Credit Card Default

Credit Card Default – Occurs in the event that you have a card balance, and you stop making payments for a certain length of time. Your path to card default is not pleasant and replete with increasingly aggressive telephone calls from the bank you owe the balance to. Let’s investigate a typical scenario:

1. You open a $10,000 credit line with XYZ Bank.
2. You spend $7,000 on a great plasma TV, a couch, and a stereo system.
3. 27 days elapse.
4. You lose your job.
5. Because of inadequate financial planning, you cannot continue paying your bill.
6. You’re $150 minimum payment comes due, and you miss the payment.
7. The bank charges a late fee to your account (in addition to interest fees of course).
8. The balance on your card goes up by the amount of the unpaid interest, and the late fee, let’s say $170.
9. During the next 60 to 90 days, your issuer continues to call, email, mail you and harass you to make the payments to your account. During this time, your card balance continues to increase.

After this, the company will change your account status to Default, and make a negative report to the credit bureaus. Between 90 and 180 days, your bank may start to offer special deals to you to pay off all or part of your balance. They may even offer to reduce your card balance. After 180 days elapse, your bank will probably give up, write off the amount you owe, and sell the debt to an outside collection agency for a small fraction of what you owe. Now, it’s the collection agency that will try to get some money out of you. OK, you can see it’s not a fun experience. You wanted to pay your bill, but you lost your job. What could you do?! Unfortunately, XYZ Bank doesn’t have much interest in your sob story. Slot Game Online

When, If Ever, Is It Safe To Default On A Credit Card?

Well, that depends on your definition of “safe”. You certainly want to avoid default, if you can, but things happen, right? Dave Ramsey has a useful take on prioritizing things. He says that 4 things are at the top: food, clothing, housing, and transportation. You’ve got to have those things to get/keep your job. So, if something must fall by the wayside, it’s got to be your unsecured debts. Slot Game Online.

Prepare For Collectors

There exist many online resources for handling collection agencies. Specific laws exist to protect you from the collection agencies. As with all laws, the important thing is knowing your rights. It will help keep you calm amidst adversity and creditor pressure. Prepare and do your research for the difficult situation you are heading toward. Creditors are aggressive, and you need to know your options in credit card default situations. Slot Game Online.

Effect Of Default On Credit Score

If your credit cards go into default, you can expect your credit score to decrease dramatically. How dramatically? Well, that depends on factors like your initial credit score, and how many cards you default on. FICO has released a few stats explaining the impact on a credit score for various situations. Slot Game Online.

The CARD Act and Universal Default

Good news! 2009’s financial reform laws for the credit card industry actually DID improve somethings. Universal default was where ALL of your creditors could put you into default, if you defaulted on ANY other card, even if you were current on that card, just like dominoes! It used to be brutal! It was an unfair credit practice by the banks, and the CARD Act has prohibited this aggressive credit card banking practice. Slot Game Online.

Recovering From Credit Card Default

OK, so you’ve defaulted. Once you’re through handling the collection agencies, and you’re ready to move on, what do you do to recover? Is it even possible?! Yes, it is, but it will take some time, and patience. Your credit score has been decimated, and you may even have filed bankruptcy. So, it’s often advisable to begin with a secured credit card. Additionally, you may actually find out that, as long as you have a job, creditors are generous with credit again. That’s because, if you’ve filed bankruptcy, they know you can’t file again for another 7 years!
I hope this helps, and good luck to you all…

5 Dangers of Co-Signing a Loan

5 Dangers of Co-Signing a Loan – I received an e mail last week from a lady that was in a desperate situation. She had co-signed a student loan for a relative and had recently been notified. That she must begin making a monthly payment of nearly $800 (since the student had defaulted). This is money she simply doesn’t have. While she thought she was doing a good deed helping a young person to obtain financing to go to college. She is now on the hook for nearly $10,000 per year in debt payments for the foreseeable future. Slot Game Online.

“A person devoid of understanding shakes hands in a pledge and co-signs for a friend.” (Prov. 17:18)
I regularly receive e mails from people wondering about whether or not they should co-sign to help out a loved one or a friend. This can be for a student loan, auto loan, a mortgage, or even a credit card. While I was working in the mortgage business several years ago, it became apparent how little people understood about the financial and legal ramifications of co-signing.

On numerous occasions I had to inform a client that their loan had been turned down due to a loan they had co-signed. In some cases, the loan was not being paid on time and it had destroyed their credit. In other cases, the addition of another monthly obligation caused their debts to represent too high of a percentage of their income for an approval. They all seemed to be in a state of disbelief saying, “but it is not really my debt…” Unfortunately, lenders do not see it that way. Slot Game Online.

1. You May End Up In Bankruptcy

When you co-sign on a loan, you are 100% responsible for repayment along with the primary borrower. If the loan payments are not made, the lender will attempt to collect from you and may ultimately obtain a judgment in court. Once a judgment is obtained against you, they may be able to force you to sell assets such as your home, vehicle, and other personal belongings. As well as attach your wages from your employment. As a result, you may have no other choice but to file for bankruptcy.

2. The Debt May Not Be Dischargeable In Bankruptcy

In the case of a student loan, most of the time you can not discharge this kind of debt in bankruptcy. What’s worse than ending up in bankruptcy? Being insolvent without being able to obtain relief from bankruptcy. A debt that can not be discharged in bankruptcy can potentially follow you for the rest of your life! Even in the case of debts that are considered eligible for discharge in bankruptcy. You must be able to qualify to file a Chapter 7 discharge bankruptcy. Under the new bankruptcy laws, you must meet a series of guidelines for the court to allow you to discharge any debt in bankruptcy. Otherwise, you may end up in a court ordered Chapter 13 bankruptcy (payment plan) for five years or longer.

3. You May Seriously Damage Your Credit Score

Even if the debt is being paid on time, it may still drive your score down. The addition of another loan on your credit file may cause you to have too many open credit accounts to maintain a high credit score. Of course, if even one payment is made late this will cause even further damage to your overall score. Slot Game Online.

4. Your Debt Ratio Will Be Impacted

When you apply for a loan. Lender will take into account the percentage that your monthly debts represent of your monthly income. Income to debt ratios are used in just about all forms of lending. They are considered as important as your credit score by mortgage companies, auto finance companies, and even credit card issuers. Slot Game Online.

5. Your Interest Rates May Increase

We have been inundated with e mails from individuals seeing substantial increases in the rate they are being charged on their credit cards. For just about any reason, credit card companies seem to be quick to raise rates on even their best customers these days. If a loan you co-signed for has even one late payment. You may see substantial increases in the rate you pay on any variable rate debts you owe.

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Durbin and Debit Savings

Durbin and Debit Savings – As you may recall, from an earlier article written on this subject. Durbin capped the amount that “regulated” banks could charge for their issued debit cards. Now, here’s where it tends to get a little tricky… who and what are “regulated” banks? Well, the guideline is, I believe, $10 billion is assets. Banks that don’t meet the asset criteria are “exempt” from the caps, therefore protection of one of their revenue streams. Do you have a debit card? Do you know the asset size of your issuing bank? Not that it matters to you as a card holder but, to a merchant, it could make a big difference in fees. Game Slot Online.

Now the articles I write are primarily meant for the beneficial education of merchants. So, with that in mind, let’s take a look at some examples of fees. Typically, if a customer is spending money with you they will likely only use their debit card for smaller (and “smaller” means different things to different people) transactions. So, for sake of this discussion, let’s say the transaction size is $100 and the customer hands over their debit card. Let’s compare some cost-to-the-merchant examples:

Tiered Pricing

Let’s assume that you are on a Tiered Pricing structure and are getting charged $1.23% + $.10 for swiped debit cards. Your fees on the $100 transaction would be $1.33 and under this form of pricing, you’re not getting the benefit of pinned or Durbin pricing. So, in effect, under this form of pricing, your processor is keeping all that extra profit for themselves. Game Slot Online.

Interchange Plus Pricing

If you’ve read any of my articles in the past. You know that I’m a strong proponent of total transparency in pricing which is what Interchange Plus Pricing offers. Let’s say that you’re fortunate enough to be priced at Cost Plus .25% + $.10 and utilizing those numbers, let’s look at some numbers. So, a customer hands you their debit card (and certainly, remember here you don’t know if it is issued by a “regulated” or “exempt” bank). First let’s look at your cost if it’s an exempt card.

Taking the.80% + $.15 PLUS your .25% + $.10, you are at 1.05% + $.25 or a total of $1.30 in fees on the $100 transaction. No great savings here when compared to the Tiered Pricing description shown above but, now, what if it’s a “regulated” card. Then, under this Cost Plus pricing, the cap is .05% + $.21 and then you tack on your PLUS of .25% + $.10 and you have a rate of .30% + $.31 resulting in total fees of $.61… now we’re talking.

Pinned Debit Comparisons

Now, let’s say that you are hooked up to accept pinned debit transactions either through an external/internal pinpad. Now, typically, your processor will be charging you a Monthly fee of maybe $5.00 to accept pinned debit transactions. Also a per transaction fee of maybe $.15. So, when a customer hands you their card. You have them enter their pin number and now your costs are as follows:

Your fees on the $100 transaction would be $1.10. On the other hand. The regulated rate is .05% + $.21 + $.15 (for the processor). So the total fees on this $100 transaction would be $.41. Of course, this would represent a significant savings for you.

Now with all this said, and with all these numbers swirling around in your head. What is most beneficial to you as a merchant? In my opinion, when you look at the numbers, it really doesn’t matter if you are on a Tiered or Interchange Plus pricing model. Since you’ll never know at the point of sale if the card is issued from a regulated or exempt bank. The resulting savings that go along with it. Hopefully, this has helped to de-mystify some of the confusion I’ve been hearing about regarding this Durbin Amendment. Thanks for reading. Game Slot Online.

5 Ways You Can Become a Victim

5 Ways You Can Become a Victim – A while there are measures you can take to safeguard your identity. Including Pre-Paid Legal’s Identity Theft Shield. No one is immune. The difference for those who employ the services Pre-Paid Legal offers is that when you become a victim. You have the power of legal counsel and the experience of licensed investigators working on your behalf. You have the power to fight back. 5 Ways You Can Become a Victim.

1.) Drivers License Identity

In America, our driver’s licenses, issued by each state’s Department of Motor Vehicles or Department of Transportation, have become our national identification card. Multiplying the potential for theft. If your driver’s license is stolen. Used by someone who receives a DUI or DWI and then fails to appear in court you may be arrested.
A Pre-Paid Legal membership with the Legal Shield add-on gives you access to an attorney 24-hours a day via a toll-free phone call.

2.) Medical Identity

When someone uses your name, Social Security Number, birth date or your insurance card to obtain medical services, they’ve attacked your medical identity. Whether they assume your identity for the purpose of getting tests, or to receive treatment, not only will your name be on the bill, but the results may become part of your medical history.
Setting the Medical Information Bureau straight – and restoring your medical identity – in most cases requires an attorney. With a Pre-Paid Legal membership, you’ll have qualified legal counsel at your fingertips.

3.) Social Security Number Identity

When your Social Security Number is used by an identity thief to file with the Internal Revenue Services (IRS), you are stuck in the middle with the tax bill, and a serious need for an attorney. If an undocumented worker uses your Social Security Number to get a job, the income reported to the IRS from the W-2 will raise a red flag as unreported income on your tax return. With a Pre-Paid Legal membership you have access to legal counsel and to IRS audit legal services if needed. 5 Ways You Can Become a Victim.

4.) Character Identity

It may seem like something out of a movie. But when someone assumes your identity and commits a crime in your name, the drama is real. You will obviously want to speak to an attorney. In a situation like this, it’s not likely that your credit card company will be of any assistance. Quick detection is essential in the fight against identity theft. The Identity Theft Shield alerts you when there has been a change on your Experian credit file. Which could be a change of address or change to your public records, including felonies.

5.) Financial/Credit Identity Theft

This form of fraud is the one most commonly recognized as identity theft: stealing your identity for financial gain. If you do not deny the debt within 60 days. It is common for victims to be unaware of a theft situation until months after the crime has occurred.

In situations like these and many others the early detection and restoration services that come with the Identity Theft Shield and the legal services of a Pre-Paid Legal membership. Provide an added layer of protection. The hours involved in dealing with identity theft add up. It’s reported that it takes 600 hours to deal with true identity theft, do you understand now how the Pre-Paid Legal membership combined with the Identity Theft Shield can be an invaluable service to you and your family. Pre-Paid Legal is the only company that offers a suite of products that fights identity theft before during and after the crime.