Is the New Credit Card Consumer Protection Law Really Going to Help You with Money Management?

When you get your credit card statement or statements in the mail each month are there other things in the envelope besides just your bill? Perhaps there is also an advertisement or two stuffed in there with the statement. And maybe, just maybe there is something with a lot of fine print that is labeled as being “important information about changes to your account.” How many people do you suppose actually read all of this fine print? Well the banks issuing these credit cards are counting on this; but the cat is slowly getting out of the bag on their latest scheme!

For years credit card companies could make changes to cardholder agreements at their leisure. There were really no restrictions placed upon these companies by the federal government. But because it was such a competitive industry it would not have been in any credit card issuer’s best interest to make themselves less competitive by doing things like randomly raising interest rates. That was until the banking and credit meltdown.

So President Obama signed a bill into law called the Credit Card Accountability, Responsibility and Disclosure Act. This bill basically states that banks are restricted in the way that they can raise interest rates on fixed rate credit cards. That’s great news for credit card holders who are concerned about money management, right? It would be, except the law says nothing about credit cards that have variable rates.

And you guessed it: now these credit card companies are changing many of their cardholders’ accounts to variable interest rates instead of fixed interest rates! Some consumer advocates are going as far as calling this a bait and switch tactic too. While we may not all agree that it is this extreme, we can all recognize that these companies are changing these terms simply to sidestep the new law.

So, what can you do? Your best option is to pay off your variable rate credit cards, and try to obtain fixed rate credit cards. Debt settlement and debt consolidation plans are also a solid choice, if your credit cards are putting excessive strain on your finances. Make sure you pay attention to the tiny print in your next credit card statement, and don't get caught with a higher than usual interest rate!

Looking to reduce debt? Debt consolidation maybe the option for you. When excessive credit card debt has occurred debt consolidation should be the first option you look into. The term “debt consolidation” nowadays is universally used to describe many different processes. Technically, it is the process of obtaining one large loan to pay off lots of small loans with the intention of lowering your interest rate, your monthly payments, and the length of time till the debt is paid off. Although there are many ways to consolidate debt, 3 basics forms come to mind.

Balance transfers are one way to consolidate credit card debt. This is when you can obtain a new credit card with a larger credit limit and a lower initial interest rate, then transfer the balance from several other cards over to the new card. While this may lower your payments and help to pay off the debt sooner, it can also be a “role of the dice”. If your situation financial position gets worst, that consolidation method may hurt your ability to seek other debt relief options.

Taking out a personal loan is another way to go and is more recommended than consolidating with another credit card. Going to your local bank and/or credit union and applying for a small personal loan to consolidate can be a great option if you can qualify. What may people are seeing, especially nowadays, is that the debt they have is hurting their ability to qualify for additional lines of unsecured credit.

Lastly is refinancing a home mortgage to consolidate debt. This can be done through refinancing the principal loan or taking out an equity line of credit secured against the home, sometimes known as a HELOC (Home Equity Line of Credit). This is a great way to consolidate excessive credit card debt; however (as with anything) there are always holes that can be poked in the process. Most importantly, and this only applies to people in a more severe trouble, you are taking an unsecured debt and turning it into a secured debt. One of the main reasons people are looking into other means of debt relief in today’s market is because housing prices have made it difficult (if not impossible) for many people to tap into the equity in their homes. Additionally, if you already have excessive credit card debt, you may be in a position where you need a subprime mortgage, and with the collapse of the subprime mortgage market your options have dwindled; if not disappeared.

The credit card industry is going through some changes. New government regulations are slowly being put into place. These new rules could help you pay off your debt more quickly. And they certainly offer some great consumer protections. These new regulations are part of the Credit Card Accountability, Responsibility and Disclosure Act which goes into effect bit by bit from now until February, 2010.

A large portion of the new rules revolve around a banks ability to change a cardholder’s interest rate. When a bank raises your interest rate it can drastically affect your ability to pay down or off your credit card debt. Many of the rules also address billing, fees and who may get credit cards. The new rules (that do not necessarily apply to credit cards with variable interest rates) include:

1. No raise in interest rate the first year the card is issued.
2. Issuers may not raise rates on existing balances.
3. Due dates may not change; they must remain on the same day every month.
4. Bills must be delivered to the customer’s mail at least 21 days before the due date.
5. Nobody under the age of 21 may get a credit card without a co-signer.
6. The bank may not raise the rate on someone under 21 without the co-signer’s approval.
7. Banks can no longer charge consumers a fee just for making a payment.

If for some reason you don’t manage your money very well and you miss a payment or two, then the bank may raise your interest rate even if you do not have a variable rate credit card. There is good news, however. If you get back on track, start to manage your money well and make payments on time for six months, then the interest rate must return to where it was originally.

So for those of you who may not be able to make the consistent payments over six months to get back to a lower interest rate, trying to settle your debt with credit card companies may be a viable option. The tomfooleries that banks were allowed to pull in the past are being eliminated. But just because the government changed these rules, savvy consumers will need to continue keeping an eye on their credit card issuers to see how they try to get around these new rules.

Warren Buffett, nicknamed the Oracle of Omaha, is possibly the greatest investor the world has ever seen. Once during a CNBC interview , Mr. Buffett mentioned that he could never make money if he borrowed at high interest rates. Mr. Buffett excels at capital allocation. It’s his profession and he is very, very good at it. This brings a very important question to mind. If Warren Buffett, a man (when I last checked) whose net worth is around $37 billion, says that he can’t benefit from borrowing money at high interest rates (for example 15%, - 30%), then how can an average, everyday Joe such as you and I benefit from borrowing money from a credit card that charges us 20%?

The answer is we can’t.

Let’s explore this a little further. Let’s assume that you have $20,000 in credit card debt and an annual interest rate of 20%. Usually, a creditor will have around a 2% minimum monthly payment on the account. This could result in the following situation:

Monthly Minimum Payments = $400
Monthly Interest Payments = $333.34

At a 20% interest rate, you’ll be charged around $4,000 in interest for the first year alone! Let’s look at this from another angle. What was that $20,000 spent on? Do you think it was used to buy items that will appreciate in value? Probably not. Even if the funds were used to make purchases on items that may appreciate in value, do you think those items will all appreciate at 20%? Once again, probably not.

Unless you are temporarily borrowing funds at these high interest rates, then it should be avoided all together. By “temporarily” I mean paying back the debt in a matter of a few months or so. Making the monthly minimums in this scenario just doesn’t cut it. If you should find yourself with excessive credit card debt, extremely high interest rates, and payments that you can no longer afford, debt settlement may be the right choice for you.

Is your home your castle? Do you use it to mask reckless financial planning? Are you reducing your options by consistent self abusive life styles? Interesting questions considering what is going on in our country now. Even though real estate values recently have gone down your home is still your best investment.

There is a pandemic going on, and it is not the swine flu. It is call refinanceitis. Thousands of people refinance their house in order to save money. Are they really saving money, or employing an expensive procrastination strategy, I wonder?

Individuals refinance for two reasons. The first is to lower the rate reducing their monthly payment. Does this really save money? Utilizing this strategy, that house which was bought for $200.000.00 twenty years ago is now going to cost somewhere around $900,000.00 to pay off. No savings there.

The second reason is to pay off credit card debt. Well, let’s say you were going to pay off $30,000.00 of credit card debt with the equity in your property, would you save money? That 30K over the thirty years will cost around $90,000.00, too expensive for me. Credit card debt negotiation may be a better solution. Most of these programs significantly cut the amount owed. Typically the debt is paid off in one to three years; obviously much better than paying $90,000.00.

As I said your house is your best investment. You wouldn’t allow the exterior to go without paint. That reduces the value. Similarly, be financially nicer to your home. If you don’t, when you need the equity the most, such as the time retirement, it won’t be there. Remember, the best debt is the one that is paid off quickly. Credit card debt negotiation may be your least expensive solution and fastest solution for eliminating credit card debt.

Change is in the air. The summer is coming to a close, children are back in school, and the weather is turning cooler as we are enter the last quarter of the year. The next three months seem to go by faster than any other quarter. This probably occurs because we prepare for one holiday after another. We celebrate a wide variety of holidays from Halloween to Thanksgiving to Christmas, or whatever you celebrate, and lastly New Year’s. Why does it seem that these holidays are all bunched up together? Why can’t they be spread out over more months? Why is it that between Thanksgiving and New Year’s the average amount of weight gained for adults is 7 pounds? Yes, 7 pounds. Think of all the food you eat and think of the amount of alcohol you consumed for each holiday. Why do we do this to ourselves year after year? When will we learn how to control our splurges? There is no better time than the present.

As we head towards the end of the year, what did you think I meant the end of the world? As we head towards the end of the year, try reign in your credit card debt. Set a budget for what you can afford for this holiday season and stick to it. Put yourself into a better financial position by sticking with your holiday season budget. Maybe you should pay by cash only. Whatever you think might work, do it. There is no better time than starting now.

Most people think that winning the lottery would be like having a dream come true. You could buy a new car. You could by a new house or that boat you always wanted. Looking into debt solutions would no longer be an issue. Unfortunately the reality is that this dream often turns into a nightmare for people who win the lottery.

Typically when someone wins the lottery debt settlement is the furthest thing from their mind. If you won the lottery today would you settle credit card debt, or would you go shopping? Would you manage your money, or would you start spending it? The statistics show that a lot of lottery winners do the latter, and many quickly find themselves broke. You don’t have to fall into this trap though.

It is only human to want to splurge if you have a large sum of money basically given to you. This is not to say that you can’t buy a new car and treat yourself to a few nice things. Rather, it is about moderation. A good rule of thumb would be not to spend more than 5% of your winnings right away. That way you will be left with 95% of the loot to invest.

If you don’t already have a financial advisor, get one. Professional advice can be instrumental in helping you deal with and hold onto your money. This does not mean that you should rely on your financial advisor completely though. Learn how to invest and save money yourself by reading books, taking classes and researching online to help you manage your money.

You need to set a budget. Setting a budget is not about being frugal. Instead, setting a budget is about being realistic and sensible. Think of it as figuring out how much you can afford to give yourself as an allowance without draining your new fortunes.

You can reduce the likelihood of going broke after winning the lottery if you take these simple steps to manage your money. You can buy some nice things and even take a vacation. But once the initial spending spree (which you did in moderation) is done, be smart with your winnings. You don’t want to be the next sad lottery story that hits the newsstands.

It is a common problem these days: people are losing their jobs. The timing for many people could not be worse either. Many people who have recently lost their jobs were already struggling with money management. It is like you got kicked when you were already down when one day you are dealing with credit card debt, and the next day you are filing for unemployment benefits. This doesn’t have to be the end of the world though. You can survive this financial crisis.

Now more than ever is when you will need to manage your money. This is a good time for you to take a personal financial inventory. First step: calculate net worth. It only takes a few minutes to calculate your net worth. Be honest with yourself though. Value your things at today’s market value instead of how much they cost you. Add everything up and then subtract what you owe in debt. This number could boost your sprits!

Second step: evaluate your spending. You must find ways to cut down on your spending. There are fixed expenses that you can not do anything about. These are your house payment, car payment, water bill and so on. While you can’t do anything about those, there are other things you can work on. If you do have a lot of credit card debt this might be a good time to look into using a credit card debt negotiation company. Identifying and cutting out any unnecessary spending is crucial.

Third step: budget. Budgeting is one of the keys to money management. Simply defined a budget is really nothing more than a spending plan which allocates your income to cover your expenses. This obviously becomes difficult if you have become unemployed because the income you were depending on has disappeared. Since unemployment benefits only go so far, you need a budget or you will not be able to manage your money.

This all seems like a lot to do, especially when you are also devoting a lot of your time to searching for a new job. But really it is not that difficult to take a quick look at your financial inventory, identify unnecessary expenses, negotiate debt, and create a budget. Doing so could be the difference between surviving this financial challenge and going belly up.

Smartphones are becoming a necessity for many people today. Unfortunately these phones don’t come cheap. In addition to the initial cost of buying the phone, you have to pay for your monthly plan. People also frequently pay for additional accessories (such as improved battery chargers) and downloads from app stores for personalizing the phone. All of this can lead you into a situation where you’re spending more money than you should on a phone. If you find yourself in the position of reviewing debt consolidation plans and trying to settle credit card debt but you don’t know where your money is going then you may want to look at how much you spend on your phone each year. It’s good to know which smartphones offer the best deal in terms of their cost. Take a look at the differences between the iPhone 3GS and the Android G1 and you can see that some phones are better than others when it comes to cost.

The iPhone 3GS is generally considered a better phone than the Android G1. There’s a lot of hype about the iPhone and much of it is well-deserved. However the Android G1 is a highly capable smartphone and it may be a lot more affordable than the iPhone 3GS is. First of all, the Android phone is cheaper to purchase; it runs $50 cheaper than the iPhone 3GS when purchased with a contract and is a full $200 cheaper when bought without a contract. Moreover, the monthly bill on this phone is cheaper; the total monthly cost of an unlimited voice, messaging and data plan is approximately $35 cheaper with the Android than with the iPhone 3GS. If you don’t need an unlimited plan then you’re looking at a savings of about $35 per month when getting an average usage plan on your Android G1 compared to your iPhone 3GS.

But do you get more for your money when you spend the extra to get an iPhone? It doesn’t appear that that’s the case. The average usage plan for the Android phone gives you a full 100 extra minutes of talk time for a price that is $35 per month lower (and both phones come with unlimited data and messaging). Both phones have WiFi, GPS, voicer commands, cameras that are comparable to one another and similar battery life in terms of talk time. The iPhone 3GS does offer longer standby time before recharging is needed and it offers more on-device memory storage. However it doesn’t offer multitasking features which the Android G1 does offer. Both phones allow you to download applications from their individual stores. The iPhone store may offer more apps but it also offers more apps that cost money. The Android store is growing and can be added to by a variety of developers so costs for downloading apps vary and may be cheaper than iPhone apps depending on what you want to download.

So what does all of this boil down to? Even if you need a smartphone, you may not need the phone that you think you need. If you’re having trouble with debt then you should look into finding a smartphone that meets your needs without costing so much. There are a lot of modern phones out there that don’t have to cost as much as the one that you think you love. Plus you can further reduce what you spend on your phone by limiting the apps that you pay for and reducing your plan if you don’t need as much talk time as you have. Instead of trying to settle credit card debt later, try to reduce your spending today. Instead of looking into debt consolidation plans in the future, try to reduce how much you are adding to your debt right now. Being smart about your phone means you’re being smart about your money.

The holidays are a mixed bag of emotions for many people. On the one hand, we get excited about all of the wonderful things that we get to experience during the holiday season. On the other hand, the holidays can be a highly stressful time of year. A lot of that holiday stress comes from financial concerns that crop up during the holidays. Right after the holiday rush a lot of people have to start looking into credit card debt negotiation, debt consolidation plans and other ways to settle credit card debt because they spent too much money during the Christmas season. If you can avoid going in to debt this year then you can enjoy the holidays more fully. If you cut back on your spending in three areas – presents, travel and parties – then you should be able to minimize the amount of debt that you acquire during the holidays this year.

The biggest problem area for a lot of people is the problem of Christmas presents. There are certain people in our lives to whom we feel obligated to give Christmas presents. This ends up costing us a lot of money. If you can find a way to buy fewer presents this year then you will have found a way to minimize your need to settle credit card debt once the holidays are done. The key here is to talk to the people in your life with whom it’s reasonable to discuss the problem. Parents, adult siblings, friends and spouses are all people that you can talk to about holiday spending. Most of us are in the same position of dealing with financial difficulties and we can help each other out by relieving each other of the burden of spending a lot of money on presents. Agree to only buy gifts for the kids, do a holiday potluck instead of exchanging gifts with friends or do a “white elephant” party where each person buys for only one other person in a group. These methods reduce what you spend on Christmas presents and help you avoid the need to review debt consolidation plans at the end of the year.

Next you may want to reconsider your travel plans for the holiday season. A lot of people travel to their hometowns for the holidays. Some go for both Thanksgiving and Christmas. Others go to both their own parents’ homes and their in-laws. Consider whether or not that’s a smart Christmas investment this year. Maybe you can plan one big family get-together in the spring instead when travel fares may be cheaper. Or perhaps you can go to just one gathering instead of several. Or maybe you can get with the 21st century and use the Internet and video conferencing to bring everyone together in one space on Christmas even though you’re in different parts of the country. Barring that, at least reduce your travel costs by looking for good deals on travel, keeping costly travel activities to a minimum and eating at home with the family instead of dining out in restaurants during the trip. All of these things reduce your holiday spending and help you keep out of debt so that you don’t have to look into credit card debt negotiation after the holidays.

Finally you’ll want to make sure that you keep your spending limited when it comes to holiday parties this year. Holiday parties are pricey whether you are throwing them yourself or just attending a variety of different events. Attendees feel the need to dress up, make sure they have fresh haircuts, bring a bottle of wine with them and even bring gifts for their hosts. To keep the costs down in this area you’ll want to limit yourself to the number of parties that you choose to attend. Make do with the clothing that you have in your closet already instead of buying dressy new clothes for the event. And stick to bringing an affordable bottle of wine or even a homemade dessert rather than a gift. These things all help to make sure that you don’t rack up a bunch of credit card debt by attending holiday parties and keep you from needing to settle credit card debt later on. And all of that makes it a lot easier for you to fully enjoy the holiday season!

The Credit Card Reform Act of 2010 is one of the best things that President Obama has done for the consumers of this country so far to date. Problems with credit card debt plague a large percentage of Americans. This new act will make it much easier for consumers to avoid some of the major pitfalls of credit cards which cause debt to get so out of control. It’s important to know what the act means for you so that you can be a smarter credit card user once the act’s regulations go into effect. It’s also important to understand that now is a really great time to look into debt consolidation plans and debt settlement options so that you can start with a cleaner slate when the Credit Card Reform Act regulations take hold.

What you need to understand about the Credit Card Reform Act of 2010 is that it is designed to hold credit card companies to higher standards. These standards are designed, in turn, to protect consumers from getting themselves into excessive trouble with credit card debt. The Act makes it so that credit card companies have to keep their rates fair (by prohibiting them from raising rates in the first year and putting strict rules in place about when and how rate reviews and increases must occur). The Act also makes it much easier for you to actually pay down your debt (by requiring clear information from the credit card company about the amount of time repayment will take, prohibiting certain fees and double billing and requiring credit card companies to apply your payment to the highest interest portion of your balance first). Finally the Act makes it a lot harder for people to get a credit card when they are under the age of 21 which is important because people tend to get into the most trouble when they get credit cards at too young of an age.

What all of this means for you is that you’re going to find it easier to understand what is going on with your credit card payments and that you should find it easier to pay off your debt on new credit cards. Additionally, you’ll be dealing with much fairer credit card practices once these regulations go into effect. However it also means something for many people right now. It means that now is the best time to look into debt consolidation plans and debt settlement options for your current debt. Many of the credit card companies have begun to arbitrarily raise their interest rates knowing that this new law is going to take effect. This proactive approach by the creditors has in turn caused financial hardships for many consumers. When interest rates on credit cards increase minimum payments typically increase as well causing people’s budgets to become negative on a monthly basis. If you can get a handle on your existing debt then you can start with a clean slate when these improved rules become the norm for credit card companies. That’s the best way to take full advantage of the benefits of the Credit Card Reform Act of 2010.

At the end of every year we take stock of what we meant to accomplish in the preceding twelve months. Most of us discover that there are things that we wish we had done but never got around to doing. We wish that we had dealt with our debt or stuck to an exercise plan. That’s where New Year’s resolutions come in. We resolve to do more of the things that we wanted to do so that we don’t feel this same way again next year. We commit to reviewing out debt settlement options so we can settle credit card debt once and for all. Unfortunately, many people fail to stick with their resolutions long enough to make them last. They don’t even get so far as looking into credit card debt settlement services before the lull of the New Year sets in and the goals go forgotten for another twelve months. Don’t be this way. Take the motivation that you’re feeling right now and use it to create a plan that you can stick to in order to meet your goals.

The main thing that you have to realize is that it is important to set up a series of smaller goals that will lead to meeting the large goal that you have chosen for yourself. Let’s say that your goal is eliminate your credit card debt as soon as possible. You need to break that goal up into smaller, more manageable goals if you’re going to accomplish what you are setting out to do. First you might contact several different credit card debt settlement services to learn about your debt settlement options. Then you would choose the service that you’re going to go with. You would work with the company to negotiate and settle your debt throughout the course of your program. This could potentially put you closer to meeting the ultimate goal of having no more credit card debt in the shortest amount of time possible, without filing for bankruptcy.

Having these little goals will help you in multiple ways. First it is going to help you to actually solidify your understanding of and commitment to this year’s New Year’s resolution. You’ll make a plan right now that will aid you in choosing a goal that you can achieve this year. Second you’ll be laying the groundwork for accomplishing this goal in a series of small steps which is what it takes to achieve a big goal like trying to settle credit card debt. Finally, you would be structuring your goal in such a way that you would have checkpoints to keep you on task. This prevents you from falling into the trap of thinking that you have all year to meet your goal (and then failing to do so because you put it off for too long.) Make a resolution, make a plan for sticking to that resolution and then hold yourself accountable with regular reviews of how far you’ve come in meeting your goal.