New Legislation Doubles Minimum Credit Card Payments

Have you gotten your credit card statement for January yet? If you haven’t, you may be in for quite a shock. Minimum monthly credit card payments are scheduled to go from 2% of your outstanding balance to 4% of your outstanding balance. In other words your payment is going to double.

This will not affect people who aggressively pay down their credit card balances. However, if you are one of the many Americans that can afford to pay only the minimum on your credit card balances, you are going to be faced with some tough choices.This payment increase is designed to get people out of debt by paying more towards their principle. By paying a minimum payment of only 2%, you are barely paying your finance charges. A $1,000 debt will become a 22-year burden that will accumulate thousands in interest.

Here are a few suggestions that will help you come up with some extra money. Only you can decide if it will be enough to cover the extra payment amount. If it will not, it is time to find a reliable credit counselor and ask for some help.

1. The average US taxpaper receives an income tax return of $2,400. You can adjust your withholdings so that you can receive an extra $200 a month instead of letting the government make interest on it all year long before returning it to you at the end of the year.

2. Stop using your credit cards. You will be that much farther ahead if your balance is not on the rise. If you are using your credit cards to pay bills or buy grocreries, it is time to schedlue an appointment with a credit counselor.

3. Cut back on your spending. Most of us have many things in our lives that we pay for that are not necessities. How many times a week do you eat out? There are several things that we have in our lives today that were not even in existence 50 years ago and people did just fine without them. Do you really need cable TV, high speed internet service or a cell phone. These might be some things that you can do without or maybe just cut back on until you get a better handle on your credit card balances.

This increase in credit card payments will cause peopele to take a good hard look at their finances and hopefully they will take corrective action before they are faced with having to make some unwanted choices. The sooner you evaluate your debt the more options you will have available to you.

Tips for Rebuilding Your Credit After Bankruptcy

This may sound strange, but the best way to reestablish your credit is by taking out new credit. In order for you to get a car loan or a mortgage you are going to have to become creditworthy again. Hopefully, you will have learned from the bankruptcy experience and it will now be easier make intelligent decisions about your financial future. By following these steps you could see your credit score rise quickly in a short period of time.

Make sure all of your accounts show charged off on your credit report or have been included in your bankruptcy. You should have zero balances for a Chapter 7. These accounts will remain on your credit record for seven years and the banktuptcy for 10 years. It’s a good idea to to contact your creditors and ask them to stop reporting them to the credit bureaus. They dont’t have to do it for you, but there is no harm in trying. Getting even one or two of them removed will help your credit score.

The next action item for you is to get new credit cards. Credit issuers probably will not be beating your door down to give you a credit card, but you can get a secured credit card. This is a credit card that is “secured” with a deposit, with the credit issuer, in an amount that will be equal to your credit limit. These types of cards usually have an annual fee and a higher than normal interest rate. The key to reestablishing your credit is to make your monthly payment on time.

Another method of reestablishing your credit is to have a friend or relative add you to their credit card account as an authorized user. You will not be responsible for the bill and it will be at the cardholders discretion whether you will be allowed to have a card. Your bankruptcy will not affect the account holders credit, but you will benefit immediately by their credit history. Keep in mind if the account holder experiences financial difficulty and it is reflected on their credit report it will also show up on yours.

Filing bankruptcy is not a death sentence. With a little bit of effort and patience you will soon have your credit reestablished and will be on your way to secure financial future.

What You Should Know Before You Take a Credit Card Cash Advance

Running a little short of cash this week? Then you remember that you can go to the ATM and get cash with your credit card, but do you know just how much that cash is really going to cost you in the end?

1. Cash advances usually have a transaction fee that can be between 2 and 4 percent of the total amount advanced.

2. There is no grace period with cash advances. The interest meter begins ticking the moment that cash hits your hand.

3. The interest rate on cash advances is normally about 10 percent higher than the interest rate on purchases. I have never seen a cash advance interest rate that is less than 20 percent and most of them are higher than that.

4. Almost all credit card companies will apply your payment to the transaction with the lowest interest rate first. This means that your cash advance will be the last transaction to be paid off.

These costs are no secret. Your credit card issuer is required by law to disclose them.
Remember that little tri-fold piece of paper that comes with your credit card. The one that most of us don’t bother to read. Well, that is card member agreement and that is where the above facts can be found.

The best advice I can give about a cash advance is to put it on a card with no balance and to pay it off as soon as possible. Before you take out a cash advance, you need to give it a second thought and decide if it is really necessary. If you are using cash advances to pay bills or buy necessities, it is time to make an appointment with a debt counselor.