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  • Reading a credit card statement can help consumers

    Reading a credit card statement can help consumers. Many consumers across the country may have noticed that their credit card statements have changed recently.

    Thanks to a provision of the Credit Card Accountability, Responsibility and Disclosure Act, credit card companies are now legally required to make their statements more clear so thatconsumers can better understand what they’re being billed for, and how much it’s costing them. According to television station KIVI in Boise, Idaho, there are a number of changes that some consumers may find unfamiliar.

    One such change, the station said, is that there is a section that is labeled either "account information" or "account summary." This area shows the most basic information about the account – how much is owed, when the payment is due, and how much of the bill is made up of interest fees. Because this information is the most essential part of a bill, this is what consumers should keep in mind.

    The station also says that bills must now include a debt report that shows how long it will take a consumer to pay off their bill if they just make the minimum payment, and another that shows the payment required to pay the debt off in three years, plus the resulting interest savings. This only serves to highlight the importance of paying more than the minimum.

    While the Credit CARD Act requires lenders to disclose both initial interest rates and all rate changes, the station advises that all consumers keep an eye on their current interest rate, which must be clearly displayed on the bill. This will help consumers understand just how much they’re paying per month over their current balance.

    The Credit CARD Act also requires that lenders make clear the fee for late payments, and keep the same due date every month. The station said both of these requirements will help consumers keep a more regular payment schedule.

    However, there is a stipulation in the Credit CARD Act that says consumers must opt in to receive notifications that they have gone over their credit limit, which the station recommends.

    A recent report in the Kansas City Star warned that some consumers may be unaware that the Credit CARD Act only changes the laws for personal credit cards, and not business cards. It warns that those tempted to transfer business payments to personal accounts would, in doing so, simply be turning their personal cards into a business card.

  • Representative pushing for debit card fee caps

    Representative pushing for debit card fee caps. Despite a great deal of resistance, Representative Barney Frank says he will continue to fight to keep caps on so-called debit card "swipe fees."

    The rule, proposed by Illinois Senator Dick Durbin, would keep banks from overcharging businesses for debit card transactions and then passing those charges on to the consumer, but the House wants to fight that proposal. According to a report in BusinessWeek, the House version of the bill would exempt government-issued prepaid cards and reloadable prepaid cards from these fee caps. It would also allow the Federal Reserve to take into account the cost of fraud prevention when determining whether swipe fees are "reasonable and proportional."

    Visa and MasterCard alone made $19.7 billion on these fees alone last year, which averaged 1.63 percent of the cost of the transaction.

    A MarketWatch report said such fees help pay for rewards on some cards, and to help offset the risk that is associated with using credit cards, given the high incidence of credit card fraud across the country. The downside of Senator Durbin’s plan, it said, is that the loss of these fees could mean watered-down rewards programs and even higher fees, leading to growing credit card debt.

  • American debt greater than disposable income

    American debt is greater than disposable income. It seems that the reason debt across the U.S. has fallen in the last few months is not that consumers are spending less money, but rather that they are defaulting on what they owe.

    Debt across the U.S., including everything from mortgages to credit card debt, was at 122 percent of the annual disposable income at the end of March, according to a new report in the Wall Street Journal. While that number is better than it was before (it reached 131 percent in the first quarter of 2008), economists would like to see that number closer to a more reasonable level, around 100 percent.

    Since that peak in 2008, lenders have written off roughly $210 billion in mortgage and consumer loans as uncollectible, the Journal said. Meanwhile, investors lost at least the same amount, but more likely well over it, on loans banks sold as securities, meaning the total loss was over $400 billion. But, the paper said, the decrease in household debts over the same time was only $372 billion.

    An ABC News report said that it was unlikely the new credit card laws would help consumers out of their debt.

  • Prices on consumer goods heading down, Labor Department reports

    Consumer goods getting cheaper The seasonally adjusted rate of change in the price of consumer goods dropped in May by 0.2 percent, bucking its recent trend and making consumer spending easier on the American public, according to figures released Thursday by the Bureau of Labor Statistics.

    Energy prices led the way among the main categories measured in the Bureau’s consumer price index, falling by 2.9 percent in May. The Bureau said that this marked an acceleration of the 1.4 percent decrease seen the month before, and that gasoline in particular was becoming cheaper, falling in price by 5.2 percent.

    Food, on the other hand, stayed at roughly the same price level as before, according to the Bureau’s statistics. While food prices had been rising during March and April, their unchanged levels could spur hope among consumers and analysts alike that this part of the index may be beginning to dip.

    Experts say that falling consumer prices could provide the impetus necessary to drive U.S. consumer spending up toward its pre-recession levels, which would be a powerful indicator of the economy’s improvement.

  • New credit card rules benefit consumers

    Fed places new limits on credit card companies Earlier this week, the Federal Reserve placed further restrictions on credit card companies, designed to make sure consumers aren’t getting gouged for already-costly mistakes.

    Soon the days of exorbitant late fees will be gone, according to an article on the personal finance website Billshrink. Central among the numerous changes the Fed introduced that will curb credit card companies’ costly practices was a cap on most late fees of $25 for first-time offenders. Those that are late on more than one of their last six payments will see that fee increased to $35. Similarly, no fee can exceed the minimum payment on the balance, meaning that if the minimum is $20, consumers cannot be charged anything more than that.

    The new rules also barred companies from charging multiple late fees on one occurrence, and eliminated account inactivity fees, the site said. In addition, lenders are required to give 45 days’ advance notice on any interest rate increase, which clearly states the reasons for it. Banks are also now required to review all interest rate increases every six months, and, if it finds the increase to have not been "appropriate," will have 45 days to reduce the rate. Another rate reduction is required if the reason for the rate increase – like frequent late payment – no longer exists.

    A Bankrate report said that there can be restrictions on these rules. For example, banks can still charge more than $25 if they can show that the costs resulting from the late payments justify a higher fee, but that would have to be disclosed up-front.

    In addition, Bankrate said, just because the banks can no longer charge annual fees or inactivity fees doesn’t mean they can’t simply close the accounts they would have charged in the past, or reduce the credit limit on them.

    The rule also does not prevent credit card companies from creating penalty interest rates. One expert told Bankrate that issuers are free to charge whatever penalty rates they want on seriously delinquent accounts, and the median penalty interest rate among the 12 largest issuers is 29.9 percent.

    As for the rates that are reduced "if appropriate," Bankrate says that there is no hard and fast rule on the topic, so any increase that does happen might not be immediately repealed.

  • How consumers can negotiate a lower annual percentage rate

    How consumers can negotiate a lower annual percentage rate. Consumers are always looking for ways to save money, and one easy way to do it used to be as simple as calling a credit card company and asking for a lower APR.

    Back in 2002, 56 percent of credit card holders that called their issuers to request a lower rate got one with a single phone call, according to a report from the financial advice website Mint Life. Obviously those days are gone, but that doesn’t mean a company will never lower a borrower’s rate if they ask.

    The trick is in negotiation. If consumers arm themselves with a bit of knowledge beforehand, they might be able to talk a lender into lowering their APR, the report said. Consumers should know their credit score, and whether their report is clean and free of errors, and then get their financial paperwork together. Some lenders may want additional paperwork that doesn’t show up on a credit report before lowering a rate, like proof of employment and income.

    It’s also important to try to formulate a backup plan, the report said. Even consumers with great credit may find that the lender will deny their request, so they should be prepared to take their balance with the company that denied them and transfer it to another card, since the lender will be more likely to extend a lowered rate if they think they will lose business.

    There are, however, risks. The report noted that if a consumer is denied, it’s very possible that their credit score will drop as a result. Calling lenders with the intent of lowering an APR will force them to look deeper into a consumer’s account and credit history, and, in some cases, to demand more paperwork. And if the company doesn’t find that the consumer has a good enough score to warrant a lowered rate, it is within their rights to lower the credit limit on the account in question. Not only will this hurt the account, but also the consumer’s credit score.

    Even those that can’t get their APR lowered might find their lives made easier thanks to the Credit Card Accountability Responsibility and Disclosure Act. A recent MSN report said that any increase to the APR must be evaluated every six months, which includes any increases since January 1, 2009.

  • Debtmerica Helps Foster Children Learn Personal Finance Strategies

    On Saturday, April 24, Debtmerica, LLC teamed up with the Orangewood Children’s Foundation to help foster children learn to manage their personal finances with an all-day event set in a fictional “Independent City.”

    Volunteers helped construct and operate “Independent City,” which simulated some of the day-to-day challenges faced by adults in modern American society. Orangewood’s foster teens were able to learn valuable lessons about paying for housing, child care, groceries, and utilities at various stations in the exhibit, which was held in Irvine, California’s Pretend City Children’s Museum.

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  • Debtmerica Helps Foster Teens Learn Real World Personal Finance Strategies

    Debtmerica, LLC teamed up with the Orangewood Children’s Foundation to help foster children learn to manage personal finances with an all-day event set in a fictional “Independent City.”

    June 17, 2010 — On Saturday, April 24, Debtmerica, LLC teamed up with the Orangewood Children’s Foundation to help foster children learn to manage their personal finances with an all-day event set in a fictional “Independent City.”

    Volunteers helped construct and operate “Independent City,” which simulated some of the day-to-day challenges faced by adults in modern American society. Orangewood’s foster teens were able to learn valuable lessons about paying for housing, child care, groceries, and utilities at various stations in the exhibit, which was held in Irvine, California’s Pretend City Children’s Museum.

    In a letter thanking Debtmerica volunteers after the event, Orangewood volunteer services program manager Kristi Piatkowski – who had previously lauded the assistance of Debtmerica volunteers for their assistance at another event last year – said that “the youth learned about money management through their workshops,” and added that “the volunteers were wonderful in making sure that the day was educational and fun!”
    Piatkowski also noted that without Debtmerica’s support, both financial and in-kind, the event would not have happened.

    Harry Langenberg, one of the Managing Partners of Debtmerica, spoke on behalf of his team, “we are very proud to be part of Orangewood’s mission. Debtmerica is a big proponent of giving back to the Community where it can, and Orangewood’s programs enable our entire staff to get involved and contribute to a wonderful cause.”

    The Orangewood Children’s Foundation’s goal is to help eliminate the neglect and abuse of children in Orange County, California. The foundation works to accomplish this on four main fronts: Strengthening families to prevent abuse from occurring in the first place, protecting children from abusive homes from physical and emotional violence, emancipating teens from abusive families, and promoting enhanced public awareness of the challenges faced by children raised in such damaging environments. This last goal has been the area in which important partners like Debtmerica have been able to do the most good for the foundation’s kids.

    Debtmerica is a financial services company that provides assistance to families who are experiencing financial difficulties and hardship. Headquartered in Orange County, CA, Debtmerica focuses on negotiated debt settlement, a powerful debt relief option which helps clients get debt free and remain so. By actually reducing debt balances over the course of the program and providing an affordable monthly payment, consumers can experience lasting benefit to their financial well-being. Debtmerica was recently named one of the “Best Places to Work” in Orange County, CA, where it also was awarded for being the third Fastest Growing Company in 2009.

  • Small business owners can put deep dents in tax bill with a few easy tips

    Tax bills can be shrunk, with care Many small businesses that successfully weathered the recent economic downturn got a nasty surprise when they found out that their subsequent tax bills counted any forgiven debt that they managed to find as income. However, according to a recent article at Business Insider, there are several ways that small business owners can cut their tax demands to more manageable levels.

    For example, Business Insider says, small businesses that began their operations within the past year can write off much of their obligation to pay taxes on equipment and machinery, as well as those on other types of capital put into use during the same time frame.

    Sales of small business stocks, in many cases, are also eligible for a 75 percent exclusion from applicable taxes, Business Insider says.

    Experts say that small businesses, as the primary engines of job creation in the U.S., were particularly hard-hit during the recent recession, shedding workers at an alarming rate and contributing greatly to the historically high unemployment rates that have been seen in recent months.

  • Report: Currency values could have big impact on those with credit card debt

    Dollar values can shift One dollar is not necessarily the same as another, according to a recent report from financial website Smart Money. When the value of the currency changes, its effect on consumers trying to reduce debt can be quite serious.

    "As the price of everything from automobiles to airfare falls, so goes the value of assets already purchased. That means debtors will be paying a higher price against assets that are losing value," reports Smart Money.

    Experts told the website that rate cuts could vary widely based on a number of factors, from a particular credit card issuer’s willingness to take on financial risk to the movement of other economic indicators.

    A number of options are available to U.S. consumers looking to find some form of debt management relief in the wake of the down economy, but other experts have warned that debtors should be careful in selecting a firm to work with, as some debt consolidation companies have tarnished the reputation of the many honest brokers operating in this market sector.