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What Is Consumer Credit Counseling?

phil — Wed, 26 May 2010 18:23:00 +0000

There are times when consumers need help with their debt. While there are many ways to get help, one of the most effective is to use consumer credit counseling services. These organizations and agencies can go by different names. You may hear of them as debt consolidation or debt management companies.

These types of consumer debt agencies and companies have been around since the early 80′s when banking laws changed and credit card debt soon after became far easier to accumulate. Because so many people were getting so far into debt and were having problems meeting even the minimum payment requirements, the banks began to take some action.

Back then the only real course of action for indebted consumers was to file for bankruptcy. This was bad news for both the consumers and the banks. As an option to bankruptcy, the banks helped to establish and fund consumer credit counseling organizations. By doing this, they were able to recover their money as well as help out those who were in financial trouble.

Over the course of time, two types of consumer credit counseling companies have come about. One is the non-profit type organizations that help consumers to make budgets and to communicate with lenders. The other type is a for-profit enterprise that can do budgets as well but they usually offer more in the way of actually dealing with the debt problem.

It is not uncommon for consumers to become confused when they are looking for help with their debt issues. It is also become more common for consumers to get ripped off by bogus credit counseling companies, which makes it imperative that consumers investigate a company before they sign on with one.

Before signing on with any company, you should spend some time thinking about what it is that you need from the company. If you are looking for a debt consolidation loan, you would do much better to work with lenders who offer those types of loans. In some cases, this can mean your local bank or some other highly reputable lender.

If you are a consumer who has too many credit bills coming at the end of the month and you are constantly falling behind with your payments, you may not be able to get a debt consolidation loan and your better choice might be to work with a company that can help you get better interest rates from your creditors or perhaps better payment terms with the companies. As you can see, these are two different approaches, requiring the skills of two different type companies.

It is unfortunate but there are some companies out there who tout themselves as credit counselors or credit repair companies who are in the business not to help you but to make a profit off of you. Some of these companies want you to pay a high advance fee before they will do anything for you. Others will take the money you send to them for payments and use it for other purposes, which is basically fraud. Yet others will set up debt programs for you which will take decades of payments from you before you reach your goal of being out of debt.

Consumer credit counseling is a good idea for some people who in hardship circumstances, but do exercise caution when approaching companies for help. Be sure to check them out before signing on with any.

The Author Peter Kenny is a writer for The Thrifty Scot, please visit us athttp://www.thriftyscot.co.uk/Loans/ and http://www.thriftyscot.co.uk/mortgage/http://www.thriftyscot.co.uk/news/012008/government-figures-show-slowing-house-prices.html

What Is Consumer Credit Counseling?

0 APR Credit Card – Truths and Traps

phil — Wed, 26 May 2010 18:06:06 +0000

If you are struggling with ever-increasing credit card debt, a 0 APR credit card could be the magic wand for you. There are a number of 0 APR credit cards in the marketplace. These 0 Interest credit cards offer cardholders zero percent on new purchases and certain 0 APR credit card offers also allow balance transfers, lowering the interest burden even further.
The Truth About 0 APR Credit Cards
These types of 0 APR credit cards are offered by popular credit card lenders including American Express, Citibank, Chase, HSBC, and Discover. These cards have many benefits to offer if you have a good to excellent credit rating.
Keep in mind, that the zero percent offered with these cards is not permanent. It is an introductory rate and is typically offered for ninety days to as long as 12 months. At the end of the interest-free or zero percent periods, cardholders will have to pay a higher ongoing interest rate. Generally, these rates could vary between 10 % – 14% and sometimes can be as high as 24%.
A 0 APR credit card is ideal when you want to purchase something expensive but cannot find another way to finance it. There will be no interest charges for the in and you will have the introductory buffer period to pay off the expense. But buyer beware … make sure you can pay the purchase off before the introductory APR expires.
Most 0 Interest credit cards allow balance transfers from your existing higher interest cards and many will waive the transfer fees. This is one of the best methods to pay off debts at a faster rate, leading to substantial savings on the interest charges incurred.
It is possible that a single credit card can have multiple APRs including the following:
1) One APR for balance transfers, one for purchases, and one for cash advances – the APR normally would be higher for cash advances compared to balance transfers and purchases.
2) Tiered APRs – Different APR levels can be assigned for different account balance levels or tiers, e.g., 15% for balances between $1 – $500 and 17% for balances higher than $500, etc..
3) Introductory APR – 0 APR as the introductory offer and a higher rate upon expiration of the introductory period.
4) Penalty APR – A penalty APR rate may apply if you are late with your payments.
The Traps to Watch Out For:
A 0 APR credit card is an attractive proposition, and often is too tempting an offer to resist. However, it is essential to be informed about the often-untold catches in these lucrative offers.
The 0 APR is a Limited Time Offer – In general, the 0 APR offered is only for a limited period. The period could vary from 3 months to 12 months. This implies that purchases made during this period will not attract any interest. You need to be cautious about the expiry period and remember to pay off before the period ends inorder to avoid hefty interest charges.
Once the introductory period is over, the 0 APR credit card may have a ridiculously high interest rate like 20% or higher.
On-Time Payment – Most of these 0 Interest credit cards require you to pay the minimum payment on time every month during the introductory period. Late payments will result in penalties that include shifting the remaining balance to a much higher APR.
Complete Payment – Certain 0 APR cards require you to pay off the balance entirely before the expiration period of the introductory offer. If not, the default high interest rate could be applied to the entire balance. Ensure that you understand these credit card terms clearly.
Applicability of the 0 APR – Most of the 0 Interest cards offer the 0 APR on new purchases and balance transfers in the introductory period. However, there are some cards that offer 0 APR on balance transfers only with higher applicable APR’s on new purchases.
Other Fees – Some credit card companies compensate the 0 APR by charging high annual fees or transfer fees on balance transfers.
Cap on Balance Transfer – Certain cards may have a cap or limit on the balance transfer amount. This means that the 0 APR will apply only for the amount within the cap limit and anything more will be charged the default higher APR.
While it may be an attractive offer to go for 0 APR credit cards, it may not be a wise decision in certain scenarios. So, before you seriously consider a 0 APR credit card, it is essential to compute credit balances, interest rates, and your pay off capability. Read the terms and conditions carefully to avoid credit traps. Understanding the fine print could have substantial savings apart from trouble free credit rating.

Robert Alan

About the Author:
For more information on what to watch for in 0 APR credit card offers, Robert Alan recommends that you visit CreditCardAssist.com

0 APR Credit Card – Truths and Traps

$194m fourth-quarter loss ‘disappointing’ for BofA

phil — Wed, 20 Jan 2010 18:54:46 +0000

Bank of America has reported a loss of $194m in the fourth quarter of 2009. Morgan Stanley and Wells Fargo both had profits in the fourth quarter of 2009 whilst the Bank of America reported it’s loss. The new chief executive Brian Moyniham said the loss was “disappointing”. Compared to a year ago this is an improvement as it made a loss of $1.8bn.

The fact that they need to repay the US government’s $45bn preferred stock just makes it worse. B. Moynihan also stated that he is encouraged by signs the economy is improving, and that they have seen a stabilisation of their credit costs.

As BofA is in this position, Morgan Stanley reported fourth-quarter net income of $413m and Wells Fargo reported a profit in the fourth-quarter from growth in its mortgage banking business. They must be going wrong somewhere They are the largest US lender at the moment but will they hold this position if they continue to lose money?

The majority of these losses were from credit although this has shown improvement and was better than the third quarter. The hit was softened by their non-interest income and its investment in BlackRock. Also BlackRock buying

Barclays’ asset management business helped make this a ‘disappointment’ rather than a full blown problem. BofA may be able to stay the leading US lender or will it continue to have problems as it tries to recover from a year of big losses?

What do you think of BofA’s performance? Do you think they can pull themselves out of this hole? If $45bn cannot do it what can?

$194m fourth-quarter loss ‘disappointing’ for BofA