Choosing the right credit card can be challenging. (Photo Credit: CC BY/MoneyBlogNewz/Flickr)

If you pay for everything in cash, learning how to find the best credit card may not be for you. However, if you plan to use credit cards responsibly and pay them off each month, choosing the right credit card is important. Save cash with these helpful hints.

No credit card is perfect

Imagine a credit card with a permanent zero percent interest rate, rewards and an ample grace period during which no late payment penalties occur. Now crumple up that fantasy and get ready to wade through thousands of credit card offers on sites like Bankrate and Credit Card Offers, to name two of many. The path to finding your ideal credit card must begin with a clear assessment of where you stand. The ideal situation is to pay off your credit card balance each month, but most people fall into one of these three categories:

1. You’re attempting to pay down a pre-existing balance
2. You sometimes carry a balance, spread across multiple cards
3. You have either no credit history or are sporting a battle-scarred credit rating

1. Paying down the mountain

If you’re already dealing with a balance, you’ll want a credit card that offers a low introductory rate and an even lower rate on balance transfers. Such cards generally don’t offer additional perks, such as frequent flier miles. However, most credit card companies have pulled rewards programs off the table these days, so go for a great interest rate, no annual fee and no hidden usage fees.

Read the fine print to ensure that things won’t go south after the initial rate expires. If you execute a large balance transfer, you probably won’t pay it all off during the introductory period. Hence, be prepared for when interest rates go up. Watch out for loopholes in the introductory rate, too. It may only apply to purchases and not balance transfers. The cap for balance transfers may also be significantly lower than your approved credit limit.

2. Be prepared, balance carrier

If you plan to use a credit card regularly and carry a balance, go for a rewards program that offers air miles, points or even cash – if you can find such a program. Watch for expiration dates on your rewards, blackout dates for airline miles and minimum-spending requirements for cash-back programs. When it comes to managing your balance, choose a card with at least a 20-day grace period. That way, you can avoid being charged interest before you even receive your bill.

3. No credit? Not necessarily a problem

While no credit or bad credit will limit your options when it comes to choosing a credit card, many online resources can clue you in to the best subprime secured credit card offers. Try not to carry a large balance on a secured card because the APR is almost always more than 20 percent. Upfront fees of $200 or more on a card with a credit limit of only $250 should not even be considered.

Sources

Bankrate

Credit Card Guide

Motley Fool

White House adviser Elizabeth Warren is in charge of setting up the CFPB. Image: Leader Nancy Pelosi/Flickr/CC BY

The U.S. Consumer Financial Protection Bureau (CFPB) is set to open next month in spite of attempts by Republican Senators to stop it. The bureau, which is the result of last year’s Dodd-Frank Act, is seeking input as to which financial entities it needs to regulate in addition to banks.

Bureau to police the consumer financial industry

The 2010 Dodd-Frank Act, which created the bureau, states that it will regulate banks with more than $10 billion in assets as well as payday lenders and non-bank providers of home and student loans. The act does not define, however, what other “larger participants” of the financial markets it should cover.

Created by the Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a federal statute that President Obama signed into law July 21, 2010. The law seeks to regulate the financial services industry to an unprecedented degree. From it, the CFPB was born, under White House adviser Elizabeth Warren. The stated mission of the bureau is to “make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”

“Consumers deserve the peace of mind that financial companies — both banks and non-banks — are following the rules,” said Warren. The bureau has until July 2012 to determine which industries will be regulated and in what ways.

Non-bank industries to be targeted

In a statement released Thursday, the bureau stated several “larger participants” that could be targeted. Those include consumer credit and related activities, consumer reporting, check-cashing, money transmitting, debt-relief services and prepaid cards. However, the bureau is also asking for input into which industries it should oversee.

Republican resistance

The bureau has met resistance from the start by Capitol Hill conservatives. The bureau can’t begin its work until a permanent director has been appointed, and some Senate Republicans have vowed to block anyone the president may nominate for the job. The bureau, however, is continuing to lay its foundation for the scheduled opening on July 21.

Bureau opposed by banks

Bank lobbies have also opposed the creation of the bureau, arguing that it will lead to fewer loans and fewer financial choices for consumers. They say it will have a negative effect on economic growth.

Sources

Reuters
Advisor fyi
Fox

Paying off credit cards can save you big money long term. (Photo Credit: CC BY-ND/lemonjenny/Flickr)

A certificate of deposit is traditionally a worthwhile, low-risk investment. However, CD rates have been so low lately that many consumers have moved their money into more productive financial ventures, reports Bankrate. Paying down debt – particularly credit card debt – has taken center stage.

One-year CD rates scraping the bottom

According to Bankrate, the current average for one-year CD rates is a miniscule 0.44 percent. The highest surveyed was 1.31 percent. Considering that credit cards typically carry an APR of 20 percent or more, a paydown is attractive. U.S. consumer credit card debt still exceeds $790 billion, despite significant shrinkage since 2004, reports the Federal Reserve. That explains why CD balances have fallen to a six-year low of $839.2 billion.

This isn’t a new phenomenon. Market Rates Insight notes that such a shift was apparent in September 2010. From Jan. 1, 2010, to June 30 of the same year, the average monthly CD amount declined by about $3 million. Of the amount that was not rolled over, surveys indicate at least 15 percent was used to pay down credit cards. The rest went into liquid accounts like checking, savings and money markets.

Demand for liquid accounts is high

The Credit Union National Association’s June Credit Union Trends Report found that highly liquid accounts are desirable to consumers looking to eliminate debt. Regular share accounts, money markets and share draft accounts have all seen greater activity since April 2010: a 128-percent total savings increase. The $834 billion in total savings reflected a $35 billion (4.4 percent) increase since April 2010, writes Credit Union Times. CDs dropped 5.2 percent over the same period. These results are consistently below historical trends and suggest that the U.S. is still firmly in the grip of economic uncertainty.

Dave Colby, the chief economist at Credit Union National Association Mutual in Madison, Wis., sees the writing on the wall.

“From a member perspective, households are rational and will continue to pay down higher-cost debt obligations versus building savings, which are losing ground to inflation,” he said.

Savings vs. debt: Weighing the pros and cons

Sources

Bankrate

Credit Union Times

Credit union trends report (PDF)

Money Rates

What kind of cake is your credit report? (Photo Credit: CC BY-SA/Alex Gorzen/Flickr)

If you’ve had a bankruptcy, foreclosure or lots of missed bill payments, you know that your credit score was diminished. But do you know about the smaller things that lead lenders to believe you’re a credit risk? A few FICO foibles can cause credit card issuers and lenders to view you with less favor and lead them to either deny you credit or charge higher interest rates.

Too much credit is a bad sign

While it may be a fact that people who max out their credit cards tend to apply for more credit cards, such behavior does not speak well to potential creditors. Too many credit applications in too short a time raise red flags. Norm Magnuson of Consumer Data Industry Association told Bankrate that banks have “shrunk the window” of frequency in which applications for credit audits are performed.

“It used to be months and months. Now you find companies doing account monitoring monthly or every other month,” he said. “That would raise some questions.”

A short sale isn’t magic

When you’re upside down on your mortgage, the specter of foreclosure may not be far away. Lenders will sometimes tell you that a short sale is the way to go. Even though you’re taking a loss, at least you’re avoiding foreclosure. Yet, how a lender reports a short sale to the credit bureaus can be just as damaging. Experian’s Vice President of Public Relations Maxine Sweet says even though the account is technically settled, the short sale ends up hurting your credit score as much as a foreclosure.

The best thing to do, advises SmartCredit.com President of Consumer Education John Ulzheimer, is to negotiate with your lender so that the difference between what’s left on the mortgage and the amount repaid isn’t reported as balanced owed.

Co-sign at your peril

Whether it’s an auto loan, student loan or any other large scale loan, if you’re a co-signer and the primary borrower defaults, you’re on the hook. Hopefully, you keep in touch with the person for whom you co-signed. Otherwise, you may not know the damage being done to your credit until it’s too late.

Minimum effort, maximum worry

It may seem easy to settle for the minimum payment on your credit cards each month, but there’s nothing easy about what that does to you in the eyes of prospective creditors.

“It suggests you’re under financial stress,” says Nessa Feddis of the American Bankers Association. “You may be defaulting.”

A busy report can indicate trouble

The more inquiries for credit that appear on a credit report, the more tiny nibbles that are taken out of your FICO score. If you know you’ll be applying for big loans – home, auto, education – try to do it all within a two-week window. This will minimize the inquiry impact, as they will be treated as a single unit. The same does not apply to credit card applications, however.

Disputing credit report mistakes

Sources

American Chronicle

Bankrate

MSN Money

If your credit card statement is this frightening, take advantage of the provisions of the Credit Card Act. (Photo Credit: CC BY/Jason Rogers/Flickr)

In 2009, President Obama signed the Credit Card Act into law. One of the provisions of the law is that credit card companies, in conjunction with the National Foundation for Credit Counseling, must provide resources for consumers who have difficulty with their finances. While they’ve held up their end of the bargain, recent NFCC studies have found that consumers simply aren’t taking advantage, reports Bankrate.

Free credit counseling, fallen by the wayside

Only 150,000 U.S. consumers struggling with credit card debt have accessed the nonprofit help to which banks and the NFCC have access, said NFCC spokeswoman Gail Cunningham. The contact number is toll-free and printed on credit card statements. As credit card debit still weighs heavily on the average, recession-weary American, the lack of initiative is troubling.

“I certainly think one of the reasons for the low response rate from consumers could be attributed to a lack of prominence,” said Cunningham. “Perhaps the number is buried somewhere.”

Within the recesses of public prejudice might be where that number is buried. Experts believe that many consumers who see the toll-free Credit Card Act number on their credit card statement may think it’s yet another “service” from the big, bad credit card company to take their money. However, Cunningham has observed that the number has been absent from some statements, which would be a violation of law.

Credit card debt shrunk in 2010

A study by Credit Karma indicates that from January to December, U.S. consumer credit card debt decreased by 8 percent nationally, to an average of $7,404 per person. Eight states, including California, Colorado, Connecticut, Indiana, Oklahoma, Tennessee and Nevada, showed as much as an 11 percent improvement.Wisconsin made the biggest dent in credit card debt, slashing and burning through the credit jungle for a 31-percent improvement over 2009.

On the other side of the scale, states like Delaware, Iowa, Louisiana, Missouri, Nebraska and New Mexico grew their credit card debt by as much as 6 percent. Mississippi was the biggest loser in the Credit Karma Survey, with 8 percent growth.

Looking for credit card help?

Visit the National Foundation for Credit Counseling website at nfcc.org for the information on non-profits near you that can help. The Federal Reserve’s website also has a free calculator with which you can calculate how much you’ll owe if you only make the minimum monthly payment on your credit card. For your mobile, there’s a useful Android Market app called Personal Financial Calculator. Or, if you are looking to compare overdraft APRs of installment loans and other consumer loan products, check out our “Loan Overdraft Calculator,” linked below.

Sources

Android Market: Personal Financial Calculator

Bankrate.com

Federal Reserve

Loan overdraft calculator

National Foundation for Credit Counseling

Obama signed the Credit Card Act. Are you using its programs?

Don't fret – overdrafts and other checking account shenanigans generally will not affect your credit score. (Photo Credit: CC BY/Dan Foy/Flickr)

Most people know that not paying bills on time or maintaining a high balance on several credit cards can result in negative marks against their FICO scores. However, there are some gray areas. For instance, will overdrafts affect a credit score? The answer may surprise you, suggests Bankrate.com’s Dr. Don Taylor, a Certified Financial Planner and Certified Public Accountant.

Bad checks won’t harm your credit by themselves

A college student worried that a checking account scam would harm her fledgling credit appealed to Bankrate’s “Dr. Don” column for advice. Someone had stolen her checkbook and written checks that caused her checking account to go into overdraft. While she was able to get her bank balance back into the black within a couple of weeks, she wondered whether going into overdraft would have an immediate effect on her FICO. Thankfully, no further identity theft occurred after she sent her bank and one of the three major credit bureaus a fraud notification.

According to Taylor, transactions on a consumer’s checking ledger do not have a direct affect on credit scores. Missing bill payments will, but overdrafts won’t in most cases. One exception is when a banking institution does a “hard pull” of a consumer’s credit history when a new checking account is opened.

Keeping tabs on your banking history, free of charge

Taylor suggests that all consumers who are interested in monitoring their banking history as a matter of periodic maintenance look into ChexSystems. This company enables consumers to pull one free banking history report every 12 months, as stipulated in the Fair and Accurate Credit Transactions Act (FACTA). Negative marks remain active for five years.

For those who have ever been denied when trying to open a fresh account at a bank or credit union, ChexSystems is often the perfect place to go for the information that can help consumers understand why they were denied. Even if that isn’t your scenario, it’s worth checking out ChexSystems Consumer Assistance page once per year to review your financial record.

Protect yourself from scams

If you are the subject of a financial scam involving fraudulent checks, contact your banking institution and law enforcement. In the event that you desire to contact your state’s banking commissioner so that others may be protected from similar scams, HSH.com has a list of relevant contact information.

Sources

Bankrate

ChexSystems

HSH.com

Get your bank account history once per year

Credit card mail offers are coming in great volume lately, according to a Mintel Comeremedia study. (Photo Credit: CC BY-ND/Paul White/Whitesites Blog)

Most people find a mailbox filled with credit card offers unappealing, but look at the bright side: It’s a sign that the squeeze on consumer credit may be loosening. Bankrate reports that the consumer credit industry has experienced a kind of renaissance when it comes to credit card mail offers. The Mintel Comperemedia study found that offers for new credit cards skyrocketed from 551 million in the fourth quarter of 2009 to 1.4 billion in the final quarter of 2010.

How credit card offers stand out in the crowd

In order to attract consumer business, more credit card offers are trumpeting no balance transfer fees, no foreign transaction fees and extended low introductory rates. Waiving balance transfer fees is particularly popular. Senior Vice President Andrew Davidson of Mintel told CreditCards.com that banks will do almost anything to grab the competitive advantage. According to a recent Bankrate study, 15 bank credit cards and 25 credit union credit cards eschew balance transfer fees. For banks that did charge interest on balance transfer fees in 2010′s fourth quarter, the mean rate was 3.06 percent.

Working to be your intercontinental champion

Another area where credit card issuers compete for business is the foreign transaction (aka currency conversion fee) arena. While not as visible as APR, annual fees and balance transfer fees, foreign transaction fees are important to anyone who travels, whether for pleasure or business. Most cards add a 3 percent surcharge for each foreign transaction, a tax that can add up quickly. More than 90 percent of bank cards and nearly 60 percent of credit union cards hit travelers with this fee, according to a Pew Trusts study conducted in July 2010.

Chase, Citibank, HSBC and others currently waive foreign transaction fees on many of their cards, said Mintel.

Consumers like extended introductory rates

Perhaps the most hotly contested area in the credit card mail wars is the extended introductory rate. A low initial APR for balance transfers and purchases is appealing to consumers, and some credit card issuers even dangle a zero-percent APR.

The teaser rate offered by credit card typically exceeded 13 months in the fourth quarter of 2010, reports Mintel. However, that number is trending higher, says Davidson.

“The squeeze on credit observed during mid-2009 is being reversed, and many issuers are now offering durations of 15, 17 or 18 months or more,” he told Bankrate. “We have even seen offers with 24- and 30-month intro rate durations in recent months.”

Credit card legislation has kept interest rates down

The Credit Card Accountability, Responsibility and Disclosure Act (CARD) has helped stabilize credit card APRs. The mean for 2010′s fourth quarter was 14.03 percent, according to Mintel. Many credit card companies have contrasted their APRs against the relatively high prime rate as a consumer draw, said Davidson.

Sources

Bankrate

CreditCards.com

Pew Trusts

WhiteHouse.gov

Shop around for a better credit card than this

Paying credit cards has been the latest consumer debt payment trend, notes TransUnion. (Photo Credit: CC BY-ND/Adjustable Rate Mortgage)

Debt payment patterns in the U.S. were changed drastically by the recession, and the shift to paying credits cards first, over mortgages, is a perfect example. Traditionally, this had never been the case. Yet when the subprime mortgage crisis put many homeowners underwater, addressing credit card debt seemed the more feasible choice, reports the Huffington Post.

TransUnion has tracked the disturbing trend

Mortgage delinquency is now viewed as almost acceptable in the current housing market, a trend that may have costly repercussions. According to credit bureau TransUnion, 7.24 percent of U.S. homeowners were late on their mortgage but current on their credit cards in the fourth quarter of 2010. In the previous quarter, it was 7.40 percent, but the drop can’t be viewed as good news, said TransUnion consultant Sean Reardon.

“(It is now) 72 percent higher than it was at the beginning of the Great Recession,” he told the Huffington Post.

By comparison, only 3.03 percent of U.S. consumers chose to fall behind on their credit cards in order to keep up with their upside down mortgages. This is the lowest known percentage for the category on record.

When the tide turned

Not coincidentally, TransUnion found that more U.S. consumers began to pay more attention to their credit cards than their mortgages just a few months after the financial collapse began in 2007. Booming unemployment and a poor housing market submerged scores of subprime borrowers as the country shifted toward an unhealthy dependency upon credit.

The growth in number of underwater mortgages is staggering. By the final quarter of 2010, 23 percent of U.S. homeowners had upside down mortgages, according to business data provider CoreLogic. That amounts to 11.1 million residential properties in negative equity, up from 10.8 million (22.5 percent) in the third quarter of 2010. Another 2.4 million homeowners have less than 5 percent equity, making the total percentage of negative and near-negative equity mortgages 27.9 percent nationwide. But it hasn’t just been subprime borrowers opting to pay their credit cards instead of their mortgages, notes Reardon.

“Initially it was,” he said, “but it spread across all risk segments. It’s now an issue at the national level.”

Sources

CoreLogic

Huffington Post

Refinance your mortgage and whittle down credit card debt

If you use one of these, you're paying an "invisible tax," says Richard Eskow. (Photo Credit: CC BY/MoneyBlogNewz)

JPMorgan Chase CEO Jamie Dimon claims that consumers should start paying for the privilege of using their debit cards, but the truth is that consumers have been paying a premium to use debit for years, argues public policy consultant Richard Eskow in a March 24 Huffington Post column. Eskow states that U.S. consumers pay $48 billion each year to use their debit cards, thanks to the increased prices retailers are forced to charge consumers to offset interchange fees charged by card-issuing banks. It’s a kind of “invisible tax” that big banks collect with no real costs or risk involved.

Debit card fees are getting carried away

The “invisible tax” Eskow speaks of amounts to a kind of sales tax of 1 percent to 2 percent on everything consumers buy with a debit card. This is a tax that hits consumers through higher prices at the register, as retailers must charge more to compensate for the interchange fees debit card-issuing banks charge retailers for accepting debit card payments. On average, retailers pay card-issuing banks 75 cents for every $100 consumers purchases. This amounts to a lot of money in the long run — and most consumers have no idea that it’s happening.

“You never got to vote on it, never heard a debate about it and may not have even known it existed before it came up in the debate over bank reform,” writes Eskow.

Interchange fees go straight to the same “too big to fail” banks that taxpayers have already fed with bailout dollars. As Eskow puts it, the debit card business is “an oligopoly-driven, secretive, usurious system that shafts American consumers along with the small businesses that are the engines of jobs and growth.” And big banks – which had 383 million Visa and 125 million MasterCard debit cards in consumer hands in 2010 – wouldn’t have it any other way.

More covert than credit card fees

Retailers use a number of tactics to encourage consumers to use credit cards rather than debit cards. Some charge an additional fee to use debit or automated card swipe systems may default to credit. Regardless, if consumers have the money to cover a purchase, they will typically use their debit cards, as it does not result in revolving debt with interest. The heightened risk of credit card default makes debit cards more of a popular item with banks than credit cards, too. The public doesn’t deal with interchange fees up front, so the concept is rarely discussed.

Dodd-Frank and the $5 ATM fee

The Dodd-Frank Wall Street Reform Act bears a provision by Democratic Sen. Dick Durbin of Illinois that limits the interchange fees banks can charge retailers. As banks have projected this will cause them to lose $14 billion in revenue (less than the $20 billion the industry gives out in annual executive bonuses), major players like JPMorgan Chase are contemplating $5 non-customer ATM use fees. Don’t be surprised if the money-making idea catches on like financial wildfire across the banking industry.

Sources

Huffington Post
New York Times
U.S. Public Interest Research Groups

GOP questions interchange fees

Don't assume a debt collector is throwing you a life preserver. Demand they verify your debt first. (Photo Credit: CC BY-ND/Gibson Regester/Flickr)

If you’re drowning in debt and need major credit repair, don’t automatically assume that debt collectors have your best interests at heart. Their job is to get paid, and the truth is that sometimes, unscrupulous techniques are used that can be illegal. Before agreeing to a payment plan or even filing for bankruptcy, demand that the collector verify your debt in writing.

Debt validation: A bankruptcy scenario

Bankrate.com provides a useful example of a scenario in which someone should demand that a debt collector validate a debt. A couple has a home with a mortgage that is in both their names. One person is in collections with $30,000 in credit card debt solely in her name. She is considering filing for Chapter 13 bankruptcy, but the couple is concerned about losing the house in the deal.

While there are some potential complications that would require the consultation of a bankruptcy attorney (or two, if a second opinion is desired), Bankrate points out that filing for either Chapter 13 or Chapter 7 bankruptcy will generally not put a home at risk.

How to get aggressive with unscrupulous debt collectors

Get everything in writing when dealing with debt collectors. Don’t reveal bank account information when they push to set up automatic payments. Demand that the debt collector provide a fax number or address to which you can submit a request for debt validation. Simultaneously, dispute the debt in question.

By demanding debt verification, you’re demanding that the debt collector prove that you owe the money, that the collector has the legal right to collect and that the original company that held the account is clearly identified. By disputing the debt, you’re one step ahead in case the debt is erroneous or the collector does not have the information. Few things are as fruitless as giving money to a collection company that may not even own your account.

Know your legal rights

Under the Fair Debt Collection Practices Act, a consumer has the right to force a debt collector to validate a debt. Attorney Tom Martin of Price Law Group says that if debt collectors fail to comply, they cannot legally continue to harass a consumer for payment. If the collector continues, the consumer may even be entitled to monetary damages. But that’s not all:

“If a debt collector receives a dispute from a consumer, and the debt collector has been reporting the consumer’s account to the credit bureaus, the collector must also start reporting the account as disputed,” Martin reminds.

As a final note, the “get it in writing” directive must also apply to the consumer. If any debt payments are made, receipts and statements should be kept as proof in the event of a lawsuit.

Sources

Bankrate
Fair Debt Collection Practices Act
Lawyers.com: bankruptcy attorneys
U.S. Courts

What happens when you’re drowning in debt?

Republicans accuse Elizabeth Warren of having a “radical pro-consumer” agenda. (Photo Credit: CC BY-ND/David Quintana/Lost in the Ozone)

CNBC reports that the White House is struggling to fill the director’s chair for both the Consumer Financial Protection Bureau and the Office of Financial Research. Harvard professor and Obama adviser Elizabeth Warren may not have the stranglehold on the former, as was once thought, while multiple candidates for the latter position have balked at the prospect of six years of political infighting. Without clear leadership, both organizations will at best be all sound and fury, signifying nothing but the status quo for financially bruised consumers.

Fighting for political turf turns off OFR, CFPB candidates

The Office of Financial Research, which was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, will be charged with improving the quality of financial data available to policymakers, such as information regarding credit cards, cash advances and the payday cash advance industry.

However, if the White House fails to fill the leadership chair, the OFR will never reach its potential. Such high-profile candidates as Yale economist Robert Shiller (of Case-Shiller Home Price Index) have excused themselves from White House consideration because they think the six-year commitment and Washington war games aren’t worth the hassle.

An anonymous source close to the appointment process told CNBC that the OFR post requires a very particular type.

The position “needs a tough-guy-like attorney” who isn’t afraid of dogfights, said the source.

Check your radical pro-consumer agenda at the door

Republican critics of Elizabeth Warren claim that she’d be inappropriate for the office of Consumer Financial Protection Bureau director because of a “radical pro-consumer agenda” that would drown every consumer finance industry from credit card companies to payday cash advance lenders in penalty fees. Even though Prof. Warren is very close to the appointment process – President Obama has put her in charge of the search – Republicans and now even some Democrats and Independents are uncertain that Warren’s appointment would be confirmed.

Republican Sen. Judd Gregg of New Hampshire told ABC News that even considering Elizabeth Warren for the Consumer Financial Protection Bureau position is “a terrible adulteration of the process.” Such big-budget power (estimated as high as $500 million) in the hands of an appointee that can operate outside the bounds of Congressional oversight is unacceptable, said Gregg.

“My concern is that she would use the agency for the purposes of promoting social justice versus for the purposes of promoting better credit and having a stronger financial system,” said Gregg.

Enter Richard Shelby

Senate Republican Richard Shelby, the senior GOP member of the Senate banking committee, is considered the top Republican choice to head the Consumer Financial Protection Bureau. According to ABC News, Shelby vetoed the nomination of Joseph Smith to the Federal Housing Finance Administration and opposed appointing Nobel Prize-winning economist Peter Diamond to the Federal Reserve board. Clearly, Shelby knows how to oppose Democrat-favored appointees.

Sources

ABC News

CNBC

Credit.com News

‘Consumers need a cop on the beat’

Big business wants financial reform - with some caveats. (Photo Credit: CC BY-ND/Adam Benforado/The Situationist)

On July 21, 2011, the Consumer Financial Protection Bureau is scheduled to officially begin living up to its mandate as the United States’ regulatory body for consumer finance companies. The impending change recently prompted business groups to send the Obama administration a “wish list” letter that expresses what they think the CFPB should do first, reports CNN Money. While focusing on bank regulation is considered a top priority, the notion of the CFPB proposing new financial reform before confirming a director is unpopular.

Confirm a CFPB director now, says big business

Harvard University professor and Obama administration adviser Elizabeth Warren originally conceived the idea for the Consumer Financial Protection Bureau, and she has been considered the most likely candidate to direct the bureau. However, Warren’s strong stance for the consumer and against the machinations of Wall Street make her an uncertain choice for confirmation, according to Sen. Christopher Dodd (D-Conn.), a co-founder of the Dodd-Frank Wall Street Reform Act. This has delayed the confirmation process, but it has not kept Warren from the difficult work of staffing the agency and meeting with bank executives, lobbyists, chambers of commerce, consumer groups and high-profile investors.

“They were wary, but polite, and quite surprised,” Warren said Monday of the meetings. “Some were sure I’d walk in with blood dripping from my fangs.”

What big business wants

In order to avoid burdensome or regulatory duplication, business groups are clamoring for the CFPB to approach banking and finance regulation with laser-like precision. Jess Sharp, director of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness, told CNN that Dodd-Frank is too ambiguous as it stands. The Consumer Financial Protection Bureau must do more.

“Targeted regulation to weed out bad actors is good for consumers, but there’s huge and ambiguous authority granted under Dodd-Frank,” Sharp said. “That can lead to huge regulatory burdens for Main Street businesses.”

Specifically, Dodd-Frank would empower the CFPB to supervise consumer finance companies that aren’t traditional banks, like short term loan companies. However, in the letter to the Obama administration, business groups frown upon such an idea.

“Deferring an expansion of supervision and examination requirements would allow businesses to devote resources to job creation rather than save them to cover what might well be unnecessary regulatory compliance costs,” the letter reads.

Praise for credit card companies

While the U.S. mortgage industry still needs repair, Warren praised the credit card industry for taking proactive measures to improve its relationship with consumers, writes Credit Card Studio. Further CFPB regulation may not be necessary.

“The data we have assembled indicates that much of the industry has gone further than the law requires in curbing repricing and over-limit fees,” Warren said. “Leaders in the industry deserve credit for moving in the right direction.”

Sources

AdvisorOne

CNN Money

Credit Card Studio

The CFPB: Arresting the development of a new financial meltdown

Rebuild credit with secured credit cards. (Photo Credit: CC BY-ND/Secured Credit Cards)

When it’s time to apply for a car loan or home mortgage, it helps to have a good credit score. However, all is not lost for those whose consumer credit history has seen better days. Although it can be expensive, using a secured credit card with an initial deposit requirement can help rebuild a credit rating so that large-scale loans are no longer out of reach. Here are some things to consider before applying for a secured credit card.

Know how secured credit cards work

In order to apply for a secured credit card, have an active savings account to serve as collateral for purchases. Generally, the credit limit on the secured credit card will be the money held in savings, although it can be a smaller amount. The card issuer will only take money out if you’re 30 to 60 days delinquent. Once bills on the secured credit card are paid on time for six months to a year, the credit score may have recovered enough to where unsecured credit card options that require no upfront collateral become available.

Issuer must report to the credit bureaus

If the issuer of your secured credit card doesn’t file with the major credit bureaus, the card can’t help you. Showing that you can make payments on time is essential for rebuilding your credit score. Keep in mind that a secured credit card will have an interest rate and grace period, so it pays to shop around for the best terms. Bankrate.com is great for comparison shopping. If you have a savings account that earns interest to go with your optimal-rate card, you’ll be on the road to credit repair.

Watch the fees and spending

Two major but often unavoidable drawbacks to secured credit cards are upfront and annual fees. Ideally, you won’t need a secured credit card for long, so the annual fee won’t hurt much, but the upfront fees can exceed $100 or more. Minimal or no upfront fee is best, but one’s eligibility for such a card will depend upon his or her credit rating.

In terms of usage, try not to use a secured credit card more than you can handle each month. Your goal should be to pay the balance in full monthly and keep total spending at less than 30 percent of the credit limit.

Sources

Bankrate

FOX Business

Rebuilding credit can be an expensive path

Do you live in one of the top 10 most credit card debt-ridden cities? (Photo Credit: CC BY/MoneyBlogNewz/Flickr)

Credit-card-wielding consumers have found that old habits die hard. That’s why it comes as no surprise that a recent study by credit reporting agency Equifax states that the U.S. is buried $790 billion deep in credit card debt. Broken down by city, here are the top 10 most credit card debt-ridden cities.

10. Winston-Salem, N.C.

On average, credit card debt per household is a robust $6,505. As the median household income is $42,869, the percent of annual income owed to credit card companies is 15.17 percent. Imagine what could have been accomplished with payday loans, rather than high-interest revolving debt that most people nurse along with monthly minimum payments.

9. Fayetteville, N.C.

One of four N.C. cities on this list, Fayetteville has 126,723 households that owe $6,519 per household on credit cards. A sizable percentage (15.34 percent) of median annual income – $42,506 – is paid in attempt to eliminate that credit card debt. With short term loans with a two-week maturity cycle, a great deal of interest debt could have been avoided.

8. Youngstown-Warren-Boardman, Ohio/Penn.

Median income here is lower – $39,304 – but so is the average household credit card debt: $6,142. However, that’s still 15.63 percent of the annual income on credit card debt alone. That’s about $1.4 billion in total debt, citywide.

7. Pensacola-Ferry Pass-Brent, Fla.

The 170,817 households in the Pensacola area owe $6,649 each to credit card companies, 15.79 percent of the median household income, $42,106. With personal loans, there would have been no cycle of debt.

6. Asheville, N.C.

North Carolina has heavy anti-payday loan legislation in place, so the credit card debt comes as no shock. Households owe 16.12 percent of annual income.

5. El Paso, Texas

Average credit card debt is lower at $5,349. That’s still 16.15 percent of annual income in El Paso, though.

4. Duluth, Minn.

Median household income: $38,392

Percent owed on credit cards: 16.72 percent

3. Toledo, Ohio

Another state that makes payday lending impossible, Toledo households owe 16.72 percent of annual income on credit cards. If payday lenders were allowed to operate at market rate in Ohio, hitting that percentage would be nearly impossible.

2. Canton-Massillon, Ohio

Median income: $40,912

Percent owed: 17.23 percent

1. Wilmington, N.C.

Households earn $42,392, but owe 17.26 percent on credit cards.

Sources

About.com

Yahoo Finance

‘I’m going to come steal your toys because your mommy didn’t pay her Discover bill’

You can get a cash advance on checking or a credit card, but you may be better off with a payday loan. Image from Wikimedia Commons.

Fees for a cash advance from a credit card or on a line of credit are rising. After the passage of the CARD Act, companies that offer loan credit through credit cards have to find ways to boost their bottom line. If it keeps up, consumers may be better off with a payday loan.

Cash advance fees are going up

The most common method of getting instant cash from credit is to go to a bank, in case you run into overdraft or need a loan until payday. A person simply draws out a certain amount of instant cash from their line of credit into their checking account, and then the balance is paid off the second the next deposit into said account is received. Bank of America and Wells Fargo charge about $2 per every $20 loaned, or about $10 per every $100. Another way to do it is to get a cash advance from a credit card. Essentially, a person withdraws money from their line of credit on the card, and has to pay a fee on top of the monthly interest. Those fees, according to Bankrate, have been increasing since the passage of the CARD Act of 2009.

Then there is a payday loan

Granted, the fees have only gone up 1 percent in that time. However, when that balance, along with that fee, is added to a balance, the interest on it can add up over a long time if it isn’t paid off. Lines of credit – like credit cards – are revolving, or in other words a person has to make payments. In essence, credit cards are revolving installment loans with a plastic card tied to them. Checking advances, like payday loans can be, have to be paid off with the next deposit.

The risk

The only thing is that a payday loan lender has more flexibility with payment plans. A bank will simply take the amount owed from a cash advance, and not offer a payment plan. A payday loan store can offer a little more flexibility. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Payday advance loans can help prevent late fees

There are many reasons payday advance loans are helpful. When you fall behind on your bills, you get late fees on top of other late fees. They continue to pile, and if you are unlucky enough to be charged a late fee and interest, it will only continue to grow. Taking out a payday advance loan can help get your bills caught up and avoid unnecessary charges to your accounts. Also, if you use a payday loan to pay off those bills, you stay in good standing with your credit company. You won’t be hurting your credit; you can prevent late bills from appearing on your credit history. If you ever need the company to work with you on payments of other sorts, they are more likely to help if you have kept your account in good standing with them. Late fees and payments don’t look as good to the company, so don’t fall behind.

Payday advance loans

Payday advance loans are simple. You typically only have to be older than 18 with steady employment and a bank account to through the application approval process. There are generally no credit checks, so your credit history won’t affect your application at all. (Applicants with no credit and bad credit can still be approved). You can  have your money deposited straight to your bank account and make simple payments back to the loan agency. Approvals only take minutes, so what are you waiting for? Apply now!

Apply for a payday advance loan | Start HERE!

Unexpected expenses can be met more cost-effectively over time with a personal loan instead of a credit card. Image: Thinkstock

For borrowers with good credit, a personal loan could be a more sensible option than a credit card. In fact, more banks have been issuing personal loans as new credit card rules have caused consumer confusion and a rash of new fees and penalties. With planning and discipline, a fixed payment instead of payments based on average daily balance involved with revolving debt can save a lot of money.

A personal loan is simple

Before credit cards became so prevalent and heavily marketed, people went out and got a personal loan when they needed cash. Marlys Harris at MoneyWatch said that old-fashioned unsecured personal loans could be making a comeback. The advantages are obvious: no confusing rules and various rates for balances, purchases, cash advances, rewards or balance transfers. A personal loan is simple: borrow a specific amount at a fixed interest rate for a certain number of years. Make all the payments on time until it’s paid off.

Banks want to make personal loans

Banks are stepping up their promotions for personal loans. American Banker lists such institutions as Wells Fargo, Discover Financial, Citi and CapitalOne. Wells Fargo will lend $3,000 to $100,000 for up to five years. Citi will lend from $300 to $7,500. Harris wrote that because the personal loans are risk-based, the banks keep their rates secret until a borrower submits an application. A Wells Fargo spokesperson told Harris that her rate for a $10,000 five-year personal loan would be comparable to the rate on her credit card.

The best way to get a personal loan

If a person faces unexpected expenses like car repair or medical bills or would like to consolidate debt at a lower interest rate, a fixed payment (rather than a payment based on average daily balance)  is the primary advantage of a personal loan over a credit card. To get a personal loan, Credit Loan suggests the bank the borrower already has a relationship with could offer the most favorable rate. But more people are finding that the best way to get started is online. A variety of information is available for free, including loan calculators to determine the total cost of a loan over its term. Plus, there are thousands of lenders competing for business on the Internet. Getting a personal loan online is simple, and there are usually no fees or costs other than the interest owed.

"Yes, it was only $14! But it's the PRINCIPLE!" (Photo Credit: ThinkStock)

In a move that has stunned the European Union and other friendly nations, U.S. Customs and Border Protection has announced plans to enact a tourist tax today. This tourist tax will require travelers from 36 nations to pay a $14 “operational and travel promotion” fee to enter the United States. The tax will apply if the traveler does not already possess a U.S. visa, reports Yahoo! News.

Tourist tax ‘inconsistent with facilitating transatlantic mobility,’ says EU

The European Union has been very open in its opposition to the United States’ newly instituted tourist tax masquerading as an operational and travel promotion fee. Air and sea travelers from nations ranging from Australia and Germany to France, Japan and the United Kingdom (among many other nations large and small) will be subject to the fee. According to Homeland Security, the tourist tax will cover the previously free Electronic System for Travel Authorization (ESTA) process, which checks foreign tourists against no fly lists and terrorist databases. The New York Times reports that tourists are now required to have Internet access and a credit or debit card so they can go through the ESTA program and pay the tourist tax. If the tourists are denied by ESTA, they must apply for a more expensive, non-immigrant visa at a U.S. embassy or consulate. ESTA is not required to tell applicants why they were denied.

Your tourist dollars at work

Homeland Security explains that the mandatory travel promotion fee is actually only $10, but the extra $4 is assessed to help recoup administrative costs. So long as a tourist submits ESTA application information prior to traveling, the process generally runs smoothly. Upon approval, ESTA authorization is generally good for multiple entries into the U.S. within a two-year period, unless the traveler’s passport expires or Homeland Security determines that it is necessary for the tourist to reapply. Additional information regarding the tourist tax (aka the “operational and travel promotion fee”) can be found at CBP.gov, the website for the U.S. Department of Homeland Security.

Sources:

U.S. Department of Homeland Security

Yahoo! News

Credit cards can weigh a person down like an anchor, and fewer people are using them these days. Image from Wikimedia Commons.

As the recent unemployment and jobs report came in, so did some other data. Fewer people are using their credit cards this year, and people are using them less. As there is less short term credit available, fewer people want to use their credit cards as a source of instant cash. People are also saving more than they used to. Since consumer goods are such a large part of the economy, a counterproductive side effect of the recession is that less money gets spent on the frivolous goods that keep the economy rolling.

Credit card use falls

According the Wall Street Journal, fewer people are using their credit cards for consumer purchases. The amount of revolving credit (like credit cards or bank lines of credit – not like mortgages, payday loans, cash advances or student loans) being used in the U.S. has been declining. In fact, the use of revolving credit has dropped every month for the past 21 months consecutively. At this rate, the credit card companies are going to need a payday loan themselves.

Unemployment has a lot to do with it

One of the side effects of recessions is that people have less reason to justify non-essential purchases. They especially cannot justify making purchases with anything other than cash. If a person makes a big purchase like a new refrigerator or living room set on a credit card, making minimum payments for the next 50 years is not as palatable. The national savings rate, on the other hand, went up. It is currently at 6.4 percent, according to the Commerce Department, up from 6 percent in April.

Less security equals less frivolity

There is no point in buying unnecessary goods, particularly if you don’t know if you’ll be able to afford the payments a few months down the road. If you want to get out of debt and have some security, it makes no sense to incur further debt to do it, unless of course you can get a debt relief loan with an interest rate that’s manageable.

Further Reading

Wall Street Journal

Save money with quick cash from a payday loan

When you need quick cash, think twice before you use a credit card. Credit cards have become an extremely expensive way to borrow money, and the new credit-card lending regulations aren’t likely to change that. Banks struggling to meet the bottom line will always find creative new ways to generate revenue at the expense of credit-card users.

Withdraw cash, write checks or use your debit card

When you need to borrow money, get quick cash from a payday loan rather than a credit card. You won’t accidentally overspend or run up a debt that you can’t pay off. You’ll know exactly how much money you have in the bank, how much you can spend, and how much the credit will cost. With quick cash from a payday loan in your bank account, you can withdraw cash, write checks or use a debit card, whichever you prefer.

Apply for quick cash in minutes

When you need quick cash, save time and hassle by applying at Personal Money Market. One short online application instantly finds the best payday lender for your particular needs. You won’t be asked why you need quick cash and you won’t be kept waiting for a response.

• Bad credit not a problem
• Bankruptcy history okay
• Credit checks rarely required
• No faxing necessary in most cases
• Everything done securely and privately online
• Immediate response to your loan request
• Automatic deposit to your checking account in as little as two hours

Pay quick cash back on payday

Quick cash from a payday loan is as easy to pay back as it is to get. Most online payday loans are paid in one payment and you’re completely out of debt on your next payday. When you need a little extra time to get caught up on your finances, installment payday loans and installment loans for bad credit are also available.

Need payday loans? Start your application HERE!