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Credit Card Debts Dragging You Down?

August 23, 2009

in Personal Finance

According to the American Banker’s Association, the average American family carries $8,000 in credit card debt. While a lot of companies claim they can magically make this debt disappear, there’s no substitute for formulating a realistic plan to get it paid off. High interest rates and late fees can complicate matters, so it’s important to make a plan and commit to it. There is no quick fix ? paying down any debt takes time ? but there are several viable options and techniques that can help.

* Prioritize

Make the payment of your credit card debt a priority. Without this basic first step, you will likely find it only too easy to keep running from the situation or accumulate more debt. Unless you address your debt head-on, it will continue to eat away at your family’s budget and even your relationships ? according to PRLog, excessive credit card debt may be a leading cause of divorce.

* Create a family budget

This is not as daunting as it may seem. First, gather the family’s financial records: bank statements, utility bills, etc. Then, list your family’s total monthly income followed by its total monthly expenditures, such as a car payment and mortgage. This way, you will have concrete numbers to work with in regard to your credit card debt.

* Pay the debt with the highest interest rate first

Lay out all your credit card statements in order of highest to lowest interest rate, and focus on paying off the highest interest rate card first. On the highest rate card, pay as much over the minimum payment as you can each month. When that one is paid off, move to the next highest interest rate card.

* Work with the credit card company

Because they are unsecured creditors, credit card companies tend to be willing to negotiate the interest rate or other aspects of your credit agreement. When you explain that your intent is to get your debt paid, most creditors are willing to listen and work with you. When you call, have your household budget and latest credit card statement from that company handy.

* Think outside the box ? do you really need to spend money on that?

What if you can’t find that extra $20 or $100 every month to dedicate to your debt payment? It never hurts to get creative. Go back to your budget and detail all expenditures – even those for which you don’t have a paper trail, such as a daily cup of coffee on your way to work or eating lunch out. Make your coffee at home and bring it to work in a travel mug, and save up to $3 a day ? that’s $60 a month you could put toward paying off a credit card. And that’s just coffee.

Brown bag it for one week a month and save the $10 a day you were spending on lunch out. In one week, that’s another $50 saved. And that waiter or waitress who brings you your lunch might be working to pay off his or her credit card debt ? waiting tables is a viable option for bringing in some extra cash with flexible hours.

Often, we just don’t realize where our money is going. Taking the time to sit down and evaluate just how much we have and where it’s being spent is not magical, but with commitment it can bring relief and eventual freedom from debt.

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Lost or Stolen Credit Card?

July 13, 2009

in Personal Finance

When it comes to finances, few things are as unnerving as losing a credit card or having it stolen. By the time you realize it’s gone, someone could be living the good life and charging it to you. But by taking action quickly, you can avoid most, if not all, liability for unauthorized charges.

When their cards go missing, cardholders are protected by the Fair Credit Billing Act (FCBA). This law mandates that as long as you report your card missing or stolen in a timely manner, you can be held liable for no more than $50 in unauthorized charges. And if you report it before the card is used, you can’t be held responsible for any charges made.

If you find that one or more of your cards are missing, here’s what you need to do:

1. Report the missing card to the issuer immediately. If you don’t know the phone number to call, it should be printed on your credit card statements. Reporting the theft or loss as quickly as possible is crucial, so it’s best to keep a list of your card numbers and the fraud reporting phone numbers in a safe place for easy access.

2. Write a letter to each credit card issuer summarizing the details of your phone conversation. Include your name, card number, when you noticed your card missing and when you reported it. Also include the name of the representative you spoke to. Make a copy for your records, and send the letter via certified mail or with a return receipt request.

3. Keep a close eye on your credit card statements for several months. If you notice any charges you didn’t make, contact the issuer immediately. You should not have to pay any charges made if you have already reported your card lost or stolen.

Minimizing Your Risk

Anyone can have his credit card stolen. But there are a few things you can do to minimize your risk. These include:

* Leave your credit cards at home when you don’t plan to use them. You’re much more likely to have them stolen from your wallet or purse than from your home, especially if you keep them locked up.

* Do not carry your PIN number with you. If you do, a thief can easily use your card to obtain cash advances.

* Carefully check your credit card statements as soon as you receive them. Thieves do not have to have the actual card to make charges to your account. They can often make purchases online, by phone or by mail with only your name, card number and expiration date. These can be obtained by stealing records from stores you’ve done business with in the past.

* Be careful when using your credit card. Only buy online from websites you trust, and be aware of suspicious activity when using your card in person. Thieves have been known to snap pictures of credit cards with cell phone cameras and use devices to read cards as they are swiped.

No matter how careful we are, having our credit card or card number stolen is a possibility. By keeping an eye on account activity and taking action quickly if a card is lost or stolen, you can prevent a thief from benefiting from his crime and avoid having to foot the bill.

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Exposure Coverage: Know the Law!

June 18, 2009

in Personal Finance

It’s frightening to think of what could happen if your credit card is stolen. You may not realize it’s gone right away, and by the time you do, someone could have charged thousands of dollars in your name. And what if someone were to get your credit card number without your knowledge? By the time you receive your statement and catch on, the damage is already done.

Fortunately, the Fair Credit Billing Act (FCBA) protects cardholders from charges made when their credit cards are stolen. But it is important to understand the law in order to make it work for you. There are certain things you must do in order to take advantage of the protection the FCBA offers.

The FCBA is designed to cover cardholders who experience billing errors. In some cases, these errors may be the fault of the credit card company or a store from which you made a purchase. But unauthorized charges, including those made by someone who fraudulently obtained your credit card or account number, are also covered by the law.

According to the FCBA, a cardholder may not be held responsible for more than $50 in unauthorized charges if the creditor is notified of such charges in writing within 60 days after the first bill showing the error was mailed. That means that as long as you check each statement for errors and notify the credit card company in writing as soon as you catch them, you can’t legally be required to pay more than the first $50. The key here is that the communication must be written in order for the cardholder to be protected by law.

If you realize that your card is missing, it is best to notify the issuer by phone right away. Most credit card companies have a 24-hour toll-free number for reporting missing or stolen cards, and that number should be on your credit card statements. Once you’ve notified the creditor by phone, you should not be responsible for any charges made after the notification. And most companies will not charge you the $50 allowed by law even if charges have already been made. This is, however, at the creditor’s discretion.

Even if you do report your card stolen or missing by phone, it is important to follow up by mail within the 60-day time frame. Make a copy of the letter for yourself, and send it to the company via certified mail or with a return receipt request. This will give you proof that you provided proper notification should you ever need it.

Losing a credit card is a harrowing experience. But it’s reassuring to know that you are protected from unauthorized charges by law. As long as you notify the card issuer quickly, a misused card shouldn’t leave you with a mountain of debt.

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The Importance of Checking Credit Card Bills

June 11, 2009

Paying bills is something that no one looks forward to doing. It’s one of those things we just want to get out of the way. So we often look at how much is owed, write a check or pay online, and forget about it. But when it comes to credit card bills, that’s not such [...]

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Five Common Financial Lies

May 16, 2009

Dishonesty can ruin friendships, relationships with bosses and co-workers, and even family ties. But in a marriage or domestic partnership, it is particularly harmful. Finding out that your significant other has been deceiving you is a difficult thing to deal with, and it can easily destroy a relationship.
Lies come in all shapes and sizes. But [...]

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