If you’re struggling to pay down your credit card debt, but the bulk of your payment is going to interest, you probably need to look at making a change.

But first, remember that all credit card issuers are charging more than we like now. According to Bankrate.com the average purchase APR on fixed rate cards was 13.79% and was 14.35% on variable rate cards as of the week of September 16.

So if you’re paying less than that, consider yourself fortunate. If you’re paying more, or if you believe your high credit scores should entitle you to a lower rate, you can do one of two things:

- Negotiate a better rate with your credit card issuer

- Get a new card with a better rate and transfer the balance

Of course, the very best plan is to pay more each month and just get rid of that debt.

If your rate used to be lower and was increased after January 1, 2009, your credit card issuer is supposed to review your account every 6 months and reduce the rate if the reason for the increase has changed for the better. This was mandated by the terms of the Credit CARD Act. In addition, if your rate was increased due to a 60-day delinquency, the increase is supposed to terminate within 6 months if you make every subsequent payment on time and for at least the minimum due.

We all know that “supposed to” doesn’t always happen, so it’s worth looking into.

When you call to negotiate a rate reduction, you do run the risk that your credit card issuer will review both your account and your credit scores and decide to reduce your credit line and/or raise your rate on future purchase.

So before you make that call, be sure to check your own credit scores and know that you aren’t going to make things worse instead of better.

If you decide to go forward and get no satisfaction from the representative you speak with, ask to talk with a supervisor. Be polite, and outline the reasons why you are a valued customer who deserves a better rate. Cite your number of years with the company, your good payment history, or a frequency of use that puts money in the card issuers pocket. (They get paid on every transaction, remember.) If they aren’t interested in those reasons, then mention that you plan to transfer your balance to a different issuer.

Before you decide to jump ship, do your research into the credit card offerings and choose a new card with terms you like. Check for annual fees. Check the interest rate on purchases (just in case.) Look at the balance transfer fee and the interest rate on balance transfers. See if that’s a fixed or variable rate, and if it is promotional, how long it lasts.

Think about how long it will take you to pay off this balance before you decide to go with a “Zero interest” introductory rate. The rate you’ll pay later may more than offset your savings during the zero interest period, unless you can increase your payments and get that balance significantly lowered.

In other words, do the research and do the math before you make a decision.

Author: Mike Clover

CreditScoreQuick.com

More finger-pointing has led to yet another mandate from the Federal Reserve that will cost homebuyers money.

First they pointed their fingers at appraisers – blaming them for inflated values that led to the collapse of the housing sector. The result was the addition of a 3^rd party to come between appraisers and lenders, real estate agents, and consumers.

Of course that 3^rd party had to be paid, so it increased costs to home buyers. But that wasn’t the worst of it. They began hiring low-cost appraisers who didn’t even know the local markets – which made a complete mess of appraisals. Fortunately, they’ve realized that didn’t work so well.

So now they’re focusing on mortgage lenders – blaming them for the collapse.

Has everyone forgotten that it was government programs that resulted in the creative financing that put low income borrowers into homes they could not afford when their adjustable rate mortgages reset?

At any rate, the newest regulations coming from the Federal Reserve – called the “Final Rules” – are set to drive costs up for home buyers. By dictating how a mortgage lender can be paid, they are effectively removing competition from the marketplace.

And as we all know, competition is the lifeblood of free enterprise.

The rule change is intended to prevent loan originators from damaging consumers by  receiving too much compensation for their services. Lenders will continue to receive fees based on a percentage of the loan amount, but will be prohibited from collecting a YSP – or yield spread premium.

This was a fee paid to mortgage loan originators for directing borrowers to a higher percentage loan. And some mortgage lenders did keep that fee for themselves.

However, what they fail to mention is that in a competitive free enterprise market, many lenders were using this YSP to offset their buyer’s closing costs. This is how lenders were able to offer no-cost mortgage loans to borrowers who were short on cash.

Yes, many failed to disclose this. But many others did not. They explained to their buyers that by paying a slightly higher interest rate, they could get their closing costs reduced or eliminated.

Left alone, the free market naturally drives more business to lenders who “disclose and share” than to those who don’t. That’s how competition works.

But… under the new “Final Rules” there will be no such thing.

The new rules also state the government will provide a “safe harbor” for borrowers to ensure that they are not “steered” toward unfavorable loans in order to financially benefit the loan originator. We aren’t sure how this will work, but it looks like they’ll be adding another set of government employees for taxpayers to support.

Under these rules lenders will be required to present facts and figures for each type of loan – such as fixed rate, adjustable, or reverse mortgages. Those options must include the lowest interest rate for which the consumer qualifies, the lowest points and origination fees, and disclosure of the lowest rates available for loans that don’t have risky features.

Risky features are defined as those with prepayment penalties, negative amortization or balloon payments within the first 7 years.

These rules go into effect on April 1, 2011, so more details will likely be revealed in the coming months.

But this isn’t all… The Dodd-Frank Wall Street Reform and Consumer Protection Act also promises to restrict compensation to mortgage lenders. We have yet to see what their rules will entail.

The best we can hope for right now is a new Congress – one that believes in a reduction in government interference in the free enterprise system.

Author: Mike Clover

CreditScoreQuick.com

Rising unemployment, bad debts, and actions taken by credit card issuers have now put more than ¼ of American consumers into a credit score category that makes it nearly impossible to get a loan. A new report shows that 25.5% of Americans now have a FICO score under 600.

You may have read that new guidelines from Washington say that consumers with scores as low as 580 can get FHA loans with only 3 ½% down – and that those with scores between 500 and 580 can get in with 10% down.

Well, yes, banks are allowed to make those loans. But they aren’t likely to do it. In real life, a FICO score under 600 almost guarantees that you’ll be turned down. And even with a score of 600 to 700, being approved is iffy.

At 700 to 750 you’ll probably be approved, but not with the very best rates. If you want to be assured of getting a loan with the most favorable interest rate, your score needs to be 750 or above. But don’t count on this to be true in the future. According to a FICO survey, 46% of bank risk managers believe that lending requirements are going to get tougher in the coming years. That could mean even higher scores will be necessary.

If you don’t know your own score, you really should check it.

Even consumers who are diligent about bill paying can have low scores due to identity theft or the fact that when the credit crisis hit, many credit card issuers lowered credit lines even for their best customers.

How can you learn your scores?

You can obtain your credit report by making a home loan application, but it isn’t wise to wait until you want a loan to check your scores. A few banks or credit unions will provide your scores for free as a customer service; you can get a free credit report with scores from this site; or you can purchase your scores directly from the three major credit bureaus. And yes, it is worth it to pay a small fee for the information, because knowing it and taking steps to improve it if necessary will save you thousands in interest on future loans.

If your scores are low, take these steps to raise them:

First, if your report contains errors or shows negative information that is more than 7 years old, follow the directions and get those items removed.

Lower your debt. Your “credit utilization ratio”- which compares your debt to your available credit – makes up 30% of your credit score, so this is critical. The combined balances on all your credit cards and lines of credit should be no more than 30% of the credit available to you. For the highest ratings, use no more than 10% of your available credit.

Keep all old credit card accounts open, but don’t apply for new ones. Remember, you want more credit available than you use, so even if you have to pay a small annual fee, keep those old accounts open.

At the same time, credit inquiries bring your scores down, so don’t apply for any new credit unless you actually need it. Ignore those department store offers no matter how tempting they are.

One thing to note: Multiple inquiries that are obviously for the same purchase count as one when made within a narrow time frame – so it won’t hurt to shop around for a loan.

Pay your bills on time. If you have past due accounts, get them paid, and then create a new track record of paying on time, every time. This counts for 35% of your FICO score.

One more thing to notice…

A few lenders are now using the VantageScore – which differs from the FICO score in both the scoring method and the points. VantageScores go as high as 990 – so a 750 score with this method is not favorable. When checking your score, be sure to find out if it’s FICO or Vantage.

Author: Mike Clover

CreditScoreQuick.com

A home could cost you…..

Over the years conventional wisdom told us homes build wealth. We have also been told its better to own .vs rent. But according to financial advisers and the New York Times this may not always be the case currently.

In a recent article in the New York Times, Dean Baker, co-director of the Center for Economic and Policy Research, estimated that it will take 20 years to recoup $6 trillion in housing wealth lost since 2005. We all know that Home Valuation Code of Conduct (HVCC )has caused issues with getting values across the country currently. But on the other hand look what happened to the value of homes that were dictated by lenders, builders, Realtor and appraisers. We squeezed the value out of homes until it exploded…… I admit I was guilty of this… We were stretching values to “the brink of destruction’ to get a deal done. Now we are feeling the after affects of buyers whom paid above market prices for their homes around the country.

Here is an analogy from a financial adviser with LPL Financial. He claims homes are a bad investment, especially in this market. I found this comment interesting and wanted him to explain this…. Here is what he said… If you take a $275,000 dollar home with a 5% interest rate and 5% down….

Scenario for Primary Residence Buyers:

A $12,250 per year loss is a not the investment I am looking for. Let’s not kid our selves, owning a home is for personal gratification. I do however believe it’s more beneficial to own .vs rent, but if you are looking for big investment returns, you better look elsewhere.

The scenario above did not include the cost of interest paid on the principal balance. Even though interest and taxes are deductible, not everyone’s deductions are the same. Your deductions depend on your tax bracket. So this was not included in the scenario… but is however another cost.

A home being a good investment is debatable. This really depends on the scenario, but I believe in most cases a home is a bad investment. One might consider a home just an “American dream” and a luxury.

Author: Mike Clover

CreditScoreQuick.com

What Kind of Credit Card is Best for Bad Credit?

By Odysseas Papadimitriou, CEO of CardHub.com

If you have bad credit and are in the market for a credit card, you have two general options: secured credit cards and unsecured credit cards for people with bad credit. An unsecured credit card is what most people would consider a regular credit card. A secured credit card, on the other hand, works just like a regular credit card with one major difference: a fully refundable security deposit is required to open the account and your credit limit matches the amount of the deposit you put down.

Before deciding between these two options for bad credit credit cards, you should consider the reason you need a credit card. If you need a credit card solely to rebuild your credit, then a secured credit card is your least expensive option to do so. Although a secured credit card does not offer you an additional line of credit in excess of the amount of your deposit, it does have a fee structure that is less expensive to the cardholder than unsecured credit cards for people with bad credit. A secured credit card also allows you to get the full amount of your deposit back once you close your credit card in good standing.

If the reason you need a credit card is because you need to both rebuild your credit and because you need an additional line of credit (i.e. you need a small loan), then you should compare unsecured credit cards for people with bad credit. Although the fees for this type of credit card are high, they are much lower since the new credit card law (Credit CARD Act) came into effect earlier this year and put stricter limits on fees.

In the past, a credit card company would typically offer an unsecured credit card for bad credit with a limit of $250. Unfortunately, by the time the cardholder was able to use the card, there was already $200 worth of fees charged to it. Essentially, a consumer with bad credit had to pay $200 in order to get access to $50 worth of credit.

Now, on the other hand, a credit card company will typically offer these types of credit cards with a limit of $300. In accordance with the CARD Act, the credit card company may not charge more than 25 percent of the credit limit in fees during the first year a credit card account is open. Typical fees for these types of credit cards include an annual fee of around $75. In addition, you now have to pay a processing fee between $25-$45 that you must pay before the account is even open. Essentially, you pay a little over $100 dollars in order to have access to $200 worth of credit – a big improvement on the previous fee structure.

Since both types of cards now require that you put money down before you can open an account (a processing fee in the case of unsecured credit cards and a deposit in the case of secured credit cards), secured credit cards are more popular than they were before the CARD Act. As proof of this, more companies are starting to come out with secured credit card offers. Capital One, for example, recently released the Capital One Secured MasterCard.

Whether you choose an unsecured or secured credit card to jump back into the credit market, it is important to remember to leave bad habits behind you. Even with a secured credit card, failure to make timely payments will severely damage your credit score. If your sole purpose is to rebuild your credit, you should know that you do not even have to use a credit card for it to help your credit score. As long as the account is open and in good standing (which it will be if your balance is $0), you will be reported to the credit bureaus as current each month.

A credit counselor who is trying to help you get out of debt might tell you to close your credit card accounts. If you absolutely can’t prevent yourself from running up your balances, then perhaps you should. But if you want to keep your FICO® scores high, that’s the wrong advice. Instead, you should keep the accounts open and keep the balances low.

The more credit you have available that you aren’t using, the higher your credit scores will be.
You’d think that the opposite would be true – that creditors would look at all the credit you have available and think you’re a poor risk because you could suddenly decide to use all of it. But that’s not the way they look at it.

And the way they look at it is important to your credit scores. To keep your scores high, FICO® wants to see a “credit utilization ratio” that’s low. That means you need to be using only a small percentage of the credit available to you. The “magic” utilization ratio seems to be 30%.

When you close even one account, your credit utilization ratio will go up, even if you don’t make any new purchases.

If you have several cards, they probably have a variety of credit limits. But to keep the explanation simple, lets say you have 3 credit cards, each with a $2,500 limit. You’re carrying a balance of approximately $1,000 on each of two cards, and have a zero balance on the third.

3 cards X $2,500 = $7,500 credit available. Your debt, 2 balances of $1,000 each, is only $2,000.

$2,000 is only 26.6% of your available credit – so you’re comfortably below the 30% limit and your credit card use is beneficial to your credit scores.

But if you cancel one card, now you only have $5,000 in available credit, and your $2,000 debt equals 40% of your available credit.

Now, even though you haven’t spent another dime, your credit utilization ratio is well  above the “magic 30%” limit and your credit scores are automatically lower.

This is the reason why so many responsible, bill-paying consumers saw their credit scores fall a couple of years ago when credit card issuers began raising interest rates and lowering credit limits.

Banks are still trying to lower their costs, along with their risks. And, since the bookkeeping involved with carrying an account does cost the banks something each month, unused accounts can be subject to an annual fee or  closed for non-use.

To avoid losing your available credit in this manner, be sure to use each of your cards at least once every few months. Charge some purchase you would make anyway, then pay the balance when the statement arrives. You’ll keep your accounts open without paying interest charges.

It really is important that you keep these accounts open, because 30% of your credit score is based on that credit utilization ratio. The only category that holds more weight is how you pay your bills, which contributes 35% to your overall score.

Author: Mike  Clover

CreditScoreQuick.com

Prepaid Credit Cards, why you  might need one…

Why would anyone want a prepaid credit card? Isn’t the point of a credit card having the ability to buy something when you’re short on cash?

Yes, that’s one reason why people carry credit cards, and it’s also one of the reasons why so many are in debt over their heads today. Those credit cards made it just too easy to over-spend.

Now that the country is in the midst of an economic crisis, some consumers have lost the ability to carry a standard credit card, while others have decided that not owning access to quick and easy credit will force them to stay within their budgets.

That’s fine, but we’ve turned into a country that functions on credit. If you don’t have a credit card, there are many things you just can’t do.

Have you ever tried to purchase something on line without a credit card? If all you have is cash you’re completely out of luck. If you have a checking account you can purchase from some sites, but not others. And when you do use a checking account, the merchant will wait until your check clears the bank before shipping your merchandise. That can take up to a week.

How about buying gasoline after hours? You can pull into a convenience store or filling station that’s closed and still use the pumps – but only if you can pay with a credit card.

A credit card also allows you to reserve a rental car, an airline flight, or a room at a hotel.

But personal convenience isn’t the only valid use for a prepaid card.

Parents and business owners are also finding prepaid cards to be useful tools in money management.

Sending your child off to school or on vacation with a pre-paid card gives them a budget while offering both convenience and safety. Lost or stolen cash is just gone. A lost or stolen credit card can be quickly cancelled and the money saved.

And, in case of a financial emergency, you can easily add more money from your checking account or even from one of your own credit cards.

Business owners who furnish travel or entertainment funds to employees enjoy two benefits: Security and record-keeping.  When carrying a prepaid card the employee can’t over-spend company funds. And, most cards offer free online access to transaction information so that business owners can see exactly when and where funds were spent. This is a valuable tool both for keeping track of employee activity and for keeping accurate records for tax purposes.

Author: Mike Clover

CreditScoreQuick.com

FHA Mortgage Insurance Premium Update

Recently the President signed into public law 111-229, which provides the Secretary of Housing and Urban Development (HUD) with additional flexibility regarding the amount of the premiums charged for Federal Housing Administration ( FHA) single family mortgage insurance programs. This new law permits HUD to increase the annual mortgage insurance premium charged. The insurance premium is based on loan to value (LTV).

Although the law allows HUD to increase to these new amounts, they have chosen not to do so at this time. HUD has decided to raise the annual insurance premium while lowering the upfront premium. FHA states that it is in a position to meet the demands of the market place while retuning the Mutual Mortgage Insurance (MMI) fund to its congressionally mandated levels without disturbing the current housing market. These levels are low because of all the foreclosures. This new FHA update will take place for loans closed on or after October 4^th, 2010.

Here are the new changes HUD will implement on MIP and upfront mortgage insurance.

Upfront Premiums

Annual Premiums

The annual premium for amortization terms equal to or less than 15 years remains unchanged and is collected to example below.

CreditScoreQuick.com

Strangely enough, one of the first reasons why you were denied is also the reason why you may have been turned down for a job application, or why you got poor grades on an exam, or didn’t win some contest: You failed to follow directions.

Applicants must follow directions and fill in every blank.

The next reason is a catch-22. You may have been rejected because you don’t have a credit history. Since approval hinges on your credit score, and since credit scores reflect your credit history, no history means no score.

So how can you establish credit? Try making application for a store charge or a gas card. Go to your local bank and ask for a small loan. Or, ask a family member with credit to co-sign for your first card.

Having a co-signer can also help if you’re rejected for the next three reasons: You’re too young, you don’t have enough income, or you don’t have enough time on your current job.

Again, youth and lack of history are strikes against you.

Under the CARD Act, credit card issuers cannot issue you a sole ownership credit card if you’re under 18 – or under 21 without income.
You’re also likely to be rejected if you’re young and just entering the job market, or if you’ve done a lot of job-hopping. Unfortunately, you’re not face to face with a person who can understand that your job changes have each been a step up, or that you were laid off because the whole company went under.
Even if you have been on the job for a couple of years, if your income is too low, some credit card issuers will deny your application. If this is the case, try for a low-limit card whose payments you can make easily on your current income. Then use it wisely to build a history.

And of course, your past credit use comes into the picture.

You may be asking for too much – You already carry a pocketful of credit cards, the balances on your current credit cards and loans may be too high, or you may have made recent application for too many cards or other sources of credit.

If you’re maxed out on your current cards, you will more than likely be denied. This not only lowers your credit scores, but tells credit card issuers that you’ll probably do the same with their card. And of course, that makes you a high risk.

So pay down some of your outstanding balances before you make application. Whatever you do, don’t keep trying a different company in hopes that one will accept you. Multiple inquiries on your credit file tell creditors that you’re desperately seeking funds…and that’s a red flag in their eyes.

You may have mis-used credit in the recent past.

Recent collections and delinquencies tell credit card issuers that you’re a poor risk. You either don’t have enough money to pay minimum balances, or you’re spending it elsewhere.

Once those delinquencies and collections are 7 years old, they should fall off your credit report. Meanwhile, the older they are, the less damage they do to your credit scores and your chance of getting new credit.
A charge-off is even worse. This tells the creditor that you’re willing to walk away from your obligations. If you really want a new credit card, consider paying back any balances that were charged off in the past.

If you really need to carry a credit card…

As a last resort, apply for one of the cards designed for consumers with poor credit histories. You’ll pay an annual fee and the interest rate will be higher, but you’ll have a card in your pocket for emergencies. And, if you use it sparingly and pay off the balance each month, you’ll begin to build a positive credit history.

Author: Mike Clover

CreditScoreQuick.com

Should You Use Your Cell Phone for Credit Card Processing?
Introduction
One of the most exciting new technologies for businesses is the ability to process credit cards using your cell phone. As with every new technology, there will be a lot of questions on whether it really works, how it can change business, and if it is safe to use. So should you use your cell phone for credit card processing? Let’s first take a look at how credit card processing works with a cell phone.

How Cell Phone Credit Card Processing Works

You may be wondering how this is all possible. If you’ve operated a business before and have taken credit card orders, you may be familiar with the big credit card processing machines. Depending on the type of phone you have, you can connect a smaller version of this machine and process credit card orders. This machine is small and the machines are specially designed to work with smart phones such as the iPhone and Blackberry.

To put a payment through, you simply swipe the credit card through the machine and the buyer can authorize it by signing his signature. He can also put his pin number through using the phone. You can even email a receipt (or a text message) of the purchase to the buyer so that he has confirmation and a record of the sale. Basically, it acts as a regular credit card processing machine.

The Advantages of Using Your Cell Phone for Credit Card Processing

If you’re a business person or professional that is always on the go, you will come across situation where you have the potential to make the sale. The only problem is that you have no way of taking the order other than getting into contact with the potential buyer when you get back to your office, give instructions for online payments, or make an arrangement to meet with him.

The most obvious benefit of being able to process credit cards on the spot with your cell phone is that you can close the sale when the buyer is interested. In business, you can lose the sale if you have an excited buyer but you lose the ability to take the order. The ability to take orders on the fly has many different applications.

For example, there are people that do business in auctions, trade shows, or even in seminars. Using your cell phone to take credit card orders can be the best way to take orders when there is nothing else available. This can make your investment into auctions, trade shows, seminars, and other events more profitable.

You can also imagine how to take orders on the fly will help professionals such as photographers, consultants, and other service providers. Being able to close the sale will cut down on lost sales as you’ll be able to sell when the buyer is sold on the product or service.

Although it may sound like risky business to use your cell phone, the whole process is encrypted and you won’t have to worry about outside parties intercepting your orders and abusing the customer information. The whole process from validating the payment and transferring funds happens instantly.

The Disadvantages of Using a Cell Phone for Credit Card Processing

The biggest disadvantage of using your cell phone to take credit card order is theft. If your cell phone and machine gets stolen or lost, this can mean a lot of problems for you. If somebody knows how to use the machine and work with the application, it may lead to fraudulent charges.

Another disadvantage is that the processing fees to use this technology are more expensive than taking orders through traditional means. The prices have gone down over time but it is still more costly than accepting orders online. You do have to keep in mind that using this technology ensures that you get the sale on the spot rather than waiting and possibly losing the customer. To many people, this will be worth the cost.

A roadblock you may face is the buyer being hesitant about using this technology. Most customers will be unfamiliar about the concept of using your cell phone to take orders and not trust it. On the other hand, using this technology allows you to avoid carrying people’s credit card numbers for later processing. It also gives them instant confirmation of their order through text and email.

You can convince them that it is completely safe and works without any problems. You should stress how it is far safer and reliable to use this method rather than taking down their name, address, and credit card information on a piece of paper to put it through later.

The Summary

All in all, using your cell phone to process credit card orders opens up many doors for professionals and business people. They can safely take orders and secure the sake. So far the feedback on this technology has been positive. Many business people that have used this technology reported that they had no problems putting orders through and most didn’t have to deal with issues such as fraud.

The advantages of using this technology far outweigh the disadvantages. If you do business while you’re on the go, you should strongly consider investing in this service. There are many different companies that offer this service so you should do some research about the rates as well as the company’s reputation. Also read up on customer reviews to see if the company is reliable and the support is strong. That will ensure that you go with a company that can provide an excellent service.

My Bio:

About the Author: Mirsad Hasic is the webmaster and editor of best credit card deals, a site where you will learn how to pick a credit card that suits your current needs plus get valuable tips on how to reach credit card debt relief.

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