Bank of America ends overdraft fees on debit cards
By EILEEN AJ CONNELLY, AP Personal Finance Writer Eileen Aj Connelly, Ap Personal Finance Writer – Wed Mar 10, 6:45 am ET
NEW YORK – Bank of America customers will soon be unable to spend more than they have in the accounts linked to their debit cards. It’s a step that may become a common move ahead of new regulations limiting overdraft fees. Rules set by the Federal Reserve that will ban banks from charging such fees, without first getting permission from the customer, are set to take effect July 1. But Bank of America is going a step further than the regulations require. It will simply no longer allow debit card purchases to go through if there isn’t enough money in the account.
For ATM transactions, customers who try to withdraw more than their balance will have to agree to pay a $35 overdraft fee before they can get the money. “The majority of our customers who overdraw their account do so with everyday debit purchases,” said Susan Faulkner, senior vice president of consumer banking for Charlotte, N.C.-based Bank of America. “They’re doing this unknowingly, because they aren’t aware that they are about to overdraft.” Since the bank doesn’t have the ability to notify the customer when they’re at the register and give them the chance to agree to a fee, it will simply reject such transactions. Consumers have demonstrated a willingness to pay overdrafts for covering the mortgage and the car payment, said Greg McBride, who follows the banking industry for Bankrate.com. “But not if it’s things like covering a latte and a scone.” The bank’s new policy will kick in on June 19 for new accounts, and in early August for existing accounts. It will replace the bank’s current terms, which allow overdrafts to go through but only charge a fee if the deficit is greater than $10. Bank of America likely won’t be the last to make the change. That’s because while the new rules will save consumers from surprising dings on their accounts, they will also cut deeply into the more than $1.77 billion annual revenue overdraft fees generate for the banking industry.
Friend or Foe?
by: Debbie Dragon “creditor web.com”
Some might refer to the good ol’ credit card as the Fantastic Plastic. As recent statistics have shown, credit cards in the western world are proving to be anything but fantastic, especially for those who succumb to its use. Debt quickly emerges and strangles the card owner somewhat like a Boa Constrictor strangling its host.
Deceptive Plastic
Perhaps it would be better referred to as Deceptive Plastic. Many card holders don’t realize what their balance is, on a day to day basis, or just how much interest they are paying on funds not paid in full by the due date.
Others should consider dubbing their credit cards Drastic Plastic. These are the people who call on their credit cards for emergencies, yet they have no management plan for the newly acquired debt. They resort to using their credit cards when times are lean, or when the temptation of a purchase makes their financial situation even more drastic!
Credit Card Debts
Credit card debt is at record levels, as the cash-strapped struggle to give up a certain standard of living, or forego a lifestyle that is not necessarily essential to their basic daily living requirements. Instead, they continue to over-commit themselves financially, and look to utilize a band-aid solution of putting it on the plastic. They believe they have survived to live and play another day. Another day, that is, until the debt escalates and becomes insurmountable.
Credit Cards Use
There are those who use their plastic to ‘keep up with the Joneses’. Others possess a…‘I would like to have’ mentality. When cash and household budgets are tight, cutting back on frivolous spending, and doing without should be a preferred way of thinking, especially when so much of life’s necessities are already being paid for by credit card. In harsh economic times, think smart, buy smart and save smart.
On average, students in the USA carry in excess of $4,000 on credit cards by the time they graduate. Indeed, education has its price. At the other end of the demographic, pensioners each carry an average of over $10,000 in credit card debt by the time they retire.
Start Rebuilding Your Credit Score
If your score is less than what you would like it to be, there are things you can do to raise it.
by: Debbie Dragon Creditorweb.com
Get a copy of your credit report and your credit score. Errors that you will want to pay immediate attention to include any reports of late payments or accounts in collections that are not true. Check each of your credit card accounts and make sure that your credit limit is correctly reported. If your limit is higher than what is listed call you credit Card Company and get then to update it. Pay attention to any accounts that state they were unpaid, settled or paid as agreed. If these accounts were paid in full, you will want to get them corrected. Finally you will need to get any negative reports that are older than the limit, usually 7-10 years off removed from your report. These are supposed to fall off automatically, but many times they don’t.
You will also want to be taking steps to pay down your debt. Continue to make all of your regular payments to your mortgage company, on your auto loans and student loans. Paying down these loans early will not have a huge impact on your credit score. Paying down your credit card debt however will make a difference and the faster you do it the quicker your credit score will start to rebound.
Your immediate goal will be to get each of your credit card balances below the 30% limit of that particular credit card. People who are working to get out of debt are often told to pay the card with the highest interest rate first, but if you are looking to up your credit score you should concentrate on the card that is closest to its credit limit first.
If you must use a credit card, use it as infrequently as possible while you are trying to raise your score. Even people with high credit scores that are looking to maintain them should use their credit cards with care. When at all possible never charge more than 30% of your total limit in any given month. Even if you pay your balance in full each month you still want to follow this important tip. Each month your credit card company will report your previous month balance, not what you paid on it. Your score is not reflective on what you paid but rather on what percentage of your available credit you have used.
Another way to boost the score is to use your old credit cards. You want them to report, so your score can reflect your credit longevity. Just making a couple of purchases a month and paying the balance in full each cycle will do the trick.
Finally, Never close an account or ask a creditor to lower your limit. Don’t miss payments or make any payments late. This can hurt your score more than you might think. Finally, don’t open new accounts unless you really need them.
How to Protect Your Credit Score
Like many Americans, you may have noticed that your credit card rate is poised to increase – as high as 29.99% in some cases, even if you’ve got a sterling payment history! You can choose to opt out of these changes, but to do so, you must close your credit card account. How will opting out affect your credit score?
This concern stems from the fact that the amount of available credit you have is a big factor in your credit-worthiness. If you have a lot of available credit, but only utilize 25% or less, lenders are more likely to see you as a financially responsible individual who is likely to avoid sinking too deeply into debt. They will lend you money because they will perceive you as low-risk.
On the flip-side, if you have a lower credit-to-debt ratio, your credit score will fall and lenders might think of you as too great a risk to lend money or extend credit to. This can interfere with your ability to buy a house, get a car loan, open new credit card accounts, or even get a job or rent an apartment.
But surely losing some of your available credit simply because you choose to opt out of exorbitant interest rates won’t hurt damage your credit score, right? That depends.
For the sake of example, let’s say you have $20,000 in total available credit. If you close a credit line worth $10,000, you will cut your available credit in half, and your debt-to-credit ratio will increase as a result.
Also, some credit models take the age of the account into consideration; if you have a well-established account, it will help your credit score by proving that you can manage your debt over time. If the credit card you want to cancel is an old one with a generous credit limit, you might want to think twice before you give it up.
A better choice might be to pay off the balance as quickly as possible, and leave the account open – just avoid making charges that you can’t pay off at the end of the month. If you don’t carry a balance, the high interest rate won’t apply to you. A high interest rate alone will not hurt your credit score.
You could also shop around for better card deals, replacing the line of credit you’re closing with another one (or more) at a better interest rate. Card rates are generally higher now than they were in 2008, even for consumers with good credit. You’ll have to consider what constitutes a “good deal” these days. 12% – 18% is not uncommon. Good luck!
Pay the lowest balance first
By concentrating on the debt with the lowest balance, you’ll get to experience small successes more quickly with each credit card that you pay off. This method will help you to build momentum – like a snowball rolling down a hill – and for many people, helps keep the motivation to stick with it.
When you pay off the card with the smallest balance first, check it off the list and move on to the next smallest balance. Again, don’t forget to also pay the minimum payments each month on your other credit cards.
This techniques is for those who have a hard time mustering and maintaining the motivation to pay down their debt. While you’ll likely pay more money in interest over the long-term with this approach, the psychological boost you’ll gain may be just what you need to succeed in becoming completely debt-free.
How to Land a Job When Your Credit Stinks
With unemployment and credit card defaults as high as they are, it seems like a terrible time for employers to screen candidates’ credit histories. But more employers are doing just that. If you really need a job but have a problematic credit report, here are some strategies that might mean the difference between gaining employment and spending many more months in job-hunting tedium.
Be the First to Mention It
Don’t go through ninety percent of the hiring process, only to be shut out at the last minute because of dings on your credit report. Potential employers will resent having to go through all the trouble of interviewing and running checks, only to find that you don’t meet their credit standards. To maximize your chance of landing the job, tell the employer that you’re aware of some problems with your credit, but that you’re in the process of repairing them.
Be Open and Honest
The employer will want to know what steps you’re taking to repair your credit. Let them know everything you’ve done so far, including refinancing and paying down your credit cards. Be prepared to provide documentation. The idea is to let the employer know you’re not trying to hide anything. Bring your own copy of your credit report to the interview to show that you’re doing everything you can to comply with the company’s rules.
Choose Smaller Companies
Small companies are more likely to cut you some slack over items on your credit report. If you can, try to develop some rapport with your interviewer. Once you’re both at ease, bring up the topic of credit checks and let them know you want to save them time and trouble by discussing a few items up front. Then produce your report and explain the problems. There’s no need to divulge personal details about an illness that left you in dire straits, but do let the employer know that your negative credit items weren’t due to financial mismanagement. (Unless they were due to financial mismanagement, in which case it’s best to stay vague and move on.)
Bad credit will earn you a bad reputation, whether or not its deserved. This is unfortunate, as the rates of credit card default and unemployment continue to rise. Speak frankly with your potential employers. Let them know that you acknowledge the problems on your credit report, and that you’re willing to fix them. This tactic won’t work with every company, but it might convince a sympathetic hiring manager to bend the rules. Good luck!
Real Debt Settlement Horror Stories I
Tell Debt Settlement Co’s to Kiss Your Ass
By Debt Prison on May 14, 2008
I’ve wanted to get some first hand information about why using debt settlement companies is such a bad idea. I was glad to discover that one of my previous articles “How to settle your debts on your own” was dead on regarding why consumers should avoid using debt settlement companies.
**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.
I’ve been exchanging emails with one of my readers who has gone through a lot of financial peril recently. But in particular, she has dealt with two different debt settlement companies. I asked her to describe her experiences with these companies and explain to me whether or not she still thinks they are a good idea. I’ll let you read for yourself what she says. Feel free to leave questions or comments at the end of this article.
Hey Barry,
Sorry it took so long to get back to you. We are moving and I have been kind of busy lately.
My experience has not been a pleasant one at all. I guess when it comes to debt no ones is, but in particular I have found that these people are liars.
The first agency I used was Credit Solutions. I was trying to make a pro-active move, like when we claimed bankruptcy, taking care of the situation before the situation arises. Well, I signed up and they promised all sorts of crap. They promised that being enrolled in their program would prevent the collection agencies from obtaining a judgment against me, and it would give me protection. WELL, I signed up and soon found out that was a lie. After my first payment (the first 3 go right to their fee) I called to make sure the cease and desist letters went out. Well, they then informed me that I had to wait until the credit card debt went to collections before that company could deal with them.
They also informed me (after I signed up) that being in their program gives me NO protection – in fact it has been known to piss the creditors off when they find out that you are in a debt settlement company. In addition, their monthly payment was crap too, because they have a range that they figure they can settle your debts for like 60% to 40% lets say. Well, they base your monthly payment on being able to settle it down to the 40% to keep their quotes down. Well, basically that is great if all of your creditors agree to those terms – otherwise you are screwed (pardon the language) because you could find out after you have done this for 3 months that you dont have enough saved.
The second agency was GHS Solutions. This agency has pissed me off so much I am actually reporting them to TASC. They are a member of this group that regulates debt settlement companies. Well, they said all the right things right…..
1- They started out by giving me some crap about how they cannot send out the cease and desist letters. They said that because I have 3 Washington Mutual Cards, and bank with Washington Mutual they (Washington Mutual) can run in and cease my bank account when they see that I am dealing with a debt settlement company. In theory that would be great for the credit card companies but VERY – EXTREMELY ILLEGAL! In reality it doesnt matter if they see that I am working with a debt settlement company because they have to go through the proper channels to be able to freeze my bank account. First, a judgment, then a court hearing for discovery, then if need be writ of garnishment and\or bank freeze. The procedure is the same no matter whether it is a card through your bank or not.
2- I was begging them to send these letters out! My feeling was that I wanted them to see that I was in some kind of program and not just ignoring them. Every time I called GHS, I was telling them I was nervous, because by the time I got into their Company, ALL my credit cards had gone to collection agencies and had been there for months. I kept saying that because I havent been responding to the calls, letters (THE big rules of these companies is that you can not talk to the creditors or the collection agencies) like they told me not too, so now I have no idea what these companies are doing. They could be working towards a judgment against me or my husband as we speak. Well Dawn,( I get the same woman every time I call) she placates me and tells me that I am overly worried about my husbands wages being garnished, and that I am PROJECTING this whole situation on to myself.
Well, one night one of my husbands WAMU cards called and it was an attorney. She was actually a very decent woman, I explained to her that I was working with a debt settlement company. She said that there are two kinds of collections- 1- where the collection agency buys the debt and can then settle with a debt settlement company. OR 2- (her kind) where the agency doesnt buy the debt (the original creditor still owns the debt) – the agency just collects on it. She said when they (in this case WAMU) contracted her company they made her sign a contract giving her rules of how they want her to collect. For example, she can only try to collect the full payment at first, they after 30 days she can send me a settlement opportunity. BUT, she had to sign that she would only work with the debtor and NOT ANY debt settlement agencies.
She also told me that WAMU would never have worked with a debt settlement company most likely BUT had they only gotten a letter (perhaps the cease and desist letter I was begging for) she said it probably would never have gotten to her desk. They most likely would have just held back until they got a payment from me. Because at least they would have known I was trying to do something and not just ignoring them. But now that they paid for her there is not much I can do.
When I called GHS, Dawn, informed me that the woman was lying and wasnt really an attorney. I told her that I wanted out of the company, and that I am going to be claiming chapter 13. She then of course gave the speech as to how bad that is for your credit. I then explained we had claimed chapter 7 over 4 years ago, and it was the best thing that ever happened to us. We had no credit problems afterward. I told her I have no problems paying for my debts settled or in full. My problem is while I am working to pay everything off I want some kind of protection to assure me that these companies are not going behind my back and obtaining judgments. By the way it is against the law for a company to fire you for one wage garnishment BUT there is no precedent for multiple wage garnishments.
Also, when your employer garnishes your wages (even if they do not initiate it) they have to pay a fee. I told Dawn that I thought everyone at GHS was a bunch of lazy people, and that I knew that they were just holding off on sending the letters out until all of their fees get paid (over 5 monthly installments) and that since time is of the essence for my particular case I didnt know if it could wait that long.
So, in the long of it, I would NEVER recommend a debt settlement company to anyone! I hope this helps. If you have any questions please feel free to ask. Thank you for all your effort on the subject, and trying to figures things out for people.
Thanks
Jennifer
New Credit Card Laws and Your Rights
by: Debbie Dragon Creditorweb.com
Recent changes in US credit law are set to loosen the stranglehold many credit card companies have over their customers and wrestle some of the power back in favor of the consumer. The law (passed on the 20th August) is the first step in what is being seen as the biggest overhaul of the credit card industry in two decades.
Credit card companies will now have to allow clients at least 21 days to pay off their monthly bills, in addition to providing 45 days warning before any major changes in their credit conditions. The new timescales, up from 14 days and 15 respectively, will give those struggling to pay their debts much greater breathing room and prevent any extra charges occurring through late payments.
Although the pendulum of power is still firmly in the grasp of the major credit card issuers, the new rules will be a welcome sign for those struggling to effectively manage their credit debt in the recession. The terms of the law also make it possible for customers to reject the terms of their new conditions (issued at least 45 days in advance) and take steps to cancel the debt and close the credit account. The good news for consumers doesn’t end there because set for implementation in February is a law which will restrict the ability of credit companies to freely impose fees, raise interest rates or sell credit cards to students. Such major shake-ups will inevitably have a stabilizing affect on the economy and ease the financial pressures on the consumer.
Credit Card Companies Fight Back
What’s good for us is rarely good for the companies though and there has been much talk recently about credit card companies charging annual fees as a way to bolster their profits, while they still have the freedom to do so. In June, Fifth Third Bank implemented a $19 on customers who had inactive accounts for 12 months, while Chase has recently introduced a $30 annual charge to some customers of the Freedom credit card. In a time when money is tight for everyone it seems that credit institutions are still hell-bent on continuing to increase their profits by any means necessary. Some experts argue that things such as annual charges are necessary step for credit card companies to take. By never having a balance on your card you are effectively getting a service for free; in this instance the automated payment system operated by the likes of Visa, MasterCard and American Express. Charging items to your card will incur a cost to the company (i.e. processing the transaction) and if they can’t rely on the interest to offset these then some other means must be sought.
Read the rest of this entry »
How to Stop Using Credit Cards and Take Back Your Life
by: Debbie Dragon Creditorweb.com
A credit card is financial oxymoron because the thing that makes them attractive also makes them dangerous. Of course I am referring to the ‘ease of use’ factor. The main case for plastic is that it takes the hassle out of making purchases both large and small, but this has some not so unexpected side effects. The first is that by eliminating cash we also get rid of our spending boundary.
We are now not limited to the money we have in our wallets but by the size of our credit limit; which unfortunately, more often than not, does not correlate. The second is the fact that the cost of this convenience is actually very high. When you add up the interest on your purchase, assuming you are not paying off your balance in full on or before the due date, the risk of late payment fees, overdrawn fees and even identity theft, you have to ask yourself if they are worth it.
You have probably already made the decision to stop using credit cards but you may have been so seduced by the luxury of plastic availability that you are not sure how you are ever going to live without them. Here’s a list of helpful tips below if you want to stop using credit cards:
1.Destroy the ones you have. You may think that you are strong enough to keep your card on you for ‘emergencies only’ but it is better to be safe than sorry. I have seen even the mighty fall beneath the irresistible pull of plastic, so before you start saying things like ‘buying this pair of shoes is an emergency… it will help boost my spirits and carry me through the work week so I can make money to get out of debt.’ These mind tricks are a sure fire sign that you are not as strong as you think and the best bet would be to take a huge pair of scissors to your credit cards now.
Read the rest of this entry »
ATTORNEY GENERAL CUOMO ANNOUNCES NATIONWIDE INVESTIGATION INTO DEBT SETTLEMENT INDUSTRY
Subpoenas Fourteen Debt Settlement Companies and One Law Firm in Connection with Probe
Debt Settlement Companies Often Charge Huge Fees for Misleading Plans, Suggest Selling Blood Plasma to Raise Funds, and Leave Consumers in Worse Financial Shape
NEW YORK, NY (May 7, 2009) – Attorney General Andrew M. Cuomo today announced a nationwide investigation into the debt settlement industry, subpoenaing fourteen debt settlement companies and one law firm. Companies in the debt settlement industry often prey upon consumers who find themselves unable to keep up with credit card payments during these difficult economic times.
“Today, millions of hardworking Americans are finding themselves imprisoned by debt. In response, a rogue industry has stepped in, offering consumers false hope, charging tremendous fees, and leaving them in a worse financial situation,” said Attorney General Cuomo. “Our mission is clear: to hold unscrupulous businesses accountable; to rein in a renegade industry; and to ensure that people are not victimized when faced with financial hardship.”
As part of his broad investigation of the debt settlement industry, Cuomo today issued subpoenas to fourteen debt settlement companies and one law firm: American Debt Foundation, Inc.; American Financial Service; Consumer Debt Solutions; Credit Answers, LLC; Debt Remedy Solutions, LLC; Debt Settlement America; Debt Settlement USA; Debtmerica Relief; DMB Financial, LLC; Freedom Debt Relief; New Era Debt Solutions; New Horizons Debt Relief Inc.; Preferred Financial Services, Inc.; U.S. Financial Management Inc. (d.b.a. My Debt Negotiation); and the Allegro Law Firm.
