Credit history reports should be free

Recently, consumers were alerted to the implementation of new federal rules expanding credit card holders' rights. These new rights, which take effect next February, arm consumers with more flexibility in dealing with credit card companies. Consumers should also be aware that there are free tools available right now to help them maintain good credit.

The Credit Card Accountability, Responsibility and Disclosure Act, which passed into law in May, will provide credit card users an additional 7 days (rising from 14 to 21 days) to pay their monthly credit card bills before the threat of late fees. Card holders will also be given 45 days notice (up from the previous 15 days) before credit card companies raise interest rates. In addition to these rights, consumers can also take advantage of their right to free credit history reports.

With identify theft cases on the rise, it makes good sense to regularly review your credit records to help stay ahead of criminals. Thanks to a law passed by Congress six years ago, you still don't have to pay anything to access your credit history from the three major credit bureaus and review your standing with loan providers and credit card companies.

All Americans are entitled to three such reports each year - one from each of the major consumer credit reporting companies.

Before the program began, Americans had to pay the credit bureaus' yearly fees for a credit report.

Now, anyone can apply for their free yearly credit history report by visiting the Web site: http://www.annualcreditreport.com.

AnnualCreditReport.com is the only authorized source to get your free annual credit report under federal law. When you visit the site, you can complete an on-line form to immediately access your credit history report.

You can also download forms to complete the process by mail, if you choose. Alternatively, you can apply for your free credit report by a toll free number: 1-877-322-8228. It takes 15 days to process phone and mail requests.

You have the right to request a free credit history report from all three credit agencies, Equifax, Experian, and TransUnion, during a 12-month time period. Whether you want to request all three credit agency reports at one time, or if you want to space them out to keep track of potential changes, is entirely up to you.

Separately, each of the credit bureaus also offers your "credit score" for a fee. But there is no charge to access your credit history.

In 2003, Congress passed the Fair and Accurate Credit Transactions Act to allow anyone to apply for the free annual credit file disclosures, also referred to as credit reports. According to the program web site, the credit file disclosure provides all of the information in your credit file maintained by a consumer reporting company that could be provided in a consumer report about you to a lender.

Regularly checking your credit history report to see what financial activity is being conducted in your name can help to limit identity theft. Checking for open credit accounts in your name that you did not authorize as well as delinquent accounts (thieves don't pay bills they run up in your name) is one way to catch such illegal activity. For more information about your credit rights and the free annual credit report program, you can also visit the Federal Trade Commission's Web site: http://www.ftc.gov/freereports.

Credit card shenanigans can save you ££££ at Christmas

Paul Lewis suggests a relatively cheap way of paying for the season of goodwill

Now is the time to give yourself a card for Christmas. To be precise, a credit card to buy those Christmas gifts and spread the cost over the next six months or more on interest-free credit. Yes, you can borrow the cost of Christmas and pay it off without paying a penny in interest.

Step 1: Find a credit card that offers you 0% on purchases for at least six months. There are a couple of dozen of these still around and the interest-free period ranges from six to 12 months. Try www.moneyfacts.co.uk or - with care - www.moneysupermarket.com.

Step 2: Are you a good or a bad credit risk? Have you missed payments on cards, mortgage, overdraft, or monthly mobile phone bill (all bad)? Are you not on the electoral roll (bad)? Are you not a home owner (bad)? Have you moved a lot or applied for lots of credit recently (both bad). If you are a bad risk the cards with the highest APRs are more likely to approve you.

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Credit card shenanigans can save you ££££ at Christmas

Posted: 21 October 2009 | Subscribe Online
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Paul Lewis suggests a relatively cheap way of paying for the season of goodwill

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Step 3: When you apply for the card (or as soon as it arrives) set up a direct debit to pay the minimum each month. That will stop you missing the payment, incurring a £12 penalty and probably losing the 0% deal.

Step 4: Use the card only for Christmas spending. Do not use it for day-to-day spending - or treats for you. Do not be tempted by a balance transfer deal. On 2 January 2010 get your scissors out and cut up the card.

Step 5: When the statement arrives in January call the card company and ask which statement you have to clear in full to avoid paying any interest. Work out the number of months left at zero percent. Divide the total due on the card by the number of months. Write down that figure. Deduct the minimum payment (which is made by direct debit) and pay the rest by sending a cheque.

Step 6: Every time a statement arrives do the same.

Step 7: When the final statement of your interest-free period arrives ensure you pay off the whole amount by the due date. Add on days for postal delays and more days for the payment to "clear". The safest thing is to pay as soon as you get the statement. Cancel the card.

Well done! You have paid for Christmas over several months interest-free! Magic!

Here's What To Do If Your Credit Card Company Is Screwing You Over

Earlier today, we spoke with Bill Hardekopf, CEO of credit card into site Lowcards.com on the subject of Citi (C) and its infatuation with raising interest rates and shutting down credit cards. Bill then shot us an email detailing why he thinks Citi is making its customers deal with 29.99% rate hikes and why you should use your credit card reward points before it's too late:

In the past week, Citi has increased the interest rate on a number of their cardholders to 29.99% and cancelled the accounts of customers holding some of their gas partner co-branded cards. Bank of America notified some of their cardholders that it will begin charging an annual fee ranging from $29 to $99 on their cards beginning in February 2010.

These actions follow last week's earnings reports that revealed that banks and credit card issuers are still losing millions of dollars due to credit card defaults and delinquencies. Issuers and analyst expect this to continue into next year.

Credit card issuers are desperately trying to rebound after the collapse of the economy and consumer lending, but unemployment, the CARD Act and the possibility of new regulations are restricting traditional areas revenue. Issuers must make changes, even if it angers Congress and their cardholders.

"Credit card issuers warned there would be changes if Congress passed new rules regulating them. They have already proved many times that they were not bluffing," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Here are the latest changes that have taken place and some consumer tips for responding to the changes:

* Citi is notifying a number of cardholders of APR increases up to 29.99%. To make matters worse, this is a variable rate that can escalate once the prime rate increases.

"We are hearing from customers with good credit histories that their rate has been increased to 29.99% for no apparent reason," says Hardekopf. "29.99% sends a message that Citi doesn't want you to use that card. It is a strong motivation to close your account."

If your rate increases and you carry a balance, call and ask them to reduce the rate. If that doesn't work, you now have a right to opt out of the rate increase by the deadline outlined in your notice. By opting-out, you can pay off the balance at the current interest rate for up to five years, but you cannot make any further charges on the account. Opt-out and pay off the
balance as soon as possible. But before you opt-out, redeem your rewards. You may forfeit the rewards once you have opted-out. This rate increase comes at the beginning of the holiday season. If your rate is 29.99% and you keep the card, do not use this card during the holiday season unless you are sure you can pay off the balance immediately.

* Last week, Citi cancelled a substantial number of their MasterCard accounts, most of which were gas partner co-branded cards. Citi said that these account closings include credit cards affiliated with Shell, Citgo, ExxonMobil and Phillips 66-Conoco.

Some customers have complained that they did not receive notice of this. But issuers do not have to give customers advance notice of an account cancellation. Issuers have the right to close credit lines immediately, so cancellation notices can be sent after the card is cancelled. Even the CARD Act only requires that issuers give advance notice of rate increases.

Citi is also shutting down the Home Depot credit card effective at the end of October. Rewards will be honored through February 2010.

Customers should use their accumulated rewards very soon or they could lose them. If the cancelled card is a rewards card, the issuer may give a deadline for redeeming the rewards. However, if you don't see the notification in the mail or forget the deadline, you lose your rewards. In some cases, the rewards are lost when the account is closed, even if the issuer is the one who closed it.

Cardholders should be on the lookout for changes and notices from their issuers. This is a good time to use your reward points for holiday travel or early holiday shopping.

* Last week, Bank of America notified a limited group of cardholders that it will start charging an annual fee on their credit cards beginning in February 2010. The fee will range from $29 to $99 and will be applied to the selected accounts based on risk and profitability.

This action came only one week after Bank of America received attention and praise for promising to put a freeze on credit card rates.

"Nearly 80% of the credit cards in America do not have annual fees," said Hardekopf. "You can certainly find a comparable card without an annual fee if you shop around. Just make sure to analyze the terms and conditions of each card and if they are similar, choose the one without this yearly fee.

"Actions like these are rarely singular events. One issuer takes a new step and the others likely follow. Issuers are trying everything they can to reduce risk and increase revenue, especially since regulations are limiting their options," says Hardekopf. "Consumers have to pay attention to their bill and the notices they receive in the mail."

Cardholders should take note that if they are in deliquency, their frequent flyer miles can be withheld by Citi:

Randy Petersen: One final note on canceling your Citi card: The safety of your AAdvantage miles is dependent upon you making sure that the final balance is paid. Citi can and does withhold miles when an account becomes delinquent. Miles are also deducted if you choose to return a product that you charged with your Citi card. But if your balance is clear, and you are set on closing the card and willing to take a credit score hit, then go ahead and cancel.

From credit cards to budgeting... how to get out of debt

f you are worried about more money going out of your bank account than coming in, then you're not alone.

The average household debt - excluding mortgages - is £9,550, according to Credit Action.

1. DON'T BURY YOUR HEAD IN THE SAND - LOOK AT YOUR BILLS

The only way you can determine where you are financially, and how you can improve your situation, is to face it head on, and that means looking at the scary figures on the credit card bills.

Of course, you have to consider all of your other bills, too, and that means your mortgage, car loans, insurance payments, utility, phone, mobile phone and any satellite or cable TV bills. To save the most money, consider your finances as a whole, not individually.

2. TAKE A REALISTIC LOOK AT YOUR INCOME AND OUTGOINGS

Detail how much money you, or your family, have coming in each month. Calculate how much of that is going to pay debts, household bills, groceries, children's school clothes, your new shoes or clothes, and socialising.

If you have more money coming in than going out, you are going to be able to sort yourself out more easily. If you have more going out than coming in, you have some tough decisions to make, so be strong.

3. PLAN A SENSIBLE BUDGET

By making small changes to your spending habits, you can start to pull yourself out of debt. Now that you know your income and spending, you can identify areas where you can save money.

For example, if you spend £5 a day on coffee at work - which adds up to more than £100 a month - cut it out or see if there is a cheaper way of getting your caffeine fix (use a flask).

Other easy ways to save are by reducing unnecessary clothes buying, shopping around for car or household insurance, or seeing if bundling together your phone, broadband and TV packages saves money.

4. TRY TO REDUCE THE INTEREST ON YOUR DEBTS

If you are paying high interest on your credit cards, then consider switching to a 0 per cent card.

Remember though, for most of these cards, the balance transfer may be at 0 per cent, but any purchases will attract interest - and when you make payments, it is the cheap debt will be cleared first.

Lenders are in this to make money. But play them at their own game, and never use that card for future purchases.

5. CONSIDER CONSOLIDATING YOUR DEBTS - BUT BE CAREFUL HOW

By putting a number of debts into one bigger loan, you can reduce the overall rate you are paying. You can also see how much is going out each month, as you have only one payment rather than many.

Extending your mortgage is one way to do this, and it may be the cheapest method, but your debt would be secured against your property, so if you miss payments, then your home is at risk.

Beware of using debt consolidation services who sometimes offer very high interest rates. Check the Financial Services Authority (0845 606 1234, www.fsa.gov.uk) before you deal with any company.

6. USE CASH WHERE YOU CAN

Limit yourself to a certain amount of spending money each week, take it out of the bank in one, two or three withdrawals, and use only that money.

If you have any money left over at the end of the week, you can put it aside to cover the unexpected.

If you have a fixation with plastic, then cut up your cards so you can't use them. Then you have no choice but to use cash.

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7. IF YOU ARE STRUGGLING TO PAY DEBTS, TALK TO YOUR LENDERS

If you are finding it hard to meet your debt payments, speak to your lenders and see if you can come to some agreement.

Lenders may write off a certain amount of the debt you owe, or agree to reduce the interest that you are paying, to free up cash flow.

There is a priority order to paying off debts - HM Revenue & Customs is top of the list - but after that pay your mortgage first and then consider which payments could be more flexible.

8. USE YOUR SAVINGS - BUT KEEP A FINANCIAL CUSHION

If you have savings that are earning a paltry amount of interest, it's worth considering using that money to pay off more expensive debt. If you are getting 1 per cent on a savings account, but paying 7 per cent on a debt, then the gain you make by moving money to pay off the debt is huge.

But make sure you have access to at least three months' money in case you are made redundant.

9. REMEMBER YOU CAN STILL HAVE FUN - AND OFTEN FOR FREE

Reducing your debts takes discipline, but it does not have to be the end of your social life. If you have money left over at the end of the week, give yourself a treat.

Also, there are plenty of places you can visit for free. Quality time does not always have to be paid for.

Credit card firms become wary of Payment defaults.

Taking heed from the recent economic meltdown, the credit card companies that earlier fought for higher market shares in terms of number of cards disbursed and offered free credit cards are now concentrating on fee-based cards.

The companies now plan to spend higher on cards and repayment ability of its customers. This helps in banks becoming cautious of defaults.

Introducing more fee-based credit cards is more logical because people tend to use more than what they pay for them. Rajesh Saxena, CEO, American Express Banking Corp. India, said "The industry is more focused on fee-based cards as the customers spend more on them. In India, the average spending of our premium card members' is tens of times." American Express India only offers fee-based cards. He also said that the card usage pattern of premium Indians is similar to that of United States, Hong Kong and Singapore.

Several premium segment cards were launched this year. While Citibank launched its Platinum Select card in February that charges an annual fee of Rs 4,000, ICICI Bank launched ICICI Bank Singapore Airlines Visa Platinum card in May 2009 which charges an annual fee of Rs 6,000. Industry executives say that these premium segment cards are used all the time.

While the inactive and free cards are letting the industry down in India, the premium card segment is at par with global standards. According to RBI, number of cards in force dropped 17.2 percent in July while the billed business slowed down by 11 percent.

Taking lessons from the increasing number of credit card defaults ICICI bank has come out with a development to block all its credit cards in case of a single default. ICICI has informed its customers that if a person is carrying more than one ICICI credit card, the bank will block all the credit cards in case of default on one and withdraw all the facilities offered under the same.