1. Myth: Transferring the balance of one credit card to another is an effective way to manage debt

In theory, moving your debt to a credit card with a lower interest rate will save you money, but in the end, having multiple credit cards can harm your credit score. Part of the formula that credit rating bureaus use to factor your credit score is a ratio of your credit line to your credit balance. Having more debt might mean a lower score.

Plus, the bigger the balance, the faster interest will accrue. For example, 20% interest on $4000 is $800, but 10% of $9000 is still $900.

2. Myth: Cash Advance is about the same as using a debit card at an ATM

Cash Advances may seem like a quick fix when your hard up, but that $60 you pull out of the machine tonight might cost you much more by next month. Cash advances often have hidden fees and increased interest that make them hard to pay off unless you take care of them right away.

3. Myth: Paying the minimum each month is okay to get you by

True, if you pay off the minimum amount due each month the credit card companies won’t sick their hounds on you, but that debt will take years and years to go away. And what’s worse, you’ll end up paying much more. Paying off a $5000 purchase over 8 years with an 19% interest rate racks up a hefty $4311 in interest. That means your paying almost twice as much!

4. Myth: Rebuilding your credit is simple

Unlike blowing off an assignment in high school, those red check marks on your credit report won’t go away quite so easily. Defaulting on a loan, declaring bankruptcy or consistently being late on payments can cause irreparable damage to your credit rating. True, through some diligence and a lot of letters and phone calls you can clean up your credit, but its far, far easier to keep track of your spending in the first place.

5. Myth: If your card is stolen, you won’t have to pay

A lot of Americans like to feel that they’ll never have to pay for something unjust done to them. Not true. While many credit card companies offer some kind of fraud protection, you still have to exercise some common sense. Just like an insurance company won’t reimburse you if you leave your keys on the front seat of your car, your credit card company will hold you liable if you leave your card sitting out in the open.

6. Myth: It’s worth it in savings to open a credit card at a retailer

It always seems like a sweet deal: sign up for a credit card and get 10% off of everything at your favorite store. In theory, this will work out since you shop at that store all the time anyway. But in reality, most people use that discount as justification to buy 30% more than they usually do.

7. Myth: You can sign up for free stuff, then never use the card

Credit card companies like to prey upon impetuous or frugal college students by offering free food or t-shirts or novelty items for filling out a credit card application. The drawbacks are two-fold: an onslaught of junk mail and an activated credit card (probably with crumby rates) burning a hole in your wallet from that point on.

8. Myth: All is lost after your first mistake

Credit card companies are bloodsucking gougers, but that doesn’t mean they can’t occasionally be swayed. If you show that you are responsible, they might forgive one mistake a year. If you know a payment is going to be late because of slow postal service or you lost the bill, call them and let them know. If you’ve been a good customer up until that point and you are polite, you might be able to keep your credit rating pristine.

9. Myth: By using cash, you are missing out on hundreds of dollars worth of rewards

The truth is, those rewards take eons to redeem, and most of the time, they are just perks, rather than lucrative ventures. For example, you might get 3 points to the dollar spent and save up 25,000 points to get a $5 Dunkin Donuts gift card. You shouldn’t use the rewards as a rationale to spend money, rather, consider it a complimentary gift for being responsible for so long.

10. Myth: Canceling unused credit cards is safe and smart

True, getting rid of cards you never use removes the risk of the card being lost or stolen, but it also reduces your total credit line, thus possibly harming your credit rating. For example, if you have $5,000 spread over 4 cards each with a credit line of $10,000 you are doing okay with about a 12.5% balance to credit line ratio. Eliminate two of those cards, and you double that figure, putting you closer to the edge of bad credit.

About the Author:

Paul Basco provides expert opinions and reviews to help you Apply for a Credit Card and Compare Credit Card Offers with GettingaCreditCard.com.

Are you on the verge of Chapter 7 bankruptcy? Have you been so late on your bills that collection agencies now call you at home, at work, and send you nasty letters on a daily or weekly basis?

Creditors and banks are not in the business of collecting bad debts. When your account is so many months behind, loan companies often sell off your account for so many cents on the dollar to collection agencies. Collection agencies are the ones who hound you at home and work and send you nasty, harassing, and threatening letters. Don’t settle for any of it! If a collection agency hounds you during dinner time and you tell them to cease contact with you, they won’t. However, if you know your legal rights as a consumer, you can send them a written copy of this letter custom tailored with your information, which will legally make them stop once and for all! What happens when they receive the letter? They have to stop calling you and writing you letters. After a while, this eventually gets back to your original creditor (i.e. bank, credit card company, etc. that you screwed them out of their money), and then your account is sold to a different collection agency. At that point, the new collection agency will start hounding you. In some cases, it may show up on your credit report as a different loan since you now owe this 2nd collection agency money. Now what do I do that the second collection agency is hounding me now since I got rid of the first one? Send them the same copy of this letter that you sent to the first! The second collection agency will have to stop hounding you and then it starts the whole vicious cycle all over again until the creditor is finally exhausted with you and they may eventually give up (depending on how much money you owe them.) In the mean time, DON’T SWEAT IT! Don’t get paranoid about people calling you. They will threaten to sue you, but they seldom do. Do you have any idea how much money and time it takes to sue somebody over? Especially over small amounts like $500 to $1,000. It’s more trouble than it’s worth. Why risk the investment of a law suit when the person they are after can just up and file Chapter 7 on them anyway.

DISCLAIMER: For your information, I am not an attorney. If you’re reading this letter, your credit could be as bad as mine is and right now, you may want to consider all of your options. I used this exact letter on over 20 different collection agencies over the past 5 years and it worked 100% of the time. I was just passing the info down on the super information highway for your enjoyment! Use this letter at your own risk (the only damage I can see is adding further collection agencies saying you owe more debt to your credit report.) But if you have 15-20 “R9″’s on your credit report now, what difference does it make it you add another one? Your credit is trashed and no matter what you do, short of either Chapter 7 or paying it all off in full, you still won’t be able to get any more loans from anybody anyway.

Okay, now for the letter. Here’s the sample. The parts marked with ([]) brackets need to be edited with your information.

[John Q. Public (your name and info in these blocks)]
[123 Maple Street]
[Anytown, FL 33012]

[ABC Collection Agency]
[1122 We Want Your Money Ave.]
[Miami, FL 33169-5131]

Acct No: [999013345900]

[August 11, 1998]

To Whom It May Concern:

You are hereby notified under provisions of public laws 95-109 and 99-361, also known as the Fair Debt Collection Practices Act, that your services are no longer desired. You and your organization are to CEASE & DESIST all attempts to collect this debt.

Upon my receipt of this notice, and as stated by this notice, “[ABC Collection Agency]” and “[John Q. Public]” shall have no further business with one another.

Ҥ805. Communication in connection with debt collection 15 USC 1692c

(c) Ceasing Communication. – If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except -
(1) to advise the consumer that the debt collector’s further efforts are being terminated;
(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or
(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy. ”

Sincerely,

[John Q. Public]

Debt Collectors and Judgments – A MUST READ.

. The number of recent inquiries on your credit report. To most people this is not self-evident, but to lenders it makes perfect sense. If you have a lot of recent inquiries from lenders who are looking to determine your credit worthiness, then chances are you may be overextended and short of cash.

2. The proportion of your balances to their credit lines. If you’re maxed out on your credit cards, then lenders may consider it a sign of one of three things: a) you’re overextended and relying on your credit to make ends meet; b) you’re addicted to credit and overuse your credit lines; or c) both.

3. Closing credit card accounts. Closing an account has the effect of lowering the credit limit on your credit report. Since you no longer are charging anything to that account whatever your current balance is also happens to be the credit limit. This being the case the credit scoring companies only see that a consumer is utilizing 100 percent of the credit line, thus affecting your credit negatively per point number 2.

4. Closing your oldest credit card account. Closing accounts affects your credit negatively, but since the impact is relatively minimal, it may be a necessary step to help get your finances under control. If you’re forced to make a decision about which account to keep open (assuming they have the same interest rate and fees), you should always hang on to the oldest account. The length of your credit history is actually about 15 percent of your score, and having an account with some longevity can be a big boost.

5. Enrolling in a debt counseling service. The only way to maintain a positive credit picture is by paying your bills on time and in full every month. Any time you seek outside assistance in managing your finances whether through credit counseling or debt negotiation, future lenders will be inevitably turned off. Unfortunately, there is no way to get around it since your enrollment is reported to the credit bureaus by your creditors, not by the debt management company. This is a source of debate, but to be conservative, you should assume that you won’t be credit worthy until you’ve established some positive credit history after completing your program. I know the last sentence sounds a bit contradictory. After all, how can you rebuild your credit history if no one will extend you credit? The answer is simple: gas cards and secured credit cards. These are very easy to obtain, and on top of that, you’re debt free. A lot of lenders will gladly extend small amounts of credit to someone who has income and no other financial obligations. Depending on the lender, it might take some time to qualify for the bigger loans, more specifically, a mortgage.

Robert Zangrilli is the CEO of Franklin Debt Relief. FDR’s “New Deal” program is able to reduce the amount that clients owe through personal debt settlement and consumer debt negotiation. Clients of FDR’s “New Deal” credit debt reduction program are typically seeking a debt relief solution as a way to avoid filing bankruptcy.

1. What can you afford? Credit counseling programs tend to be a lot more expensive than debt settlement programs. The reason is simple: credit counseling only produces results on the interest rates, whereas debt settlement is able to actually negotiate the amount you owe. Simply put, if you are in a true financial bind, then the clear choice for you should be debt settlement, and on a pure “money saved” basis, debt settlement will almost always be the answer. Although this is undoubtedly an important factor, it is not the only variable to consider before making a decision on which program is best for you.

2. What sort of credit impact can you tolerate? Some credit counselors out there will undoubtedly tout that their program doesn’t affect your credit score negatively. This is a play on words. Sure, your score won’t drop, but ask any lender what the impact is to your loan application. Let me save you some time—it’s devastating. That being said, debt settlement is no better for your credit, and lenders in general definitely do not like seeing debtors seeking outside help for their financial situation. On the flip side, they definitely do not like seeing the past due marks from enrolling in a settlement program. So let’s consider this example: Four years ago, John decided to use credit counseling, and Mary decided to follow the debt settlement path. They both have the same income and expenses, and they both apply for a $200,000 mortgage. Who is more likely to get it—John, who is 1 year away from completing his credit counseling program, or Mary, who finished her debt settlement program 1 year and half ago and has since been rebuilding her credit? While this may vary from lender to lender, in general Mary would be considered the better loan applicant. What if John paid a lot per month and they both finished their respective programs in the same amount of time? By itself, the credit counseling program would be better for your credit, but when you factor in the fact that Mary would probably have more savings to contribute to a down payment, she’d still probably be considered the better loan applicant. Do I think this is fair? Not at all. It’s ridiculous that lenders are so harsh on clients of credit counseling programs. Unfortunately, the system is flawed, but until there are adjustments made to correct it, debt settlement clients will be in a more favorable position to obtain new credit upon completion of their program.

3. Who do you owe? So you can save more money in debt settlement, but not always. If you owe a more aggressive creditor like Citibank, then it’s possible that credit counseling or bankruptcy may be a better option for you. The reason: Citibank not only tends to settle for more on average, but they are also more likely to pursue legal action to collect a debt. Although under most circumstances debt settlement is still successful with these creditors, it is a much riskier undertaking when you’re dealing with Citibank. If you cannot afford credit counseling and your debt is exclusively with Citibank, then unfortunately you’re probably better off filing bankruptcy.

4. What is your personality type? I’ve read just about every article online regarding credit counseling versus debt settlement, and I’m amazed by how most finance authors eliminate the human element from this discussion. The bottom line: debt settlement is not for the faint-hearted. There is no guarantee that everything will work out completely as planned. Some settlements may be higher than estimated. Some settlements may be lower than estimated. You will inevitably get some creditor calls. This is the nature of the program, and you must be willing to accept some level of uncertainty before enrolling.

I organized the following 4 questions in this order on purpose. After all, if you can’t afford credit counseling, then it’s pretty much out of the picture as an option for you anyway. I don’t mean to sound overly cynical, but we live in a material world and issues like having an anxious personality must be sacrificed when you don’t have the money necessary to freely exercise this aspect of your character. On the flip side, if you have 100% Citibank debt, it would be foolish for you to choose debt settlement over credit counseling or bankruptcy just because you fancy yourself a risk-taker.

There are countless other variables that influence whether debt settlement or credit counseling is appropriate for you (i.e. what state you live in, your income source, etc.). Your best bet is to discuss your individual situation with someone knowledgeable in these arenas.

Robert Zangrilli is the CEO of Franklin Debt Relief FDR’s “New Deal” debt settlement service is able to lower the debt amount and monthly payments of its clients by up to 50 percent. Franklin Debt Relief is a leading debt reduction company in Chicago, Illinois.

Every month tens of thousands of Internet savvy fundraisers surf the net using searches like “Fund Raising Idea.” The reason these fundraisers are looking for new Fundraising ideas is because the old one didn’t work or it no longer works as well as it did in the past. Bundling fundraisers into a robotic process of conformity would only reinforce a fundraising industry without imagination.

Imagination is just what your next fundraiser needs. It is time to dig down deep into your world of new ideas and apply some new thoughts to your next fundraiser. Not succumb to the drone like programs of the past. Having like product numbers between fundraising companies is not going to help the desired outcome of your next fundraiser. That just stifles incentive to come up with new innovative fundraising ideas. Coming up with the next best idea to reach more supporters is what will have the best influence on your next fundraiser. As a matter of fact the product you sell many times does not even matter. If you don’t believe me take a poll of those who purchased products during your last fundraiser. Ask them two simple questions: Did you need these products? And: Did you really want the fundraising products that you purchased? I think we all know the answers. So, how do we use our imaginations to reach beyond our sphere of influence and really conduct a remarkable fundraiser?

Step one:

Leave your comfort zone. The age-old adage, if its not broken, don’t fix it, really doesn’t apply anymore. It may be applicable if we were talking about a child’s toy or a lawn mower, but we are dealing with something much more important than that. We are dealing with fundraising to provide for the lives and future of our children. If we wait until a fundraiser is broken (such as every other school is doing the exact same fundraiser) then the damage is already done. Lower sales and less participation has already affected your bottom line. Therefore, step outside of the box and take your next fundraiser to farthest edges of WOW you can find. Think of anything and everything you haven’t done in the past to promote your fundraiser.

Step two:

Play Follow the Leader. Doing something remarkable, such as raising $30,000 with a two-week brochure sale, is much easier when others who feel your same excitement surround you. Fundraising coordinators often find it is much easier to find excited, enthusiastic volunteers when you have a remarkable exciting idea and energy level to share. This group will be a huge help when you begin to promote your group’s fundraiser and they will follow you when given the right reason.

Step three:

Avoid “Path of Least Resistance Fundraising.” So many times we make a decision because it was the easiest path to take. Please remember if it were easy everyone would be doing it. According to industry experts, the average product sale fundraiser generates less than $3000 for the fundraising group. I then ask, “How do schools, with the same student enrollment as you, generate $30,000?” They earn it with imaginative unique ideas to carry their fundraiser the extra mile. Now it’s your turn!

The last step is the easiest.

Enjoy the journey. Your children or students are only this age once. Make it fun for them and yourselves. Life is full of difficult challenges don’t make your next fundraiser one of them. Step out to the edge, use your imagination and get creative. Isn’t it what we teach our children?

About the Author

Dan Salazar is the Founder and CEO of Reusable Planet, a company that helps organizations increase revenue through creative fundraising and simutaneously protects our planet by recycling at the same time. Dan is known for working with large corporations and helping them to grow and raise capital by using original ideas never thought possible.

For many borrowers, adjustable rate mortgages (A.R.M.) are an attractive means of qualifying for a home. Fewer borrowers realize the potential negative amortization problems these loans can create.

Adjustable Rate Mortgages

Adjustable rate mortgages are very popular with home buyers. The popularity arises from the fact the initial interest rate on such loans is typically much less than one finds with fixed rate loans. As a result, home owners can squeeze into homes that they might not otherwise be able to afford with fixed rate mortgages.

The potential risk with adjustable rate mortgages is well known. A borrower runs the risk the interest rates will increase over the years, resulting in financial hardship when month mortgage payment amounts go up. If the rates and payments go up to much, the borrower can run into serious problems trying to make payments and may even lose the home.

To overcome the fear of rising rates, many lenders use caps on rate increases to entice home owners. These caps essentially limit the amount the monthly payment can increase for any fixed time period. For many loans, the period is one year and the rate increase is one percentage point. While this makes borrowers feel more secure, there is one little thing lenders fail to point out.

Negative Amortization

On many adjustable rate mortgages, the caps apply only to the monthly payments due on the loan. The caps do not apply to the actual interest rate being charged on the loan. This situation leads to a financial disaster wherein you are making the monthly payments, but actually seeing the principal of your loan increase. This situation is known as negative amortization and should be avoided at all costs.

Negative amortization is best explained using good old credit cards for an example. If you have credit card debit, and everyone does, you know that making the minimum monthly payment may not make a dent in the total balance. In fact, it may be less than the interest charged for the month. This becomes apparent when you receive the next bill and your balance has increased! Welcome to the world of negative amortization.

On an adjustable mortgage, you need to read the fine print to full understand how any caps apply to your loan. Whatever you do, try to stay away from negative amortization whenever possible.

About the Author

Dan Lewis is with Great Western Mortgage – a San Diego mortgage broker providing San Diego home loans. Visit http://www.gwhomeloans.com/services.html to learn more about options on San Diego mortgages from a San Diego mortgage broker company