Stay calm. You'll fix the problem more easily that way. (Thinkstock)

Have you ever tried to call a credit card company or cell phone company about fast cash charges on your bill that are unreasonable or simply not accurate? Perhaps it has left you in need of personal loans or installment loans to cover the costs. Sometimes, it is beyond frustrating to logically work with the customer service reps on the phone. Companies like that make a lot of money by making it almost impossible to correct an error on your bill. However, don’t give up and agree to be taken advantage of.

Fix the error, get your money back!

Want to know how to get your money back easier, at least 99 percent of the time? First, stay calm and be nice. Even though you’re upset that you have to take the time to get your own money back, you won’t get results by being nasty to the representative you’re speaking to. Remember, it is not the rep who is responsible; he or she just happens to work there. So, going at it from the angle of assuming it was an error and staying on that path makes them want to hear what you have to say.

Remain calm and nice and call back if need be

On the first call, if you get someone who won’t work with you, even though you are being nice, just thank the rep for the help and hang up. Call back and start over with another rep. Eventually, you’ll get someone who sees the value of keeping you as a customer and will help you to resolve the error.

You can ask for the supervisor or manager

If you aren’t getting any help from the reps, then nicely ask for a manager or supervisor. If they tell you the supervisor will only tell you the same thing they are telling you, stay calm and continue to request to speak to one. Being nice and polite will help you get the problem resolved.

More companies today are truly realizing the value of keeping their customers over the long haul, rather than thinking there are plenty more out there. If you stay calm, nice and patient, you won’t have to feel taken advantage of.

The Capital One class action lawsuit, revived on appeal, accuses the credit card company of deceptive lending and unfair competition. Flickr photo.

Raising credit card interest rates on customers without telling them has gotten Capital One in trouble, again. A class action lawsuit accusing Capital One of violating the Truth in Lending Act by raising credit card interest rates without warning was dismissed by a federal judge earlier. But the 9th Circuit reinstated the Capital one class action lawsuit July 22. New credit card rules enacted earlier this year make arbitrary interest rate increases illegal.

Capital One class action lawsuit

The Capital One class action lawsuit accuses the credit card company of unfair competition and deceptive lending for raising  credit card interest rates without giving consumers “clear and conspicuous” warnings. The Courthouse News Service reports that after having the credit card for three and a half years and complying with the terms of the contract, lead plaintiff Raquel Rubio claimed her credit card interest rate suddenly more than doubled.

Capital One reserves the right to deceive you

Rubio sued Capital One for breach of contract, violation of the Truth In Lending Act and unfair competition. A federal judge dismissed the class action, ruling that Capital One satisfies its obligation to be clear and truthful by stating that the rates and fees were subject to change. Capital One reserved the right to “amend or change any part of your Agreement, including periodic rates and other charges, or add or remove requirements … at any time.”

Capital One buries deception in fine print

The Capital One class action lawsuit was revived on appeal. A three-judge panel ruled that Capital One can’t represent that the rates are “fixed” if they are not. Reuters reports that Rubio had accepted a February 2004 mail solicitation from Capital One that offered a credit card with a 6.99 percent rate on balance transfers and purchases. The solicitation included a required table that said in 10-point type that the rate could rise if Rubio missed a payment, exceeded her credit limit or had a payment returned. But in eight-point type on the same page, it also said terms were “subject to change,” and a cardholder agreement that Rubio received the next month said Capital One could “amend or change any part” of her agreement “at any time.” Capital One raised Rubio’s rate in August 2007 to 15.99 percent though she had not triggered any of the conditions warranting a hike.

The credit card industry

In a panic, credit card companies began using tactics that were highly questionable. They started raising interest rates without cause. They began slashing limits of even their good customers. They began charging fees for just about everything they possibly could. In the end, it left a credit industry that was not well looked upon by the American public.

The Obama administration stepped in recently to push for credit card reform laws. The aim was to create a watchdog-like service that kept lenders on the up-and-up. Gone are the days of lenders being largely “unregulated” and free to do as they please, depending on the market.

The new credit card reform

Although the laws governing credit cards have been signed into effect, there are still some concerns. Many analysts are optimistic about the changes, but they are cautious to have full confidence in the system just yet.

Here are some issues that have yet to be sorted out:

• Higher interest rates from the beginning. Putting a limit on interest rate increases is causing credit card companies to raise those rates right from the start. Because they can no longer raise rates without a 90-day notice, they will compensate in other areas. Consumers will also see a rise in APRs on their existing credit cards, particularly if they have any trouble in their past payment histories. Consumers need to remember that credit card companies still have the ability to raise interest rates, although there now is a universal grace period.
• Annual fee structures will change. One of the perks of opening a credit card was the ability to avoid annual fees or interest changes for customers who consistently made on-time payments. This is likely to change. Currently, only about 20 percent of U.S. credit cards have annual fees, however that amount is expected to sharply increase in coming months. The estimated annual fee will be anywhere from $50 to $100.
• Banks are looking to take advantage of grace periods by closing the window of time consumers can take advantage of them. Many banks are looking to compensate for lost revenue by charging interest from the day of purchase, instead of giving people the normal 21-28 day grace period to pay the balance in full without additional charges.
• The new Obama administration laws still do not regulate fees on balance transfers, cash advances or late payments. Currently there is a penalty rate for late payments that is averaging 28 percent. That average is expected to rise to the mid-30s by the end of the year, as credit card companies are scrambling to make money where they can.

The reformed laws

Laws that govern credit cards were sorely in need of change, and the Obama administration put these changes into effect at the right time. Unfortunately, there is still a long way to go for companies to continue lending and make a profit, while not taking advantage of borrowers.

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Young people and lenders

Now that the recession is over, companies are trying to find new ways of bringing in cash. Part of that includes finding and targeting a new market. That new market has been clearly carved out by credit companies, and it is the college-aged students who are now the new generation of borrowers. Credit companies know that this is a good sector to hone in on.

What qualified the new market?

The new market has no credit history and no steady income, so how does that make them the perfect group? Despite those shortcomings, they also have no history of defaulting. In a world where there are millions of defaulting customers to deal with and few ways of recouping the debt, a prospective customer without financial baggage can be enticing. In addition, lenders are focusing on college-aged consumers who have a high income potential. They are hoping that in future years, these are the customers who will have the income to buy high-ticket items and have the resources to pay for them.

Is it good for the consumer?

The question remains, though, whether or not this extended credit to the college-aged borrower is good for them. New studies are showing that recent college graduates leave school with thousands of dollars in unpaid credit card bills, and that trouble early-on carries over to their adult lives. According to a recent study done by Sallie Mae, provider of student loans, a large number of students are relying already on credit cards for their daily lives. The average undergraduate has $3,173 in credit card debt and half of all college students have four or more credit cards.

Unsecured loans are growing in numbers and amounts in society today. Younger and younger people are falling victim to the problem and the future is not showing any signs of improvement. Though the college-aged student has income potential, there is also a bigger picture to look at. They have credit card debt to deal with and once they graduate, they also will have student loans to deal with. That can put a strain on even the top-earners in the most lucrative fields.

There is some education on the way

The Credit Card Accountability, Responsibility and Disclosure Act, or Credit CARD Act, was just signed into effect a few weeks ago, and it aims to help consumers with education. The act looks at the past history of practices credit lenders use to draw in students, without giving them a clear picture of the potential consequences of holding the cards. The CARD Act strives to limit what banks can do to market their loan products to consumers between the ages of 18 and 21. There are also additional restrictions on how they handle college students’ accounts, and in many instances parents have to be involved in credit acceptance for anyone under 21-years of age.

Credit in the future

Credit in the future is going to be monitored more closely by watchdog groups, and that is good news for college students. Though unsecured loans are available, that doesn’t mean they are a good idea. More and more young consumers are learning the hard way that credit, though it can provide financial relief, comes with a high price. Without understanding that high price, they are setting themselves up for future disaster.

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Let’s say you are lucky enough to get a new unsecured credit card. That means that your credit has to be somewhat stable, because credit card companies are no longer handing out credit like they used to. Now there is a rigorous intake process that sorts through applicants and notes those who are most likely to pay their debt on time and those who are most likely to default.

Once you get your credit, you run to the local store to make your first purchase. It could be something as innocuous as dinner for your family, or it could be a big-ticket item that you were waiting to put on credit. It may seem well and good for a while, but then your bill comes. For a lot of people it isn’t until their bills come that they realize the true relationship they have with their credit lenders. Though there is an immediate benefit, there is a long-term payout.

Credit card trends to be wary of

Credit is necessary in today’s market. If you ever expect to get a car, house or any big-ticket item, you have to have a decent credit score. However, now that lenders have been through the recession, they are changing their rules as to how credit is managed. Here are some new characteristics of credit cards to pay attention to:

1. Credit rates will continue to rise. Surveys show that four of every five credit cards have the dreaded “variable rate.” Since the recession, those variable rates have been steadily on the rise. Coming 2010 the trend is expected to continue. Although regulators have managed to change the rules of minimum payments, it still may take consumers much longer to pay off debt if they stick to the minimum payment amount.
2. Great deals are available, but beware. The credit cards with great deals are still going to be introduced to the market, but this time they come with some startling regulations. For example, Discover card advertised a 0% balance transfer deal that requires only two purchases a month. What was hidden in the fine print, however, was a hefty minimum requirement of purchases to be eligible.
3. Fees are on the rise. In the past ten years fees for over-limit purchases and late payments have risen dramatically. It’s a chronic problem with credit cards from most major lenders. For example, Citibank’s Citi Simplicity card offers no late fees when users make purchases once a month. The catch is that if you do go over your limit, the penalty rate kicks in. That rate is well over 30%.
4. Low-rate offers are also sketchy. Sure you may find a great low-introductory rate on a card, but there are many more ways for the lender to increase the fees involved. For example, Chase removed their cap on balance transfer fees for some of its lower-rate offers. That means that if you are transferring a substantial amount, expect to get the lower interest rate, but a higher fee. That fee may just about eat up any savings you got from the lower rate.

The future of credit is still in the lenders favor

Overall credit is still sided to benefit the lender more than the consumer. That’s nothing new in the world of credit, but it is projected to be worse than it was pre-recession. This time lenders are focused on bringing in as much cash as possible, as many ways as possible. They are making themselves ready to act quickly should future payment problems occur. Consumers need to be aware of the fine print and understand that benefits these days are not as transparent as they once were.

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It's going to take some time, but it is definitely worthwhile.

In part one of this series on getting rid of credit card debt, we discussed both drastic and practical ways of approaching financial recovery. Now that you have considered those first steps, it is time to figure out what to do next in order to embrace debt-free living. The following suggestions are certainly not easy, but those who are now in full debt recovery will tell you that they are certainly worthwhile.

Get on the phone and discuss your credit card debt

Now that you’ve created a snapshot of your debt, go down your list and call each credit card company. If you are late on a payment to them, explain why and give them a date by which you can send a payment. Even if it is a small payment, be honest about when you can send it in and then do exactly that.

If you do not have frequent late payments or are not behind in your bill, and if your FICO score is decent, call each credit card company and try to negotiate a better interest rate than the one that you currently have. One way of doing this is to single out one of your cards with a more affordable rate and call the companies with higher rates to inform them that you are considering sticking primarily with the one with the lower rate. Or, another way of approaching this is to research companies offering better rates and tell the credit card companies with higher rates that you are considering changing to one of those cards because of the rate difference. If a lower rate is not immediately offered, don’t be afraid to ask them to lower it. The worst thing that can happen is that they can say no and, compared to the high interest rates that you’re paying, that shouldn’t be nearly as frightening.

If the credit card company refuses to lower your interest rate, consider moving your debt to a card with a more comfortable rate and, after doing so, you may consider canceling the high rate card.

The road to debt recovery begins with a single month

After cutting your credit cards and/or negotiating a lower interest rate, look at your monthly personal budget and very carefully calculate the largest possible payment you can make on all of your balances each month. Next, add ten dollars to the minimum payment requirement offered by each credit card company. Now, add up all of the minimum payments, plus the ten dollars that you added in the previous step. If the minimum amount that the credit card company allows you to pay is lower than the maximum amount that you can afford to pay each month, go ahead and subtract the lower amount from the higher. The remaining sum is what you should consider applying to the card that is charging the highest interest rate.

After the high interest rate card is paid off, you may consider canceling that card, but don’t stop there. Now it is time to go back to the beginning and repeat the entire repayment process all over again by focusing on the card with the next highest interest rate. Do not lower the amount that your calculations permitted you to pay before the first highest card was paid off, however. Instead, continue to designate this exact same amount out of your personal budget for paying off credit card debt until it is all gone. Continue to repeat this entire process of paying your credit card debt off by assassinating the highest interest rate cards first and working your way down until you are left with cards that have affordable rates and you are debt free.

Carefully consider emergency cash options

Once you are debt free, if you ever find yourself in need of a cash advance, before turning to a credit card, carefully weigh that option against that of a loan till payday or an installment loan from a personal loan company. Always know your options, study them closely and select the one with the lowest repayment terms for your personal budget.

Making a hard decision is the first easy step to a debt-free life

It takes some sacrifice and a lot of discipline, but you really can get rid of credit-card debt for good. Relax. Breathe. Others have done it and you can too. Paying off credit-card debt can seem overwhelming when you look at your statements each month and realize that you’re not even putting a dent in it. You may have tried getting personal loans, applying for extra cash till payday, or even working a second job, but you still feel like you’re drowning in debt.

It isn’t easy to break the credit-card spending cycle but it is, in fact, completely possible. You first have to believe that financial recovery can be achieved and then you have to make the commitment to work hard at it.

Simple (but not-so-easy) steps to financial freedom

Cut up your cards. If you’re ever going to get your credit-card debt under control, you must stop adding to it. There’s no room for negotiation on this one: Cut up your credit cards. This can feel like a drastic action, but if you’re serious about getting out of debt, you cannot use credit cards.

Consider other emergency-cash options. If the thought of not having any credit cards is too much for you to handle at first, choose one card to keep for emergency use only. Store that card in a safe place or give it to someone you trust, but don’t carry it in your purse or wallet. If the card has a high credit-limit, consider asking the credit-card company to lower it. Remember, when you’re in need of emergency cash, a credit card is not your only way out. You can get a short-term loan or an installment loan online even if you have bad credit, without the risk of over-spending.

Don’t be too quick to close accounts. Don’t be too quick to close your credit cards before you’ve paid them off. Many people have made the mistake of closing their accounts when they cut up their cards, without understanding the negative effects this action would have on their credit ratings. For one thing, closing an account stops the clock on that part of your credit history. If you’ve had credit cards for a long time and have made the payments as required, that history can have a positive impact on your credit rating. Closing an account can also negatively affect your debt-to-credit ratio, which can have a direct affect on your credit score. So cut up your cards, but do some research and ask around before you cancel any accounts.

Be honest with yourself. Take an honest look at your credit-card statements and tally up what you owe. This is scary for people who purposely avoid looking at the bottom line because of the stress it causes. Ironically, however, not knowing what you actually owe can be the most stressful part of all. Make a list of your account balances and make a note of the interest rate on each. List the balances in descending order of interest rates, so that the account with the highest interest rate is at the top of the list. Next to each entry, write down the minimum required monthly payment. Finally, note the name and phone number of each credit card company.

Make a realistic personal budget. Once you’ve decided to get serious about credit-card debt recovery, have cut up your cards and taken an honest look at what you owe, take some time to make a realistic personal budget setting forth your monthly income and expenses. Look at what’s left after deducting the essentials – rent or mortgage, car payment, utilities, food, etc., — and decide how much of your disposable monthly income you can devote to paying off your credit-card debt.

What’s next?

Read part two of this series for suggestions about what to do next. There, you’ll find advice about negotiating with credit card companies and getting rid of account balances with high interest rates. If you exercise some willpower and resolve and take these suggestions seriously, you really can find your way to a debt-free life, once and for all.

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Americans surveyed

Foreclosures, bad money lenders, and unscrupulous credit card company tactics took their toll on the American public throughout 2009. According to a new poll done by the AP-Gfk, 42% of Americans labeled 2009 as a “very bad year.” The last time the poll was done was back in 2006 when 39% considered it a “good year.” The results of the survey are telling of how the public is processing the hard recession and its affect on the economy.

On the bright side

Results of the survey showed that though Americans believe that 2009 was a harrowing year in terms of the economy, they also believe that 2010 will be a good year. The traditional optimism of the American public is still alive despite the recession. In fact, 72% of those surveyed are anticipating better times for the economy and almost 80% are anticipating better times for their individual families.

Mari Flanigan of South Milwaukee, Wisconsin is one of the country’s hopefuls. Flanigan is a 36-year old unemployed woman whose business was pushed out of the market due to competition. She said, “My finances now are in shambles, but I believe that now the recession is over, things should turn around.” Despite her optimism she still admitted, “Financially, I am scared.” Her plan to recover includes going back to school, rather than jumping into the job market again. She said, “I’d rather find something where I make less money, but do something I love.”

The hopeful future and a resilient nation

The survey done by the AP-Gfk also showed how resilient the American public is. Take Marcia Andrews of Blairsville, Pennsylvania, for example. She was a high school nurse in the beginning of 2009 but due to budget cuts in education, her position was eliminated. At 69-years old, there were not a lot of options readily available. She said, “It was the wrong place and the wrong time for me.” Now, almost a year later she is in the beginning stages of converting an old house into a bed-and-breakfast. Though the economy is down, she was able to sort through money lenders, personal finances and debt to find a great business loan for funding.

Then there is James Lewis of Alton, Illinois. His view on the recession is harsh. He stated, “Everything [was] done wrong. Everybody [was] losing their 401k. Some people losing their house and their retirement.” Though he is critical of government ways, he also acknowledges that 2009 was not “too bad” for him personally. His hope is that once the economy stabilizes he will have another shot at finding a better job.

What will 2010 hold

Regardless of how people are responding now, the true state of the economy will unfold in just a few short months. Though 2009 was riddled with record numbers of foreclosures, bad money lenders, and heightened unemployment rates, there is still hope that the unknown of 2010 will be positive. Only time will tell what state the economy will be in, but surveys are showing that public perception is optimistic. As one unemployed American said, “In times like these, sometimes all you have is your attitude.”

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