Credit cards in the US

Almost everyone in the US uses credit cards as a way to pay for debt. Dependency on credit has grown immensely throughout the economy, as lenders in the past were more than willing to extend funds to borrowers. Unfortunately, the recession put a damper on that freedom, when credit card companies were sent reeling by their former over-enthusiastic lending. They began using tactics like cutting people’s limits, even if they had more than that limit charged. This automatically put them in a higher interest rate bracket, and many times unjustly cost them over-limit fees. Credit card companies also began charging higher interest rates without notice to consumers, based on their “adjustable rate” clause in the contract. It was unscrupulous acts like this that pressed the Obama administration to face the credit crisis head on, making legislators step in and find ways of regulating credit card company activity.

Understanding credit cards

To understand what impact credit card companies’ actions have on credit, it’s important to understand how credit is scored. A consumer’s credit score is made up of five different components:

1. 35% is based on history of payments
2. 30% is based on debt percentage, or credit being used versus credit available
3. 15% is based on the length of time credit has been open
4. 10% is based on new credit taken out
5. 10% is based on a mixture of the overall credit a consumer has

Knowing this, the most important thing a consumer can do is pay their bills on time. This is the largest contributor to credit scoring. It’s also important to have a good mixture of all of these elements to maximize a credit score.

Also, length of credit is very important. It’s much more beneficial to have a good payment history with one credit card company than to open new cards that have no history. Consumers should always keep good-standing credit cards open to benefit the most from them.

Debt consolidation companies

Many experts advise against using debt consolidation companies because they do what consumers can do for themselves, for free. A debt consolidation company will charge large fees to negotiate. Experts say that if a consumer wants outside help they should contact the NFCC, the National Foundation for Credit Counsel. They charge a small fee, but it is much less than a debt consolidation firm. The NFCC will communicate with lenders on a consumer’s behalf to work out an affordable plan. They also will work with the consumer to create a workable budget that allows the client to pay down debt as soon as possible.

Debt questions to ask

One important issue to face is what actions led a consumer to having credit card problems. Did overcharging send the credit amount skyrocketing? Did fees due to late payments do the damage? Are credit cards too widespread? These are all questions that need to be addressed for consumers to create healthy relationships with credit. On the other hand, the credit card problems may be due to extenuating circumstances such as unmanageable medical costs. If this is the case, bankruptcy may be a more viable option for the individual. Regardless of what the solution is, it’s important to get to the root of the credit card problem and take care of it. The future after the recession is still unknown and consumers have to work hard to make sure they will be financially sound.

Now that the recession is over, people are still having a difficult time managing. Though the market is showing some signs of stabilizing, people are still trying to get out from under the huge debt they stored up. If you are one of the millions of people who are struggling with debt survival, here are some tips on how to handle your finances.

How to handle debt

There are some things to do if you have debt. Here are the most important:

1. Budget. Get on a strict budget. This is of premiere importance when you are mired in debt. You want to know where the debt problems are and what you’ve done to create it. Write down everything you spend for a month—from your daily coffee to child care. Get specific with where your money is going down to the penny. Once you have that, then categorize your items as necessities or discretionary.
2. Plan. Have a debt plan to pay down your highest interest cards first. You want to minimize the time you are paying on them because they are costing you more in the long run. The best thing to do is write everything down and start paying one by one. Work on the highest, then the next, etc., until you work your way down to the smallest debt you have. For bigger amounts it may take a second job to help, but you’ll be thankful you made the extra effort when your credit card debt is gone.
3. Consolidation. Should you consolidate or not? We’ve all seen the commercials for consolidation. They advertise as if the one move to work with them will solve all your financial problems with one phone call. That is not true. The basics of a consolidation company are that you are taking one big loan to cover all of your existing payments. It can work if you are willing to sever your credit card payments afterwards. Also, beware of consolidation firms that ask for large upfront fees to fix your credit. You can do that yourself with some care and organized work.
4. Be honest. It’s important to do some self-analysis and find out why you got into debt in the first place. Was it due to overspending? If so, why? Is there an emotional reason you are spending so much? If you knew you didn’t have the money, what compelled you to buy anyway? You need to know what beliefs are going on in your head when it comes to spending and be willing to change them. The worst thing you can do is get on track financially, only to fall back into your old patterns of spending.
5. Collectors. If your debt gets to the point of having collectors call, you need to know what your rights as a consumer are. Debt collectors cannot harass you or abuse you. They cannot imply that you have committed a crime or imply that you will be arrested if you don’t pay a debt. You have the right to tell them to not call you at work or home.

Moving forward with debt

It’s important to understand the rules of debt and how to manage it. Understand that it is up to you whether you want to get out of debt for good. A lot of it involves taking a hard and cold look at your former actions, and then being proactive about changing them in the future.

Amusement parks are in dire straits, and you could reap the benefits.

Amusement parks are looking for debt relief by bringing in new customers. Both Disney and Universal theme parks are facing a tough time. They know that to manage their finances they need to find new customers to lure in. These two, and many smaller parks, are looking to deep discounting prices of entry and ride fairs, to spur attendance once again.

Operators are trying to come up with the lowest admission prices they can reasonably work with. “This is the most aggressive year that I’ve ever seen for discounting in the theme park industry,” stated Robert Niles, editor of Theme Park Insider web site. The recession has driven many families to cutting out their vacation plans altogether, opting for close-to-home activities or visiting and staying with relatives.

Discounts are huge

For the first time, Disneyland, Universal Studios and many Six Flags parks are digging deep to bring their prices down. Besides the prices of admission, they are discounting items and rides inside the park.

Disneyland is offering three-day pass for just $99. Many of the Six Flags parks are offering buy-one-get-one-free ticketing. Universal Studios will be offering a $60 six-month pass to people living in the area. This is the first time parks are offering these types of discounts beyond the normal “slow season pricing,” which is normally offered only during early spring and late fall.

Staycationers

A trendy term in the amusement park industry is “staycationers.” A staycationer is someone who lives close to the theme park. Parks are trying hardest to lure these visitors in, because they seem to be the most receptive to advertising.

Haley Marks, spokesperson for Disneyland stated, “It’s unrealistic to think families will drive hundreds of miles to Disneyland anymore. At least not during the recession. … So our marketing and advertising is focusing on the families already in the area. We are trying to bring them in to keep our finances flowing, even though it’s at a much slower rate.”

That seems to be the philosophy behind wooing staycationers into parks. Although the numbers will be down, there will still be people in attendance. For parks to remain open and manage to find debt relief, they need to keep revenues coming in, regardless of how slow them become.

The future of amusement parks

Like businesses in all industries, amusement parks are going through a change. Smaller parks are unable to withstand the drought of customers and closing. Mid-sized parks are fighting for their lives. Large parks are the only ones with enough capital to be creative with marketing and advertising, hoping to bring in a new customer base that will carry them through the recession.

Mark Kane, park president of a Six Flags park stated, “The whole world is on sale, and we are emphasizing our sensitivity to the economy and trying to offer more deals … not only at the gate but throughout the park.”

Take advantage of savings

This is a great time for consumers who are looking for debt relief to still find fun vacations. Eliot Sekuler, Universal Studios Executive, stated “I can’t remember a time when we really worked harder to come up with new things for people to come see and more value to make it more affordable.” Everyone believes that the discounting will remain until the market recovers. As Sekuler added, “Parks are competitive and will not give up their market shares. We will fight for customers for as long as it takes.”

Credit cards should be used carefully. However, if you need a car, the incentives available now could make using a credit card to buy a car feasible. (Photo: picasaweb.google.com)

If consumers are in the need of a car, this may be the right time to use credit cards to do it. Most dealerships have huge inventories and no way to get rid of them. The recession has put auto dealers in difficult positions, since most Americans are in no hurry to invest in big-ticket items. That’s great news for consumers who are looking to make an auto purchase. Potential savings on a car are substantially greater and selections are huge. Most auto dealers are making generous deals, with cash-back options and low financing rates. Cars that once were marked up are now being marketed at well below the sticker price, and sometimes even lower than the dealer’s cost.

Scott Painter, CEO of TrueCar, said, “There’s no question that you should get a screaming deal… the slump in sales resulted in discounts so steep that new cars can sometimes be less expensive than comparable used ones.” According to research done by TrueCar, last year dealers sold approximately 21 percent of 2009 models for less that dealer price. This year, that number is up to 25 percent already.

Dealerships Feeling the Pain

Adding to the auto industry climate is the rapid closings of many dealerships. In 2008 there were 1,200 closing dealers, this year GM Corp alone is planning on closing 1,200 to 1,500 franchises. These closings have helped turn the industry upside down. For example, at one time the Range Rover was a high-quality luxury vehicle. Now, there are fleets of the vehicles available with $12,000 cash-back on purchases. This isn’t the only vehicle with this kind of savings. Cadillac’s CTS sedan comes with $7,000 in incentives, while Ford’s 2010 Transit Connect vans are already coming with a $300 cash-back special.

Credit Cards: A Near Necessity

Credit cards are almost a necessity in today’s world. Many people use credit cards for everything from everyday purchases to big-ticket necessities. Although the recession has taken its toll on the credit and lending industry, companies are trying to right their wrongs and help customers make purchases. Recently, the federal government has stepped into the credit card mess, citing unscrupulous activities and demanding changes. Credit card companies understand how bad they look in the eyes of the public due to their dodgy dealings. Some companies are cutting customer’s limits, but also bringing down interest rates to make payments more manageable. They want to have customers who continue to pay on their bills, rather than just file bankruptcy or abandon the accounts.

Because of this, credit cards are slowly being used once again to fund high-ticket items like cars. With the overwhelming discounts and deals available, this is a wise choice for some consumers. Lilah Branson of Nashville, Tennessee said, “I need a car and I wasn’t planning on buying on in the recession. But then I saw the deal my credit card company offered and the deal the dealership had…combined, the deals were too good to pass up.”

Things are Slowly Picking Up

Credit cards are helping people again, slowly integrating back into everyday use. No one knows the where economy will be once the recession is completely over, but consumers are steadily getting their feet wet and wading back toward normalcy.