Loopholes to new credit-card protections that start Feb. 22

The second phase of the Credit CARD Act of 2009 becomes effective in three weeks. The change means more certainty for folks currently holding balances. For instance, banks no longer will be able to suddenly raise interest rates on existing balances.
But that doesn't mean they can't make mischief with you account. Your bank still will be able to raise rates at any time for any reason on future purchases after the first year a card is opened. It will have to tell you 45 days before it makes the change, but it can start charging the new rate on any charge made 14 days after it sends out that notice.

So if you get such a notice and don't agree with the new rate, it's best suspend charges from that card right away. After all, you might not get that notice until several days after it was sent out.

Consumer Reports outlines what the Credit CARD Act does and doesn't do. In addition, on the Defend Your Dollars Web site, Consumers Union's advocates have outlined the law's exceptions and gotchas.
If you'd like to do more to protect yourself and others from obnoxious banking practices, join Consumers Union's campaign to promote establishment of the Consumer Financial Protection Agency

Turn your iPhone into a credit card terminal

For years, small business owner Pat Jackson struggled to find an affordable way to let customers pay for heating and air conditioning repairs with their credit cards at home.
The owner of Jackson Comfort Systems in Northfield, Ohio, once tried out a credit card processing service from Nextel, but her technicians hated the bulky phones it required. Then she looked into options from AirCharge and United Bank Card, but those services were pricey: up to $250 for portable credit card machines and $25 per month, per truck for wireless service.
Eventually, she asked her 27 technicians to simply write down customer credit card numbers. Payments would get processed in her office. But that led to errors and higher credit card fees. Plus, customers didn't like it.
"It was frustrating," says Jackson. "We pride ourselves on good customer service, and that meant we weren't giving it."
But in May, Jackson received a flyer telling her about a new service called GoPayment from Intuit (INTU). For $20 per month, Jackson's technicians can use their existing cell phones and text messaging services to process payments. Instead of waiting weeks to get paid, Jackson Comfort Systems gets its money on the spot.
Paying with plastic has been the norm for years, but for many small businesses like Jackson's that operate remotely, it has been an elusive benefit. Out on the road, options were limited: buy cumbersome machines for hundreds of dollars, call the office with credit card numbers, or simply miss a sale by refusing to take credit cards.
Now, photographers, contractors, limo drivers and dog trainers -- any business that operates remotely -- can find a wealth of new software to process credit cards on mobile phones.
Apple's (AAPL, Fortune 500) iPhone has been a big driver, with a slew of new applications popping up in the last year. Users type a credit card number and expiration date into the phone, and have the customer "sign" on the phone's screen.
"Now we have some small businesses that are running their whole businesses off the iPhone," says Derek Del Conte, co-founder of Inner Fence, which developed the first iPhone application for processing credit cards.
Inner Fence's app costs 99 cents to download and then $25 a month. Each transaction costs 25 cents, plus 2.09% to 3.79% for fees charged by the credit card companies. The app also lets business owners issue refunds, review prior sales and email PDF receipts of their transactions.
GoPayment, the service that Jackson uses, requires a $60 setup fee and a $20 monthly fee, plus a $0.23 per-transaction fee and 1.64% to 3.54% for credit card processing fees.
Jackson decided to spend an extra $1,000 extra to buy 10 pocket-sized Bluetooth credit card swipers that work in conjunction with the cell phones. She reserves them for when she rings up bigger sales. Using a swiper lowers the credit card fees -- it's an anti-fraud measure adopted by the processing companies.
Jackson estimates that the swipers save her $600 a month in fees. For her company, which has annual sales of $3.2 million, the entire investment in mobile credit card processing paid off within a couple of months.
"It saves us a bunch of money at a time when business costs are increasing," she says. "The customers like it, and the technicians like it -- and they never like any kind of changes." 

More consumers pay credit card before mortgage: study

As the economy climbs out of the worst recession in decades and unemployment remains high, financial strains have forced consumers to prioritize monthly debt payments in order to maximize cash flow.

The percentage of consumers delinquent on mortgages, but current on credit cards rose to 6.6 percent in the third quarter of 2009 from 6.3 percent in the previous quarter and 4.9 percent in the same quarter a year earlier, a new study developed by TransUnion showed.

The trend first emerged in the first quarter of 2008 when it was at 4.3 percent, Chicago-based TransUnion said.

Less emphasis on mortgage payments could portend higher delinquency rates and perhaps even more foreclosures. That does not bode well for the hard-hit housing market, which remains highly vulnerable to setbacks.

"This goes against conventional wisdom and that has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages," Sean Reardon, the author of the study and a consultant in TransUnion's analytics and decisioning services business unit, said in an interview.

By making a minimum payment on a credit card before a full mortgage payment it gives consumers monetary leeway to go about their daily activities, especially if they have lost a job.

"You cannot buy groceries with your house," he said.

The study, obtained exclusively by Reuters prior to its scheduled release, was conducted on consumers that had at least one credit card and one mortgage, and examined 30-day credit card and mortgage delinquency data between the second quarter of 2008 and the third quarter of 2009.

Conversely, the percentage of consumers who were delinquent on their credit cards and current on their mortgages decreased to 3.6 percent in the third quarter of 2009 from 4.1 percent in the first quarter of 2008.

"The 'flip' in payment hierarchy in the lowest scoring segment was evident earlier during the fourth quarter of 2007, compared to the first quarter of 2008 for the total market," Reardon said.

The delinquency rate for consumers with the lowest credit scores who were delinquent on their mortgages, but current on credit cards during fourth quarter of 2007 was 19.1 percent, and rose to 29 percent in the third quarter of 2009.

In a trend similar to that of the total market, the percentage of consumers delinquent on credit cards, but current on mortgages decreased from 18.1 percent in the first quarter of 2008 to 14.5 percent in the third quarter.

CONSUMER CAUGHT IN CONUNDRUM

"The implosion of the mortgage industry over the last 24 months, the resetting of adjustable-rate mortgages and the weak job market came together and redefined how consumers are managing their finances and meeting or not meeting their credit obligations," Ezra Becker, director of consulting and strategy in TransUnion's financial services business unit, said in the interview.

The analysis shows changing consumer preferences, he said.

"The financial services industry must recognize and adjust to the payment hierarchy shift," he said.

In California, the percentage of consumers delinquent on mortgages, but current on their credit cards increased from 3.5 percent in the third quarter of 2007 to 10.2 percent in the third quarter of 2009. In Florida, this same variable increased from 5.1 percent to 12.4 percent.

In this same time frame, the United States increased from 4.0 percent to 6.6 percent.

In contrast, the number of California consumers delinquent on their credit cards but current on their mortgages declined from 3.3 percent in the third quarter of 2007 to 2.7 percent in the third quarter of 2009. In Florida, this variable declined from 5.0 percent to 3.9 percent, the report showed.

Time to play the cards right

THE sales may be over, but some of us will be left with only too clear a reminder of Christmas 2009 in the form of lingering credit card bills. 

High Street shops slashed their prices by up to 70 per cent during the sales, tempting many to splash out thinking they were saving money.

The average interest rate on credit card balances rose in December to 15.28 per cent, so unless you can pay off the balance quickly you could end up paying over the odds for your sale bargains.

If you can, you should pay off more than the minimum payment each month, which will save you money and reduce the debt faster.

Of course, credit cards are a useful tool, and many offer extra benefits such as reward points, but don't be seduced into debt by "free" money.

If you have overspent, the best thing to do is juggle those cards. For a small fee many credit card companies will offer you a new card with zero per cent interest on balance transfers.

This allows you to pay off what you owe more quickly instead of covering little more than the interest.

Bad Credit Debt Consolidation – Pay Off Credit Card Debts Much Quicker

 By going through bad credit debt consolidation you could end up paying off credit card debts much quicker. It is important to understand that those who have several credit cards with high interest rates will benefit from debt consolidation. If you have just a few credit cards that are not high interest rate cards you will probably not benefit from consolidating your debt.
If you are in a position where you only have a few credit cards and they do not have an interest-rate above 15% then it would be wise to use the extra money you have to pay on these debts rather than to pay for debt consolidation. Debt consolidation works much better for those with several lines of credit that are considered high interest. At the present time, the average number of credit cards an American household has eight. If you currently have eight credit cards you know just how difficult it can be to make sure these bills are paid on time and in full. If you have missed a payment in the last few years your interest rate has drastically increased.
With the credit market greatly struggling over the last few years you have probably seen your interest-rate increase a great deal by missing any payments. Some credit cardholders have even stated their credit card interest rate has went from 2.99% all the way up to 25.99% by missing one monthly payment.
By consolidating all of your debt it is very likely that you will not only avoid missing payments but you are also going to find a lower overall interest-rate. By combining all of your debt into one lump sum you’re going to find that the interest rate is much lower for all of your credit cards combined.

8 Credit Card Myths You Need To Know

Many people think that they know all there is to know about credit card issues and how to solve them. The problem is that much of the information that is out there is faulty, unreliable, or just plain incorrect. In this article, we will go over some of the biggest myths surrounding credit card issues.

1. Anyone can get their credit card bill reduced

Debt settlement firms often claim that anyone can get their debt reduced. They don’t, however, let people know that only consumers with heavy financial problems can get their debt reduced. Things like medical bills, divorce, and losing your job can help get you off the hook but otherwise, you are most likely going to have to pay the full amount of your credit card bill.

2. I have to hire someone to get me out of debt

A big myth involving debt is that you have to hire someone to negotiate with your credit card company. The fact is that credit card companies would actually rather discuss these matters directly with the consumer rather than dealing with a middleman.

3. Debt relief agencies are all the same

This could not be further from the truth. Debt relief agencies vary dramatically, but you’d be better off to choose a debt relief agency that belongs to the The Association of Settlement Companies (TASC). TASC companies will allow you to be in full control of your money at all times and only serve to offer helpful advice and experience.

4. Debt settlement companies are safe

Debt settlement companies that require you to send them the money for your credit card bill every month are not safe. That money is not insured and if the debt settlement company goes bankrupt or they decide to leave town, you will lose both your money and any good credit you have left.

5. Debt settlement won’t affect my credit rating

Asking a credit card company for a debt settlement won’t affect your credit score but once you do come to a negotiation with the company, it can do some serious damage. Likewise, skipping payments, like many non-TASC companies recommend, can hurt your credit score almost as much as bankruptcy.

6. Debt settlement agencies are cheap

Debt settlement agencies are far from cheap and you will most likely end up paying more in the long run than just negotiating with a credit card company yourself. Either way, debt settlement in general is going to cost you a lot more than you think.

7. It’s either debt settlement or bankruptcy

This is not true. Instead of debt settlement, try to find a nonprofit credit counseling organization near you or on the Internet. These groups will help you get back on your feet and out of debt.

8. With debt settlement, I’ll be out of debt in no time

Debt settlement can take years to get you completely out of debt and in the meantime, debt settlement companies will be sending you monthly bills for their services. If you play your cards wrong, you may as well have chosen a new creditor.

Credit Card Debt Hits All Time High, Need Help Getting Out Of Debt?

We are now well into 2010, it’s February already! Have you started this year the same as every other or are you well on your way to making all the changes you promised that you would make? Don’t wait or put it off any longer, consolidate your debts now into one affordable monthly fee improving your cash flow problems now.
During a recession it is hard for many people in the economy, myself included. Nobody is perfect and it is very hard for all of us to maintain a family, a household, run a car etc, whilst finding the time and money to enjoy some of the finer things in life as well.
Some key problems with bad debt start with Credit Card debt spiralling out of control before you have any idea that it could be a major problem. With overdraft limits being pushed, accruing bank charges and somewhat extortionate late payment fees on credit cards you find yourself asking why and how.
So if you find yourself feeling all doom and gloom here is a few tips on how we can help you regain control over your finances.
Consolidate all you debts into one affordable monthly payment thus improving your short term cash-flow.
Next and perhaps the most important, do not sign up for credit cards and stores cards as in the long term it can equate to paying double for the products you are buying. There is nothing clever in paying £60 for a garment that was originally only £30 to start with and overpriced at that. Plus, don’t forget the late charges and good old admin fees.
Learn to manage your money well, a fool and his money are soon parted. Work out your weekly budget for essentials and luxury items and stick to the budget.
If you wish to speak to one of our team then give us a call and we will be more than happy to hear from you and hopefully we will be able to help you in some way.