Check Your Credit Card Terms

Credit card companies have always changed interest rates and terms at their whim but this practice has gotten much worse in uncertain times.  Card companies have seen a huge increase in charge-offs (bankruptcy) from customers so they’re effectively passing on that expense to consumers who are doing nothing wrong and all in the name of risk.

We all receive frequent letters from our card companies with special offers or terms of service agreements and changes.  Now is definitely the time to read these documents because a change in terms can adversely affect your credit.

Many card companies are decreasing credit lines.  When this happens a consumer can automatically exceed 50% of their available credit, which will hurt your FICO score and all without you even knowing.  Card companies can also raise interest rates for no reason at all or due to a late payment on another revolving account you may have.

If you’ve been struck with one of these changes, call your card company and request that the change be reversed.  In many instances they could make the change for you and you’ll be protecting your credit in doing so.

Repo Man Profits on the Rise

The repo man doesn’t have quite the stigma it did just 2 years ago because so many people have been affected either directly or indirectly.  Recently our neighbor had his convertible mercedes taken by the local Sheriff.  Why they didn’t just turn in the keys when they couldn’t pay we’ll never know but this is not an infrequent site nowadays.

Repossessions of cars and other luxury items like motor homes are up nearly 40% creating job opportunities for repo businesses.  Many of those conducting the repossessions have said that most of them are non-confrontational where the people just give up the keys.  We all know the economy is bad so it’s accepted to a certain extent.

But if the embarrassment doesn’t affect you the ding on your credit will.  In fact a repossession can sit on your credit for a long time, up to 7 years.  Some people turn to bankruptcy, which will also affect your credit obviously so it might be best to at least attempt to sell your luxury item before it’s too late.  If you have no choice but to turn it in, consider turning it in before the local sheriff shows up to take it.

Unlike banks holding mortgages, auto loan holders are very unlikely to work out a reduced balance or interest rate but many will offer payment plan assistance.

FICO 750 is the New 650

If you don’t follow your credit score now might be the time to start.  It can save you thousands in interest fees and other charges by having a good one.  A “good” credit score (FICO) used to be 650 but times have changed with the tightening of lending restrictions and banks running scared.  They simply don’t like the risk in this uncertain market.

Statistics show that a person with a FICO of 650 or higher could get a loan 90% of the time, this was just one year ago.  Today that rate is at 60% and falling fast.  For home loans it’s even worse with banks requesting large down payments for lower credit score or just denying them altogether.

Though in the past we’ve felt that credit monitoring services were less than on our side there are some benefits and the cost isn’t that much.  Yes, there is a cost so don’t let them fool you on that point.  The most advertised is freecreditreport.com (not free), it’s actually $14.95 per month to have your credit monitored but well worth the money if you’re in the market for a car or home loan.  They can help to easily dispute negative marks while also informing you by email if there is a credit request on your SS#.  This could save you a bundle in preventing identity theft.

If you’re struggling with unsecured debt now but want to get in a house or new car consider signing up for a credit monitoring agency like freecreditreport.com (really experian) but also look into debt management counseling, which can reduce your payments and interest rates while also protecting your credit score.

Best Ways to Use a Credit Card

Credit cards can be a trap for many where credit lines are extended without even being requested.  It’s often just to easy to spend money with a credit card but there are good ways to make use of your credit without getting in trouble.

Some have found ways to use credit cards to pay college tuition.  This can often be a result of being turned down for a student loan or grant.  For some this strategy can work but the interest rate charge will be significant making your bill increase each month.  For others it’s a great lesson in managing payments over a period of time.  If anything, the goal should be to pay down that card as quickly as possible.  Remember to always pay more than the minimum payment to get ahead.

Look for benefits in your cards.  A fantastic source for this information is creditcardguide.com where you’ll be able to view the benefits each card has.  If you’re paying off your card each month the benefits can really add up.  The two top rated cards are Discover More and CitiCash Returns cards.

If you’ve had trouble managing your cards and are now in over your head contact a debt management specialist.  They do help and will be able to assist in most cases to reduce balances (settlement) or interest rates with determined payment plans (management)

Airfare Goes Sky High

Airfares are on the rise and just in time for the heaviest travel season of the year, the holidays.  Part of this increase is due to an enormous merger between former rivals Northwest and Delta airlines, which will create the world’s largest airline.  Some have said this merger would result in lower fares but that is yet to be seen.

Actually fares have gone up somewhere between 13-15% or about $50 on a $350 flight from last year.  This increase is significant as a year over year increase and could be due to more than just the merger.  Fuel prices have gone up even though of late they’ve been coming down.  This added expense is passed on to the consumer.

In the past airlines have battled for every last customer and most of the time the only weapon was to reduce prices but this tactic forced many airlines into bankruptcy.  Times are changing.  Prices are coming up while the number of flights and seats available are going down.  In the long run this could finally stabilize the airline industry and eliminate unnecessary travel.

Watch CBS Videos Online

Fed Funds Rate Approaching Zero?

Today the Fed cut a key interest rate by 1/2% to help keep the economy out of a deeper recession.  The fed funds rate now sits at 1% but can it get lower?  Absolutely, but many analysts believe the rate will remain at 1% to provide the Fed with a little room to lower the rate further next year if the economy continues to slide.

What does all of this mean to you?  Well, banks are supposed to also slash the rates they provide you for loans and credit cards, effectively passing on savings and leaving more money in your pocket.  But one problem has been that banks are being tight with their money and refusing to loan it out.  This prompted the Fed today to demand that banks start lending money particularly if they are part of the new $700 billion bailout.

If you do see reduced rates on loans and credit cards, take advantage by paying them down or taking out a loan to start a new business.

Retailers Demand Stimulus Before the Holidays

With retail sales down sharply each month and the holidays around the corner, retailers are looking for help.  It seems no amount of marketing will help when people simply don’t have the money to spend.

The recently passed $700 billion bailout plan is getting cut up quickly with large chunks going to banks to free up credit as well as billions going to the auto industry to keep them afloat, but will any of this end up in the hands of retailers and if it does, will it be fast enough?

The concern many have is if another stimulus package is passed, will the money end up with the consumers where it needs to be and will it be enough?  One would think that if the Fed is looking to distribute a stimulus check they would at least try to get it going before the holdays are over.

Stay tuned on this story as it’s constantly evolving and no one knows yet quite where it will end up.

Controlling Your Debt

Did you know that the average American household with at least one credit card has over $9000 in debt on those cards with interest rates in the high teens?  Many people get to this place by using their credit card for things they really shouldn’t like trips to the coffee shop.  Try to limit purchases to items you can pay off within two months.  If you don’t, you’re sure to fall into the credit trap particularly if making the minimum payment.

Credit cards are considered unsecured debt but not all debt is bad.  Taking a loan out for a home (secured debt) is a safe bet so long as you purchase a home you can afford.  Loans for school can also make sense but understand how large the balance can become over time.

If you have money to pay down debt, work on the higher interest rate debts first.  Paying off your home mortgage early wouldn’t be as effective as paying off the car with a 10% interest rate or credit card at 18%.

Know that things do happen to everyone.  Be prepared by having at least 3 months of expense money set aside.  If you’re in over your head with debt, contact a debt management specialist for help.

Advice…Go with your gut

The world economy is now in turmoil and when this happens the advice will flow from every corner of the media, most of it inconsistent.  This flow of information can have a tremendous impact on a persons decision making process.

In 2001 after the dot-com bust, new regulations were enacted to keep stock experts from manipulating the market by way of voicing their opinions on talk shows.  Now there are requirements to show what stocks they own and if they’re buying or selling.  Today you’ll hear lots of “I don’t know” responses from these experts because they are protecting themselves…..good idea!

So what advice do you take if any?  Gain a general understanding of what’s happening in the economy. Remember that anyone you talk to is likely in the deal for a commission or payment of some sort, nothing is free.  A great example of this is the real estate industry.

If you’re looking for a home now at the much reduced prices, many realtors will tell you we’ve hit bottom and you must buy now, but how do they know it’s at the bottom?  They don’t!  You could end up buying a home and losing 10% of its value within three months.  Maybe it’s better to buy on the way up then at least you know what the bottom is.

When making important financial decisions for your family do the research and go with your gut!  Read the original article.

Homeschool > saving money..did you know?

It’s been a difficult year for most everyone even trickling down to our kids.  Many families who once could afford private school no longer can and others are no longer in the proper district due to a home foreclosure. There are other options though and they’ve become incredibly popular even before the economic bust.

Home school allows a parent to school their children at home in a variety of ways.  Some people use charter schools while others homeschool through the local district.  It’s important to know that if you home school through a district, that district will be getting money from the state to enroll your child.  We’ve seen amounts of up to $9000 per student.

Some charter schools actually offer some of this money back for curriculum and other materials.  This provides the parent with a credit to purchase items that you need for your homeschooling.  There are some restrictions but not many.  Credits can be around $2000 for the year, which easily buys a curriculum and whatever else you think would be great for your home student.  What’s even better is that you get to keep it!

Consider homeschool for your kids if you can no longer afford private school or you’re not happy with what public schools in your area have to offer.

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