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  • Advocacy group says rules don’t do enough to protect from credit card debt

    Advocacy group says rules don't do enough to protect from credit card debt Consumers Union, which runs the influential Consumer Reports publication and website, recently came out in favor of the federal government further lowering penalty fees consumers can be charged, according to a report from the Madison Capital Times. It believes these charges, capped at $25 for a first offense and $35 for repeated missteps, can add to consumers' credit card debt too quickly and easily.

    Further, the group alleges that penalty interest rates on credit card debt have not been effectively reined in, the report said. Currently, there is no cap at all, and it believes a penalty rate should not be able to exceed 7 percentage points more than the standard APR.

    Once the Consumer Financial Protection Bureau gains its full power in July, many expect it to put a number of new protections related to credit card debt in place.

  • Arizona credit card debt can be pursued up to six years

    Arizona credit card debt can be pursued up to six years The Arizona state Senate recently voted to clarify the length of time in which defaulted credit card debt can be pursued by its original lender or a collection agency as six years, according to a report from the Yuma Sun. However, critics say that the original lenders often sell these outstanding debts to collections agencies within a far smaller time period than that.

    "The institution ends writing them off and then selling the debt for pennies on the dollar to these out-of-state debt buyers," State Sen. Paula Aboud of Tucson told the newspaper. "Some years later this debt buyer jumps on them for a $2,000 debt that is now $8,000 to $10,000 because of the six-year extended period of time where the interest and fees has accumulated."

    Collections agencies pursuing defaulted credit card debt were recently named the top consumer complaint by the Federal Trade Commission because many engage in harassing tactics.

  • How to Reduce Your Medical Debt

    How Can you Reduce your Medical Debt?

    Health care costs in the U.S have skyrocketed in the recent years. If you are one of those few lucky people who have sufficient medical insurance coverage then this might not be a major concern for you. However, a large number of people are experiencing financial crunch since recession and find it difficult to allot funds for medical insurance. Thousands have sub par medical insurance plans while many others do not have any insurance cover at all. Sudden medical emergencies can compel these people to look for debt consolidation options. There is no need to worry though. There are financial aid programs available for people who are in monetary trouble. Most hospitals have a financial assistance department which can forgive medical bills partly or even completely.

    Check if you are eligible for reduction in medical bills

    If your annual income is less than 200% of the federal poverty level, only then you would qualify for complete elimination of your medical bills. However, if you do not meet the requirement, you would still be eligible for a reduced bill. Usually, if your medical bill is more than 30% of your annual income, the financial aid department of the concerned hospital will come to your rescue.

    You should keep in mind that medical debt to income ratio can vary with hospitals. Also, you would qualify for financial assistance from hospitals only when all your options are exhausted. For instance, you can’t expect any aid if you have not used your medical insurance or have not applied for public medical benefits.

    How to apply for reduction in bills

    To begin with, you have to find out whether the hospital maintains a financial assistance department or not. Ask the billing office or enquiry section to clear your doubt. If the hospital has provisions of providing assistance to financially struggling patients then you have to submit documents to prove your annual income. You would also need to inform the hospital authorities about all your assets including your savings accounts, CDs, IRAs etc. In case you are jobless or do not have any assets, the financial aid department will make you sign an affidavit stating that fact.

    If you want your medical debt to be forgiven then you would need to contact the hospital within 6-12 months. Otherwise, your chance will be lost.

    Reducing your medical bills is not as difficult as you think

    Applying for reduction in medical bills does take a few hours of intimidating paper work but it can save you a lot of money at a time when you need it the most. You might feel lost amidst all the paperwork and but do not lose hope. Your medical bills can be reduced more easily than you think but you have to be persistent and patient for it.

    Medical debt can be a financial as well as psychological blow to you and can distress you immensely. In this situation, the reductions in your medical bills can save your day. So make sure to look for financial aid programs if you are facing mammoth medical bills but can’t afford to make the payments.

  • Most states see credit card debt grow

    Most states see credit card debt grow Consumer spending led to an increase in the average amount of credit card debt in 33 states across the country between the third and fourth quarter of 2010, according to a new report from the credit monitoring bureau TransUnion. Similarly, the amount of new credit card accounts granted to consumers grew 19.1 percent between that period and the same quarter in 2009.

    Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit, noted that this was the second time since the end of the recession that consumer credit card balances have increased, the report said. However, the rate was still 8.62 percent lower than it was at the end of 2009.

    Many consumers may have reduced their credit card debt with more conscientious bill payments and controlled spending, but the vast majority of balance reduction was instead the result of greater charge offs by lenders.

  • American Express sees fewer instances of late credit card debt

    American Express sees fewer instances of late credit card debt The latest data from American Express shows that the lender saw instances of consumers falling 30 or more days behind in paying their credit card debt slip to just 2 percent in February, according to a report from Dow Jones Newswires. This was a slight decrease from the previous month's rate of 2.1 percent.

    Meanwhile, the rate at which the lender had to charge off bad credit card debt as being uncollectable was 3.8 percent of all accounts, the same figure observed in January, the report said. The all-time high for this type of action came last April, when it was 10.1 percent.

    Financial experts are often at odds to explain the drop in delinquent and defaulted credit card debt seen in the last year. Some say it's the result of more conscientious payment of bills, while others contend it's the result of the massive amount of charge offs in 2009.

  • Bank of America adds annual fee for some credit cards

    Bank of America adds annual fee for some credit cards Bank of America recently announced it would add a $59 annual fee to the accounts of about 5 percent of its credit card customers in an effort to increase revenue, according to a report from the Los Angeles Times. In all, the change, which goes into effect on April 11, will hit about 2 million accountholders who have significant credit card debt.

    "I feel like an indentured servant," Sue Laman, a customer who has $30,000 in credit card debt with the bank, told the newspaper. "But what can I do? I can't refuse their annual fee. They know I have no choice except to pay."

    The change is expected to generate about $118 million in new revenues for the lender, the report said. Currently, Bank of America controls the credit card debt for about 40 million consumers.

    This change is likely in response to greater federal regulation that limits the amount of revenue a bank can generate through rate changes and fees for certain credit missteps.

  • Household debt fell in 2010

    Household debt fell in 2010 The total amount of debt held by Americans nationwide fell to $13.4 trillion, the second straight year in which consumers reduced what they owe to lenders, according to the latest statistics from the Federal Reserve Board. Meanwhile, the net worth of all U.S. Households rose to $56.8 trillion duringthe fourth quarter of last year, up $2.1 trillion from the previous three-month period, based on assets of $70.7 trillion.

    Many consumers have been able to successfully reduce the amount of debt they carry by limiting purchases, particularly made with credit cards, and increasing the amount they pay into their outstanding balances every month.

    Some also may have seen their debt reduced not because of more conscientious bill payment, but rather as a result of bank write offs. However, all major banks in the U.S. have reported continual declines in the amount of delinquency and charge offs they saw for credit card debt in nearly every month for the last two years.

  • Lawsuit over credit card fee restrictions becomes more contentious

    Lawsuit over credit card fee restrictions becomes more contentious Last fall, TCF National Bank, which is headquartered in South Dakota, filed a lawsuit against the federal government, alleging that regulations that limit the interchange fees whenever consumers use their credit card to make a purchase violate the constitution, according to a report from the upper Midwest news source the Minn Post. However, the U.S. Department of Justice recently asked a South Dakota federal court to throw out the case, causing TCF to file more paperwork.

    The new documents say the Justice Department's request is not based on its belief that the regulations are indeed constitutional, the report said. TCF also says the laws are tantamount to price fixing, and limit the fees banks charge to merchants when consumers take on credit card debt to make a purchase.

    Most banks say the added restrictions from the government will cost them billions of dollars a year.

  • Banks forgiving more debt than consumers cut

    Banks forgiving more debt than consumers cut Household debt has fallen from more than $12 trillion nationwide to figures ranging around $11.5 trillion. But considerably more than half of the $1.1 trillion drop in consumer debt has been the result of banks striking bad accounts from their records, according to a report from Time Magazine. In all, $695 billion of that $1.1 trillion has come from debt being written off, with the remaining $375 billion being the result of more conscientious bill payments by consumers.

    In all, about $8.5 trillion of the nation's outstanding household debt is tied up in home loans, while credit card debt, totaling $730 billion, makes up the next-largest credit type, the report said. Auto loans followed at $710 billion.

    Many consumers have tried to be responsible in paying back their outstanding debts in recent months, but money problems may have been exacerbated by ongoing unemployment that led to defaulting on loans.

  • Southern cities dominate those with most credit card debt

    Southern cities dominate those with most credit card debt Almost all of the top 25 cities in the country with the most credit card debt in December were located in the Southern U.S., according to a recent study from the credit reporting bureau Experian. Residents of San Antonio, Texas, led the nation with $5,177 in average credit card debt, and Jacksonville, Florida, also topped $5,000 and was listed second.

    The only city in the top 10 that was not in the South was Seattle, Washington, which had an average of $4,877 in credit card debt, the report said. In all, Florida had the most cities in the top 25 with four: Jacksonville, Tallahassee, Miami and Orlando. Georgia and Texas had three each.

    Many consumers increased their credit card spending in the final month of last year, leading to the first jump in the total amount of credit card debt held across the country in nearly two years.