Consumers are telling credit card companies to take a hike. In July, revolving credit fell by $6.1 billion. As card issuers have increased rates in anticipation of regulatory legislation taking effect, customers appear to be jumping ship in droves. In response to losing business, credit card companies are developing new credit card products that are supposedly “customer friendly.” A major bank has announced its forthcoming “basic” credit card that provides the same adjustable rate for all types of transactions including purchases, cash advances, and balance transfers. Customers will no longer pay over limit fees, and will be assessed a flat fee for late payments. No doubt other card issuers will follow this trend, but don’t get too excited. Industry leaders anticipate raising interest rates for credit cards for recouping profits previously gained through discontinued or lower fees.
This amounts to a kind of shell game for consumers; you’re going to pay high finance charges, but it’s up to you to figure out exactly how your annual percentage rate (APR) is assessed. It doesn’t matter whether it’s generated by transaction fees or increasing interest rates. Of course, if you pay your balances in full and on time each month, you can eliminate interest charges and late fees.
Getting Out of Debt: Stop Shopping and Get Debt Help
If you depend on credit cards for recreational shopping, you’re probably paying a lot more for what you buy than you know. Carrying balances on credit cards leads to escalating balances, and who wants to be paying for a designer bag long after it’s gone out of style? Getting out of debt can yield a better return for your money than typical deposit accounts or investments. Developing a debt management plan on your own or seeking debt help through a credit counseling service can put you on the track toward financial freedom.
Debt Help: Escaping a Financial Nightmare
If you always screen your calls, delay opening the mail, and haven’t balanced your checking account in months, you may benefit from getting debt help. Credit counseling services can help you design an affordable cash budget and negotiate affordable repayment terms with your creditors. Although your balances may not be reduced, credit counseling services can often negotiate waivers of late fees, overlimit fees and membership fees. In exchange, you’ll pay the credit counseling service a monthly fee, along with the amount you’ve agreed to pay toward your debts each month. You will also have to close your credit card accounts, but this is a small price for achieving financial solvency and regaining your sanity.
Personal finance expert Suze Orman is known for her “Suze smackdowns” where she scolds people for spending too much money on frivolous purchases while they struggle with debt and other bills. Whether you love her or hate her, Orman’s message of taking personal responsibility for your financial habits is right on target.
Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.