Card Issuers Don't Care, And They're Proving It

Chuck Jaffe

BOSTON -- Lisa in Boston is at wit's end. A few years back, she consolidated all of her outstanding debts -- including her remaining student loans -- onto a low-rate credit card that promised a rate of roughly 5% for the life of the loan.
She has steadfastly paid the bill down, always on time, but seldom over the minimum because, she said, "I can't afford that much more than the minimum."
Recently, Lisa got a notice that Chase Card Services is raising her minimum monthly payment to 5% from 2%. That will raise the monthly amount due on her outstanding $14,000 balance from $280 per month to $700 per month -- enough to make Lisa tight on the rest of her bills.
Joe in Tulsa, Okla., is equally frustrated. He has worked hard over the years to pay off his credit card bills, but because his work in the oil business can sometimes be spotty, he has always wanted to have available credit to get him through the lean times. When Joe recently paid off the bill on his Bank of America card, his "reward" was a note informing him that the credit limit on his account was being reduced sharply.
These types of stories are legion nowadays. Consumers are feeling the squeeze as credit-card issuers dig in to survive tough economic times and prepare for new operating rules.
No credit due
Last week, this column looked at why the rules changes -- though a step in the right direction -- are not necessarily going to help consumers. What Lisa and Joe have in common is that they, like millions of consumers affected by their card issuers' new playbook, want to know what they can do about it. See story on new credit card rules.
In a word: Nothing.
When you feel like you have gotten the short end of the stick, or a raw deal, trying to negotiate with a credit-card issuer is a bit like dealing with the Internal Revenue Service, only without the IRS' charm. Arguing with a card issuer over the way they have treated you -- or mistreated you, more likely -- is like fighting City Hall or working with a nasty boss: resistance feels futile.
That's particularly true right now. With credit-card issuers feeling the pinch and narrowing credit lines or cutting off customers -- including many who have made timely payments and managed balances properly -- I went looking for the right way to handle complaints with credit-card issuers.
I started this search after hearing from many consumers after writing about the new law. The common lament was that if the card issuer has a cold -- and they do, which is why they are cutting risks, even though that means hurting good customers -- the consumer gets the flu.
"Card issuers just don't care right now," said Credit.com's Gerri Detweiler, author of "The Ultimate Credit Handbook."
"It used to be that you could use the threat of taking business elsewhere, but these days I think that some of the card issuers actually want that," she said "You can go up the chain of command when you don't get anywhere with customer service, then maybe find the name of an executive -- or the top executives -- in the annual report or on the company's Web site and write a letter and send documentation. In the past, that would help to resolve things, but today it's entirely possible that they'd ignore it and never bother to respond."
Complaining up the ladder from the customer service rep, going to investor relations (if you are a shareholder), writing the big boss, filing complaints with the Better Business Bureau or Federal Trade Commission all feel good, but they may not resolve the problems in the account.
"I advise people to write to the president of the company, the comptroller of the currency, and to write their senator or Congressional representative," said Linda Sherry of Consumer Action. "But I haven't been telling them that complaining that way will restore their minimum payment, or their larger credit limit."
Tight squeeze
One thing every consumer should recognize is that the lenders moves are sometimes made with ulterior motives. Lisa called Chase, for example, and was offered the chance to keep her minimum payment at 2% of the outstanding balance, so long as she agreed to an interest rate of roughly 8% instead of the lower rate she was promised for the life of the loan. And Joe quickly was offered the chance to have his credit limit restored or even raised -- but with a balance transfer deal.
Close the account, and you take an exposure off the books for the issuer -- they want that -- while hurting your own credit score (though someone with good credit will see their score bounce back quickly). Opt out of the term changes -- part of the new law that went into effect last week requires a card issuer to provide 45 days notice before altering terms, and allows the customer to say no to the changes -- and the lender will freeze the account. Your terms will stay the same until you pay off the debt, but the credit line is shut off.
And if you think the lender was hard to deal with as an active customer, try getting a fee waiver or complaint addressed when you have refused its terms and conditions and put the account on lockdown.
While President Obama's planned consumer protection agency for financial issues may help someday, the truth is that it may not be able to resolve the growing rift between card users and issuers. After all, government officials put the new rules in place, and it's already clear that they'll be of minimal help.
"With credit card relationships, there are a million shades of gray, and you'd like to say 'This is how to complain and win,' but you can't," said Greg McBride, senior financial analyst for BankRate.com. "Closing your account and taking business elsewhere is a great option, unless you are in the market for a car loan or mortgage in the next six months and you're afraid of torpedoing your credit score, or you're the guy who is worried about losing a job and who wants whatever credit line they can keep as a back-up plan."
McBride added: "You may not use the card very often or you may do everything right, but a seldom-used account or an account where there is a lot of available credit -- even when everything is paid on time -- represents a risk exposure to a card issuer, not an opportunity to boost their receivables. If you are not an opportunity, you're their risk; you may not see it that way, but that's the logic you are facing."
The easiest way to avoid the problem, of course, would be to pay off the debt. Only when you have zeroed the balance and can manage payments without running up debt anew can you deal with credit card issuers on your own terms, rather than theirs.
Copyright © 2009 MarketWatch, Inc.

5 Strategies to Lower Your Rent Now

When it comes to lowering their monthly housing payments in the down economy, renters have homeowners beat.
Refinancing a mortgage requires plenty of paperwork, a stellar credit score and weeks of effort. But property owners faced with profit-sucking vacancies and cash-strapped tenants are increasingly willing to negotiate. According to a recent survey from rental property marketplace Rent.com1, 68% of landlords reported lowering rents or giving one or more months free to retain tenants.
Try these five strategies to cut your bill:
Research the market
Learning what other people in your building and neighborhood are paying for comparable properties can help you figure out whether you’re overpaying, and how much room you have to negotiate, says Steven Cohen, the president of consulting firm The Negotiation Skills Company, which helps clients negotiate for better deals. Ask other renters what they pay, check similar property listings on Craigslist2, and get a local comparison on RentoMeter.com3. Cohen’s daughter Abigail tried that tip and found that others in her neighborhood on New York’s Upper West Side were paying an average 20% less than she was for a studio apartment. She brought those figures to her landlord and ended up with a new lease this summer for $1,550 instead of $1,850 -- an 18% discount.
Play up qualifications
“If you aren’t a good tenant, you won’t have a strong case,” says Peggy Abkemeier, the president of Rent.com. “The landlord may not want to make concessions to get you or keep you in the unit.” Point out that you’ve always paid on time, have kept the property in great shape and haven’t had any complaints from neighbors. Renters hunting for a new place have less leverage here, but they can benefit from a reference from a previous landlord.
Take on a roommate
Obviously, the more people sharing your space the less rent you’ll pay. But landlords may also offer a break to fill under-housed units. When Eric Woodbury and two friends were apartment hunting in Medford, Mass., in July, one property manager offered them a three-bedroom unit for $2,000, or roughly $667 apiece. Or they could move into a $2,200 four-bedroom where one tenant was already in place, cutting the per-person rent to $550. “That was a big selling point for us,” he says.
Look beyond rent
If your landlord stands firm on the monthly rent, ask about other possibilities to cut costs. For example, you might negotiate for more utilities to be included or a discount on extras like storage space or parking. Rent.com found 38% of landlords were willing to reduce security deposits, and 8% relaxed pet policies (which typically include an extra security deposit).
Track vacancies
Turning over an apartment can cost a landlord thousands in upgrades, marketing and lost rent, Abkemeier says. If your building or community is looking more and more like a ghost town, you have plenty of leverage to negotiate. “I see and hear people moving out of my building all the time,” says Iris Karasick of New York City. Karasick already negotiated the rent on her one-bedroom on the Upper East Side down $100, to $2,155, earlier this year, and says she hopes the vacancies might help push it below $2,000 this fall. “I’m sure they’d rather have a good tenant in the apartment than have to hunt for someone new,” she says.

1. http://www.rent.com/

2. http://www.craigslist.org/

3. http://www.rentometer.com/

URL for this article:http://www.smartmoney.com/personal-finance/real-estate/5-strategies-to-lower-your-rent-now/

Deal of the Day by Kelli B. Grant

Win at the credit scoring game

To get the best deal on a loan, you need some new strategies to bump up your score - and keep it there.

(Money Magazine) -- Borrowing money today requires impressing an increasingly hard-to-please crowd. With creditors of all kinds more cautious than ever, you need an A+ application to land the best terms -- and that means an A+ credit score, the number lenders use to judge your risk of default.
The most commonly used credit scoring system, called FICO, rates people from a very risky 300 to a pristine 850. And right now we're in the middle of a credit score crunch: "You need a 750 or better today to have the same treatment you got with a 700 two years ago," says John Ulzheimer, president of consumer education at Credit.com.
John D'Onofrio, CEO of Autoloandaily.com, seconds that: "Two years ago a 680 was enough to get a great car loan rate. Today it's often the minimum to qualify at all."
Think you're still in the clear? Don't be so sure. Lenders have been making changes that could cause your score to slip from excellent to average. Improve and protect your number with these strategies:
Learn your score. You have three FICO scores, based on your credit reports at the three credit bureaus: Experian, Equifax, and TransUnion. The numbers tend to be in the same ballpark, so pony up $16 to get one representative score at myfico.com. You can get an estimate free at Creditkarma.com. But the FICO score gives you a better sense of what lenders see.
Scout for mistakes. Your scores are only as good as the information they're based on. And a third of people who've pulled their reports have found errors, according to a Zogby poll. That's good reason to read your report.
When you buy your FICO score, you'll get a copy of the report it was based on. Get gratis histories from the other bureaus via annualcreditreport.com (you're entitled to one free from each bureau every 12 months).
Spot an error? Request a correction, following the instructions on the bureau's website. Let's say the size of a credit line was misstated or an account was mistakenly marked delinquent. Getting the error fixed could raise your score as much as 200 points, says Ulzheimer, who has also worked for Equifax and FICO.
Never, ever be late. As you'll see in the pie chart on the right, the biggest chunk of your credit score comes from your payment history. Just one late payment can shave 100 points off a 750-plus credit score, says Ulzheimer. Lenders can't tattle on you to the bureaus until you're 30 days past due, adds credit expert Gerri Detweiler. But don't risk it. For all your bills, enter recurring due-date reminders on your computer calendar.
Missed a payment? Get back on track within the next 30 days, and you should "get back the lion's share" of points lost, Ulzheimer says. More than 90 days late? The damage can stick for years. If it was a one-off lapse, call your issuer and plea for a good-will adjustment to your credit report. (It's a long shot.)
Remember the magic 20%. The second-biggest factor in your score is how much you owe vs. how much credit has been extended to you. The part of this that's easiest to finesse is your credit card utilization rate, or your total card balances compared with your total credit limits, as well as each card's balance relative to its limit.
Example: If you've charged $5,000 on cards and have $50,000 in credit, your rate is 10%. For the best score today, 10% is ideal, but you can probably creep up to 20% and keep a high rating.
Unfortunately, with banks lowering credit limits and canceling unused cards, it's harder to maintain such a low percentage. In the previous example, if your available credit is cut to $20,000, your rate shoots to 25%. That could sink your score by as much as 50 points, says Ulzheimer. The lesson: Know your limits, watch for changes, and stay under 20% on each card and in total (0% if you'll be applying for a loan soon).
Already above 20%? Paying down debt is the obvious way to lower your utilization rate, but another strategy is to apply for an additional credit card to increase your overall credit limit. That may cause you to lose a few points in the short term -- so don't do it if you're about to apply for a mortgage -- but it should pay off in the long run.
Keep oldest cards in play. As noted, credit issuers these days are eagerly canceling cards that are not in use. Besides reducing your limit and increasing your utilization ratio, having an account closed can hurt you in another way, especially if it's among your older ones.
See, 15% of your score rides on the length of your credit history. The longer you ably manage revolving debt, the better you look. So don't cancel your oldest cards. And don't let them get canceled on you: Move a recurring charge to each so they stay active.
Already ditched or been ditched? A new card (see previous) can help with your utilization rate, but there's little you can do to help the "history" component of your score, except to keep other old accounts in use.
Accept fate on the rest. There are other factors involved in your score, but they're not so easy to manipulate. For example, 10% is based on how well you manage a mix of credit types, such as mortgages, car loans, and credit cards. But you don't want to go out and, say, finance a car just for a score boost; besides, you can easily get 750-plus with just a few well-tended credit cards.
Along the same lines, 10% is based on "new credit," but the effects of a new application can be positive or negative, depending on your history.

By Carla Fried, Money Magazine contributing writer August 24, 2009: 5:06 AM ET
Find this article at: http://money.cnn.com/2009/08/24/pf/credit_score.moneymag/index.htm

New Credit Card Laws

This newsletter has previously discussed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act. This set of provisions has recently merged with the Credit Cardholders’ Bill of Rights. On May 22, President Obama officially signed the CARD Act and the new regulations will take effect in February 2010. This set of laws is a major milestone for the credit card industry and may be instrumental in ending deceptive practices that affect consumers. Below is a brief outline of some of the changes that will take place under the CARD Act.
What will change?
According to the Center for Responsible Lending, a non-profit research organization, the following new laws are definite and may benefit consumers.
• Applicants under the age of 21 will not be able to get approved for a credit card unless they obtain a co-signer or show they have sufficient income.
• Creditors will be required to give cardholder’s 45 days notice before changing rates. After a new account is opened, rates will not be able to be increased during the first 12 months. Promotional rates must last six months. Card companies can still raise rates in the event of delinquencies, but must lower the rates if the cardholder stays current for a period of six months.
• Bills must be mailed at least 21 days before the due date rather than the current 14 days. Early morning deadlines will also be banned.
• Over-the-limit fees can only be applied if the consumer consents to over-the-limit transactions.
• Card companies must apply payments above the minimum payment to the highest interest rate balance.
How may this affect the credit card industry? The Motley Fool (www.fool.com), a financial education site, indicates that credit card issuers may cut back on certain benefits in order to recoup lost revenue from these new laws. For example, grace periods and cards without annual fees could become obsolete. Credit card perks and reward programs could also be eliminated. As many consumers have also experienced, creditors may continue to lower credit lines to reduce risk. It may also become more difficult for applicants to obtain credit, especially those with weak credit histories.

Credit Card Stats:

A recent study of the 12 major credit card issuers determined that all violated one or more rules that would now violate the CARD Act. Below are some findings:
• 93% of issuers could raise the interest rate at any time
• 72% of cards included offers of low promotional rates which issuers could revoke
• The median penalty rate of 27.99% would add charges of $100 and $180 annually for every $1,000 in revolving purchasing debt.

What to Expect As New Rules on Credit Cards Take Effect

Credit-card users get new protections this week, the first of a series of federal actions that constrain card issuers from changing terms on customers.
Starting Thursday, banks must comply with parts of the recently passed Credit Card Act of 2009 by mailing bills at least 21 days before their due dates and providing at least 45 days' notice before making a significant change to their rates or fees. Currently, banks are generally required to mail billing statements at least 14 days in advance and provide a 15-day notice of altered fees or rates. The new rules also will bar banks from increasing fees and rates without warning when a consumer misses a payment or exceeds a credit limit.
Consumers also will be allowed to avoid future interest-rate increases and pay off any outstanding balance over time under the original rate terms. Currently, if a consumer gets hit with a penalty rate, for example, they aren't given the option to reject the rates.
The bulk of the legislation's key provisions will take effect in February 2010, including limits on interest-rate increases on existing balances. The following July will see the introduction of new disclosure rules, drafted and approved by the Federal Reserve Board and other banking regulators.
In anticipation of the legislation, major card issuers have been raising interest rates and fees, reducing credit lines and closing accounts. Banks say the changes also are being driven by the weak economy, which has resulted in higher losses and funding costs. Earlier this month, for example, American Express Co. notified its Blue, Optima and co-branded credit-card customers that it was raising interest rates by an average of two to four percentage points. Other changes to these cards, which take effect with customers' October billing statements, include higher rates and fees for cash advances and late payments. American Express also eliminated fees for customers who exceed their credit limits, months before the legislation clamps down on a host of card fees.
Favoring Variable Rates
Other issuers, such as Bank of America Corp., J.P. Morgan Chase & Co.'s Chase Card Services and Discover Financial Services, recently converted customers' fixed rates to variable ones. The changes will make it easier for issuers to bump up the rates they charge without notifying customers. By contrast, banks must currently notify fixed-rate card holders of any change in rates.
Banks are also paring back their rewards programs. Citigroup Inc., for example, has started adding annual fees to some of its rewards cards, such as the Citi Diamond Preferred Rewards card. Under the Discover More Card rewards program, customers can earn an additional 5% back on purchases in categories that rotate quarterly; for the third quarter, however, the cap on purchases that qualify for the cash-back bonus was lowered to $300 from $400. Meanwhile, Chase last fall scaled back the bonus opportunities on its no-fee Chase Freedom cards. For Chase Freedom card customers wanting to earn a fixed 3% bonus for spending in the grocery, gasoline and fast-food categories, Chase now levies a $30 annual fee.
While the new legislation will help eliminate sudden rate increases and force more disclosure, the banking industry has said the restrictions will reduce available credit. The cost of borrowing also will rise, companies say, since they will have to be more careful about giving credit. Average interest rates on credit cards rose slightly to 14.43% through May, according to the Federal Reserve, although rates are still below historical levels of 18% and 19% that were typical 20 years ago.
According to Consumer Action's 2009 credit-card survey, which looked at 39 cards from 22 financial institutions, rates and fees began climbing this spring. The advocacy group said more credit cards now come with minimum cash-advance fees and higher balance-transfer and foreign-transaction fees.
"There's no question that issuers are taking advantage of this window before it closes to make as many changes as freely as they've been accustomed to," said Ruth Susswein, Consumer Action's deputy director, national priorities.
Changes to card terms are causing some consumers to alter their spending patterns.
After Bank of America raised his 7.9% fixed rate to a 13.9% variable rate last spring, Mark Nilles paid off his remaining balance, shopped around for another card and canceled his BofA card. In the future, the Arvada, Colo., hydrologist said he plans to rely on savings or shorter-term, fixed-rate loans instead of credit cards to pay for one-time expenses.
"It made me reassess everything that I was doing credit-wise," said Mr. Nilles.
More Fudge Room
For now, consumers should check their statement due dates to make sure they're getting the required additional time to pay their bills. Some people may want to adjust any automatic debits coming out of their checking accounts to make sure they're not paying their bills sooner than they need to, said John Ulzheimer of Credit.com, a consumer-education Web site. "This gives you a little more of a fudge period," he said.
Consumers are likely to find better credit-card deals if they also have a checking account at the bank. Under Chase Card Services' Chase Exclusives program, for example, Chase Freedom card holders who also have checking accounts at the bank can earn up to 10% more points on their spending.
The bank also rolled out a new credit card, "Slate From Chase," that automatically refunds the 12th month's interest charges each year if customers enroll in the bank's AutoPay program from a Chase checking account.
Meanwhile, for a limited time, Citi is offering some customers an additional 2% cash-back bonus on qualified spending on Citi credit cards if customers also have a banking relationship at the company.
By JANE J. KIM

Write to Jane J. Kim at jane.kim@wsj.com

Article from http://online.wsj.com/article/SB10001424052970204044204574358612543642536.html

Be cautious about giving info to census workers.

With the U.S. Census process beginning, the Better Business Bureau (BBB) advises people to be cooperative, but cautious, so as not to become a victim of fraud or identity theft. The first phase of the 2010 U.S. Census is under way as workers have begun verifying the addresses of households across the country. Eventually, more than 140,000 U.S. Census workers will count every person in the United States and will gather information about every person living at each address including name, age, gender, race and other relevant data. The big question is - how do you tell the difference between a U.S. Census worker and a con artist? BBB offers the following advice:
• If a U.S. Census worker knocks on your door, they will have a badge, a handheld device, a Census Bureau canvas bag and a confidentiality notice. Ask to see their identification and their badge before answering their questions. However, you should never invite anyone you don’t know into your home.
• Census workers are currently only knocking on doors to verify address information. Do not give your Social Security number, credit card or banking information to anyone, even if they claim they need it for the U.S. Census. While the Census Bureau might ask for basic financial information, such as a salary range, it will not ask for Social Security, bank account or credit card numbers nor will employees solicit donations.
Eventually, Census workers may contact you by telephone, mail or in person at home. However, they will not contact you by e-mail, so be on the look out for e-mail scams impersonating the Census. Never click on a link or open any attachments in an e-mail that are supposedly from the U.S. Census Bureau.
For more advice on avoiding identity theft and fraud, visit www.bbb.org

Debt Settlement = Results

Many consumers receive results from debt settlement companies. According to the Association of Settlement Companies (TASC), consumers seeking to manage their debt have higher success rates when using credible debt settlement companies rather than credit counseling services. TASC, the non-profit watchdog organization for self-regulating the debt-settlement industry, gathered the information from various sources, including the Consumer Federation of America and National Consumer Law Center, the Executive Office for the U.S. Trustees and testimony by credit counseling companies.
With both shorter program durations and lower budgeted monthly payments, debt settlement programs frequently see higher success rates and fewer dropout rates. Other differences between credit counseling and debt settlement are:
• Debt settlement companies do not receive any fees, contributions or other forms of compensation from any entities other than the debtor client. Meanwhile, credit counseling companies get money each month from their customers, plus they receive "contributions" from credit card companies and "fair shares" from banks.
• Debt settlement programs are typically 36 months or fewer. Credit counseling programs are usually 60 months or more.
• For consumers that complete programs, the total cost of a debt settlement program is usually about half the cost of a debt management program offered by a credit counseling company.
• Debt settlement programs achieve individualized and customized results depending on a consumer’s circumstances and needs. Credit counseling payment plans are fixed payments over a length of time.

Budget Travel Tips

Summer is here and during this time of the year many families travel to various destinations for vacations. If you are planning a family excursion, below are some tips and resources that may help reduce your travel costs.
Use gas wisely. According to a survey conducted by the Travel Industry Association (TIA), rising gas prices are not likely to affect travel plans of American consumers. The results of the survey participants indicates that travelers plan to cut costs on other vacation expenses in order to compensate for higher fuel costs. For example, 38% of respondents would drive to a closer destination or spend less on souvenirs and shopping. Web sites such as www.gasbuddy.com and www.gaspricewatch.com list prices in your local area and are updated by local volunteers. Getting a tune up on your vehicle before your trip may also help you get better gas mileage.
Use the Internet to plan your trip. In recent years, many consumers have taken advantage of the many online travel booking sites. ComScore Networks Inc., a marketing firm that studies online consumer behavior for marketing purposes, reports that 150 million Americans visited these sites in 2005 and revenues from travel sites exceeded $60 billion. These user-friendly sites allow you to enter your departure and arrival dates and allow you to choose from a variety of package deals. It is a great way to compare prices! These popular sites listed below can help you begin your search.
Timing is everything. Summer is usually the busy time of the year for many prominent tourist areas. Therefore, many vendors such as hotels, airlines, and restaurants raise their prices during peak season. When something is in demand, you usually pay top dollar for it. If possible, you may consider scheduling your vacation after Labor Day when the busy season ends. However, most families with school-aged children may not be able to do this since kids usually begin school around that time of the year. Another option may be to plan your hotel or airfare trip during the week and avoid the higher prices of weekend travel. If your schedule is extremely flexible, check out the last minute deals on many of the travel booking sites. Airlines do not want to travel with empty seats and may offer low prices just to fill vacancies.
Monitor your food budget. Food can be a major expense on a family vacation. Experiencing the local cuisine is definitely an exciting aspect of a trip, but dining out for every meal can really become a budget buster. Consider packing some non-perishable items like cereal, snacks, peanut butter, jelly, bread, soda, and juice boxes. If you are staying in a hotel, bring a cooler in which you can store milk and ice. You can create some quick meals instead of always visiting a restaurant.
Make it a family affair. Instead of staying in a hotel, check out the price of a beach house or condo. You may be able to split the costs with other friends or family members by staying in a spacious beach property. This would also help you save on food costs because most condos and houses are equipped with stoves and refrigerators, which would allow you to cook a lot more meals "at home." Check out the site www.beachhouse.com for a wide variety of vacation rentals.
Search for discounts. When planning your trip, be sure to search for coupons or special deals on area attractions, amusement parks, and events. For example, if you plan to visit a Six Flags Theme Park (www.sixflags.com), go to their web site and look for special summer deals. The American Automobile Association (AAA) also offers deals for members. Visit their site at www.aaa.com. Once you arrive at your hotel, pick up flyers and brochures in the lobby that may offer coupons for local attractions.

Online Travel Booking Sites
• www.travelocity.com
• www.expedia.com
• www.orbitz.com
• www.travelzoo.com
• www.hotwire.com
• www.hotels.com
• www.farechase.com
• www.all-hotels.com

Save on Summertime Grocery Shopping

Grocery prices may seem like they are constantly rising, especially with the volatile economy. Food is one aspect of most budgets that usually can be reduced. Summertime is typically a season in which most people may eat less because of the heat. That fact alone may help save money on buying food items. Below are some eating and food tips that may help you save money on your grocery bill during the summer months.
Drink plenty of water. Drinking water is usually more healthier and hydrating than filling up on sodas and sugary drinks. Water is also one of the most economic beverages. Unless you have a problem with the water in your local area, drink tap water instead of individual bottles of water, which can be harmful to the environment and costly to purchase.
Buy produce in season. Eating fresh fruits and vegetables are healthy staples of a well-balanced diet. Check your supermarket ads and consider buying produce that is in season.
Plant your own garden. If you have the space and a green thumb, consider planting your own fruits and vegetables. You may be able to save some money by growing your own produce and the taste of homegrown food can be very appetizing. Also, consider freezing and canning items so you can enjoy them throughout the year.

Go vegetarian. WebMD recommends eating vegetarian once per week to increase your consumption of plant foods. By cutting back on expensive meats and seafood, you can save money with more vegetarian meals that you eat.

Make homemade ice pops. Children usually love ice pops and other frozen treats. Consider making your own ice pops with natural fruits and juices instead of buying prepackaged processed frozen snacks. The Tree Hugging Family web site lists a variety of homemade popsicle making ideas. Visit their site at http://www.treehuggingfamily.com/homemade-popsicles-recipes/.

Credit card delinquency on the rise

Reporting agency says 11% increase could be an indication that tax refund checks are being used to cover daily living expenses.

NEW YORK (CNNMoney.com) -- Credit card delinquency rates jumped 11% in the first quarter, possibly indicating that consumers are using tax refunds to pay day-to-day expenses, according to a credit reporting agency report released Monday.
The delinquency rate -- which is the ratio of borrowers 90 days or more delinquent on one or more of their credit cards -- increased to 1.32% in the first quarter of 2009.
That's up 9.1% over the previous quarter, and 11% over the previous year, according to the report from credit reporting agency TransUnion.
The average borrower debt rose 4.09% from the previous year to $5,729, TransUnion said. The agency uses data from 27 million anonymous, individual credit files.
"This increase could be an indication that tax refund checks, typically used to pay down balances in during the first quarter in years past, are now being used to cover daily living expenses," said Ezra Becker, of TransUnion's financial services group, in a written statement.
The economy is losing jobs by the thousands, and mass layoffs and pay cuts have continued the credit crunch. Banks have tightened lending standards because of a heightened default risk, providing less credit to consumers.
State by state: Delinquency rates were highest in Nevada, at 2.44%; Florida, with 1.9%; and Arizona, 1.68%.
Rates were lowest in North Dakota, at 0.73%; South Dakota, at 0.77%; and Alaska, at 0.77%.
Alaska has the highest average bankcard debt, at $7,476, while the lowest is West Virginia with $4,640.
Outlook: TransUnion said it expects the 90-day delinquency rate will continue rising, nearing 1.7% by the end of 2009.
Depending on the effects of stimulus programs and unemployment, the rate's upward climb could hit a peak in late 2010 or early 2011, the report said.
TransUnion expects Nevada will have the highest delinquency rate by the end of 2009, at 2.95%, while Alaska will have the lowest at 0.96%.
But outside influences could have unforeseen effects, the report cautioned.
"The impact the changes to credit card regulations and associated legislation, and the response of card lenders to those changes, will have on consumer behavior and hence delinquency rates is still unknown," the report said.

By Julianne Pepitone, CNNMoney.com contributing writer
Find this article at: http://money.cnn.com/2009/06/08/pf/credit_card_delinquency/index.htm

Job Search Tips

According to a Household Data Survey from the Bureau of Labor Statistics, there are approximately 14.5 million unemployed Americans as of May 2009. If you are one of the people that have unfortunately found yourself without a job due to the economic crisis, below are some tips that you may consider as you search for a new employment.
Make use of the web. Online job search has become very common with the advent of the internet. Check out some of the major job search sites listed in the box to the left. You may also check out a web site for a company that you would like to work for and see if they have posted open positions on their web page. Also, check out web sites for business and trade associations in your field. Web sites for your local newspaper may also have job postings online.
Consider a part-time job or temporary job. A part-time job may be easier to acquire at first than a full-time job. If you are collecting unemployment, some states allow you to still earn a certain amount of wages while collecting benefits. Job sites such as Snag-A-Job (www.snagajob.com) specialize in part-time employment. Summertime and holiday seasons are prime times in which retail stores, restaurants, and amusement parks may need extra employees. This may also be a good idea if you are currently working, but would like to supplement your income. Temporary agencies may also be a good source of income. You may have a wide range of long and short-term assignments. For the most part, the jobs through agencies may be a temporary gig, but could eventually result in full-time employment. Find ways that you can earn extra money by using your skills. For example, you can babysit, watch pets while people are away, perform computer tasks, or clean houses.
Network. Let all of your friends, family, and acquaintances know that you are looking for a job. You may find out about an unadvertised position through word of mouth. Contact your former college’s alumni office or visit their web site to see if they have alumni postings on their site. You can also create a profile on the LinkedIn.com, a business networking web site. You have the option of "linking in" with former business associates or people that work in your industry.
Volunteer. If you are currently unemployed, you may consider volunteering in your community while you search for employment. Offer to donate your specialized services whenever possible. For example, if you work in the advertising or marketing field, help a charity organize a fundraiser event. In addition to dedicating your time to a worthwhile cause, you will also be networking and making important contacts. A business owner that sees you in action may offer you a job at their company or refer you to another colleague in your field.
Continue to educate yourself. If you are currently unemployed, this may be a good time to continue your education. Enrolling in a college or university to obtain an advanced degree is one option. You may also consider inexpensive courses at your local community college to refresh your skills. Instead of a formal class, there are many other ways you can learn new information on a daily basis. For example, you can visit your local bookstore or library for books written about your occupation. Also, you may contact your local unemployment office to see if they offer any free or low-cost training or educational programs. You can find local resources by clicking on your state on the U.S. Department of Labor web site located at http://www.dol.gov/dol/location.htm.

Job Search Sites
• Monster: www.monster.com
• Careerbuilder: www.careerbuilder.com

• America’s Job Bank: www.ajb.org

• Indeed: www.indeed.com

• HotJobs: www.hotjobs.yahoo.com

• USAJOBS: www.usajobs.gov

• Craigslist: www.craigslist.org

• Job of Mine: www.jobofmine.com

• LinkUp: www.linkup.com

• Jobster: www.jobster.com

• Snag A Job: www.snagajob.com

• Groove Job: www.groovejob.com

• Job.com: www.job.com

Save money on your cell phone bill

Cell phones have become a common gadget in most of our lives. According to CTIA – The Wireless Association, there are now more than 262 million wireless subscribers in the United States, which includes 83 percent of the total U.S. population and 3.3 billion active cell phones worldwide. Since there is a good chance that you may have a cell phone, below are some tips that may help you save money on your monthly bill.
Assess your minutes. Track your usage each month to make sure you subscribe to a plan that meets your needs. Check to see if you are using more minutes than your plan allows. If so, you may benefit from subscribing to a plan that offers more minutes instead of incurring overage charges. You may also want to sign up for a service such as www.overmyminutes.com. It is a free service that sends you an alert before you are about to go over your monthly minutes. On the other hand, if you are not using as many minutes as you are paying for, you may be able to save money by switching to a less expensive plan.
Scale down your plan. In addition to your minutes, you may also want to consider if you are paying for extras that you do not use or are not really necessary. For example, you may be able to eliminate extras such as games, ringtone downloads, and web surfing capabilities.
Decide whether to keep your landline. According to the FCC, nearly millions of land lines have been discontinued since 2000. Canceling your home phone may allow you to eliminate a bill each month. Before you decide to cancel your landline, ensure that the decision is right for you. From a debt settlement standpoint, basic home phone service allows you to give collectors a phone number in which they can leave a message. Numerous voice mail messages on your cell phone may use up some of your minutes. Also, a land line gives you an opportunity to make local calls for free. Cell phones usually use minutes whether you call locally or long distance.
Use the same plan as your friends and family. Some carriers allow friends and family members to talk for free if they subscribe to the same service. There may also be a discount if you form family plans. So, it is usually wise if everyone in the household has the same cell phone carrier.
Consider a prepaid phone service. If you use your cell phone sparingly, you may consider a prepaid or pay-as-you-go plan, which usually allow customers to buy minutes as they need them and do not involve lengthy contracts. Search for pay as you go plans by visiting www.myrateplan.com.
Be wary of cosigning for a cell phone. Cosigning for a cell phone for someone that may not qualify for one can result in a costly experience. It is wise to think about what can happen before you make that commitment.

Warm weather allows you and your family to complete certain chores and participate in seasonal activities. Throughout your neighborhood, you may see people planting gardens, washing cars, and children playing in backyards. Below are some money-saving tips that may help cool your wallet as the temperature heats up.
Save money on your air conditioner. You may want to prepare your air conditioning unit for hot and humid days. For example, keep all objects away from the air conditioning unit. Make it a habit to routinely remove grass and leaves from vents. These items will block airflow. For more tips, visit the Department of Energy’s web site at www.energy.gov.
Consider inexpensive ways to have family fun. Some families plan vacations during the spring and summer seasons and these excursions can be costly. Just because an elaborate vacation is not in your budget does not mean that you can’t have fun. Discover the many activities that you can enjoy in your local community. Most libraries offer summer reading programs for children and adults. You can also rent movies at the library for free. Call your local zoos, museums, and amusement parks to see if they offer discounted rates on certain days or during specific times of the day.
Spring clean your vehicle. Extreme temperatures may be difficult for your car to handle. Routine maintenance on your vehicle may help its performance and improve gas mileage. For example, have an oil change performed regularly and keep your tires properly inflated. Visit the Car Council’s educational web site at www.carcare.org for more auto maintenance tips. Also, keep in mind that gas prices tend to skyrocket during the warmer months. Web sites such as www.gaspricewatch.com and www.gasbuddy.com track gas prices in your area and are updated by local volunteers. You can also save on gasoline by carpooling. Visit www.erideshare.com to search for local commuters that are going the same way you are or you may post your own listing.
Sell items that you no longer use. During the spring season, some people shed all of their unwanted and unused items. Ebay (www.ebay.com) is the largest online auction site and a good source to sell items that you no longer use. Visit their web site for more details on how to begin selling. You can also try your local Craigslist site (www.craigslist.org) to place an online classified ad for free to people in your area. Also consider placing ads in your local newspaper, host a garage sale, or check with the recreation department in your local community to see if there are any neighborhood flea market days. You may be able to reserve a table.
Save money on home improvements. Many people perform home improvements in the spring and summer months. Although you may have to hire a professional for some complicated projects, you may be able to tackle some tasks yourself. A wealth of informational resources exist to teach you how to do home improvement jobs such as cleaning your gutters, painting, and installing a ceiling fan. Visit your local bookstore or library to find a comprehensive guide on do-it-yourself home improvements.
The Internet and television are also great sources. DIY Network offers an information-packed site located at www.diynet.com. This site features a wide array of do-it-yourself projects, with topics that range from home improvements to decorating. Home Depot also offers free Do-It-Herself Workshops, Weekly Clinics, and Kids Workshops. Visit www.homedepotclinics.com to register at a Home Depot near you.
Freebie Finder
Absurdly Cool Freebie Finder (www.absurdlycool.com) is a site that automatically lists freebies on the web, while filtering out the scams. Common freebies include offers for household products, fast food restaurants, and educational materials.

Credit and Car Buying

Since you are currently enrolled in a debt settlement program, buying a car may seem difficult. However, if your only means of transportation is unreliable and creating costly repair bills, you may make the decision to purchase a different vehicle to save you time and money. Here are some tips that could help you purchase a reliable car at an affordable price.
Make a list of expenses. Establishing a budget will help you determine how much of a car payment you can afford.
Know your credit score. It is good to know exactly what your credit score is before you apply for a car loan. You have the right to receive a free copy of your credit report by visiting www.annualcreditreport.com. For more information on how to purchase your credit score, visit www.myfico.com. According to Jeff Ostroff, host of the informative web site, www.carbuyingtips.com, "Lenders have greatly tightened requirements after the financial crisis to ensure a buyer’s ability to pay back the loan. It’s more important than ever to make sure your credit report is as clean as it can be."
Choose a vehicle. Before you apply for a loan, have some idea of the type of car that you would like to purchase. Visit sites such as www.Autoweb.com, www.Cars.com, and www.CarsDirect.com to search for vehicles in your area and to research makes and models. You may consider obtaining a vehicle history report at www.carfax.com for any car in which you express an interest. Unlimited reports for 30 days cost $39.99.
Since you are enrolled in a debt settlement program, select a reasonable-priced, modest vehicle. Remember, you are buying a car for reliable transportation and not as a status symbol. In most cases, you want to select a late-model used car as opposed to a new car. You can find many quality pre-owned vehicles for less money. In addition, you avoid the hit on the first year depreciated value of the new car.
Choose a financing option. There may be lenders who will extend credit to you despite your financial trouble. With the rise of the internet, you no longer have to rely solely on the dealer for financing. CarBuyingTips.com strongly recommends the use of online lending services such as www.autocreditfinders.com. This site will put you in contact with lenders who specialize in high risk loans. You may also try applying for a car loan through your credit union.
Be aware of dealer scams. Salesmen realize that individuals with flawed credit reports and tight budgets focus heavily on the amount of the monthly payment. Therefore, they may offer you a car loan in which payments extend for 72 months. Although the payment amount may fit your budget, you will most likely be paying too much for the vehicle. If you decide to sell or trade in the car before you have made all of the payments, you will be "upside down in the car," a phrase used by dealers to mean that you owe more than the car is worth.
Try to obtain a car loan for no longer than 48 months. If the figures are not workable with the car that you choose, select a less expensive vehicle. Oftentimes, some dealers prey on your emotions and make you feel as though you should be grateful that they approved you for any car. They might also tell you that you could not get financed through any other dealer or lending institution. If the dealership
will not budge on the payment or loan terms, consider taking your business elsewhere.
Read all paperwork. Before signing any paperwork, read everything carefully. Oftentimes, dealers add a variety of miscellaneous charges such as VIN# window etching, dealer prep, and a warranty that you never requested. In most cases, these services are not necessary and can be done cheaper on your own.
"The buyers need to be reminded that they are in dire straits, they can barely afford the car, so they should be going there to buy a car only, nothing else," said Ostroff.
Visit Ostroff’s site at www.carbuyingtips.com to read in detail about the top ten car dealer scams. Arming yourself with knowledge will help prevent you from falling victim to car salesman trickery.

Helpful Car buying Web Sites
* Kelley Blue Book (www.kbb.com): This site provides car buyers and sellers with new and used vehicle information. Visit this site to see how much your car is worth if you are selling, buying, or trading.
* Consumer Reports (www.consumerreports.org/cro/cars/index.htm): The auto section of this site gives details and unbiased reviews of new and used vehicles in categories such as safety and value.
* Bankrate.com (www.bankrate.com/calculators/index-of-auto-calculators.aspx): Bankrate offers a long list of helpful online calculators that may assist you with car buying. There are calculators such as the "Car Early Pay Off Calculator" and "Negative Equity Auto Loan Calculator".

Inspiring Thoughts

If you don’t like something change it; if you can’t change it, change the way you think about it. ~Mary Engelbreit

Changes in our lives are usually inevitable. Whether it is spring changing to summer or trying to change a bad habit, most of us will experience some form of change at one point.
As we undergo a major change, we may have mixed feelings. For example, if you recently enrolled in a debt negotiation program, you may feel optimistic that you took the first step to achieve financial freedom. Yet, the fact that you must live on a budget and have limited access to credit may scare you.
Living without available credit may be quite an adjustment, especially in a world where credit cards are accepted everywhere from local pizza shops to furniture stores. Many retailers may also pressure you to apply for credit cards when you checkout and you may have to decline more than once.
Some consumers may also use credit cards to pay for unexpected emergencies or to buy necessities before their next paycheck arrives. Without this security, new debt negotiation customers may feel like they will never be able to survive without credit.
Although overcoming your dependency on credit cards may be difficult, try to focus on the positive aspects of your financial decision. Look to the future and imagine how relieved you will feel once you are free from the bounds of debt. As a result of hard work and perseverance, you may one day not receive any more calls from collectors or have to keep track of multiple credit card bills.
Throughout your debt negotiation program, we will provide you with a variety of money-management tools such as this newsletter. Our goal is to equip you with knowledge that will help you remain debt-free. During these changing times, remember that your negotiation company is here for you. Feel free to give us a call if you ever have a question about your program. We realize that the many changes that you are experiencing can be stressful and we want to help you accomplish your financial goals.

Stop Making Financial Excuses

Changing bad financial habits usually requires a lot of hard work and determination. At times, it seems easier to put off this daunting task and make excuses. These actions could of course delay your financial progress on the road to financial freedom. Below are some common financial excuses and how to overcome them.

"I deserve totreat myself."

Working towards building your reserve account is hard work. Rewarding yourself occasionally is a good way to recognize your efforts and an incentive to keep striving for your goals. However, treating yourself everyday or more than your budget can handle may lead to overspending. To keep your reward system in perspective, try setting a schedule. For example, every time you discover one of your debts have been settled, treat yourself to lunch at a nice restaurant or the new best-seller. The items do not have to be extravagant. You may enjoy and appreciate your rewards more when you realized that you have worked for them.

"I don’t have timeto save money."

Establishing a realistic spending plan and eliminating unnecessary items from a budget can be rather time-consuming. You may have to set aside a few hours each month for tasks such as tracking your expenses, clipping coupons, and sorting through receipts. Dedicating sufficient time to a particular goal usually pays off in the long run. You can use online resources to help you save money. Sites such as Kiplinger’s online budget worksheet (www.kiplinger.com/tools/budget/) can help you create a workable spending plan. You can also search for coupons online at http://www.coupons.com/.

"It is hard to save in a bad economy. "

According to a recent survey conducted by the Opinion Research Poll, 77% of Americans feel that the media is making the economy worse with negative coverage. Frequent reports about the state of the economy may make some people have a pessimistic attitude, which can inhibit achieving goals. Although the current economy is not in the best of shape, it is important to keep a positive outlook and hope that circumstances will improve in the future. Many consumers also exercise frugality in the midst of a recession. It is a good idea to get together with friends and family to find ways to cut costs.

"I will start saving money tomorrow."

For tasks that require hard work, it is easy to procrastinate and say that you will begin tomorrow or at a more convenient time. The first step to achieving your goals is to begin immediately. It may also help you to make long-term and short-term goals. The chart below may help you brainstorm future goals that you would like to accomplish. Many times seeing your goals in writing can help you envision your success. Eliminating budget busters such as expensive lattes and vending machine snacks are also habits that you can start to break today instead of waiting until tomorrow.

Credit card debt rises faster for those 65 and older

By Kathy Chu, USA TODAY

Cash-strapped older Americans are racking up credit card debt faster than other consumers amid dwindling retirement portfolios and rising medical costs, a study shows.
The study, which will be released Tuesday by Demos, a liberal public policy group, shows that low- and middle-income consumers 65 and older carried $10,235 in average card debt last year, up 26% from 2005. Card debt for all borrowers surveyed rose 3% during that time, to $9,827.
Overall, revolving debt — mostly on credit cards — grew during much of 2008, the Federal Reserve says. But as consumers pared spending, outstanding debt also fell. From the fourth quarter of 2008 through the first quarter of 2009, revolving debt slipped 2.3% to $939.6 billion.
Vulnerable consumers are turning to credit cards for necessities, not luxuries, Demo's survey shows. For instance, more than half of households say medical expenses contributed to their credit card debt.
"The frivolous spending idea, that's not what's driving families into crazy debt," says Jose Garcia, a Demos associate director. "The expense that most affects families is the cost of living."
Demos' phone survey, conducted April through August 2008, polled 1,205 low- and middle-income households, defined as those with 50% to 120% of local median income. The margin of error is plus or minus 3.7 percentage points.
The data are in line with other industry research showing that seniors are becoming the face of the indebted.
From 1992 through 2007, the latest data available, older Americans' credit card debt grew faster than the overall population, according to the Employee Benefit Research Institute, a non-partisan group that studies economic security.
"You see a great increase in credit card debt for people right near retirement age," says Craig Copeland, a senior research associate at EBRI. "They're probably still working, but they're also the most likely to become disabled," which could force them to rely on credit cards.
Demos' survey found that those carrying credit card debt are also paying more for it: Close to one in four households now pay more than 20% interest. And households charged late fees paid an average of four fees during a 12-month period.
These high rates and fees can upend consumers' budgets, advocates say. "When your interest rate goes up, it's another hammer blow to your ability to make ends meet," says Sally Hurme of AARP, the group for consumers 50 and older.
Find this article at:
http://www.usatoday.com/money/perfi/credit/2009-07-27-credit-card-debt-seniors_N.htm

Consumers hit again as some banks raise credit rates, fees

The ink has barely dried on credit card reform signed by President Obama in May, and already, issuers are raising prices again.
Most issuers have raised rates or fees for certain borrowers. In the latest round, Bank of America and Chase have increased, or are increasing, their maximum balance-transfer fees, from 3% to 4% and 5%, respectively. Chase is also expanding the definition of who could get hit with a penalty interest rate. Meanwhile, InfiBank is establishing a higher minimum APR — the greater of 15.99% or 11.99% plus the prime rate — on many cards. And Capital One and Citigroup continue to raise card rates for certain borrowers.
Issuers' actions come as a growing number of consumers lose their jobs and default in record numbers on their credit card debt. The industry is also preparing for restrictions to take effect in February 2010. That new law limits when issuers can raise interest rates on existing debt and charge late and over-limit fees. But it doesn't impose a cap on card rates and fees.
Keefe Bruyette & Woods analyst Sanjay Sakhrani says issuers are repricing accounts "given the pressure from a high level of charge-offs and delinquencies and ahead of the rules being implemented."
The banking industry says Congress has no one to blame but itself for higher rates and fees because banks had predicted that restrictions on pricing would lead to higher costs for everyone. The changes, according to Scott Talbott, a senior vice president for the Financial Services Roundtable, which represents the nation's largest banks, are a "natural result" of the new law: "The industry is restricted in setting credit terms based on the borrower's individual risk profile, so the price goes up for all borrowers."
Yet some critics say that issuers are taking advantage of a loophole in the law to bolster their financial conditions. Increases in credit card rates have been "widespread" as issuers try to make up for falling revenue because of higher loan losses and pending restrictions, says Bill Hardekopf, chief executive of LowCards.com, an information site.
Sen. Charles Schumer, D-N.Y., and Sen. Christopher Dodd, D-Conn., have called unsuccessfully on federal regulators to impose an "emergency freeze" on rate increases on existing credit card balances.
In a statement Monday, Schumer slammed issuers for trying to "wring more dollars out of their customers." Some of the changes in card terms, Schumer says, are "against the spirit of the law and ... just plain wrong."
Issuers' pricing changes mean that consumers have to keep an "eagle eye" on the fine print of their bills, says Ruth Susswein, deputy director of national priorities at Consumer Action, an advocacy group.
Curtis Arnold, founder of CardRatings.com, a comparison site, says he can't "totally fault the issuers for making adjustments while they can, as long as it's not highway robbery."
By Kathy Chu, USA TODAY

Find this article at: http://www.usatoday.com/money/perfi/credit/2009-06-29-banks-fees-credit_N.htm?obref=obinsite

Consumer Bankruptcies on Pace to Hit Pre-Reform Levels in 2009

The American Bankruptcy Institute said that consumer bankruptcy filings in the first half of 2009 are higher than at any point since bankruptcy reform in 2005, and are on pace to hit levels seen before the legislation passed.
There were roughly 675,000 consumer bankruptcy filings in the first half of this year, according to data released last week by the American Bankruptcy Institute.
If the current pace continues, more than 1.3 million consumer bankruptcies will be filed this year, a level that hasn’t been seen since 2005, a record-breaking year for consumer bankruptcy protection requests. The record that year was due, in large part, to a change in bankruptcy laws that made it harder for consumers to file and provided some protection for creditors.
The new bankruptcy law led to a large spike in filings just before it took effect, and a sharp drop-off for the next several quarters. There were nearly 2.04 million consumer filings in 2005, and only a quarter of that the following year, according to American Bankruptcy Institute statistics. Annual bankruptcies didn’t surpass 1 million again until last year. The first time consumer bankruptcies had topped 1 million was 1996, at more than 1.1 million. From 1997 through 2004, bankruptcies ranged between 1.2 million and 1.6 million.
The American Bankruptcy Institute reported that the overall June consumer filings total of 116,365 was 40.6 percent higher than the 82,770 consumer filings recorded in June 2008. While the June total represented an increase over the previous year, it was 6.8 percent lower than the total from May 2009. Chapter 13 filings constituted 27.7 percent of all consumer cases in June, a slight increase from May.
But the quarter-over-quarter trend is pointing higher. According to ABI data, there were 316,158 total consumer filings in the first quarter of 2009 and 359,193 filings in the second quarter, a level that roughly mirrors quarterly filing averages seen before the bankruptcy reform legislation was passed in 2005.The trend prompted ABI Executive Director Samuel J. Gerdano to comment, “We expect that there will be more than 1.4 million new bankruptcy filings by year end.”The more bankruptcy filings, the harder it is for collection agencies to recover debts, says Dan North, chief economist at Euler Hermes ACI, a trade credit insurance firm. The collection agencies tend to be collecting unsecured debts, which fall behind secured debts when the bankruptcy courts allocate the debtor’s assets.And debtors have become smarter about protecting their assets, North adds. So if a debtor has disposable income, he’ll put it into an IRA or some other vehicle outside of the reach of the bankruptcy court.This is likely occurring more often, according to North, who points out that disposable income is increasing at the same time that bankruptcies are. Many consumers are putting that additional disposable income into savings as evidenced by the sharply rising savings rate.“The bankruptcies will continue after the recession is over,” North added. “Bankruptcies and unemployment will likely continue for a couple of quarters.”North added that the recession itself could be near an end, but business and consumers alike, who were burned by the economic conditions of the last couple of years, are very unlikely to recover very soon because many had gotten themselves too deep into debt and had nothing to fall back on when real estate-related credit started drying up.
Source:
http://www.insidearm.com/index.cfm?objectID=5AB31D86-A174-D60D-77EE0B3773EE990B&print=1

5 Factors That Determine Your Credit Score

Are you sure you know how good your credit is?

Since September, more credit-card companies have been cracking down on card holders they consider risky -- and even lowering the boom on those good standing -- by reducing their credit lines or increasing their interest rates.

About 65% of banks have lowered the credit limits of new or existing credit-card customers, according to the Federal Reserve’s April survey of senior loan officers, up from 45% in January.
Consumers have taken notice: 19% of customers reported recent interest-rate hikes in June, up from 15% in February, and 14% said their credit limits were recently lowered, up from 8% in February, according to a separate telephone survey of 1,000 credit-card customers conducted by a market research firm for Credit.com.

Recent legislation to prevent credit-card firms from making those kinds of changes won't stop rate hikes and credit limit reductions, as companies may attempt to implement these before a new law takes effect. The Credit Card Accountability Responsibility and Disclosure Act signed by President Obama in May aims to protect consumers and improve transparency associated with sudden changes in their credit-card company policies, but the law will not take effect for another two to eight months. In the meantime, consumers should expect more interest rate or fee hikes or credit line reductions, says Ken Lin, CEO of CreditKarma.com, which offers free credit scores and free tools to help consumers improve their scores. Individuals with credit scores below 700 may see their credit lines reduced, and those with scores below 620 could see some of their credit cards canceled, Lin says. “The idea is to eliminate risky credit card holders before this legislation takes effect,” he says.
Of course, most decisions on interest rates and credit lines are handed down not by MasterCard (MA: 181.48, +0.54, +0.29%) or Visa (V: 66.85, -0.30, -0.44%) but by the banks that underwrite them.
Bank of America spokeswoman Betty Riess says the bank has always “closely monitor[ed] accounts for risk and may adjust customers’ lines…depending on their risk profile.” In April, Bank of America notified less than 10% of its customers of a rate increase, which went into effect on their June statement, she says. Some of those increases were the result of the bank’s periodic review of individual credit risk, which looks at how individuals are using all their credit and whether they’ve defaulted on loans to other creditors, she says.
Discover (DFS: 11.39, +0.16, +1.42%) says that most of its customers haven’t experienced credit line reductions or interest rate increases, but the firm increased interest rates on a small number of cardholders who were paying late or not paying at all.
American Express (AXP: 28.76, -0.62, -2.11%) spokeswoman Desiree Fish says the company has been reducing lines of credit since September but that the majority of its customers haven’t been affected.
Spokespersons for Bank of America (BAC: 12.23, +0.04, +0.32%) and American Express say their firms haven’t announced policy changes associated with the credit-card legislation.
For now, consumers would be wise to keep a closer eye on their credit scores. Here are the five most important factors that affect your FICO credit score and a few ways to protect yourself against the credit crackdown.

Do You Pay on Time?

• 35% of your credit score
  

Start marking your credit-card bill due dates on your calendar. Paying your bills on time plays the biggest role in determining your credit score.
To stay on top of your charges, consider setting up an automatic bill payment, says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. Look over your past bills, estimate your minimum required monthly payment and set up automatic bill payments for that amount, she says. That way, you’ll meet the payment deadlines, dodge late fees or interest-rate hikes, and remain free to pay the remaining balance at your convenience.
The consumer who pays his bills on time every time maintains an average credit score of 706, Lin says, but the drop-off is huge. The average score of a consumer who pays on time 99%: 658.
Making a late payment can also lead to universal default, the condition in which credit-card companies raise your interest rate on their cards for being late with another company’s payment. Once the Credit Card Accountability Responsibility and Disclosure Act goes into effect, that practice will be curtailed, but if card issuers perceive an increase in a cardholder’s risk level through some other means, they could roughly double their rates, Lin says. The annual percentage rate of the average credit-card firm is now 10.9%, according to Bankrate.com.

What Do You Owe?

• 30% of your credit score
  

Paying bills on time doesn’t guarantee a high credit score. You’ll also need to keep your balances from surpassing 30% of your total credit line.
Your credit score is based in part on your credit utilization ratio, the amount you owe in proportion to your total credit limit. If your credit-card company reduces your credit limit, your debts make up a larger percentage of your credit line. If your line is cut unexpectedly, call your issuer to try to undo the reduction, especially if you’ve been on time with payments and maintain a low balance.
In some cases a credit line reduction is unavoidable, says Linda Robertson, a certified financial planner with Financial Finesse, a financial education company . In the past year, many retailers like Fortunoff and Linens ‘n Things shut down or went into bankruptcy and canceled their credit cards. When their credit-card holders lost those lines, their scores may have suffered, she says.

How Long Have You Been Borrowing?

• 15% of your credit score
  

A middle-aged consumer often fares better in this category than a recent college grad.
The length of your credit history is basically a straight measure of the number of years you’ve had credit. The trick here is to keep your first credit card open, even if it has a high interest rate or a low spending limit. Use it a few times a year so that the credit-card company doesn’t shut it down, Cunningham says.

Is Your Credit Still Expanding?

• 10% of your credit score
  

Applying for new credit is often a Catch-22. With new credit, you can prove your ability to handle several payments on a monthly basis. However, applying for too much credit in a few months can slightly harm your credit score, says Cunningham.
“It signals that you’re desperate for credit and don’t have cash available to pay for your needs,” she says.
Opening new accounts over time will raise your credit score in the long term, provided you pay your bills on time, says Craig Watts, spokesman for FICO, the company that calculates and issues the credit score that most lenders use. Requesting and checking your own credit report from FICO or one of the three credit bureaus won’t affect your score, he says.

Is Your Credit Diverse Enough?

• 10% of your credit score

To maintain credit diversity, opt for a variety of credit, including credit cards, a car loan or a mortgage – but make sure to pay each bill on time and keep the accounts active. Opening a wide variety of new accounts and not using them won’t raise your credit score, Watts says.

Source: http://www.smartmoney.com/personal-finance/debt/5-factors-that-determine-your-credit-score/

Citi Hikes Rates. Is Your Credit Card Next?

Holding on to a credit card with a low annual percentage rate is becoming even harder.
Citigroup has increased interest rates for as many as 15 million U.S. credit-card accounts, according to an article published late Tuesday in the Financial Times, citing anonymous sources. It is still unclear how high the new hike will leave customers' rates or whether all card-holders will be affected equally. Citi did not return a call seeking comment.
The rate increases were revealed just months before the new consumer-protection rules in the Credit Card Accountability Responsibility and Disclosure Act are scheduled to go into effect. The law, which was signed by President Obama in May, aims to shield consumers from unfair practices and improve transparency associated with sudden changes in their credit-card companies' policies.

Citi isn't alone. In April, Bank of America notified fewer than 10% of its customers of a rate increase, which went into effect on their June statement, says BofA spokeswoman Betty Riess. Some of those increases were the result of the bank's periodic reviews of individual credit risk, which examine how individuals use all of their credit and whether they've defaulted on loans to other creditors, she says. Discover says the firm increased interest rates on a small number of cardholders who were paying late or not paying at all. American Express spokeswoman Desiree Fish says the company notified some card holders in June that it is increasing interest rates by two to three percentage points effective July. “From time to time we have to make changes to adjust to the economic environment," she says.
Spokespersons for Bank of America and American Express say their firms haven't announced policy changes that are specifically associated with the credit-card legislation. Wells Fargo and Discover spokespersons declined to comment on future strategies.
Interest rate hikes are part of a long-term trend that started before Congress passed the new legislation, says Ken Lin, CEO of CreditKarma.com, which offers free credit scores and free tools to help consumers improve their scores. And consumers can expect to see more rate increases over the next few months, he says.

Here is a quick update on rate hikes and how they might affect you and your credit:

What did Citi do?
Citi increased interest rates on between 13 million and 15 million U.S. credit-card accounts that are co-branded with retailers, according to the FT.
After Citi became aware of the FT story, the firm issued the following statement: “We have adjusted pricing and card terms for some customers as part of our regular account reviews. This is an ongoing process to ensure we offer terms, interest rates, credit lines and products based on individual needs and risk profiles.”
Before the most recent hike, Citi credit-card holders of co-branded cards who were carrying a balance saw their rates increase by an average of three percentage points between January and April, the largest increase among the top card issuers for that period, according to a Credit Suisse report cited by the FT.

Why is Citi doing this?
Citi said in its statement that these changes reflect the rising cost of doing business in the credit-card industry.
Citi and other credit-card issuers' actions were triggered in part by a rise in the number of consumers unable to pay their debt, an increase in the cost of extending credit and a shrinking number of opportunities to securitize loans, says Travis Plunkett, the legislative director at the Consumer Federation of America. Securitization involves packing loans into securities and selling them to investors; with the economy still in decline, fewer investors are willing to buy these assets because they don't expect a healthy return.
Card issuers are also making policy changes in an effort to undo their own errors, Plunkett says. In the run-up to the credit crisis, issuers were extending credit to high-risk individuals who may not have been able to afford their own borrowing habits. Consumers' ability to repay their debts has worsened as the unemployment rate has climbed, Plunkett says.
Could other credit-card issuers plan similar moves?
Card holders can expect more card issuers to change their terms, particularly by increasing interest rates, before the new credit-card legislation goes into effect, says Linda Sherry, a spokeswoman for Consumer Action, a nonprofit consumer education and advocacy organization that studies credit trends. Some parts of the law will go into effect as early as August.
The law is designed to make it more difficult for card issuers to engage in risk-based pricing, which includes increasing interest rates for risky behavior, like making a late payment on another lender's credit card, Lin says. “Historically, credit-card companies have had leeway to determine their own risk indicators and charge based on that, but with this legislation it'll be harder for them to do that,” he says. “They're trying to get ahead of the curve now.”
One way card issuers could beat the system is to spread higher interest rates among most credit-card holders, not just the risky ones, Lin says. That could mean higher rates for individuals who pay on time and have stellar credit histories. “The net effect is that everyone's pricing will go a little higher,” he says.

What can consumers do to protect themselves?
One option for most Citi card holders it to take advantage of the issuer's “opt out” option, which allows them to dodge a scheduled interest rate increase on their card on the condition they stop using it after its expiration date. Card holders can continue to pay off their balances after that. While this option helps avoid a higher interest rate, it means that you'll have one less credit card to use. Moreover, once the card expires, it could lower your credit score.
Another option is to call the card issuer and work out a personalized plan to pay off your balance. In some cases, issuers will allow holders to retain their original interest rates, provided they pay off their balances immediately, Plunkett says.
In general, card holders can transfer the existing balance on a card that gets hit with an interest rate hike to a new card that offers 0% APR on balance transfers from a few months to a year. (Typically, this requires a one-time fee of around 3% to 5% of the balance amount you’re transferring.) However, these offers have been disappearing over the past year and are given only to borrowers who are considered creditworthy, Plunkett says.
In any case, try to pay off balances as soon as possible. One of the last rules of the new law is that card issuers won't be able to raise your interest rate on an existing balance – just on purchases going forward, Sherry says. However, this part of the law isn't scheduled to take effect until July 2010, she says. That's why card issuers are putting rate hikes in place now, while they can make money off your existing balance.

Source:

http://www.smartmoney.com/personal-finance/debt/citi-hikes-rates-is-your-card-next/