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November 19th, 2010

3 scams that can leave you with credit card debt

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Scams aimed at swindling consumers out of their money are perpetrated every day. The Internet Crime Complaint Center (IC3), a partnership between the FBI and the National White Collar Crime Center, recently logged its 2 millionth complaint about online criminal activity. Other scams are perpetrated by phone or even with letters sent through the mail.

Among the scams making the rounds that can boost your credit card debt or empty a bank account are:

  • Debt settlement services. So many Americans are desperate to get out of debt that they become easy prey for people claiming to offer help with debt. While there are legitimate agencies offering debt help, there are others out there looking to prey on people. Avoid working with companies that make outrageous claims about their success rates or require large upfront payments before providing any services.
  • Hijacked email and social network accounts. Someone hacks into an individual’s account and sends messages to all the contacts claiming that the account holder has been robbed and stranded in a foreign city. The desperate plea for help asks recipients of the message to send money.
  • Solicitations from charities. Many charitable organizations step up efforts to solicit donations at the end of the year. Callers urge you to support their organization and try to convince you to use a credit card to make a donation. Fake organizations often use a name that sounds very similar to legitimate charities. Anytime you receive a solicitation from a charity verify that it is a legitimate group before donating.

Show restraint when giving money

Be skeptical of individuals or companies that approach you unsolicited and ask for money. While many legitimate companies are constantly marketing their services and products, it always pays to check out any unfamiliar organization you are thinking of supporting before handing over any money.

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November 15th, 2010

Falling delinquencies for credit card debt: A hopeful sign?

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Several major credit card lenders are reporting lower delinquency rates for consumer credit card accounts; this  development is seen as a positive sign for the US economy. Factors influencing this trend include:

  • Economy: As the US economy shows signs of improvement, consumers who’ve returned to work are able to resume making payments on credit card debt.
  • Consumers using credit cards less: The lower your credit card balances, the easier it is to keep your payments current. As concerns about job security and the general economy continue, many consumers are reducing their use of credit cards.
  • Issuers charging off noncollectable accounts: Credit card companies remove bad debt from their active portfolios, a practice that reduces their delinquency rates. Although some creditors are reporting lower charge off rates, overall rates for charge offs remain high when compared to historical data.

Consumer credit counseling and debt consolidation options: Finding the help you need

The first step you’ll want to take when dealing with credit card debt is understanding that you have to help yourself. Being embarrassed or procrastinating in facing debt head-on can lead to more debt along with credit and potential legal problems. Here are some options for dealing with credit card debt:

  • Credit card debt consolidation loans: Your bank or credit union may offer personal loans, sometimes called “signature loans,” with finance charges lower than you’re payng on credit card debt. Compare the annual percentage rates (APR) on your credit card accounts with the APR for unsecured debt consolidation loans.
  • Credit card counseling and debt consolidation plans: Consumer credit counseling services can help with credit card debt management and consolidation. They’ll review your finances, help with establishing a cash-based budget, and negotiate affordable repayment of credit card debt with your creditors. You’ll make scheduled payments to the credit counseling service, and they’ll pay your creditors. These programs can help with avoiding bankruptcy and reduce or eliminate collection efforts by creditors.
  • Online debt consolidation: It’s easy and convenient to seek online debt consolidation options, but please be careful. Don’t respond to unsolicited e-mail offering debt help. Seeking assistance through the National Foundation for Credit Counseling (NFCC) or a HUD approved counseling agency can help you find the help you need while avoiding scams.
  • Avoid holiday spending using credit cards: Recent reports indicate that consumers are spending at higher levels, and this may be due to the approaching holiday season. Put your credit cards away and use cash or your debit card for funding holiday spending.

If you’re having problems with credit card debt, please seek consumer credit counseling and debt consolidation help immediately. The best holiday gift you can give yourself and your family is regaining financial security.

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  • 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.

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