Securing your credit card

One of the most widespread forms of theft today is credit-card theft and fraud. In today's society, you can virtually conduct all of your daily cash transactions with a credit card. You can buy gas for your cars, groceries, rent DVDs, see movies or enjoy an entire evening of entertainment without using cash. You can simply charge it or use your checking debit card just like cash.

Because of the convenience in this type of theft and fraud, criminals are costing us billions of dollars each year in credit-card interest rates and the rising cost of merchandise. Until credit-card companies find a solution to the fraudulent use of credit cards and store merchants begin checking the identities of the person using the credit card, this will continue to be a popular form of theft and fraud.

The fraudulent use of credit cards is not limited to the loss or theft of credit cards. A capable criminal only needs to know your credit-card number to fraudulently make numerous charges, including cash withdrawals, against your account. The following are a number of crime prevention tips or recommendations to guard against the illegal use of credit cards.

•Photocopy both the front and back of all your credit cards and keep copies in a safe and secure location. This will enable you to cancel your credit card as soon as possible if it is lost or stolen. (Most cards have the toll-free number on them to cancel your account.)

•Endorse all credit cards as soon as you get them. Just above your signature, write the statement "Please Ask for Identification."

•Carry only the minimum number of credit cards actually needed and never leave them unattended.

•When you write a check, never allow the salesperson to write down your credit-card number on the check. If paying by credit card, never let the salesperson write down your driver's license or social security number.

•Avoid signing a blank receipt, whenever possible. Draw a line through blank spaces above the total when you sign card receipts.

•Unless you are absolutely confident you are dealing with a reputable company, never give your credit card account number over the telephone.

•Don't be fooled by a scam where a con artist wants to verify your credit-card number because you won a prize. One current scam involves con artists who call at random. The thief informs the victim that if their VISA card begins with the number four, the victim wins a prize. However, all VISA cards begin with the number four, and all MASTERCARDs begin with the number five. The only prize the cardholder gets is the fraudulent use of their credit card.

•Notify credit-card companies in advance of a change of address.

•Destroy unused credit-card applications, such as those received in the mail advising the recipient "you have been pre-approved for…"

•Open billing statements promptly and reconcile your card amounts each month, just as you would your checking account.

•If you receive a letter stating you should have received a credit card in the mail, and you have not received it, notify the company or lending institution immediately.

•Beware of vendors calling and attempting to sell you merchandise or gifts over the telephone. Don't give them your credit-card number.

•When you use a credit card to make a purchase, maintain visual contact with the card and make sure no extra imprints of your card are made to other charge slips. Destroy all of the carbons so no one can obtain your account number.

•Be aware of anyone standing near you when you use your card and PIN number. They may have a cellular telephone with a built-in camera that will record your information.

•It is a good idea to retain your credit-card receipts and check them to your monthly billing statement.

•In the event your credit card is lost or stolen, immediately notify the credit-card company. Most issuing banks and companies can be reached 24 hours a day, 365 days a year. The majority of fraudulent purchases are made within 48 hours of the loss.

Credit-card thieves may sometimes call the victim, informing the person that their credit card has been found and that it is being returned. This ploy gives the thief time to go on a charging spree because the cardholder never calls to cancel the card.

By virtue of the Fair Credit Billing Act (FCBA), if you report the loss of a credit card before it is used, the card issuer cannot hold you responsible for any unauthorized charges. If a thief uses your credit card before you report it missing, the most you will owe for unauthorized charges on each card is $50.

Economy Project: Picking The Right Credit Card

In yesterday's KERA economy segment, we looked at what new changes in credit card regulations will mean for consumers when they take effect in February. Today, we go a step further with help for choosing a credit card. Todd Mark of Consumer Credit Counseling Services of Dallas says avoid the mail offers and shop around, but know your credit score determines what you'll get.

Mark: If you've got a great score, guess what? The sky's the limit and you should be looking for what's the best cash back opportunity. Is it frequent flyer miles or is it one percent cash back to your favorite shopping stores?

Sam: But now aren't those kind of incentives just to get you to spend more money?

Mark: It is, but if you've got a good score there's a good chance you're using credit the way I want to see you use credit. And that's using it where you're paying it off on time and in full every month. Remember if you do that it doesn't matter how much you spend, it's not costing you a penny in interest.

Sam: Let's say then that you're someone who carries a balance every month, but you pay more than the minimum.

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Mark: At that point, you're looking for what's the cheapest card, what are the cheapest interest rates. And of course if you're carrying a serious balance, or say you've had delinquencies in the past, and your score is problematic. You may not qualify for the best deals and you're saying do I have to worry about annual fees or application fees? What are my late fees or balance transfer fees? And certainly, what kind of interest rate are we looking at? You would generally see folks in the ten to fifteen percent range if they've got decent credit and you'll certainly find teasers in the zero, three, six percent range. But if you've got problem credit, we see people regularly in the high twenties, the thirties. And folks that are really troubled, we see some forty percent interest rates on credit cards.

Sam: I didn't know interest rates went that high.

Mark: They do. If you are truly subprime and you are dealing with a lender that is not necessarily looking out for your best interest, you can go that high.

Sam: Shopping around though almost means doing business perhaps with a bank or credit card company that is not maybe even in your city.

Mark: Certainly

Sam: Is that wise? Are you better off dealing with whomever you regularly do business with?

Mark: Well, there's banking relationships and then there's a credit card relationship. For banking, I always want to have a relationship with a local bank or a credit union so that you're not just a number or you're not some process on the internet. But you can go in, sit across a desk from somebody and say here are my needs or I need a loan or there's a problem you need resolved you want to be able to have that face to face relationship. Now if we're talking about a credit card. I've got two credit cards in my wallet. One of them I opened up twenty years ago when I was back in college. I didn't know the bank at the time and I don't have a relationship with anybody at a local bank now, although it's a very well known national bank. I've never had a problem of dealing with them because I always pay it off in time and in full every month. So for me, I don't really care about the relationship with the credit. It was what they were giving back to me as far as a loyalty program, and that's the most important thing.

Sam: Are those offers that come in the mail all the time so bad?

Mark: You know, it always depends on your credit. You may get a preapproved offer, or it says it's preapproved, and it's a mass mailing that they send out to millions of people. And you reply back and say, "This is the deal I want- it's better than anything I found online." And they say "Oh well we're so sorry you didn't qualify for this one but with your credit score we can give you this." So it's almost like a lost leader to get you on the phone or online with them to talk about what you truly would qualify for. So some of the deals, if you qualify for them, they could be fantastic But I'd rather you proactively go out and seek, with your credit, what's the best you can do. Don't just accept what comes through the mail.

Sam: In the end, with all of these choices out there for how to manage credit, what type of credit cards to use, does any of that matter if you're using credit irresponsibly?

Mark: Absolutely not. Credit is a very powerful tool if used responsibly. But if you're using it to buy today what you can't pay for tomorrow, you're just becoming enslaved to a debt that's going to cost you so much over.

Todd Mark is Vice President of Education for Consumer Credit Counseling Services of Dallas.

Most of the provisions in the Credit CARD Act take effect in February. Provisions concerning more time to pay, retroactive rate increases, and more advance notice of rate hikes began in August of 2009. Todd Mark is Vice President of Consumer Credit Counseling Services of Dallas. For more information on this and other issues to the economy, go to the blog area of kera.org/economy.

Choose the right credit card to suit your situation

(Getty Images News)

By KARA McGUIRE

Minneapolis Star Tribune

Since the credit crisis and this economic downturn took hold, most credit card companies are re-evaluating risk and changing the terms -- even for their best customers. A week doesn't go by without a reader sharing a nightmarish story about a closed card, a lowered credit limit or jacked-up interest rates and higher fees.

I always appreciate feedback from readers. But there's something more they should do about their lousy credit card than complain to me about it: Shop around.

Yes, it's harder to be approved for credit these days, and who knows if the good-looking cards of today will keep their attractive terms tomorrow. Many American Express cardholders, for example, received letters about rising fees and interest rates right before rules about giving customers 45 days notice of such changes went into effect. With more credit card reform on the way, banks are experimenting with ways to keep their credit card business highly profitable.

But it's worth trying to find a needle in the plastic haystack, right?

Unfortunately, finding a great card among the thousands out there is no fun. So I enlisted the help of four credit card experts who have made it their business to recommend cards to customers: Curtis Arnold of CardRatings.com, Bill Hardekopf of lowcards.com, Adam Jusko of indexcreditcards.com and Schwark Satyavolu of Billshrink.com. You can also do your own research for free on their sites.

Carry a balance?

Focus on finding the lowest interest rate. Period.

For people who don't pay off their bills in full each month but have excellent credit, a favorite among our panel of experts is the Simmons First National VISA Platinum for its 7.25 percent variable rate.

Previous credit concerns?

If your credit is less than stellar, Jusko says to try the Citi Forward Card. Pay your bill on time and stay below your credit limit and you can reduce your rate (advertised as 14.25 percent) and earn bonus points toward rewards.

Satyavolu likes the U.S. Bank Visa Signature card with its 9.99 percent variable rate. It does have a $75 annual fee, but Satyavolu says "annual fees typically are worth it for people that carry an average balance of $10,000 or more."

If you're looking to transfer that balance, it's not as easy to find a 0 percent interest offer with no balance-transfer fees. Arnold directs all balance-transfer seekers with good credit to the Pentagon Federal Credit Union. Its Pentagon Federal Platinum Rewards card offers a 2.99 percent fixed annual percentage rate (APR) for life (there is a one-time 2.5 percent balance transfer fee).

As at many credit unions these days, the eligibility requirements for membership are easier to meet than you'd think. If you don't fit into one of six categories listed atwww.penfed.org/howToJoin/overview.asp, for $20 you can join the National Military Family Association as a "concerned citizen." Two other military-related financial services organizations -- First Command and USAA -- also get high marks for credit cards with reasonable terms.

New to credit? Poor credit?

All of the experts think that for most folks in this category, a secured card -- a card you guarantee with a savings deposit -- is the best option. Stick with a major issuer such as Bank of America, Citi, U.S. Bank or Wells Fargo. Arnold says to try and keep the annual fee, common with secured cards, below $40.

If you're lucky, you'll pay the fee just once because your credit will improve enough so you can apply for an annual-fee-free unsecured card within a year.

If you're in college, there's a whole category of so-called student cards geared toward you; you're not expected to have a credit history. Interest rates in this category are typically higher. But you weren't planning to carry a balance anyway, right?

Love credit card rewards?

Cash is king among this credit-loving gang. Jusko, Arnold and Hardekopf give high marks to the relatively new Schwab Bank Invest First Visa and Fidelity Retirement Rewards American Express cards. Both pay 2 percent cash back into an investment account. Although Blue Cash from American Express scaled back its rewards recently, it also was a unanimous pick. After you spend $6,500, you'll earn 5 percent cash back on groceries, gas and drugstore purchases and 1.25 percent everywhere else. It's great for the person who charges at least $1,000 a month.

Finally, another pick of the bunch is the True Earnings American Express card. It's only available to Costco members and offers 3 percent cash back on gas and restaurant purchases, 2 percent on travel and 1 percent everywhere else. This is my family's primary card.

What's in your wallet?

I asked each credit card geek which credit card he uses most. American Express dominates. Arnold and Hardekopf use the American Express Blue Cash card, although he's tempted by the Schwab cash-back card mentioned above. Satyavolu, a frequent international traveler, uses a Starwood Preferred Guest American Express Card. It has a $45 annual fee, but it earns an effective rate of 4 to 5 percent in points that can be redeemed for stays at the Starwood family of hotels. Jusko favors two cards that are no longer available to consumers, but if he switched cards today, he'd go with the True Earnings card.

The Folly of Credit Card Regulation

Government restrictions on credit card terms is a bad idea, and it betrays basic misunderstanding of economics.
Elizabeth Warren, a Harvard law professor recently appointed as chair of the Congressional Oversight Panel created to oversee the Emergency Economic Stabilization Act, is a leading proponent of new terms for credit card companies.
The current credit terms which Professor Warren wants to restrict increase credit to consumers. Indeed, current terms give issuers the incentive to extend more credit to consumers than they otherwise would, credit which is so critical in this economy, especially to low-income consumers. Assuming Congress has their best interest in mind, they should not interfere.
The credit card business is highly competitive. For anyone that believes otherwise, for anyone that believes credit card companies enjoy inflated profits, the best way to help consumers is not regulation but competition. Therefor Professor Warren, along with other proponents of government restrictions, should put their money where their mouths are, quit their jobs and start a credit card company.
When they offer better terms to credit card users, customers will line out the door. Other credit card companies will either go out of business or match their terms. Professor Warren will make a fortune for herself, and at the same time help poor consumers much more than she could do otherwise.
But if Congress allows new regulations, costs will go up for credit card companies, and the inevitable results will be less credit available, and at higher interest rates. That would be an unwelcome swipe at the already vulnerable American consumer.
Protectionism and regulation are plagues, and they emanate from arrogant government officials and feed on ignorance and economic hardship. During the Great Depression the first thing to be sacrificed was free markets. People expected Washington to provide subsidies and "protect" them with regulations. And today those sentiments are abundant.
It is important to understand that regulation and price controls such as the ones proposed by the Obama administration discourage entrepreneurs from coming up with ways to make products and services cheaper and better. Competitive markets are much better than government bureaucrats in determining the best terms for consumers. Over-regulating creates deleterious side effects.
It is also worth noting that access to low cost goods and services make us richer, not poorer. Free economies create changes in consumer spending, and job losses are inevitably involved. Yes, allowing American to buy cheap goods and services from abroad causes American producers that are uncompetitive to lose their jobs. But when these uncompetitive American producers lose their jobs, American consumers gain, and on the whole the economy is better off.

Student Credit Card DebtOn the Rise

National study released this year by Sallie Mae, one of the country’s leading student-loan providers, found that undergraduates’ credit card balances are the highest they have been since the company began conducting the study in 1998.

College students had an average credit card debt of $3,173 last year, with seniors graduating with an average debt of $4,100. Direct educational expenses, such as tuition, textbooks, school supplies and commuter costs, accounted for much of this debt: Nine in 10 undergraduates reported using their credit cards to pay for these items.
“Some of the results of the study are alarming, and we would caution students to avoid carrying credit card debt,” said Michael Kim, vice president of student services for the University of Southern California Credit Union. “Unless they have the means to pay off the credit card balance at the end of the month, they face significant finance charges that they will likely be paying off for many, many years after graduation.”
The nation’s economic recession has likely contributed to this increase in credit card debt by hampering many parents’ ability to fund their children’s pursuit of higher education, said Karen Klugh, communications manager for the American Financial Services Association.
“Because we’re in a recession, and it’s tough economic times all around, students aren’t getting as much help from their parents, so they’re having to undertake a lot more themselves,” she said.
Shouldering these educational costs often involves using credit cards, which have become the primary method of conducting transactions in the U.S. and conveniently allow students to get their hands on needed supplies without having to pay up front, said Kalman Chany, president and founder of Campus Consultants, a company that provides students and parents with financial aid advice.
“In some ways, having credit card debt can be beneficial, but you want to try to avoid getting to the point where you’re only paying the minimum, because that’s a slippery slope that’s hard to get out of,” Chany said.
Many USC students who carry credit card debt said they try as best they can to keep it under control, but rising educational costs and personal expenses, such as food, rent and gas, have made this task more difficult.
“Being in school and having no liquid income is hard. That’s what creates the debt,” said Christopher Fernandez, a third-year graduate student studying theatre.
Arpit Kadakia, a junior majoring in accounting, said the combination of increased expenses and personal spending habits has impacted his credit card debt.
“Expenditures keep going up, and my credit card balance is higher than I’d like it to be because I sometimes spend more than I earn,” he said.
Chany, who wrote a book on financing education for the Princeton Review called “Paying for College Without Going Broke,” said students can control their debt by using their credit cards only when absolutely necessary, creating a budget to track where their money is going and eliminating gratuitous expenses.
Jonathan Pack, a junior majoring in business administration, said he keeps his spending under control by carefully considering the value of his purchases.
“Personally, I think I manage [money] really well, and I try to make sure I don’t spend any money on anything I don’t need,” Pack said. “I do everything as cheap as I can but still have it be of good quality.”
Carolyn Zeller, a third-year graduate student studying theatre, said she has managed to avoid significant credit card debt by only using her card for emergencies, but said she still has trouble sticking to her monthly budget.
“My own personal bank account has very little income, but I have to pay for a lot at school, so it’s not always guaranteed it’ll be under [budget]. I think I manage [money] pretty well, but when it’s over what I’d spend, that’s when it gets complicated,” Zeller said.
Ultimately, maintaining a small credit card balance to build a good credit score is a wise move, Kim, Chany and Klugh said. Students should also increase their financial literacy by educating themselves about the basics of debt and how best to manage and avoid it, they added.
“Credit card usage should always be limited,” Kim said. “We often say th at students need to live like students today or else they face living like students after graduation because they’ve burdened themselves with huge amounts of debt.”

Michael Mayo: Credit card consumers paying price for bankers' mistakes

I got a letter from Bank of America the other week. The bank wanted to let me know that the interest rate on my credit card was increasing.I've never been late with a payment and have a balance that's 1/13th my credit limit. The bank told me my annual interest rate would be going from a fixed 8.9 percent to a variable rate starting at 14.65 percent.Such a deal!The 5.75 percent rate hike represents a 65 percent increase in interest charges.
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"We are making this change to your APR due to a change in our business practices," Bank of America wrote.This is the same Bank of America that has taken $45 billion in federal bailout money, the same Bank of America that has taken over Merrill Lynch and Countrywide Financial, the same Bank of America that on Monday announced a first-quarter profit of $4.2 billion.The rate increase feels like a bait-and-switch, but my agreement allows it. I can reject the increase and pay off the balance at my old rate, provided I don't use the card for new purchases.Bank of America isn't alone in raising interest rates and lowering limits to credit card customers. Other banks, including Chase and Citigroup, have been doing the same.And I'm not alone in my frustration and confusion. Scores of readers shared similar stories when I wrote about the situation on my blog last week.Rick Carroll told how Bank of America lowered his limit to just above the amount he owed, triggering a chain reaction that saw his limits lowered on other cards. "Make a long story short, I had a credit score last October of 703 and now I enjoy a score of 590 without doing a thing but paying my bills," he wrote.Peter Moran wrote: "Congress is giving these banks money for basically nothing, and they are charging excessively. Taxpayers are getting hit twice for the banks' bad investments."Considering the prime interest rate is now 3.25 percent, credit card rates of 15 percent to 20 percent for good customers and more than 30 percent for those who make one late payment seem exorbitant.And it seems designed to put people into infinite debt, driving more people to default or bankruptcy. How that helps anyone -- the banks, consumers or the overall economy -- is beyond me.Peter Garuccio, a spokesman for the American Bankers Association, said, "Given what's happened with 401(k)s and other assets, all of us are less credit-worthy than we were before. ... In order to make credit available to the widest number of consumers, banks need to take these steps."He also said some credit-card companies are hiking rates before new consumer-friendly laws take effect in July 2010.Betty Riess, a spokeswoman for Bank of America, said "a small portion" of customers with APRs below 10 percent have been notified of increases regardless of their credit history.In the quarterly results Monday, Bank of America said it lost $1.8 billion on its credit-card division."Our costs of providing credit have significantly increased," Riess said. "Loan default and charge-off rates have risen significantly."So in other words, the bad customers are making rates go up for all customers.Which in turn might lead to more bad customers, more defaults and another meltdown/bailout akin to the foreclosure/mortgage mess.Something tells me this isn't going to end well.Cash sounds good from here on out.

Rules have changed for consumer credit

The world of consumer credit has been altered dramatically over the past year, and many of the changes affect whether you can obtain credit, and what you pay. "In the previous two decades, your credit scores have become more important over time. Then in the past year, it's suddenly become critical," said Liz Pulliam Weston, author of the newly updated "Your Credit Score: Your Money & What's at Stake" and who has extensively researched credit issues.The credit world is vastly different than a year ago, and not knowing about the changes could cost you money."The rules have definitely changed," said John Ulzheimer, president of consumer education for Credit.com.

Credit polarization."What I've seen is the world dividing up into two worlds--the credit haves and the credit have-nots," Weston said. Those with great FICO credit scores--the brand of three-digit scores that matter most--still have access to lines of credit at good interest rates. They include mortgage refinancing, car loans and rewards credit cards.What's changed most is for those without sterling credit. Fewer will qualify for loans at all, and those who do will face higher interest rates and more onerous terms. "Having great credit is crucial if you want to have the best possible financial life," Weston said. "People don't realize how much more they pay for having mediocre or bad credit."A $300,000 mortgage with a great credit score might cost you $1,500 per month, while the same mortgage with a poor score might cost $1,800 monthly, according to MyFico.com, a division of the firm that created the FICO score.Fair Isaac, the company that began the FICO score and sells it to lenders, does not disclose exactly how it calculates scores.-- New benchmarks.Until the last year, having a FICO credit score of 700 to 720 was good. Today, you'll need about 740 for the best mortgage rates, 750 for the best rewards credit cards and 760 for the most favorable auto loans and home-equity lines of credit, Weston said. A year ago, a score under 620 might have been considered subprime and subject to punitive terms. Today, that has jumped to 660 or even 680, Weston said. "That's a huge turnaround," she said.-- Lower limits/canceled lines.Banks are more often reducing borrowing limits and canceling credit lines. "It used to be that credit card companies would pick on the folks with poor scores or who had missed a payment or had something else obvious they could point to," Weston said. "These days, they're just whacking credit lines right and left."But if you have great credit, with a FICO score of about 750 and greater, you're in demand. So call your lender and ask for that line to be reinstated or tell them you'll take your business elsewhere.If you have a low FICO score, "you're in a world of hurt," Weston said. The only thing you can do is try to improve your score. The best way to do that is to stop borrowing and pay off balances.Ulzheimer predicts creditors within the next one to three years will be lending again to higher-risk consumers. "Lenders have very short memories," he said.-- Canceled credit cards.Some companies are canceling cards because of low use. That's different from the past, when issuers would keep dormant customers on their books for years in hopes they would start using their card. You want to maintain the available credit of "back of the wallet" cards to help your credit score. You're likely to have a higher score if you have high limits compared with the amount of that credit you actually use. The easiest way to do that is to occasionally use the card--a few times a year--and pay off the balance.-- FICO 08.Fair Isaac is rolling out a new scoring model. FICO 08, developed last year, cares even more than the old formula about the ratio of your borrowing to your available limits--your credit utilization, Fair Isaac has said."It's even more sensitive to the balances you carry on your credit card," Weston said. Ideally, you would keep balances below 30 percent of your available limits, regardless of whether you pay it off in full, with less than 10 percent being best.FICO 08 also ignores small overdue bill collections of original debts of less than $100--for, say, overdue library books or small medical bills.It's difficult to determine when and if lenders will start widely using FICO 08. Only one of the three major credit bureaus, TransUnion, is offering a FICO 08 score to lenders, Ulzheimer said.-- Experian FICO score.Consumers can no longer buy their FICO score from Experian, another of the big credit bureaus. On Feb. 14, Experian cut off access because of a dispute with Fair Isaac. But many lenders use the Experian FICO score, so you could be judged based on a score you cannot see ahead of time. That puts consumers at a disadvantage, Weston said. But there's little you can do little about it. In many cases, your Experian FICO score will be similar to scores from the other two bureaus, TransUnion and Equifax, but not always.-- Score simulators.Several credit-related Web sites have developed FICO score simulators, which are useful if you're curious about where you stand. Examples of simulators are at such sites are Bankrate.com, Quizzle.com and Credit.com. But if you're in the market for an important loan, it's worthwhile paying for your FICO scores from MyFico.com. That way, you know where you stand and whether you'll qualify for the best borrowing rates. And you can always pull your credit reports, upon which your score is based, from AnnualCreditReport.com. Then you can quickly and easily dispute errors that might be hurting your score.

Credit card rates rise for even the best customers

As yet another sign that credit companies view their customers as little more than prey, they’re raising interest rates on even their best customers – customers who pay more than the minimums, pay on time, and never miss a payment. American Express raised my rates from 10% to 13% this year for no reason; I'm one of the aforementioned good customers and I have excellent credit.
The reason? It’s a pre-emptive strike against their customers who will soon be protected by new regulations. Once these regulations start preventing credit card companies from earning the extra profits in all the crooked ways they’ve grown fond of in recent years, they’ll have to go back to making their money the old fashioned way. Buy earning interest on money loaned. They’re playing catch-up in advance.It’s the best they can do until they dream up new ways to screw their customers that congress hasn’t figured out how to stop yet.

Debt Consolidation:IVA Debt Consolidation Advice: Best way to wipe off multiple debts

IVA Debt consolidation advice seems to be found all over. It is usually meant to persuade you that you need to take out another loan to consolidate their debts with the sole intention of solving your problems. Well, to tell you the truth, this is very far from the truth, your debt problems won’t be solved by taking out another loan. By taking out yet another loan on top of the one you already have, you have just put yourself at a great disadvantage, it is probably the worst thing you can ever do. The only time a loan is essential for dealing with an existing debt is if the combined payment is less than the sum of all other monthly payments. The loan amount is consolidated to meet the new repayment amount comfortably on top of the other financial obligations. If you can’t meet the above conditions then you are badly off and you should not consolidate your loans. The best advice to any person who wants to consolidate their loans is to use of a good consolidating program, such as, debt management scheme. This is also what we call IVA or Individual Voluntary Arrangement. This is a plan which is drawn up by a legal qualified insolvency practitioner (IP). S/he will look at your income and expenditure so that it can be decided together with you on what you can afford on a pro-rata basis. The IP will make sure that each creditor is paid proportionally in terms of their percentage to your overall debt. The best IVA debt consolidation advice is when the insolvency practitioner renegotiates with all your creditors and an agreement being reached where they will cut all your debts by up to seventy per cent at a stroke. By doing so, your total debts are reduced by two thirds of the original loan figure. What every person should know is that an IVA is a legally binding agreement between the debtor and his/her creditors. The monthly payments arrived at, should be paid in full at the end of the month and after the usual five years the loan is completely written off During the IVA period the creditors are not allowed to contact you in any way. After the IVA period (five or six years) you will be debt free. This type of IVA Debt Consolidation Advice is not easy to come across, but if you take your time by doing your homework correctly, you will surely hit the jackpot. One thing you should be aware of is that, there is a certain minimum amount for a person to qualify for an IVA. This minimum amount is usually 15000 pounds or more debt in the market. To choose the best IVA, you have to go through a detailed search about the different companies that offer it, so that you come up with the best that suits you. Anyway, all said and done, an IVA is the best tool to overcome the credit burden and it prevents you from being declared bankrupt. Normally, the banks take the decision of taking an advice as positive one and they will usually offer you with another loan if you need one once you have successfully completed the IVA. Aaren Dervin is advisor of Iva Debt Advice Solutions.For any IVA Debt Consolidation Advice, IVA UK Advice visit http://www.iva-debtadvicesolutions.co.uk

Rewards Cards

7 ways to get the most from rewards credit cards

With virtually all credit card issuers offering rewards, the issue is not whether you should get a rewards card, but what type of rewards card is best for you. But it's a confusing marketplace, with card sponsors featuring cash back, points and other incentives to get your business. To top it off, you've got to consider such basic factors as annual fees, interest rates and other terms, making the decision pretty complicated.
"When considering a rewards card, the most important issue is to put some thought into it," says Scott Crawford, CEO of Debtgoal.com, and a former executive in HSBC's credit card group. "You can look at something online or get an application in the mail that seems like the best thing ever, but if it doesn't fit what you're interested in, then it just won't work for you. Like if you have an airline miles card, but if you don't fly much, that isn't a really good deal."
Similarly, if you have a card that gives you points, but you don't remember to redeem them, having enough points to score a free iPod isn't worth much. Rewards cards that are less generous than others can also be problematic, as are ones with annual fees, high interest rates or onerous terms.
So here are the seven tips you need to keep in mind when adding a rewards card to your wallet:
1. Align rewards with your interests. Reward credit cards come in many different shapes and sizes -- generally allowing you to accumulate points towards merchandise, gift cards, airline miles or cash back -- so it makes sense to align rewards with your interests and goals. If you're hunkering down and trying to budget your income better, you might choose a card that offers points towards such basics as shopping at your favorite grocery store or points that will go towards your mortgage payment. If traveling is your thing, an airline miles reward card for an airline that flies out of your local hub may do the trick.
Just don't pick something that you aren't likely to use. Also be wary of rewards that end up forcing you to spend more money -- such as those that you can redeem for gift cards at other merchants -- because you very well may end up spending more money on top of the rewards than you otherwise would have without it. You could choose a card that offers a choice of points or cash back and switch back and forth among those options as your needs dictate.
2. Don't forget about cash back. Cash back reward offers give you the most basic currency available -- cash -- to spend as you like. Although cash is a reward that is widely available, consumers don't choose it as much as you would think, mainly because you have to spend a lot of money to accumulate much cash, says Roger Brooks, vice president of sales and marketing at ValueCentric Marketing Group, a company that provides transaction-based marketing services. "It's hard to accumulate anything, you have to spend a lot to even get $20 back at the end of the month," he says. "From our experience, most providers feel that rewards are much more valuable than cash back because consumers would rather accumulate points towards something they want."
3. Compare the reward offer with others. A major mistake many consumers make is to add a credit card to their wallet on impulse, says Crawford. "I used to work in credit card marketing and it's amazing how little thought people put into getting a credit card offer. I would say that most credit card decisions tend to be made on impulse."
Instead of making a spur-of-the-moment decision, take a few minutes to compare what the offer is in front of you, or the rewards terms of the cards currently in your wallet, with others offered by the industry. This chart lists some of the best deals available to consumers by major issuers such as Citibank, American Express and JP Morgan Chase.
This table also allows you to compare interest rates and annual fees, although those will vary depending on your individual credit score and credit history. Be wary of cards with annual fees even if their rewards are more generous than others, because paying any type of fee may wipe out any advantage you gain in rewards. "You can destroy all the value of your rewards card even with a modest annual fee," Crawford says. "I have a United Mileage card that charges me $80 a year in annual fees, which means I have to charge $8,000 a year just to break even. Would I be better off getting a cash back card that doesn't have an annual fee? Probably."
4. Dump less rewarding cards. If you've got several cards, you may be diluting the impact of your rewards by putting charges on all the cards or you may be charging more on a card that offers less advantageous rewards than the others. Cards with annual fees and higher interest rates should be the first to go. If you are going to add a card while dumping others, look for a card with a competitive rewards program that also offers a strong balance-transfer program. Such programs typically include 0 percent interest for a period of time and may also offer double or triple rewards on balance transfers.
Also, before you decide to dump your existing cards, take a look at your financial situation. If your credit score has gone down or you're behind on your bills or you're close to the limits on all your cards, you may not be able to obtain a new card, as issuers are tightening lending criteria. Check out Balance Transfers 101 before you cancel an existing card or accept a balance transfer offer.
5. Run your spending through one card. After you've dumped your other, less rewarding cards, if you still have more than one card, try to put the dollars that you typically spend through your credit card on that one card to maximize the value. It's not going to do you much good to have a great rewards card if you don't use it. Of course, you don't want to spend money you don't have just to get rewards, but if you typically do put certain expenses on your card, put those on the rewards card first. That way you'll get the most bang for your spending buck as possible in the form of your preferred reward.
6. Know when your rewards points expire. It used to be that rewards never expired; now it is more unusual if they don't expire. Be sure to check the fine print in your credit card agreement or on the reward affiliate's site to see when your particular rewards expire. "Typical reward expiration is 12 to 18 months, with some going out as long as 24 months," says Brooks. "Sometimes you can buy your points back after they expire, but it's best to use them before the expiration date. Typically, you'll get a notice, or two, before they expire."
7. Keep track of changes in terms. Credit card issuers are notorious for changing terms. When they do so, they have to notify you, but the problem is, you're not likely to even read what they send, since it generally comes in the form of a dense snail mail notice in fine print. However, a change in rewards terms, such as getting fewer points or a lower percentage of cash back, is something that will typically be disclosed in such a notice, so you need to take a minute to examine the notices your card company is sending you.
If a change in reward terms is material, you can always start the process of looking for another, more beneficial, card again. That's especially true if you have a good credit score and don't have a lot of cards with high balances. That makes you a desirable customer to credit card companies and means that you likely will find a better deal elsewhere.
See related: Chart: Compare credit card rewards offers, Debit card rewards programs gaining acceptance, Which is better: Frequent flier or cash reward programs, Give more with less through charity credit cards, Trips and traps of credit card rewards programs

Credit Card Holders, Squeezed Twice by the Banks

The Credit Card Trap” (editorial, April 6) notes the contemptible behavior of banks that are increasing credit card rates for the same taxpayer-consumers footing the bill for their bailouts.
When taxpayers are asked to recapitalize banks, they should not be charged for the privilege. Yet the cost of consumer credit has only increased since the first bailout package. While some conditions were imposed on shareholder dividends and executive compensation, there were never any provisions to protect consumers. This is unacceptable.
Last November, I sent a letter to Treasury Secretary Henry M. Paulson Jr. calling for rules that would prohibit credit card companies that received federal assistance from raising their rates. I also cut up my credit card as an act of protest, vowing not to use it until federal action put a stop to outrageous profiteering. I am still waiting.