement Rings
December 23, 2007
Getting engaged is an important time in a couple’s life. An engagement ring will be worn for your whole life. For many couples, the cost of an engagement ring can be really high. How do you pay for a ring without waiting years to save up for it and postpone your wedding?
One way to pay for an engagement ring is with a store credit card. Many jewelers offer these. The problem with the store credit cards is that they have an incredibly high interest rate. You can go and get a regular credit card often for 5 percent or more low interest than the typical store credit card. You’re better off using a regular credit card than a store credit card for engagement rings.
The other option is to borrow the money from friends and relatives and pay it back. You can even offer them a small amount of interest to get the help. This will still come out cheaper than a store credit card.
Credit Card Consolidation to Save Money
December 23, 2007
Credit card consolidation is an excellent way to save money on your credit card bills. You end up paying interest each time that you make a purchase on a credit card and don’t pay the card off. These amounts can add up quickly. Typically the interest rate is very high on credit cards and you can end up paying triple or more for your items by the time the credit card is completely paid off.
One way to avoid this high interest is to get a low interest rate credit card consolidation loan from a banking institution. You can get these for almost half the interest rate you pay on your credit cards. Have the loan pay off your existing credit cards. You will then make one payment a month and pay significantly less in interest rates. Don’t keep using the credit cards once they are paid and you should be able to get control of your credit card debts in no time.
Credit Card Debt Tips
September 24, 2006
Getting into debt is always very easy to do especially with a credit card handy. Here’s an article that talks about that debt and how to get out of it.
Do you know your credit terms?
April 18, 2006
Most of us use credit cards constantly, yet “it seems that a credit card’s basic terms remain a mystery to many of us when put to the test,” says columnist Eileen Ambrose of the Balitmore Sun.
A recent survey by Braun Research found that more than 40 percent of the 1,000 cardholders polled had no idea of the interest rate on their card. One of five didn’t know the credit limit. And nearly 70 percent didn’t realize that their card company could raise their interest rate if they were late on a payment to a different creditor.
Wow. Those are pretty amazing statistics.
Here are a few things you should be aware of when it comes to credit cards:
- ~It’s much better to shop for a card than it is to sign up for the first offer that comes in the mail.
- ~Grace periods nowadays are just 15 or 20 days long, not a full month long (like they used to be).
- ~Terms can change. For instance, a “fixed-rate” is only fixed until the card company tells you it’s changing the rate.
Spring Clean Your Credit Cards
March 29, 2006
Did you know that fraudsters can get information on your unused accounts and start spending freely without you knowing about it? Often when people want to stop using a credit card, they just toss it in a drawer or cut it up. But those accounts are still live unless you call the company and ask to canel the account.
That means a person trying to steal your credit can find the information and use the card, even if you haven’t used it for a long time. Cards are typically valid for several years and often automatically renew, though new cards must be activated in order to charge the account. Some cards, especially individual store cards, don’t have expiration dates, which means someone could wrack up sales on a card you literally haven’t used for years.
If you have accounts you’ve stopped using, spring is a fine time to clean out your accounts. If you still have the cards you are no longer using, call the number on the back and ask to cancel the account. If you don’t have the card any more, or you aren’t sure if an account was formally closed, get a copy of your credit report. It will show all the accounts you have open. This will not give you the full account numbers, but the last four digits will appear.
Then you can write the companies in question and ask that your accounts be closed.
While you’ve got your credit report in front of you, look at the debt you are carrying and what the interest rates are. See if you can find a lower rate card to transfer your debts to, and make an effort this year to pay more than the minimum every month. And when the debt is paid, remember to close the account!
Credit Agencies to use VantageScore
March 16, 2006
Equifax, Experian and TransUnion have joined forces and “created a new credit scoring system aimed at simplifying the loan process for both lenders and borrowers,” according to AP Business Writer Eileen Alt Powell. Traditionally, each agency used its own proprietary formula to create scores.
The new system, called VantageScore, will provide “greater consistency and predictability to consumers and credit grantors.” Here’s a breakdown of the new scoring system, which is based on the academic scale:
- A — 901-990
- B — 801-900
- C — 701-800
- D — 601-700
- F — 501-600
The new scores are available immediately for financial institutions, but won’t be rolled out for consumers until later this year.
