Financial Relief Available for Active Military Members

If you are a military service member called to active duty, the government's Service Members Civil Relief Act can significantly cut your credit card interest payments as well as offer many other financial protections.

Originally called the Soldiers and Sailors Civil Relief Act of 1940, it was revised in 2003 and renamed the Service Members Civil Relief Act (SMCRA).

SMCRA requires credit card issuers, mortgage lenders and other creditors to lower interest rates to no more than 6% on debt accumulated and loans made before the service member entered military service. Lenders must recalculate payments to reflect the lower rate. For credit cards, the monthly payment must be reduced by the amount of interest saved during the covered period.

Lowering the rate to 6% doesn't happen automatically. The service member must submit a written request to creditors with a copy of military orders. The creditor must comply with the 6% rate, or apply for court relief by showing that the military service hasn't "materially affected" the ability to repay the debt.

"The average credit card rate is over 12%, so cutting your rate in half to 6% can be a significant savings for your credit card payment. It gives you a chance to pay off more of your balance and reduce the amount of money you pay in interest payments. This is an opportunity for service members to get out of credit card debt much faster" says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Once the period of active military service ends, the interest rate for all loans, including credit cards and mortgages, will revert back to the original interest rate, and the payment will be recalculated accordingly.

It is important to note that any debts that are accumulated after going on active duty are not covered under SMCRA. The interest rate on new purchases will be the standard rate, not 6%.

There are other financial protections under SMCRA:

* Protection from eviction. A service member may seek protection from eviction if monthly rent is less than $2,400 (this amount increases as it is adjusted for inflation). Unless the lender has court approval, it may not seize or foreclose property for failure to pay a mortgage debt while the service member is on active duty or within 90 days after their period of military service.

* Termination from lease. If a service member enters into a lease before going into active duty, the SMCRA will allow him/her to break the lease, or to terminate a residential lease entered into while in the military, if the member receives permanent change of station orders.

* Delay of civil court actions, including bankruptcy or divorce proceedings. Service members involved in civil litigation can request a delay in proceedings if they can show their military responsibilities prevent their proper representation in court.


Link to more information about the SMCRA:
Service Members Civil Relief Act Public Law
http://www.usdoj.gov/crt/military/scratext.htm

HUD Service Members Civil Relief Act Q&A
http://www.hud.gov/offices/hsg/sfh/nsc/qasscra1.cfm

Economic Crisis Affecting Credit Card Payments

Last week, Standard and Poor's released a new survey that provides a statistical glance at how American households are doing during the current credit crisis. This study highlights some fascinating statistics about credit card usage.

It shows that one in five of those surveyed indicated that they are sometimes (14%) or always (6%) unable to pay their credit card and/or loan balances each month. 8% make only their minimum payment and 8% always or sometimes pay less than the minimum payment.
The survey says that credit cardholders are also increasing their use of credit cards for cash advances. 10% of Americans are taking out more cash advances on their credit cards than they did in the past. This increase is evidence of the financial stress that is spreading for cardholders because cash advance rates are extremely high and should be used only in emergencies. Most credit cards charge 20-25% APR for cash advances.

Of those who carry a balance, 22% have between $5,000 and $20,000 in credit card debt. 3% have more than $40,000. 25% are at or near the limit with their primary card. An additional 20% are at or near the limit with their secondary card.

"This shows that many cardholders have a high debt utilization ratio, which is an important component in credit scores and indicates to creditors that the cardholder is a credit risk," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "As a result, the cardholder's credit score can drop and the interest rates for most loans can increase to a higher rate tier. A higher rate makes it very difficult for households to pay down their credit card debt."

Another concerning statistic is the prioritization of monthly bills. 35% of respondents said their mortgage was the bill they would pay first while 26% said their credit card is the bill they would pay before all others.

"If money is tight and you have to make choices about what to pay, first pay the bills that are a necessity for health, shelter, basic groceries, and basic transportation. Then pay the secured loans, such as your car loan. Since credit cards are unsecured, pay them last," says Hardekopf.
The study provides the statistics to show that Americans are having more difficulty paying for their credit card loans. Over the past year, 13% of respondents said they found it a lot more difficult to pay, 25% said it was somewhat more difficult. Just 10% said it was less difficult.

"If you are in danger of missing a payment, contact your creditors as soon as you realize you have a problem. They may be able to help you work out a payment plan, lower your rate, or lower your monthly payment. It is better business for them if you keep making some type of payment toward your loan and interest payments," says Hardekopf. "Banks lose money when accounts go into default, so they would also like to avoid this."

Link to press release about the study:http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/10-15-2008/0004904758&EDATE=

Weekly Credit Card Rate Report October 16, 2008

The LowCards.com Weekly Credit Card Rate Report 10-16-08

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the rates of
1260 credit cards in the United States.

Our index showed that Annual Percentage Rates moved slightly higher
this past week. The average credit card rate for purchases was 12.06%
for the 1260 credit cards that are tracked by LowCards.com compared
to the 11.89% average for the previous week.

The average cash advance rate was 20.70% which was slightly
lower than the 20.71% from the week before.

The release today of tame inflation numbers and other weak economic
indicators from the Department of Labor increases the possibility of
another rate cut and lower credit card rates in the weeks to come.

Bill Hardekopf, CEO of LowCards.com added "It has been another volatile
week in the financial industry and I think we are all looking ahead to the
Fed Meeting on Oct. 28-29 to see where credit card rates are going. Oil has
been dropping and the chance of a recession has been increasing. That
could give the Federal Reserve enough reason to drop interest rates again
and that would bring down credit card rates. Credit card approval rates are
still tightening as banks try to improve the credit quality in their
portfolios."

The credit cards with the lowest interest rates in the nation this week are:

1. 5.00% SimplyCash Business Card from American Express
2. 5.00% Wells Fargo Prime Rate Visa Credit Card
3. 5.00% Nordstrom Platinum Visa

The LowCards.com credit card rate report is compiled weekly
using data from 1260 credit cards which are tracked on the
LowCards.com website. The Complete Credit Card index is
available here

http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.LowCards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

The LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1260 credit cards
offered in this country.

The founders of LowCards.com have written a book called
The Credit Card Guidebook which helps clarify the confusing
world of credit cards. Consumers can download this book
absolutely free as a PDF or browse it online:

http://www.lowcards.com/the-credit-card-guidebook/index.php

Created by Hampton & Associates, the company has been
analyzing the credit card industry and supplying objective
websites on various consumer expenses for eight years.

Latest Fed Cut--Good News for Credit Card Consumers?

Latest Fed Cut--Good News for Credit Card Consumers?

Today, in a move to stimulate lending and spending, the Federal Reserve cut
its key lending rate by half a percentage point, to 1.5%. The Fed's hope is
that this rate cut will encourage lenders to loosen their tight squeeze on
lending and new credit.

The optimistic view is that the rate cut can be good news for consumers if
rates drop for credit cards, automobile loans and business loans. It might
also result in a stabilization in credit card approvals and credit card
limits.

"In the past few months, we have seen a decline in approvals for credit
card applications and a decrease in credit limits. This is the creditor's
way of pulling up the drawbridge to protect themselves from additional risk
and potential defaults," says Bill Hardekopf, CEO of LowCards.com and author
of The Credit Card Guidebook. "Unfortunately, that kind of action penalizes
and rejects some qualified applicants."

The rate cut will benefit some cardholders with variable rates because their
interest rate may drop in the next 30-45 days. However, each and every
cardholder will not see a rate cut.

"There are also opposing forces that can even cause an increase in your
rate, despite the rate cuts," says Hardekopf. "Credit card issuers not only
care about your credit history, but they are now paying much closer
attention to predicting if you will be a credit risk in the future. If they
see that you might be a future credit risk, they can use this as a reason
to increase your rate today."

Other forces that may cause your credit card rate to increase instead of
decrease:

* You are considered a risk if your credit score is low or was recently
lowered.

* You are considered a risk if your balance is close to your credit limit
with this card or other cards--even if it was the the issuer who lowered
your limit and that caused your balance to be closer to your limit.

* In the terms and conditions, many issuers give themselves the right to
change rates at "any time for any reason" or because of market conditions.

* Some issuers state in their terms and conditions that they can increase
rates because of bad economic conditions. "This time of failing banks,
tightened credit markets and higher defaults is probably one of those
times," said Hardekopf.

If your issuer doesn't drop your rate, consumers can call and ask for a
lower rate. If the issuer won't lower your rate, continue building a good
payment history and credit score, then ask again.

LowCards.com ( http://www.lowcards.com ) simplifies the confusion of
shopping for credit cards. It is a free, independent website that helps
consumers easily compare credit cards in a variety of categories such
as lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and review for
each card. The LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1260 credit cards offered in
this country.

We are happy to help the media with an credit card related inquiries you
may have. We are proud to have been involved in many major articles
about credit cards. You may see our press clippings at
http://www.lowcards.com/press/press.asp . Created by Hampton &
Associates, the company has been analyzing the credit card industry and
supplying objective websites on various consumer expenses for eight
years.

Economic Turmoil Causing Credit Card Changes

The economy's roller coaster ride has left most Americans wondering how the recent events will affect their personal financial situation.

One of the biggest questions is if the recent failures of major financial institutions and government bailouts will change their credit card rate and terms. "While it is difficult to predict if the bailouts will be successful and save the economy, we can reasonably predict that this recent financial earthquake is going to shake up the easy and generous lending practices of banks and lenders. As fear and uncertainty hit the market, lenders are much more cautious about lending to both businesses and consumers.That easy credit will not be available for as many borrowers," says Bill Hardekopf, CEO of LowCards.com and author of The CreditCard Guidebook. "Lenders are now focused on limiting their risk and protecting themselves."

These changes could lead to increases in an individual's APR rates or a decrease in your credit limit.

"The Federal Reserve has kept interest rates low and the attractive APR rates that we have seen advertised are still out there. But issuers seem to be approving fewer consumers at this attractive rate," says Hardekopf. "It appears the issuers are tightening up on how they classify a consumer's risk factor and this results in the issuer approving fewer people at that attractive rate and more at a higher APR.

"In addition, if you do anything that decreases your credit score, this can signal that you are a higher credit risk to the issuer. When you increase your risk factor, issuers are now more likely and quicker to increase your APR."

Credit card limits may be the component that is even more affected. Banks seem to be lowering the credit limits on cards for those with less than excellent credit. Banks may feel this is a way to protect themselves against cardholders who have taken on too much debt and have increased the risk of defaulting on a loan.

"Issuers do seem to be lowering credit limits on certain customers to cut their risk," says Hardekopf. "They seem to be doing this particularly with customers with fair to poor credit, not necessarily with customers with excellent or good credit."

An issuer could decrease a person's credit limit for a number of reasons, including a drop in credit score, a late payment, or even carrying a balance that is too close to the limit.

Here are some tips on how consumers can protect your credit limit:

* Keep your balances at less than 30% of your limit. According to a recent credit card survey by Consumer Action, 51% of those surveyed had at least one credit card with a limit about $10,000. "If your limit is $10,000, and you must carry a balance, keep your balance under $3,000 for that card,"says Hardekopf.
* Improve your credit score. A drop in your credit score can cause a drop in your credit limit. A FICO score of 720 or above is generally considered a good score.
* If your issuer lowers your credit limit, they will notify you by mail. This notice can be included in your monthly statement or it could come in an unmarked, white envelope that makes it easy to miss and toss out as junk mail. However, if your limit drops and you don't realize it, you could unknowingly go over your limit which will cause not only a fee, but a drop in your credit score and the possibility of your rate increasing to the default rate of about 30%.
* Most issuers now accept your card for payment, even if it puts you over your credit limit. Set an online credit alert to notify you when you get close to your limit.
* If you have a good credit score, a good payment history, and a low debt ratio, but the issuer increases your limit, call and nicely question this. Tell them you are a good customer, and would like them to restore your credit limit.
* If your limit is lowered and your balance is close to your limit, transfer part of your balance to a credit card with 0% APR for 12 months for balance transfers. Do not use this card for purchases. Just use this introductory rate as a chance to pay off your debt as quickly as possible.