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  • Debt Consolidation – Everything You Need to Know

    “Debt Consolidation” is one of the most commonly misunderstood and misinterpreted personal finance strategies that consumers inquire about all the time. While some view it as a method of taking on new loans, others see it as a debt relief alternative. It is more important than ever for inquisitive consumers to have a very strong understanding of exactly what debt consolidation entails, and the impacts it can have on personal finances.

    There are many benefits to consumers from debt consolidation, including lower payments, lower interest rates, fewer accounts, and the peace of mind of dealing with only one creditor. However, with all the misinformation available on the web, learning about all the pros and cons of debt consolidation can be a time consuming and confusing process, when in fact it is relatively simple and straightforward.

    We have compiled the vital information that consumers need in order to make a well informed decision regarding debt consolidation as a potential strategy to resolve credit troubles and improve their finances.

    What is Debt Consolidation?

    Debt consolidation is a process that allows qualified consumers to take out a new loan that pays off most or all of their outstanding debt. This new debt consolidation loan, by aggregating all of the individual debts and paying them off, often becomes the only debt consumer makes payments to. Debt Consolidation loans usually come with interest rates considerably lower than those loans that consumers are currently saddled with and are trying to pay off, usually consisting of car loans, personal loans, student loans, and high interest rate credit cards.

    By taking out a debt consolidation loan, consumers can potentially save thousands of dollars over the life of the loan, since debt consolidation programs offer relatively low annual percentage rates on their loans making the savings substantial and immediate.

    More Debt Consolidation Information

    1. What are the pros and cons of debt consolidation?

    2. How to find the best debt consolidation loans?

    3. How to differentiate between debt consolidation programs?

    4. Is consolidating credit the same as debt consolidation?

    Once consumers have a solid understanding of debt consolidation they can compare and contrast it with other debt relief options like debt settlement, credit counseling, debt roll-up, or filing bankruptcy.

    In addition to fully understanding debt consolidation, every consumer should thoroughly research all of these alternatives, so they can make an informed decision as to what solution is the right choice for their particular situation and financial goals.

  • Consumers still unhappy with lenders despite less credit card debt

    Consumers still unhappy with lenders despite less credit card debt Though the landscape of the credit card industry has changed considerably since the passage of the Credit Card Accountability, Responsibility and Disclosure Act, allowing Americans to better handle their finances, a majority say they're not happy with lenders, according to Consumer Reports. Many people have successfully cut their credit card debt to a national median of $3,793 – down about $1,100 from last year.

    However, only 45 percent of consumers said they are either completely or very satisfied with their credit card lenders, the report noted. In addition, 16 percent believe they've been treated unfairly by the issuer, though that figure is down from 21 percent last year. Respondents said they were most unhappy with banks imposing annual fees, cutting the maximum amount of credit card debt they can take on, canceling their account without notice or raising minimum payments.

    Consumers have reduced their credit card debt in recent months by upping the total of their monthly payments while spending less.

  • Chase waives foreign transaction fees on some credit card debt

    Chase waives foreign transaction fees Chase recently announced it would eliminate the fee on all credit card debt accrued in other countries for cardholders using its British Airways Visa Signature card, which used to be 3 percent of the purchase price, according to a report from USA Today. This charge was attached to all transactions completed abroad, even if they were made in U.S. dollars.

    The British Airways card follows two other Chase travel accounts in waiving fees on transactions in foreign countries, the report said. It previously nixed similar charges on credit card debt for its Priority Club Select and Hyatt accounts. However, Chase also reduced the amount of bonus miles it offers to new cardholders, from 100,000 in the fall to just 50,000 currently.

    Many credit card lenders have recently restructured introductory offers in an effort to draw in more consumers who may have tried to reduce their use of these accounts.

  • Debt Counseling

    Debt Counseling

    For consumers whose debt is somewhat manageable and don’t need to seek drastic measures to resolve it, there may be a benefit in seeking the assistance of debt counseling, also known as credit counseling.

    With debt counseling, consumers learn how to properly handle their finances, so that they can recognize what led to their debt problems, and learn to practice financial strategies to prevent it from happening in the future.

    In addition, debt counseling can help them understand how best to approach repaying their current outstanding debts in a way that makes financial sense for them and their families. Consumers who enroll in a debt counseling service can establish a plan to allocate more of their paychecks to paying their bills each month in order to quickly reduce their balances.

    Unfortunately, using a debt counseling service may not be helpful to consumers with more substantial debts because it will not eliminate or reduce outstanding balances. However, it will help consumers create a monthly budget for paying off their balances responsibly. Debt counseling may be more beneficial to consumers whose debt load isn’t totally unmanageable because, unlike some other forms of debt elimination, it will have no bearing whatsoever on their credit score. However, participation in a debt counseling program will show up on a consumer’s credit report, which can still affect his or her chances of getting a loan with a fair interest rate.

    For example, lenders may view consumers who apply for an auto loan or mortgage, and have used a debt counseling service, as a risky investment because of their history of mismanaging money. Thus, lenders may increase the amount of interest a consumer may have to pay on a loan if they qualify. The debt counseling may also make it difficult to qualify for a credit card or other type of unsecured debt for a certain period of time.

    If consumers are burdened by a much heaver and insurmountable debt load, a reasonable alternative to debt counseling is debt settlement. Contacting a debt settlement company is one of the most common debt solution options available to consumers. These organizations have trained negotiators, who speak directly to a lender on a client’s behalf to reduce the total amount owed. Often, these debts can be reduced by roughly 50 cents on the dollar, and settlement programs can enable consumers to become debt-free from enrolled accounts in as little as 24 – 48 months. Generally, creditors will demand a lump-sum payment when a settlement is negotiated, although many creditors are also willing to structure settlements over time.

    Whether consumers chose debt settlement or opt to enroll in a debt counseling program, they should thoroughly examine whether either method is right for them. Consumers should also research debt counseling and debt settlement firms to determine the best provider in the market.

  • Mobile the best way to make a secure payment

    Mobile the best way to make a secure payment The heads of two major online handlers of credit card debt – eBay and Boku parent company Andreessen-Horowitz – recently participated in a discussion in which they agreed using a mobile phone is the safest way to make a purchase online, according to a Mashable report. John Donahoe, eBay's CEO, also noted that he expects consumers' mobile phones will soon replace their wallets.

    The reason for this, Donahoe said, is phones don't save any financial information unless the user sets them to do so, Mashable reported. Marc Andreessen, speaking on behalf of Boku, said consumers will routinely take on credit card debt with their mobile phones rather than traditional payment methods in the near future.

    Consumers who want to take on credit card debt to make a purchase on their mobile phones should be careful that their handset isn't using a Wi-Fi connection, as this may make it easier for someone else on the network to access some of their personal information.

  • Lenders now offering accounts zero percent introductory rates

    Lenders now offering accounts zero percent introductory rates Many credit card lenders recently began offering accounts that gave consumers six months of interest-free spending as a way to lure old borrowers back into the credit system, according to a report from television station New York 1. These offers show lenders want more consumers who may have had credit trouble in the past to begin taking on credit card debt again.

    However, consumers should be aware that zero percent interest offers typically also carry higher transfer fees than other cards, the report said. In many cases, they range from 7 to 9 percent. Others may carry caps on the amount of credit card debt a person can transfer to the new account.

    Many lenders have increased their rewards offers in recent months as consumers have relied less on cards, by taking on less credit card debt and increasing payments on their monthly bills.

  • How to Get Out of Debt Fast

    Many Americans want to know how to get out of debt fast. Many Americans may be wondering how to get out of debt fast as their bills and credit balances have piled up in recent months and created a financial headache. How to get out of debt fast is a common question that has several answers which may allowconsumers to pay off or greatly reduce the amount they owe to creditors.

    One method to get out of debt is to seek the help of a debt settlement agency. Using this method, a consumer will have a trained negotiator assigned to them, who will negotiate with creditors on the debtors' behalf in an attempt to reduce the total amount they owe. Once the debt has been negotiated down to a lesser amount, lenders often require consumers to pay their negotiated debt amount in one lump sum. This will require the consumer to save up a lump sum payment before the debt can be settled, and the program usually lasts between 24 – 48 months. However, debt settlement is often successful in reducing a consumer's total original balance owed by up to 50 percent, making it a possible solution to the dilemma of how to get out of debt fast.

    Another way for consumers to get out of debt fast is to call their lender and ask to have the interest rates reduced on their account. While this may not work for everyone, it can't hurt to ask. Consumers may find this method to be particularly helpful if they have a credit score good enough to qualify for a credit card with a lower interest rate from another lender. The threat that a customer may leave and transfer their balance elsewhere could be enough to convince the lender to lower the interest rate to a rate that is much more manageable.

    If lenders are steadfast on the interest rate figures, and the consumers’ credit score is still high enough they may benefit from seeking a balance transfer to a card that carries a low, or zero-percent introductory rate. With this method, a consumer compiles interest on their existing balance much slower than they did in the past, which may allow them to cut their debt significantly before the introductory offer ends and the interest begins to accrue again.

    Yet another option for those trying to figure out how to get out of debt is to talk to a credit counselor, who can suggest a debt management plan that could help pay off debt within four to seven years. Although this method is not as fast as debt settlement, this type of program makes consumers devote considerable time to a financial education process that will also help draw up a sound financial budget and eliminate unnecessary expenditures to further chip away at their debt. In a credit counseling program, consumers will usually pay back every dollar of the principal they owe, but at a lower interest rate.

    Before arriving at any solution on how to get out of debt fast, consumers should first review their finances and research their options to ensure they choose a plan that best fits their financial situation. 

  • MasterCard profits jump even as consumers avoid credit card debt

    MasterCard profits jump even as consumers avoid credit card debt MasterCard, the second-largest credit processing network in the world, said its profits in the third quarter climbed 15 percent, beating many analyst predictions, according to a report from Bloomberg. This is largely because it doesn't actually deal with consumer credit card debt, but rather makes money from every debit and credit card transaction it processes.

    "We are at the heart of a growth sector," said CEO Ajay Banga in a conference call with analysts. "While we recognize that the industry is changing, we're not going to simply look to see our way through challenges that may arise, but we're going to convert on the underlying opportunities that they present."

    The profit was surprising because many analysts expected the company to lose ground as consumers took on less credit card debt, the report said. However, Americans often used their debit cards instead.

    Many consumers have tried to decrease their credit card debt in recent months because they're fearful it may have an adverse affect on their financial futures.

  • Discover offers more cash back for credit card debt this holiday season

    Discover offers more cash back for credit card debt this holiday season Consumers who have Discover More, Open Road and Motiva cards issued by Discover will be able to earn 2 percent cash back for every dollar of credit card debt they take on this holiday season, according to the Christian Science Monitor. This is twice the normal rate of 1 percent, and is designed to entice consumers to take on more credit card debt.

    The promotion will run from November 15 through December 31, and customers have to sign up online to be eligible, the report said. In addition, it is only valid for the first $1,000 in credit card debt a consumer takes on.

    A recent poll found that many consumers will rely less on their credit cards this coming holiday season. This is in keeping with the recent nationwide trend that has seen Americans scale back their spending and increase their monthly payment as they become more wary of carrying large amounts of credit card debt.
     

  • Consumers taking on less credit card debt at small businesses

    Consumers taking on less credit card debt at small businesses. Consumers took on less credit card debt at Main Street retailers, service providers and restaurants dropped to 5.06 percent in the third quarter of the year, according to the latest quarterly study from the Capital Access Network. That's a decline from the high observed for the same period last year, when the proportion was 14.84 percent.

    "This report from CAN, along with Federal Reserve Statistical Release G.19 Consumer Credit published on October 7, 2010, lends support to the notion that Main Street retailers, service providers and restaurateurs seem to be attracting a disproportionately high share of the reducing consumer credit card float," states Glenn Goldman, CAN's CEO and president.

    The report said the rate at which consumers have taken on credit card debt at local businesses has declined in each of the last 12 quarters.

    Consumers have been more careful about adding to their credit card debt in recent months, and have instead concentrated on reducing it with greater monthly payments and more controlled spending.