Develop a budget. Start by listing all sources of income. First list fixed expenses such as mortgage payments, insurance premiums, and auto loans. Next, list the expenses that vary from month to month such as utility bills, recreation and clothing. If there is any hope of controlling your credit card debt you must create and stick to a budget.

There are different kinds of debts. Mortgages and auto loans are debts secured by collateral. In the event of default on a secured debt, a lender may foreclose on your home or repossess your car. Unsecured debts are loans with no collateral and often have variable interest rates and are assessed a fee for late payments. In the event of default on an unsecured debt a lender may report to a credit-reporting agency, contact the debtor repeatedly by mail or telephone, and in general make life miserable for those who find themselves in financial trouble.

If you are among the millions who have found themselves in a financial crisis, consider your options – budgeting, debt consolidation, or bankruptcy.  Which works best for you?  It depends on your level of self-discipline, how much debt you have, and your future financial prospects. While eliminating debt may seem next to impossible, your life does not have to go from bad to worse.

Self-help may be the easiest, cheapest way to eliminate debt. First, stop charging now. Incurring more debt will only compound the problem.  Make a list of all your credit card bills starting with the smallest. Pay as much above the minimum payment as you can afford on the card with the lowest balance. Continue until this debt is paid in full, and then proceed to the next card. Systematically paying off your credit cards one by one will reduce your debts dramatically. The fastest way to eliminate credit card debt is to put every penny you can towards paying off your credit cards. Do not underestimate the effect an extra five or ten dollars paid repeatedly over time can have on eliminating debt.

You may be able to reduce the amount of your combined monthly payments and lower the interest rate by obtaining a home equity line of credit or a second mortgage. Think carefully before taking this route.  Your home becomes collateral with these loans. If you make late payments or miss payments you could lose your home. These types of loans may provide certain tax advantages but the fees can really add up. The same goes for debt consolidation. You eliminate or reduce interest rates and the amount of your monthly payments, but the length of the contract and the fees can be more than your original debt.

As a last resort, bankruptcy could be considered. A bankruptcy remains on your credit report for 10 years, making it difficult to obtain credit, get life insurance, or buy a home. However, it can be a fresh start for those who cannot otherwise satisfy their debts.

About The Author

Noel Hynes is the owner of http://1st-for-credit-cards.com. Easy online credit card applications.

The Fair and Accurate Credit Transactions Act, signed into law on Dec. 4, 2003, gives every American the right to a free credit report every year from each of the three major credit bureaus — Equifax, Experian and TransUnion.

What the law doesn’t do is give every American the ability to read their credit report. Not one word in the law says the credit bureaus have to write it in plain, easy-to-understand language. Go to http://www.ftc.gov and click on consumers then credit and read it for yourself. Hopefully you’ll stay awake .

While all credit reports follow a basic format, some vary so what you are about to read doesn’t apply across the board. If you didn’t get it directly from one of the bureaus mentioned above, your best bet for a translation is the source providing your copy.

Here is the four part skeleton most bureaus use. Part one is your identifying information. This would be information like your name, social security number, previous addresses, current address, date of birth, driver’s license number, telephone number, spouse’s name and your employer and length of employment. As with all sections, pay close attention because chances are pretty darned good, some of it is wrong.

It is wrong because this information comes to the bureau from a myriad of sources and the bureau doesn’t take the time to update or correct it. That leaves you as your own correcting agent.

Part two is your credit history. This is usually the longest part of your report because you probably have had department store accounts, multiple credit cards, multiple bank and other financial institution loans, mortgages, car loans, lines of credit, home equity loans and other transactions involving credit.

Sometimes you will see the bureau calls these accounts trade lines. No big deal because they are still your accounts.

These accounts usually start with when you opened the account then tell the type or kind of credit (installment, car loan, personal loan, etc.) and whether it is in your name or someone else is on the account with you. The total amount of the loan with your high credit limit or if it is a credit card, your highest balance follows. The next thing it shows is how much you still owe and if the payments are fixed or minimum monthly amounts. Your status, open/inactive/closed/paid, follow your payments then comes the item everybody wants to know, how well you’ve paid on the account.

This is where the bureaus list if you are late, and if late, how late and how often you’ve been late. If you are not late, it will show you pay on time.

Part three is called Public Inquiries or Public Records. This is where tax liens, judgments, foreclosures and bankruptcies are listed. You want this part to be blank and I do mean blank. If you see anything here, attempt to correct immediately if not sooner.

Part four is the Inquiries section. It is divided into two parts. Part one are the inquiries you initiate by filling out a credit application. This section is generally referred to as the hard inquiry section because you are the initiator of the inquiries.

The second part is called the soft inquiry section. What you’ll find here are the names of companies who have sent you offers of credit or current creditors who are monitoring your account.

Sometimes there is a fifth section called Remarks. Read it because you never know who reported what about you.

Each credit report bureau places an explanation of terms usually on the backside of the report pages. In it, they explain what the numbers and letters you see next to your accounts mean. So, if you see something like I9, don’t fret as it should be defined in the explanation of terms.

Of course, I9 could be negative, so you may have to fret. Either way, you are now almost totally armed to deal with that free credit report the law said the bureaus had to give you.

Good luck and may all your credit be A+.

Tom Koziol wrote “Credit Card Capers: Exposing All Their Dirty Tricks” as an expose on how the banks are robbing consumers via their credit cards. Get the dirty lowdown at [http://www.creditcardcapers.com]

There are three major credit reporting agencies that issue credit bureau reports; Experian, TransUnion and Equifax. It is recommended that you obtain reports from all 3 credit report agencies as they most likely contain varying information since creditors subscribe to agencies on a purely voluntary basis. The credit reports provided by each of the different bureaus may present somewhat differently but generally speaking the information will be broken down in much the same way.

There are four main parts to the credit report: personal profile, credit history, public records and inquires. Check each section carefully for any errors. Note any errors you may discover on a separate piece of paper as you read over your report.

Personal Profile

At the top of the credit report you will find all your basic information such as your full name, current and previous addresses and employers, social security number, and date of birth. Your spouse’s name may also appear if applicable. In addition, you may notice several variations of your name listed. This can occur when creditors record the information incorrectly. These discrepancies are usually left on your credit report. It is important however, to ensure that your address is correct. An incorrect address could alert you to a possible identity theft.

Credit History

The next section is your credit history. This provides you with an itemized list of your current active, past closed accounts and their balances or arrears. Listed first is the name of the creditor and your account number for each bill–sometimes the account numbers may appear partially obscured for security purposes.  These debts could include real estate mortgages, credit cards, car loans, or medical bills.

There will be a column for identifying the nature of the account; Joint, Individual, Undesignated, Authorized User, Terminated, Maker, Co-signer or Shared. There will also be a notation of the date when the account was opened, number of months the account payment history has been reported and date of last activity. The report will show your high credit limit or the maximum you are allowed to borrow, if applicable. There is a column for Terms which indicates the number of instalments or monthly payments remaining on the account.

The next few columns will show the balance remaining on the account, any past due amounts and the status of the accounts. There are two types of accounts; installment and revolving. An Installment account means that there are fixed payments and a specific ending date, such as with a car loan. A revolving account is one with no fixed ending date as with credit card debts. Creditors like to see few revolving debts.

The credit report will indicate the different types of accounts and also may assign it a numerical ratings system. You may see such symbols as R1, R2, R3 or I1, I2, I3.The R or I indicates Revolving or Installment and the numbers indicate the payment history of the account as follows;

• 0- account hasn’t been used yet
• 1- paid as agreed
• 2- 30 plus days past due
• 3- 60 plus days past due
• 4- 90 plus days past due
• 5- 120 plus days past due
• 7- Collection account or bankruptcy
• 8- Repossession or foreclosure
• 9- Charged off or bad debt

The credit report will also show a record of any debts that have been turned over to a collection agency. It will show the date the collection was reported, the name of the company handling the collections and the company or lender that the loan was originally issued with and the balance remaining on the account.

Public Records

These are reports obtained from local, state and federal courts. They will indicate records of bankruptcies, tax liens and monetary judgments. Overdue child support records may also be shown. These public records will remain part of your credit history for seven to ten years and reflect negatively on your total credit score.

Inquiry Section

This section reveals any parties that have obtained a copy of your credit report over the last two years. There are generally two types of inquires, hard and soft. A hard inquiry is one initiated by you, whenever you apply for a loan or fill out a credit application. A soft inquiry comes in three forms; companies that wish to offer you promotional applications for credit, current creditors that are monitoring your account or credit bureau inquires requested by you, the consumer. These soft inquires do not show up on credit reports that businesses receive, only on copies provided to you. Although many lenders will view too many inquiries on your report as negative, it is important to note that two or more ‘hard’ inquires within a 14 day period count as just one inquiry.

Credit Score

The credit report can also reveal your credit score. A credit rating scores is a means of calculating an individual’s credit risk to determine how likely they would be to make good on a loan.  The score is a three digit number ranging between 300 and 850. The higher your score, the better it reflects on you as a borrower. A good credit rating score will enable you to negotiate for better interest rates.

Disputes

What if you should find an error on your credit report?  Once you have discovered an error, contact the credit bureau that issued the credit report and state in writing what you found to be inaccurate. You will find the contact information listed at the top of your credit report.

The credit reporting companies must re-investigate the claim within 30 days. They will then contact the party that submitted the item and attempt to resolve the dispute as quickly as possible. Remember, you have the right under the Fair Credit Reporting Act to dispute any inaccurate or fraudulent information that may appear on your credit report, and should do so in a timely fashion.

Once you learn to read and understand a credit report, you are moving towards a more secure financial future. Obtain your report today!

About The Author

Melanie Cossey is a successful home based freelance writer. Melanie writes many informative articles on the topic of credit, such as What is a FICO score and why is it important and Comprehending a Credit Report.

Within two years they’d reached their savings goal and began house hunting.  They found their “American Dream” home in a new community with lots of amenities that seemed perfect for their soon-to-be family. They were elated that their years of saving were about to finally payoff.

But, they ran into a big problem when they went shopping for a mortgage.  Even though they  had enough income to make mortgage payments and enough money saved to afford the down payment, they had no credit history.   Lenders had no FICO score to evaluate their creditworthiness in order to offer them a loan. Fair Isaacs Co. established a credit scoring system in the 1980′s and since then FICO scores have been used to determine if someone will qualify for a mortgage and the interest rate they would pay.

Over 50 million U.S. adults fall into the same category – they have either too little credit history or no credit history at all.  But now thanks to a new FICO formula, called FICO Expansion Score, lenders will now have opportunities to extend credit to consumers based on non-traditional credit data that are excluded from credit bureau reports.

FICO Expansion will consider a wide range of financial transactions including payment activities such as rental payments, deposit accounts, payday loans, book or CD club payment plans, and retail lay-away plans.

Who stands to benefit from this new scoring model?  Anyone who makes little use of banks, credit cards, or checking accounts.  The “credit underserved” claims Fair Isaac Co, which includes young adults, low-income consumers,  widows or divorcees, and immigrants.

And while those in the credit card and mortgage industry see this new scoring model as a potential benefit, those in the credit counseling sector foresee potential problems.

Fair Isaac CEO Tom Grudnowski is excited about his company’s new credit-scoring resource.  “This extension of the FICO score gives lenders and other businesses another powerful tool …, while expanding service options for consumers who have missed out on opportunities simply because they lack a traditional credit history.”

The opposition, namely debt and credit counselors, see both the good and the bad.  Some consumers will benefit by qualifying for less costly credit arrangements.  However, others could fall prey to becoming overextended unless they also receive some basic credit and debt education.

Tom Hicks, a credit counselor in Chicago, worries that “with the average American household owing $8,000.00 in credit debt, this could open the door to others finding themselves unable to handle credit properly.  Ultimately the burden lies with the consumer,” he says.

Fair Isaac Co. estimates that at least half of those without traditional credit profiles will benefit from this new scoring method.

About The Author

© 2004,  http://www.yourfreecreditreportnow.com

Author: James H. Dimmitt

Discover more money-saving tips and articles in our free weekly ezine, “To Your Credit” by visiting http://tinyurl.com/bgo9.

Subscribe today and receive FREE bonuses!

“The vulnerable relationship between child and parent is a metaphor for the relationship between a soldier and his army. It is also more than a metaphor when we consider the formation and maintenance of good character. The parents betrayal themis – (the ability to feel good about oneself , self esteem, self image) – through incest, abuse, or neglect puts the child in mortal danger. Despite intellectual limitations, the small child usually grasps the danger, although the child’s mental representation of the danger differs from adults. The child’s inner sense of safety in the world emerges from the trustworthiness, reliability, and simple competence of the family.

“Similarly, the child’s acquisition of self-control, self esteem, and consideration of others depends upon the family. Absent inherited mental disorders, good parenting will produce good character and all the other adult resources of dignity and maturity, including ideals, respect for others, self respect, ambitions, self-care, pro-social rather than anti-social activity, reliable capacity to distinguish reality from fantasy, and so forth.

“Lurking behind these supposedly settled truths is the platonic assertion that good character is a firm wall between a good person and evil acts, regardless of the betrayals of “what’s right” and other blows, such as bereavement that may simply happen to an adult. Often there is the invisible unstated assumption that those that hold power in society exhibit loyalty and care in fulfillment of themis. (p 32)

“If military practice tells soldiers that their emotions of love and grief – which are inseparable from their humanity – do not matter, then the civilian society that has sent them to fight on their behalf should not be shocked by their “inhumanity” when they return to civilian life. (p 67)

“Viet Nam narratives reveal that the events that drive soldiers berserk are betrayal, insult, or humiliation by a leader; death of a friend-in-arms; being wounded; being overrun, surrounded, or trapped; seeing dead comrades who have been mutilated by the enemy; and unexpected deliverance from certain death.” (p 80)

Even in families without children the parents are leaders. Parents make financial decisions that impact the future of their children, their stature in the community, self worth, and dignity. There is nothing dignified about the effects of predatory financing. Yet there is an initial assumption that those who impact the credit scores of Americans are exhibiting loyalty and care in fulfillment of their chosen occupation. Americans believe our laws and regulations such as Regulation “Z” protect their rights. There is a strong belief that the system will work.

The economic downturn of 2000 through 2002 is firmly grounded in consumer spending and consumer debt. The real estate boom infused more disposable income into the economy. Exportation of manufacturing and services sector jobs to foreign countries, plus the huge trade deficit add to our woes. In early 2003 the federal budget deficit and the threat of war add to troubled economic times. Bankruptcies achieved record high levels. However, as with history and military battles, we must learn from the past to see the future and prevent future mistakes.

William F. Aldinger started his career with CitiGroup, learning quickly that sub-prime financing in the CitiFinancial subsidiary was a lucrative business. After leaving Citi, Aldinger went to Wells Fargo, and then to Household International as CEO. All three companies are now classified as predatory financing companies, and all three have been forced to settle with the states, government, and consumers. Household restated earnings for the entire time that Aldinger was with the company. HSBC has a four year agreement with Aldinger to continue as Chairman and CEO of Household under HSBC, and then he will become chairman and CEO of HSBC North America, Inc and director of HSBC Holdings. The past tells us the future. HSBC contends that there will be no changes to their business model. Therefore it is safe to predict that HSBC will become the largest global predatory lender ever witnessed by a civilized orderly society.

Those that managed to delude themselves into thinking they are financiers providing a service to society, while masquerading as predators, argue that they are servicing a sector of society that would otherwise not receive adequate attention. Countering that argument, the Community Reinvestment Act perhaps should be revisited and strengthened. Perhaps federal and state governments should remove predatory abilities from the private sector while providing structure and funding. Americans should not be abused by a system that is failing.

Historically, if we use the actions of predators to show us what areas need reform we can reverse the economic downturn we see today. Just like gangs, organized crime, and similar activities, the government should look for the cause of the problem while instituting prevention and removal of the opportunity for predators.

Credit cards are responsible for a huge portion of American debt. Easy credit and the need for credit is expected in today’s society. Again predators have an opportunity. Household International provides financing for, and ongoing compensation to merchants under their existing contracts. Again, there is an initial assumption that those who impact the credit scores of Americans are exhibiting loyalty and care in fulfillment of their duties, that they will follow Fair Credit Reporting and Fair Credit Billing, etc. With over twenty million transactions a day, and over sixty participating merchants, Household International impacts the lives and family values of many taxpaying Americans every day.

Consumer watchdog organization Household Watch receives consumer complaints daily. Based on their web site log statistics Household Watch only receives complaints from 5% of those who visit. Many others get the information they need from their web site data. Over 400 people per day use the Household Watch web site to find links which enable them to pay their bill online.

The Federal Trade Commission, therefore, recognizes Household Watch and sister site BestBuyCard as a source of consumer help. Where predators see an opportunity the government should step in to stop them. When the government does not step in, consumer organizations step in to fill the gap. We sincerely hope, therefore, that the consumer organizations will be heard a loudly as the predators and the government when decisions are made. They speak for the public, with emphasis on the public that experiences violations of regulation “Z” and other areas where they expected special trust and confidence.

About The Author

Timothy Blake has a Bachelor’s Degree in Business with a specialty in Management of Technology.  He is an investigator for Consumer Advocacy organization Household Watch at www.householdwatch.com

Most businesses want to be able to borrow money when they need it, without the owners having to guarantee the loans personally. This means less risk to the owners. But wanting to get credit for your business and actually getting it can be two different things.

One company recently approached us because over the past two years they had created a successful business, with over  twenty employees. But they couldn’t get a business loan because they hadn’t taken the time to build a business  credit profile and didn’t know where to start.

You may have seen marketing hype about how a business credit profile can overcome a bad personal credit file. In most  cases, however, it’s important that small businesses have both good business credit, as well as solid personal credit on the part of the owners. This is especially true in the  current environment where investors and venture capitalists aren’t handing money out to just anyone who can breathe and has a business idea! Even established businesses will find it  necessary in some cases to provide the business owner’s personal guarantees on some loans or credit cards.

Building business credit is completely different from  building personal credit, though your personal credit may  be linked in some ways. For example, credit reporting giant Experian sells a business credit score that is based on both the risk of the business and the personal credit of the  owner of the company.

In addition, you don’t have the same credit protection laws with business credit that you do with personal credit. So  you want to make sure you start out on the right foot, or it can be difficult to make corrections.

The key to properly establishing business credit is twofold:

1. Set up the proper business structure and take basic steps to ensure your business appears “real” and stable to the  business credit bureaus. That means getting the proper  occupational licenses, and a phone number that is listed with directory assistance in the businesses’ name, among other things. Your business will generally need some form  of corporate structure to effectively build a business  credit rating.

2. Borrow or buy products and services from companies that will report your credit history to the major business credit reporting agencies such as Dunn & Bradstreet and Experian.

Unlike personal credit ratings, where you can have a small income yet get a top FICO credit score, the best business credit scores are reserved for large stable businesses,  those with several million dollars in sales a year and 25-50 or more employees.

But don’t let that stop you! By taking a few careful steps, you can start small and still build a decent business credit rating to get you the borrowing power your venture needs.

A few warnings:

1.   Don’t try to “buy” good credit! Some companies will offer to “sell” trade references for a large sum of money. This is a rip off and if the credit reporting agencies find out,  they will purge those references.

2.   Don’t spend large sums of money on a shelf corporation from a company that “guarantees” you will be able to use it to get loans. More often than not, the company won’t have  the kind of credit rating you’ll need to be successful.

3.   Don’t try to get business credit as a substitute for bad personal credit. If you have damaged personal credit, work on rebuilding it while you’re building business credit.

Entrepreneurs are usually hard-working, creative and willing to get the job done. Fortunately, those are the same  qualities that will help you through the process of building strong business credit. Get started now! For more  information about building business credit, visit www.BusinessCreditSuccess.com

About The Author

Gerri Detweiler is considered one of the country’s top credit experts. She has been interviewed for thousands of radio, television and print newstories including USA Today, The Wall Street Journal, The New York Times, Dateline NBC and many others. She has testified before Congress several times and worked on reform of the national credit reporting laws.

How does a reward program work?  Typically, the program awards points, “dollars” or a cash value based on the amount you charge.  The rate at which you collect points varies depending on what you charge or where you charge it.  Some programs offer extra points for using their card at a specific place such as a supermarket or fast food restaurant or for certain items.

Some programs offer a variety of rewards.  Consumers can earn meals, tickets to sporting events, airline tickets, electronics, or even create their own reward program.

The goal is to get you the consumer to use your credit card as much as possible.  Why?  FEES!  The credit card issuer makes money from two sources each time you use their card.  First, from the merchant who pays the issuer a merchant transaction fee and secondly, from you through finance charges and late fees.

A recent survey found that nearly half of U.S. cardholders enrolled in a credit card rewards program have never redeemed their points. However, 60% of consumers said rewards program influences their decision when deciding which credit card to use for a purchase.

When considering an offer for a card that offers rewards, be sure to read the fine print.  Find out what you have to do to earn points.  Look carefully for any restrictions as to when you can redeem them.  Also check to see if your points carry over from one year to the next.

Reward programs most benefit those who pay off their balances monthly.  For those who carry a balance or even pay late, the resulting higher balances and fees aren’t really much of a reward, are they?

© 2004,  http://www.yourfreecreditreportnow.com

About The Author

James H. Dimmitt

Discover more money-saving tips and articles in “To Your Credit” by visiting http://tinyurl.com/bgo9

Subscribe today and receive FREE bonuses!

jimdim815@aol.com

1. The Federal Reserve Discount Interest Rate.

Banks and other lending institutions borrow money from the Federal Reserve Banks. The discount rate is the interest rate a Federal Reserve Bank charges eligible financial institutions to borrow funds on a short-term basis. This rate is set by the boards of directors of the Federal Reserve Banks.  The discount rate has a direct effect on the “Prime Interest Rate”, which is the interest rate on short-term loans that banks charge their commercial customers with high credit ratings.  You can get live information on the current Prime Rate at http://www.FedPrimeRate.info.

Of the three major factors that affect your interest rate, this is the one you have the least amount of control over.

2. Your FICO Score and Credit Report.

There are companies that gather and sell information about information on where you work and live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy. They are called Consumer Reporting Agencies (CRAs). The most common type of CRA is the credit bureau. Potential lenders will get your credit report from the credit bureau.

The FICO score is a method of determining the likelihood that credit users will pay their bills. It condenses a borrowers credit history into a single number.

You can protect your FICO score and credit report by paying your bills on time and not over-extending yourself. You also have the right to have false information removed from your credit report.

3. Lender Business Factors.

Banks and other lenders are in business to make a profit. They also exist in a competitive market. Like all businesses, they will balance their profit margin with competitive factors.  If they charge too little, based on your credit history and the prime rate, they risk going out of business.  If they charge too much, they risk losing you to a competitor.  Therefore, in order to get the best deal you can, you should shop around.

Keep one thing in mind when you are shopping around. One of the things that affects your FICO score is the number of times your credit report has been accessed in a certain period of time. Therefore allowing too many potential lenders to run your credit report in a short period of time could be counterproductive. Three or four is typically a safe number.  If you request an on line quote from several lenders, they won’t typically run your credit report until after they have made their initial quote.

(You must explicitly provide a potential lender with permission to run your credit report. For that, they usually need your Social Security Number.)

In summary, the three major factors you pay for a loan are the prime rate, your credit history (FICO score) and business conditions such as competition. In order to get the best rate you can, you can do two things, keep up a good credit history by paying your bills on time, and shopping around for the best rate.

About The Author

David Brumbaugh is the owner and operator of EZandFree.com [http://EZandFree.com], which provides consumers with online tools for easily obtaining free competitive Mortgage and Loan Quotes. It also serves as a mechanism by which Mortgage Brokers can obtain legitimate qualified leads from people who need their services.

Terms of Use

Copyright 2004 David E. Brumbaugh. All rights reserved. This article may be published in your newsletter or web site. It must be reproduced in its entirety including the biography and web address.

The types of billing disputes/errors covered by the Fair Credit Billing Act are:

• Charges that list the wrong date or amount.
• Charges for goods and services you didn’t accept or weren’t delivered as agreed.
• Math errors.
• Failure to post payments and other credits, such as returns.
• Unauthorized charges.

Before you dispute any of issues you must first contact the retailer and try to settle the dispute. If they ignore you, or the dispute is not settled then contact the credit card company. Usually you need to have your dispute in writing to the credit card company. The address for billing disputes is different then the address to send payments. The billing dispute address can be found on the back of your monthly statement. If it cannot be found, call the credit card company’s customer service for the billing dispute address. You usually only have a certain number of days to dispute the billing error so make sure you mail in your dispute before the deadline.

If contacting the credit card company doesn’t resolve the dispute, you may contact the Office of the Comptroller of the Currency’s Customer Assistance Group. Their website is http://www.occ.treas.gov/customer.htm and phone number is 800-613-6743.

For more personal finance information visit the Finance Blog [http://financial.blogsmack.com/]

First and foremost you must understand that using your credit card after you’ve received this notification results in your automatic “agreement” to the new terms in the notice. To prevent these new terms from affecting your account you must stop using that credit card immediately or by the date given in the notification statement.

The most common modifications to credit card agreements include new APR’s (annual percentage rates),  new fees and/or changes to existing fees, or a change to the grace period on your account.  The grace period is the number of days during which any credit used for purchases may be repaid in full without incurring a finance charge.

Not knowing or not keeping track of the dollar amount limit on your card is another trap you should avoid.  Credit card issuers will allow you to charge a small amount over the limit set on your account.  However, don’t be surprised when you get hit with an “over limit fee”, usually around $35.00 or higher, on your next statement.  Also, be prepared for your APR to be increased if you go over your credit limit.

You’ll also trigger an increase to your interest rate if you miss your payment due date.  Some companies consider your payment late if not received by noon or 1 p.m. on the date due.  Along with the higher rate, you’ll also pay a “late fee” of $29 on up.  Be sure to use the company’s preprinted envelope when sending your payment.  These envelopes allow the pre-printed bar code to be scanned by the post office so that it can be delivered more efficiently.

If you’ve counted on those few extra days from the time you mail your check and the time the check clears your bank, beware!  Many credit card issuers have switched from the traditional method of processing checks to a new electronic process. This new system shaves off a day or more from the traditional method it normally takes for your check to clear by electronically debiting your account.

If you’re considering paying your credit card bills online, check to see if any additional fees will be charged for using this type of payment.  I recently received an e-mail message from one of my credit card companies announcing how easy it would be to make my payments online.  Included in fine print at the bottom of the e-mail was this note -  “A fee of up to $14.95 may be charged for this service and will be deducted from your checking account”.  Hmmm, spend 37 cents on postage and mail my payment five days before the due date or pay now and get charged an additional $14.95 fee?  I’ll bet you can guess which choice I made.

Taking the time to carefully read and understand your credit card agreement now will help you save money by avoiding unnecessary fees or climbing interest rates later down the road.

© 2004,  http://www.yourfreecreditreportnow.com

About The Author

James H. Dimmitt

James is editor of  “To Your Credit”  a FREE weekly newsletter focusing on money management news and tips.  You can subscribe to his newsletter and also get a FREE copy of your credit report when you visit: http://www.yourfreecreditreportnow.com

jimdim815@aol.com