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Credit Cards Debts

lindataylor — Mon, 21 Jun 2010 13:58:46 +0000

A credit cards debt is a term that is used to refer to the form of unsecured customer loans/ debts in which the customer accesses such credit via the usual credit cards. As a result, the debt culminate in circumstances or rather situations where the customer buys a service or a product using the credit card systems such as visa cards, leading to a loan that the customer is bound to pay within the agreed period of time and at predetermined and agreed interest rates. Consequently, such debt is likely to accumulate and soar due to the increasing interests as well as penalties for defaults in situation where the customer/ defaulter declines to pay the credits card company for the money that makes the debt or rather failure to pay the debt within the agreed period of time.
The interest rates or penalties that are charged on credit card debts either normally or in cases of default is not static thus vary among credit card companies or with time (Dugas 7). For instance, in case where the customer has either defaulted or failed to pay the credit card debt, the credit cards debt company will levy the customer interest and the respective penalty basing on the current such terms and in line with the organizational policies and procedures governing the same. According to Aparajita & Anusha (6), penalties for default and late payment ranges from between $ 10 to $ 40 the latter of which the company will inflict to the customer upon which the respective company is expected to report the delayed payment/ debt default to the respective credit rating bodies/ agencies. This paper reviews the issue of credit cards debts with a bias to the United States of America. Furthermore, it reviews the pros and cons of the credit cards debts.
Credit card debts: empirical facts
According to Dugas (7), statistics have evidenced that the credit card debts are more popular and extensive in use among the highly developed and industrialized countries. In a research conducted by the United States public interest group in 2008, it was found out that the total amounts in credit card debts in the United States was approximately 962 billion USD as at July 2008. On the other hand, the approximate total of in credit card debts among the United Kingdom consumers was estimated at 64. 7 billions Euro as at match 2009, while in Australia, such debts were estimated at 41 billion AUD by the end of the year 2009. In the United States of America, it has been proven that before an average college graduate kicks of his or her after college life such a student in most cases will have accumulated credit card debts amounting to $2000 or even more; a factor the places young American in credit cards debts crisis very early in life. More so statistical results reveal that the mean credit card debts as at March 2009 in the United States of America fell close to 3000 USD. Similarly, the average number of credit cards held and continuously used as at the same time was found to be 2 (Tyson 8).
The credit card debts and the universal defaulters
The most controversial part of credit card debts is the application of the universal default principle. In relation to the credit card debt, the universal debt principles arises in circumstances where in cases of default or delayed payment by a customer to specific lender/ creditor even the other creditors to whom this specific customers owes money in terms of credit card debts increases the customers interest rates despite the fact that he is only a defaulter with only one creditor (Aparajita & Anusha 7). The critics of this practice have often termed it as unfair to the customer and purely a fraudulent move by the Credit Cards Company or creditor whoever is the applicant of the principle. According to Aparajita & Anusha (7), the universal debt principle is the key cause of credit card debt crisis among the credit card users especially in the United States of America and which has made it lose a great extent of popularity among the American consumers.
Credit card debts relief
Prior to the amendment of the America bankruptcy law, it was easier for the credit card debts holders/ customers to get credit card debts relief. Under the earlier bankruptcy laws, it is possible for the customers/ account holders to apply for or rather requests for the relief on the annual card debts interest rates, which are typically known as the annual percentage rates (APR). This leads to reduction in cost/ interest of the credit card debts incurred by the customer. Basing on the results of the survey conducted by the United States public interests group (USPIG) in 2002, it was found out that out of the sample population of fifty respondents and which included American from varied credit backgrounds who had got in touch with their credit cards provider requesting for debt relief, more that half (56 %) had succeeded in getting significantly lower annual percentage rates (Dugas 9). The survey had found out that the APR of the successful applicant had been reduced by 5.53 on average. Also the credit card debt could be cancelled in certain circumstances especially when the account holder is by law proven to be bankrupt. However, amendments on the bankruptcy law steered by the great need to protect the credit companies from the risks arising from the bankruptcy concerns has rendered debt relief and canceling of credit cards debts very difficult (Aparajita & Anusha 10).

Unsecured Bill Consolidation For Smaller Interest Repayments

barry — Sat, 18 Jul 2009 18:23:52 +0000

Many of us think that unsecured loan credit debt consolidation offering can help to modify their bill installments. For e.g., when you have a unsecured loan credit that can cover all your current loans, you can transfer all your various bills onto that single credit card so that you only make a single monthly repayment in future. However, do verify if your ready credit transfer bills are worth the effort. Generally, you may need to pay approximately 4% of the transferred balance, although from time to time, there are some promotions with zero apr transfer card. Although line of credit bad credit debt consolidation loan is easy, understand that it is only suitable for smaller bills, loans and/or debts given the limit of your credit card and the high cost on your credit card account balances once your interest-free interval is over.

However, budget counselors generally advise their clients to invalidate their credit cards and stop their ready credit so that they can help to control themselves from further purchases on credit again which worsen their DTI ratio. Although it can be very troublesome without credit cards in the first few weeks, it is the most simple method to stop more loans when you buy what you can afford with cash. This allows you to have more disposable income to clear off your remaining loans soon.

Things can be more efficient to take a look at debt management from finance companies, loan brokers and/or banks. These debt consolidation companies will provide you with a new loan which covers all your remaining high interest cards bills or delinquent debts. The new monthly payment for these loan consolidation offerings is usually smaller compared to what you are paying for all your existing debts, but this is at the expense of a longer loan payment term. For those of you with properties, houses or cars, they can be eligible for secured loan consolidation to lower the interest charges charged by the finance firms. For people with poor credit, this can be the only viable approach to consolidate debts with efficient interest fees. The disadvantage to secured unsecured debt consolidation loans is that there is a higher risk you must bear when you default on the monthly payments, you may lose your secured loan collateral.

Note that unsecured debt consolidation can lower your monthly loan payment such that you have an easy time clearing your bills or/and debts and this also helps to have good credit standing as fast as possible. However, your loan principals remain as they are. Although debt consolidation firms can send a debt settlement letter to get interest fees discount, your core savings over the interests will come after your Tri-merge credit report is revived to ideal categories.

For example, when you are repaying a $20,000 unsecured lending at 9% interest rate over a loan tenor of 5 years, you need to make a monthly debt repayment of $415 and a total of $5,000 in interests by itself. If you consolidate your $20,000 unsecured loans for tenant into a term of 20 years at a lower 7% interest rate, you need to pay $155 every month but the total interest charges become $17,200. That is the extra interests you have to pay for making it easier to repay your debts over a longer loan period.

Introduction to Credit Cards Terminology

William King — Mon, 06 Apr 2009 12:04:38 +0000

Ever since Stacey Smith got her credit card, she has been trying to decode the alien credit card terms that the credit card companies use. Deciphering credit card terms is a task in itself! The credit card companies use fancy language, which we don’t use in our everyday use. So much so that even filling the application form is a pain. What is needed is a good credit card glossary to enable mortals like us to understand credit card terms.

We have complied a simple to understand credit card glossary. In simple words, it is card which can be used to obtain cash, goods or services up to a stipulated credit limit. The glossary covers some of the most commonly used credit card terms.

Lets begin with the most basic “account number”. It refers to a unique number that is assigned to every credit card. Next in the credit card terms come “annual fees”. Some of the credit card holders are charged annually for holding the card. This is known as annual fees. Another credit card term that would be used frequently is “APR”. It is the rate at which card companies charge you every year for your account.

No credit card terms dictionary is complete without the term “balance transfer”. It simply means moving your credit balance from one credit account to another. It helps in saving your interest payments. A credit card term that most people are afraid to come across in credit card terms is “bad credit”. It means poor or bad credit rating. It can be caused by late payments, exceeding card limits etc.

In credit card terms, the next word would be, “cash advance”. Cash advance means a loan taken through your credit card, using an ATM. Then in credit card glossary comes “credit report”. It is a record of your credit history that is usually consulted by lenders in order to decide whether they should lend you money or not, and how much.

In credit card terms, you will also find the term “debit card”. Debit card allows you to spend money on the balance available in your account – usually from a current or savings account.

Next in our list of credit card terms is “grace period”. It is the time period between the transaction date and billing date when the payment can be made without incurring any interest rate.

If you are going through a money crunch then this credit card term is essential for you to understand – the “minimum payment”. Minimum payment is the smallest payment that you can pay to keep your account in good standing.

Another very important credit card term to understand is “PIN number”. It is the security code that you need for authorization while making money transaction through your credit card.

Next credit card term is “pre approved”. This means a customer who has already passed the initial credit bureau evaluation.

Here’s to hoping that you would now feel more confident about using your credit cards with at least the credit card terms making some sense to you!

William King is the director of Wholesale Pages: http://www.wholesalepages.co.uk , Australia Wholesalers: http://www.australiawholesalers.com , Pakistan Real Estate & Pakistan Property: http://www.zameen.com and Dubai Property & Dubai Real Estate in UAE: http://www.bayut.com . He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing, promotion, marketing and supply chain requirements.

Time to Repair Credit Card Debt is Now!

William King — Mon, 06 Apr 2009 12:02:42 +0000

Increasingly large numbers of people are troubled about repairing credit card debt especially in America. The chief reason for this is our spending beyond our needs and our inability to curb our spending. How many of us have unopened bank statements and notices that are lying somewhere in the drawers. We expect these to be paid by them. Well the fact is that credit card debt repair will not happen by itself. We need to sit up and take action to repair credit card debt.

First of all, understand that you will need to do drastic things to repair credit card debt for it can’t be undone by itself. Once you have realized this then you can start working on it. The first step in repairing credit card debt is to collect all the bills and calculate the amount that needs to be paid. Once you know the correct amount that is due, you are doing a reality check and are now ready to repair your credit card debt.

Hopefully after seeing the amount that is due you would get shaken up enough to stop making unnecessary purchases. The only way of repairing credit card debt is to stop purchasing all those luxury items. Stick to the very essentials. You would be surprised at how avoiding a weekly trip to your saloon or taking your own lunch bag would do wonders at adding up the figures and thus help in credit card debt repair. Once you have a control over your expenses you have a control over your credit card debt repair too.

Next in the steps for repairing credit card debt is making a monthly budget. Add the total income of your family and subtract the absolute essential expenses from it. You would get a tentative idea about your savings and this exercise would help you to budget in order to repair credit card debt. Once you have a figure to achieve every month you would be motivated to get that figure and thus resist the urge to spend. Repair credit card debt is a task that you cannot let yourself forget at any point.

Next use low interest credit cards for bill consolidation to repair credit card debt. This will help you in saving the interest payments. You would be surprised to see substantial savings through saving of interest payments. This in itself is a big step in repairing credit card debt.

Last but not the least, lock your credit cards! Yes lock them up! It is difficult to control the urge to stop spending. So don’t cut them but store them in a safe place. Next, start by paying off your debts as soon as possible, since, the later you pay the more will be the interest on it. It might be a slow procedure but it is possible. So don’t lose hope and see how you repair your credit card debt without much trouble and doing so will maintain your debt records and from this you can limit your self to some vital expenditure.

William King is the director of Wholesale Pages: http://www.wholesalepages.co.uk , Wholesale Dropshipping Products Directory: http://www.aidandtrade.com , Pakistan Real Estate & Pakistan Property: http://www.zameen.com and Dubai Property & Dubai Real Estate in UAE: http://www.bayut.com . He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing, promotion, marketing and supply chain requirements.

Say No to Credit Card Minimum Payment

William King — Mon, 06 Apr 2009 12:01:36 +0000

Let us face it. Most of us own at least one credit card if not more. Getting a bill every month is always an agonizing experience because that makes us realize how much we have spent. Often we end up realizing that we didn’t need to spend that kind of amount or worse still, realize that we cannot afford to pay the entire amount due that month. So we end up making the credit card minimum payment, hoping to clear the balance next month. We repeat this exercise the next month too, and the next month and the next month…till we are caught up in a vicious circle where we pay only credit card minimum payment. This doesn’t bother many of us since making credit card minimum payment doesn’t affect our credit report. We seem to take it in our stride and let the to-be-paid amount to pile up till we have a huge credit card debt to pay off.

It’s not uncommon to pay credit card minimum payment. In fact a whooping thirty percent are paying only the credit card minimum payment. For the first time users credit card minimum payment means the lowest amount that we can pay to make our account stay in good standing. While credit card minimum payment helps us to pay our debts without getting a bad credit report, it somewhere down the line also makes us to take our debt for granted. Opinions are much divided on this issue.

However one thing that stays true is that if you are just paying minimum credit card payment you are being sucked into a circle of debt and possible bankruptcy! The credit card minimum payment is calculated as a percentage of your current balance. The credit card minimum payment drops as your balance is paid, but thanks to the magic of compounding, you’ll end up paying for a long, long time. This is something that most people are not aware of and end up paying minimum credit card payment only. So not only do we keep piling up huge debts to be paid but are unaware of the hidden cost that we also have to pay while paying minimum credit payment.

Earlier the credit card minimum payment used to be around 2- 2.5%. However some time ago US government has increased this percentage to 5%. This was because people would make only credit card minimum payment, thus increasing their debts. To make people pay up their debts faster the government took this step to increase the interest rate. And it seemed to have worked like a charm! Many people are now shelling out more than merely paying minimum credit card payment.

It is better to pay off full payment than paying credit card minimum payment if you wish to save your hard earned money because if you go for the minimum payments, that will in the end will take you to a big lump sump amount to be paid which will leave you helpless and you will find no way out other than paying it and loosing your hard earnings in one payment.

How to Protect Your Business from Credit Card Fraud

William King — Thu, 26 Mar 2009 11:44:25 +0000

Everywhere you look there is information on how individuals can protect themselves from credit card fraud. This information can be found at banking institutions, libraries, on TV, on the Internet, its everywhere. However, that isn’t the case for businesses. How can your business protect itself from these fraudulent individuals who make purchases for products or service online or over the phone? Like most business, you may ship the products before discovering that the credit card is stolen. In this case, your company suffers the bill and the true owner of the credit card cannot be held reliable.

Nevertheless, these are the steps to protect your business from fraudulent individuals and avoid this terrifying situation.

It is important that you gather all the information associated with the credit card. This can be done by requesting all of the information exactly as it is shown on the card. This information includes: The cardholder’s name (Exactly as shown on the card, including middle name or middle name initial). Request all 16 digits on the credit card. Request the credit card verification number. This number is the last 3 or digits located on the back of the card after the account number. Request the expiration date on the card. Request the billing address for the card which in most cases should not be a P.O. Box. Requesting this information is very important. The fact is that most card thieves only have the card number. They will not have any other information associated with the card. By having all of this information you will be able to utilize address verification services. Address verification service compare the billing address given by the customer to the banks database and alerts the user if the addresses are different.

Pay particular attention to customers who list a different billing address and mailing address. In some cases, card thieves may also have the cardholders ID. In this case they will be able to supply the billing address; however, request for the product to be sent to a different address. You may opt to call the bank of the credit card and ask them to call the cardholder to verify the purchase.

It is definitely advised not to ship orders internationally with a different billing and mailing address.

In most fraudulent cases, the card thief will request a next day delivery. They want to get the product fast and without being caught. This is a red flag and should be carefully observed. If the order is larger than your typical orders, most definitely question it. Remember, the card thief is not concerned about how much he/she is spending; it is not their money. Most likely, he/she needs a large quantity for resale.

As a business owner, you want to do everything it takes to protect your business from fraudulent activity. It may be resourceful to have all the information collected validated by the customer. Since you are not meeting with the customer directly, it is wise to request that the customer fax you a copy of the credit card and photo id. This may seem extreme, but not as extreme as been taken for thousands of dollars in products. This precaution should most definitely be exercised for large orders involving heavy sums of money.

If you do find yourself a victim of this fraudulent activity, take immediate action to reduce loss.
1. Immediately inform your local police department. Make sure to answer all the questions the police may ask and give them all the information that you have.
2. Contact the bank of the credit card. Request that the issuing bank calls the customer to inform them of the situation. Make sure to give the issuing bank all the information that you have. Including, the billing and mailing address the card thief submitted. When the cardholder calls your company, explain the importance of the situation and why it is vital that he or she also reports the incident to the police.

By following these steps you are taking the necessary action to protect your business from credit card fraud.

William King is the director of Wholesale Pages: http://www.wholesalepages.co.uk , Aid and Trade: http://www.aidandtrade.com , Daily Trader: http://www.dailytrader.com and Pakistan Property Portal http://www.zameen.com/ . He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing, promotion, marketing and supply chain requirements.