creditors

10 Reasons You Should Hate Your Credit Card Banks!
by Scott Bilker

Scott Bilker is the author of the best-selling book "Credit Card and Debt Management." He is also the Editor and publisher of the FREE DebtSmart® E-mail Newsletter (http://www.debtsmart.com). Sign up today!

Buying a house forces you into debt, going to college forces you into debt, buying a car forces you into debt, if you don't have a credit card then you don't exist because you don't have a credit history. We just can't win.

And when you finally get some debt, the credit card banks are right there to take advantage of us! I've had enough! I'm sure you have too, so please tell me your story in the survey.

1. CRAZY HIGH-INTEREST RATES
Believe it or not my friend recently received a credit card offer through the mail with a starting interest rate of 35%. I can do better with almost any loan shark! Oh yeah, that bank IS a loan shark--depending on your definition of "is."

2. CHANGING THE TERMS WITH FINE PRINT
Ever notice that the bank's letters that encourage you to use your credit are in BIG BOLD letters. You know, the letters that say, "go on vacation," "write yourself a check," "buy a new wardrobe," but the letters that try to get you to give up your rights are in microscopic small type?

What are they hiding?

They're raising their late fees, getting you give up your right to bring them to court, jacking-up your interest rates, and much more!

The worst part is that these "amendments" are "negative response." That means that if you don't tell them that you don't want the terms, then you're agreeing with whatever they sent you.

It's like those music clubs. You know the ones. You pay 1 cent to join and get 12 CD's. The only catch is that if you don't tell them not to send the monthly selection they send it automatically and bill you! It's like making a deal with the devil!

I'd love to do business like that! I'll just ship you a television, and if you don't return it I can charge you! Real easy to get the sale isn't it?

I guess if you happened to die while the letter is in the mail then it's a guarantee you'll agree since there's no way to respond. If the banks had it their way they'd probably try to bill you in the afterlife.

3. BAIT AND SWITCH
You know those pre-approved credit offers you receive in the mail nearly everyday? Well, they're really not "pre-approved." Check the fine print. They always have some words that allow them to weasel out of giving you the card that you think you're applying for.

The offer may say, "0% for six months, then 9.9% fixed, with no annual fee, and $5,000 credit limit." Then you get the card and it's "6.9% for 3 months, 29.99% variable, $50 annual fee and $400 credit limit."

What happened?

Re-read the fine print in the original offer and you'll find the tricky legalese that says something like, "Ha, ha bet you can't read letters this small! We don't have to approve the pre-approved offer and can therefore send you any card we wish."

4. PENALTIES FOR BEING LATE TO OTHERS
You'll love this one! Many credit card banks have changed their policies so they can raise your rates, no surprise, but check this out. Some will raise your rate to 23% if you're late paying your electric bill. That's right! They check your credit file and if you are late paying any other bills, not just theirs, they slam you even more!

5. DECEPTIVE OFFERS
Even when you read all the fine print they can STILL do whatever they want. They'll send you credit offers and say, "you can use all your available credit" and when you do they'll charge you a penalty fee! Then when you call to complain they'll tell you that you're an idiot that doesn't have any common sense. See my article "Chase Bank Tries to Pull a Fast One."

6. CAN'T EVER SPEAK TO A HUMAN
Just try calling them to check on your account. It's takes forever to speak to a human! They always want you to key in all the account information, all the numbers, then when you finally talk to their drones they ask you for all that information again! Why the hell did I enter it in the first place!

I can get around this by hitting "0" then the "#" keys. I get a reply, "We cannot recognize your account number so please be tortured again by reentering it now." I keep hitting the "0" and "#" keys until the recording gives up and says, "Please hold while we transfer you to one of our new hires who probably cannot help you anyway."

Hmm, It's almost like they don't want you to talk to anyone...

7. BANKRUPTCY LAW HYPOCRISY
Here's another good one. The banks have lobbied Washington to change bankruptcy laws to make it more difficult to dissolve debts in bankruptcy. They want the consumer to be more responsible for repaying their debt!

Let's see. Who gave the consumer making $10,000 per year a $50,000 credit line? Who sent that consumer letters saying, "go on vacation, give a check as a present this season, buy a new wardrobe."

Give me a break. These banks want to have it both ways. It's just as much they're responsibility for making us able to get into debt.

Do you think they'd be in favor of a 3-day waiting period to give credit cards? How about the government has to call the consumer to verify that they can really afford to use the credit line? Think the banks would like that!

8. STOP YOU FROM GETTING A JOB OR HOME
If you have a problem with your credit card bank they're going to report this in your credit history. Everyone looks at your credit history. Landlords review it to see if you will be a good tenant, insurance companies look at that report, and employers also review your credit history.

What happens when the creditors make a mistake? A mistake that makes you look terrible to potential employers and landlords? Oops, not their problem. It's your responsibility to find and correct their error.

I bet many people have been turned down for jobs and are paying more for their insurance because of a mistake in their credit report that a bank made years before!

9. FEES, FEES, FEES
Late fees, overlimit fees, annual fees, bla, bla, bla. And they're going UP! It's like being robbed at gunpoint in an alleyway by a guy in an Armani suit!

Come on, give me a break! Does it really cost the bank $35 if you're late by one day with your payment? I doubt it.

Actually, you may not have been late at all. The bank may have just credited your account late and charged you anyway. see the article, "One Day Late--Yeah Right!" to read more about this.

Banks make 47% of their revenue from fees! Don't ever let a fee go. Call the bank and make them waive that fee, and if they don't, PUNISH them by doing business with another institution.

10. CREATE MORE WORK
I remember as a kid when my parents brought in the mail. I used to ask, "Is there anything for me?" What's was their response, "No, only bills."

Freakin' bills! That's all that's in the freakin' mail. And you have to read the details or they'll freakin' get you!

CONCLUSION
The only way to fight back is to use one bank against the other. They need our business so we need to reward the banks that are good to us and punish the ones that take advantage of us.

Banks are a business like any other. They're job is to service you and I. If we don't like they way they treat us then it's time to do business with another bank! Don't ever be "brand loyal" unless that bank has been "customer loyal." Meaning that they've always given you their best rates and service!

For free information about how we can help you reduce your debt, please fill out our form.

This is the credit score that creditors look at when determining if you are credit worthy. The Beacon Score is determined by negative entries such as late payments which would decrease your score or a positive, timely payment history on your accounts, which would increase your score.

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In a Chapter 13 agreement, the court creates a debt repayment plan that allows the filer to keep their property. In order to file for Chapter 13, a person must have a source of income and promise to pay part of their income to creditors. The court allows the filer to keep any assets that have debts against them if they make payment on them under Chapter 13s. A Chapter 13 filing will remain on a credit report for 10 years. With Chapter 13, there is a better chance of obtaining future loans and credit.

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Is Christian Debt Management right for you?
Managing debt can be a difficult task. High interest rates, fees, and extended repayment terms may mean you end up repaying several times the original amount that was borrowed.

This is where Christian Financial Consultants can help. Through our Christian Debt Management program and extensive network of not-for-profit resources, we have found common ground for our clients and more than 12,000 creditors nationwide. By reducing or eliminating interest rates and fees and by restructuring monthly payments, we can help you to make significant progress on your debt every single month.

For free information about how our Christian Debt Management program can work for you, please fill out the form on the right.

Getting Your Overpayment Refund
by Scott Bilker

Scott Bilker is the author of the best-selling book "Credit Card and Debt Management." He is also the Editor and publisher of the FREE DebtSmart® E-mail Newsletter (http://www.debtsmart.com). Sign up today!

Dear Scott,

I receive your newsletter and love it. Very helpful!

Recently I have taken out a debt consolidation loan. From application for the loan and closing on the loan was 3 months. The consolidation loan included preprinted checks made out to each of the creditors (5) with the total balance owed at the application time.

The problem was that during the 3 months before closing I had been paying the minimum payment, so when the loan closed and the checks were issued the check amount was higher then the actual balance.

I have received credit checks from all of the creditors for the difference but one. The one I have sent 2 letters to the customer service address request the account be closed and issue the check.

It has been 2 months with no response from the creditor. I have received 2 statements showing the credit. What is the next step to getting the money back?

They owe me $179.00 to much money to walk away from. What is very upsetting to me is that, if I owed them money, I would have to pay late fees, interest and get marks on my credit report.

Sincerely,
Aimee

Aimee,

Thanks for writing! I love your attitude!

They should be required to pay you a late fee! But doubt that will ever happen but maybe someday a law can be added to the books that would require late fees due the consumer in this situation.

I have certainly been in similar situations. By making an overpayment to any creditor, you create a credit balance. That credit balance must be returned to you. You asked for a check twice and they haven't sent it.

Here's what I would do...

1) I'd call and speak to a customer service rep to see what's going on with the check. Maybe they sent it and the "check is in the mail."

2) If I still didn't receive the check, I'd use the credit card for my normal shopping, groceries, etc. Once I spent $179 I'd stop. If I went over $179 I'd pay them the difference and never use the card again.

3) Here's a technique you can try if you don't mind more hassle. I would do it because I'm also interested in finding out the results of creative financial techniques and telling everyone what happened. If I had credit checks issued on that credit line I'd write myself a check for $179 and deposit it into my personal checking account.

There a few possible complications with this: (1) if they have already sent you a check for $179 then it would be a cash advance and subject to cash advance fees (2) even if they haven't issued the check they may still try to charge you a cash advance fee, even though it's your money! In fact, I would bet they would charge you the fee. If I received a statement, after writing the check, that the $179 brings my balance to zero (plus a fee), because it's my money, and they charged me a cash advance fee, I'd call the bank and ask to have that fee waived because they never sent me the credit check. They'd probably argue and say it's still a cash advance to which I would reply, "it's not an 'advance' against my credit line because it's not a loan, it's my own money!" If they still didn't waive the fee I'd formally dispute the charge. I don't know if you want to make a mountain out of a molehill however, it is an option.

4) Same as (3) but use the card at an ATM or do a cash-advance at a bank.

Please let me know the outcome of your situation--thanks!

Regards,
Scott

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Debt can build up and become more and more difficult to manage. High credit card interest rates make the situation even worse. Our credit repair counselers can help you reduce your debt and repair your credit.

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The borrower is servant to the lender.
Proverbs 22:7

The financial cost
We all know there is a financial cost to indebtedness. High interest rates, fees and extended repayment terms mean the debtor ends up repaying several times the original amount that was borrowed.

Resolve your obligations
There is a vast difference between meeting your obligations every month and actually resolving them. This is where Christian Financial Consultants can help. Through our extensive network of not-for-profit resources, we have found common ground for our clients and more than 12,000 creditors nationwide. By reducing or eliminating interest rates and fees and by restructuring monthly payments, we can help you to make significant progress on your debt every single month. This provides a ray of hope and a promise of freedom. The net result will be freedom from debt in a fraction of the time that would be required otherwise. To find out how Christian Financial Consultants can help, request a confidential free quote or call our toll-free counseling helpline.

A step on the right path
There is a solution. Allow yourself and your loved ones to live a simple life as God intended. Rather than just meeting your obligations every month, why not begin to resolve your obligations? To find out how Christian Financial Consultants can help, request a confidential free quote or call our toll-free counseling helpline.

Please fill out the form on the right for a free counseling session.

Debt Negotiation
by Scott Bilker

Scott Bilker is the author of the best-selling book "Credit Card and Debt Management." He is also the Editor and publisher of the FREE DebtSmart® E-mail Newsletter (http://www.debtsmart.com). Sign up today!

Question

I need to know if this will really work. It makes me very nervous in not paying my bills so they can be negotiated. I talked to DEBTCO and I got very excited that I could be out of debt in 3 years but when I got the papers (contract) I felt a little uneasy. Should I be uneasy? Should I think more about consolidation? Please help me make the right choice. I really need help with my debt. Thank you. --Jackie

Answer

Jackie,

Thanks for writing!

I do not know all the details for DEBTCO however, I'm certainly familiar with negotiating for payoff terms with credit card banks.

It's been my experience that credit card banks will negotiate settlements with customers who are having trouble. And "having trouble" does include not being able to make their payments.

My impression is that you're a good money manager and can find a way to pay your bills by using your credit options. You don't want to be late because you know that would really hurt your credit history. Worst of all, paying late may increase the cost of your outstanding balances if banks penalize you by raising your rates--not to mention all the late fees and other penalties.

My guess is that they (DEBTCO) want you to stop paying so you'll fall into the category of being in trouble and, therefore, it will be much easier for them to settle your accounts. Even if they can settle your accounts for less, which is probably the case, the settlement will be reported in your credit history and will certainly not look pretty to future lenders.

Okay, so I've written a lot of words so far but really haven't reached a conclusion. This is because there's always a trade off. You can do what DEBTCO says and probably (not definitely) have them settle your accounts for less thus saving you money.

BUT you risk the consequences of not paying your bills on time which can be further-reaching than the penalties on the accounts you want to settle. Lately, many banks have changed their policies to include clauses that give them the right to raise your rates if you're late paying other creditors!

Here's an example of that from my Citibank card: "If you default under any Citibank Card Agreement because you fail to make a payment to us or any other creditor when due, you exceed your credit line, or you make a payment to us that is not honored by your bank, we may increase the ANNUAL PERCENTAGE RATE (including any promotional rate) on all balances to a default rate of up to 24.99%."

What to do?

I never want to tell people what they should do. Ultimately you should base your decision on what you have learned. Speak with people that you trust to help you make our decision.

However, I can tell you what I would do if I were in your position.

I would call each bank that you want to settle with and ask to speak with their "settlement department." Tell them that you're going to be having trouble paying your bill and that you may even be considering bankruptcy (which you may have to sometime), but you want to find out your options for paying off the account in full if they reduce how much you need to pay to "settle" the account. For example, if you owe $5,000, tell them that you can pay it off in full for $2,500.

They may say that you must pay it off in ful,l or they may offer other payment plans or even reduce the interest rate to zero. They will need to be convinced that you really need help otherwise they won't consider settling the account for less than the outstanding balance.

Just make it clear to them that you'll be talking to a bankruptcy attorney to explore that option. Tell the bank that if they can offer you something reasonable you'll work with the bank, or else you'll be forced to consider the bankruptcy option.

What I'm suggesting is that you try to settle the accounts yourself first. You may not be able to get better payoff numbers than DEBTCO but it's possible that you can. Also, you may be able to avoid the problem of not paying your accounts on time.

I'd be happy to look at your contract with DEBTCO and give you my opinion on what they're promising. You can send it to me by email or fax to (609) 660-1412.

Good luck and please let me know what happens!

Regards, Scott

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Scott, you have too many credit cards!
by Scott Bilker

Scott Bilker is the author of the best-selling book "Credit Card and Debt Management." He is also the Editor and publisher of the FREE DebtSmart® E-mail Newsletter (http://www.debtsmart.com). Sign up today!

Scott,
I read your article in which you state that you have 80 or so credit cards. I'm not sure why this is advantageous. I have cancelled all but one card which I pay in full each month and by no means see my "options" (to get into debt, I guess) as being restricted.

For instance, I did need to carry a balance for 3 months to pay for an engagement ring at the beginning of this year. All I did was charge it to my everyday card, which has a lousy rate but gives me perks, get a new card with a low rate so I paid almost no interest for those three months, then closed that card when it was paid. This is actually better than calling the banks for the best rate because the cards with the perks almost always have the lousy rates, so you're better off putting it onto one of those cards, and then transferring it to a lower rate card, then you get the perks.

The problem with having multiple cards that go unused is that potential creditors will count available credit against you when you apply for a mortgage or a car.

Also, the more open accounts you have, the greater the chance of being defrauded. Having only one card is by no means restrictive there are hundreds of companies who would give me a card after a 5-minute phone call. I just don't see the point in keeping cards that aren't being used open. --Keith

Answer
It's true. Between my wife and myself (joint accounts) we have over 80 credit cards!

WARNING, I am NOT advising anyone to go and get 80 credit cards! The more credit lines you have available, the greater the probability you'll increase your debt, obviously.

So why do I have so many cards?

There are many reasons:

1) When I borrow money I want to have many loan options. About half of my accounts are offering me low-rate transfer deals all the time! I have purchased used cars with my credit cards at 0%! And because I have so many cards I can continue to transfer the balances and keep the rates less than 4% all the time. I've been doing that for more than 10 years!
2) I'm into this topic, saving money on credit cards. How can I write about credit cards if I don't have credit cards? How can I verify good credit card offers if I don't ever receive or use any?
3) I actually enjoy trying to uncover the true costs of credit. I need lots-o-data!
4) Who would you want writing about credit...someone who hasn't had or used a credit card for 25 years or somebody who deals with credit cards all the time?

I don't carry a balance on all of those credit cards. If I did, then this article would be about bankruptcy not being "debt smart."

If you think 80 credit cards are a lot then how many do you think the worlds record is?

According to the Guinness Book of World Records Walter Cavanagh of Santa Clara, CA is "Mr. Plastic Fantastic" and blows me away with a total of 1,397 unique accounts! I couldn't even image juggling that many credit cards.

Next, your strategy for using a card that gives you perks, at 0% for purchases, is good. You used the perk card then transferred the balance to a low rate card. When you were done you closed all the accounts. That's great!

I personally don't close the accounts as long as the banks aren't charging me an annual fee. I keep them open because they ALWAYS give me a great offer within a couple months after my balance goes to zero. I don't want to keep applying for new accounts and closing accounts.

It is true that you're going to have a difficult time getting a mortgage if you have many open credit lines--even if the balances are zero. That's because the bank doesn't want you to have the potential to get into credit card trouble since it could affect their mortgage profits.

How many cards are too many?

When you apply for a mortgage the bank may ask you to close some credit card accounts before they grant you a mortgage. When I purchased my home I had 24 credit card accounts and I got the mortgage with no problem and no questions asked. Each bank has it's own lending policies.

As far as having a greater chance of becoming a victim of fraud, I doubt the number of cards is going to make you a greater target. In the last email newsletter my friend, Robert Gamble, told his story of identity theft where someone was trying to get new credit lines in his name.

Actually, when you think about it, someone would have a difficult time getting new credit in my name. If they tried they'd probably get rejected because I have so many accounts right now. If I only had 2 accounts open then it would be much easier for someone to defraud me with identity theft. Ironic isn't it?

And since I don't carry all those credit cards with me, I only carry 2 in my wallet, I don't have to worry about losing the actual cards. Also, I keep a list of all the items in my wallet just in case I do ever lose it. Plus I have every account and every phone number in a database so I can contact each bank if there ever was a problem.

You said that you don't see the point to having that many credit cards. The point is a personal point, Scott's choice, for Scott's reasons. It works for me and may not work for everyone. I attribute getting out of debt to having all those credit cards. I learned how to beat the system by being immersed in it and developing good "Credit Card and Debt Management."

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Credit Card Balance Transfers
by Scott Bilker

Scott Bilker is the author of the best-selling book "Credit Card and Debt Management." He is also the Editor and publisher of the FREE DebtSmart® E-mail Newsletter (http://www.debtsmart.com). Sign up today!

Scott,
I would like to use a credit card introductory rate to pay off a bank loan. I will need to borrow $13,000.00 credit to pay off the loan. In order to do this, I will need to open two new credit cards, preferably with 0% interest for 6 months. I would then like to transfer the balances on those credit cards to new credit cards with low introductory rates. How often can I continue to transfer to new cards with introductory rates?

I have heard that if my credit report shows too many credit card company requests within one year that I will be turned down for new credit cards. I have also read that I can request credit card issuers not to run a credit report on myself--so that my credit report will not show that I have applied for several credit cards in a short period of time, and thus I would be extended credit by new credit agencies. I thought all credit card companies would only issue credit if they first run a credit report on the applicant. Is this true, or do the companies automatically run a credit report on the applicant every time a balance transfer request is made?
--Gail

Gail,

Thanks for writing!

You're being very DebtSmart® by transferring your balances to lower rates. Zero is always the best rate! Right now I have four cards offering me 0% for one year! Actually, I just got a fifth offer yesterday that I will also take advantage of to see if there are any tricks.

You can continue to transfer your balances to lower cards in perpetuity! My experience is certain proof of that result. I have been transferring my balances to low rate deals for over a decade. About 6 years ago I was told that these deals would end however, they've only gotten more frequent.

Last year credit card companies mailed 5 billion credit offers! That's up from 3 billion in the year 2000. I doubt it's going to be slowing down anytime soon. And because of that fact the consumer is in control! We have the power to decide which banks we spend our money on to buy their money.

It is true that when you apply for credit the bank looks at how many credit-inquires are shown on your credit report. The more inquires the more negatively it could, and I must stress, could, be in giving you the new credit line. Just because you have many inquires doesn't mean you're going to get turned down for new credit. Each bank has it's own criteria for determining who and how much credit to allow.

By the way, your current creditors also take a look at your credit from time to time. This too shows up as an inquiry to your credit report. I have a dozen inquires on my report and it has never stopped me from getting new credit.

Most importantly is that you have paid on time. Don't be late! That's is what will hurt your chances in the greatest way. Of course, judgments and repossessions don't help as well.

If you do get rejected for credit always remember to request a copy of your credit report. You should always request a copy of your credit report from the credit reporting agency that supplied that data to the creditor that rejected your application. And you get this report for free if you request it within 60 days of being rejected. Be sure to review that report for errors and dispute inaccurate information.

You cannot request that a bank does not look at your credit file. Well, I guess you could make that request but they would say, "okay we won't look but you won't be receiving any credit from us."

I doubt it's a standard for banks to review your credit report prior to completing a balance transfer on an existing account. However, they have probably warned you in their account terms that they can look at your credit report at anytime.

The bottom line here is that: 1) It's smart to transfer your balances to lower rates 2) Credit inquires may or may not hurt you depending on each banks criteria. 3) If you are rejected for credit always get a copy of your report and check it for error. And take a look at all the credit inquires.

Good luck!

Regards, Scott

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Creditors often consider debt consolidation programs a positive sign, that shows that you are putting serious effort into repaying your debt. As you begin to repay your debt as part of a debt consolidation program, your credit rating is likely to begin to improve.

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