Credit card default rates are now above 10% for several major issuers. This means these banks don’t expect to be paid back on over 10% of their credit card loans. To cut their losses, issuers now appear to be more open to settling or negotiating a payment plan for your credit card debt.

While settlement and payment plans could worsen a poor credit score, it does remove some of the weight from the burden of debt. Experts suggest that cardholders be proactive and try to work out a solution to help them avoid bigger financial problems.

Bank of America, the nation’s largest bank, recently reported that its default rate jumped to 12.5% in May, up from 10.5% the month before. American Express said its default rate rose to 10.4% from 9.9%. Defaults will continue to climb as unemployment continues to rise and the financial crisis continues. This increase in defaults means billions of dollars per year in losses for banks.

Growth in delinquencies is a major problem for credit card issuers. They must write down a balance to zero once a person has been delinquent for 6 months. They will continue to try to collect the debt through a collection agency, but they have to show the loss on their books.

If you are having financial difficulties and can’t make your credit card payments, now is the time to contact your issuer, explain your situation and work out a payment plan. Issuers are now under stress and, in some cases, they may be more willing to work with cardholders to create a payment plan.

Where should consumers start?

If you can make some monthly payment, ask your issuer to lower your rate and waive your fees. In many cases, a lower rate and reducing the interest payment will make a big difference in how much of your debt you can pay off.

If you are in danger of missing a payment, contact your creditors as soon as you realize you have a problem. The sooner you contact them, the more willing they may be to work with you.

If the first person you speak with can’t help lower your rate or make adjustments to your account, ask to speak with a supervisor. Persistence may be necessary to find the person who can or will help you. Explain that you are in debt, the steps you are taking to repay it, and what you can pay today. The adjustment could result in reducing the amount outstanding or working out a payment plan that could work for both sides. Document all conversations, including the person with whom you spoke, the date, time, and the results.

If you are already in default and unsure of what to do as a first step, don’t ignore the problem and hope it goes away. A good place to start is “Help With My Credit,” a service started by financial institutions and credit card issuers to educate and assist cardholders who are struggling to make their credit card payments. “Help With My Credit” provides a toll-free telephone number (1-866-941-1030) for consumers to call with credit card and debt issues. Operators will provide information about contacting credit card issuers and accredited credit counseling agencies. Consumers can also get help and information through a website, HelpWithMyCredit.org. ( http://www.helpwithmycredit.org )

If you are in danger of default and close to or over 90 days past due on your account with no hope of paying it off, you can also talk directly with your credit card issuer about debt settlement. They may be able to help you work out a settlement where the account is closed and you pay a portion of the amount that is due.

Keep in mind that there are negatives to arranging a settlement for debt. Closing an account due to settlement is bad for your credit score and will affect your score for several years. If the forgiven debt is more than $600, you must also pay income taxes on the amount that is forgiven by filing a Form 1099-C.

Do not respond to ads from debt settlement companies that promise to cut your debt in half. They charge high fees, much of it due up front, for services that you can sometimes do yourself with the same success. In some cases, they can even make the situation worse.

A non-profit accredited counseling agency can help you get lower interest rates and develop a debt management plan. The National Foundation of Credit Counselors ( http://www.nfcc.org/ ) is a good place to start. Their Debt Management Plan is a systematic way to pay down your outstanding debt through monthly deposits to your credit counseling agency, which will then distribute the full amount of these funds to your creditors. It takes approximately 36-60 months to repay debts through a Debt Management Plan and when you are finished, they will help you re-establish your credit. Fees include a $25 counseling fee and a $10-$25 monthly fee for the Debt Management Plan.

Credit card default rates are now above 10% for several major issuers. This means these banks don’t expect to be paid back on over 10% of their credit card loans.To cut their losses, issuers now appear to be more open to settling or negotiating a payment plan for your credit card debt.

“While settlement and payment plans may relieve a bit of the pain for issuers and cardholders, this is not an ideal solution. It is just a way out to avoid total loss. For cardholders, it means their financial situation is so difficult that they can’t pay anything on their loans. They probably already have a poor credit score and settling their debt could make it worse, but it does remove some of the weight from the burden of the debt. For issuers, they are losing money on loans, but at least it isn’t a total loss,” says Bill Hardekopf, CEO of LowCards.com and author of
The Credit Card Guidebook. “It is important for cardholders in this situation is to be proactive and try to work out a solution. Their actions could help them avoid bigger financial problems.”

Bank of America, the nation’s largest bank, recently reported that its default rate jumped to 12.5% in May, up from 10.5% the month before. American Express said its default rate rose to 10.4% from 9.9%. Defaults will continue to climb as unemployment continues to rise and the financial crisis continues. This increase in defaults means billions of dollars per year in losses for banks.

Growth in delinquencies is a major problem for credit card issuers. They must write down a balance to zero once a person has been delinquent for six months. They will continue to try to collect the debt through a collection agency, but they have to show the loss on their books.

If you are having financial difficulties and can’t make your credit card payments, now is the time to contact your issuer, explain your situation and work out a payment plan. Issuers are now under stress and, in some cases, they may be more willing to work with cardholders to create a payment plan.

Where should consumers start?

If you can make some monthly payment, ask your issuer to lower your rate and waive your fees. In many cases, a lower rate and reducing the interest payment will make a big difference in how much of your debt you can pay off.

If you are in danger of missing a payment, contact your creditors as soon as you realize you have a problem. The sooner you contact them, the more willing they may be to work with you.

If the first person you speak with can’t help lower your rate or make adjustments to your account, ask to speak with a supervisor. Persistence may be necessary to find the person who can or will help you. Explain that you are in debt, the steps you are taking to repay it, and what you can pay today. The adjustment could result in reducing the amount outstanding or working out a payment plan that could work for both sides. Document all conversations, including whom you spoke with, and the date, time, and the results.

If you are already in default and unsure of what to do as a first step, don’t ignore the problem and hope it goes away. A good place to start is “Help With My Credit,” a service started by financial institutions and credit card issuers to educate and assist cardholders who are struggling to make their credit card payments. “Help With My Credit” provides a toll-free telephone number (1-866-941-1030) for consumers to call with credit card and debt issues. Operators will provide information about contacting credit card issuers and accredited credit counseling agencies. Consumers can also get help and information through a website, HelpWithMyCredit.org. ( http://www.helpwithmycredit.org )

If you are in danger of default and close to or over 90 days past due on your account with no hope of paying it off, you can also talk directly with your credit card issuer about debt settlement. They may be able to help you work out a settlement where the account is closed and you pay a portion of the amount that is due.

Keep in mind that there are negatives to arranging a settlement for debt. Closing an account due to settlement is bad for your credit score and will affect your score for several years. If the forgiven debt is more than $600, you must also pay income taxes on the amount that is forgiven by filing a Form 1099-C.

Do not respond to ads from debt settlement companies that promise to cut your debt in half. They charge high fees, much of it due up front, for services that you can sometimes do yourself with about the same success. In some cases, they can even make the situation worse.

A non-profit accredited counseling agency can help you get lower interest rates and develop a debt management plan. The National Foundation of Credit Counselors ( http://www.nfcc.org/ ) is a good place to start. Their Debt Management Plan is a systematic way to pay down your outstanding debt through monthly deposits to your credit counseling agency, which will then distribute the full amount of these funds to your creditors. It takes approximately 36-60 months to repay debts through a Debt Management Plan and when you are through, they will help you re-establish your credit. Fees include a $25 counseling fee and a $10-$25 monthly fee for the Debt Management Plan.

The LowCards.com Weekly Credit Card Rate Report June 18, 2009

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 12.04% this week which was unchanged from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

June 18 12.04%
June 11 12.04
June 4 11.63
May 28 11.63
May 21 11.64
May 14 11.65
May 7 11.65
Apr. 30 11.61
Apr. 23 11.60
Apr. 16 11.55
Apr. 9 11.55
Apr. 2 11.57
Mar. 26 11.69
Mar. 17 11.70

The average cash advance rate for this week was 20.54%
which was unchanged from last week.

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

1. 3.25% Fifth Third Bank Platinum Prime MasterCard
2. 4.24% American Quarter Horse Association Business Credit Card
3. 5.24% Farm Bureau Bank Platinum MasterCard

The LowCards.com credit card rate report is compiled weekly
using data from 1060 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 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.

Credit card fraud is widespread: Cards being stolen and used to purchase gas; restaurant workers stealing credit card information to use for personal purchases; phony bank emails urgently requiring you to send account information; PIN and account information skimmed at ATMs.

Daily news stories show that credit card fraud can occur in a variety of ways and can happen to anyone. The more you know about it, the better you can protect yourself.

Credit card fraud is theft that occurs anytime a credit card or a card’s information is stolen and used as a fraudulent means of payment in a transaction. It can happen without the cardholder ever realizing that the card information has been stolen. When a card is lost or stolen, it remains active and open until the cardholder notifies the issuer that the card has been lost or stolen. The thief can use the card until it has been reported and cancelled.

According to the FTC, credit card fraud costs cardholders and issuers billions of dollars each year.

Experts suggest that cardholders review credit reports to look for suspicious activity or accounts opened by someone else in your name. It is the cardholder’s responsibility to frequently monitor the account for fraudulent charges.

Credit card fraud has advanced beyond stealing and using real credit cards. Here are two common practices that are used to steal your credit information:

* Skimming. Skimmers are devices that can be used to swipe credit cards and collect the account numbers and information embedded in the magnetic strip. Anyone can buy a small, handheld skimmer. These can be used in restaurants. The waiter or cashier takes your card, charges your account, then swipes it a second time to steal the information. Skimmers can also be installed at ATMs to catch your PIN when you enter it. One way to detect these skimmers is to look for raised edges on the machine. If you are unsure about the ATM, use another one.

* Phishing. The most common form of phishing is the email that appears to be from your bank or credit card issuer with an urgent message about your account. These emails require you to reply with your account information or give you a number to call to supply your account information. Once you provide this, they can take money from your account or open new accounts in your name. Legitimate banks do not ask for information in this manner.

The FTC and FBI suggest taking these actions to guard against fraud:

* Sign your cards as soon as they arrive.

* Carry your cards separately from your wallet in a zippered compartment, a business card holder, or another small pouch.

* Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.

* Keep an eye on your card during the transaction, and get it back as quickly as possible.

* Void incorrect receipts.

* Open bills promptly and reconcile accounts monthly, just as you would your checking account.

* Report any questionable charges promptly and in writing to the card issuer.

* Notify card companies in advance of a change in address.

* Be cautious when responding to special offers (especially through unsolicited e-mail).

* Be cautious when dealing with individuals and companies from outside the country.

* The safest way to purchase items via the Internet is by credit card because you can often dispute the charges if something is wrong. Make sure the site you are using is a secure site.

* If you bank online, don’t use the “automatic sign on” for bank or credit card sites.

Read the rest of this entry »

Credit card fraud is widespread. Cards being stolen and used to purchase gas. Restaurant workers stealing credit card information to use for personal purchases. Phony bank emails urgently requiring you to send account information. PIN and account information skimmed at ATMs.

Daily news stories show that credit card fraud can occur in a variety of ways and can happen to anyone. The more you know about it, the better you can protect yourself.

Credit card fraud is theft that occurs anytime a credit card or a card’s information is stolen and used as a fraudulent means of payment in a transaction. It can happen without the cardholder ever realizing that the card information has been stolen. When a card is lost or stolen, it remains active and open until the cardholder notifies the issuer that the card has been lost or stolen. The thief can use the card until it has been reported and cancelled.

According to the FTC, credit card fraud costs cardholders and issuers billions of dollars each year.

“While most issuers have technology to help identify fraudulent activity, it is the cardholder’s responsibility to frequently monitor the account for fraudulent charges. Also, review your credit reports to look for suspicious activity or accounts that were opened by someone else in your name,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Credit card fraud has advanced beyond stealing and using real credit cards. Here are two common practices that are used to steal your credit information:

* Skimming. Skimmers are devices that can be used to swipe credit cards and collect the account numbers and information embedded in the magnetic strip. Anyone can buy a small, handheld skimmer. These can be used in restaurants. The waiter or cashier takes your card, charges your account, then swipes it a second time to steal the information. Skimmers can also be installed at ATMs to catch your PIN when you enter it. One way to detect these skimmers is to look for raised edges on the machine. If you are unsure about the ATM, use another one.

* Phishing. The most common form of phishing is the email that appears to be from your bank or credit card issuer with an urgent message about your account. These emails require you to reply with your account information or give you a number to call to supply your account information. Once you provide this, they can take money from your account or open new accounts in your name. Legitimate banks do not ask for information in this manner.

Here are some tips from the FTC and FBI to guard against fraud:

* Sign your cards as soon as they arrive.

* Carry your cards separately from your wallet in a zippered compartment, a business card holder, or another small pouch.

* Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.

* Keep an eye on your card during the transaction, and get it back as quickly as possible.

* Void incorrect receipts.

* Open bills promptly and reconcile accounts monthly, just as you would your checking account.

* Report any questionable charges promptly and in writing to the card issuer.

* Notify card companies in advance of a change in address.

* Be cautious when responding to special offers (especially through unsolicited e-mail).

* Be cautious when dealing with individuals and companies from outside the country.

Read the rest of this entry »

The LowCards.com Weekly Credit Card Rate Report June 11, 2009

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 12.04% this week which was up sharply from last week at 11.63%.

The average credit card rate six months ago (December 11) was 11.78%.
Nine months ago (September 9), it was 11.99%

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

June 11 12.04%
June 4 11.63
May 28 11.63
May 21 11.64
May 14 11.65
May 7 11.65
Apr. 30 11.61
Apr. 23 11.60
Apr. 16 11.55
Apr. 9 11.55
Apr. 2 11.57
Mar. 26 11.69
Mar. 17 11.70

The average cash advance rate for this week was 20.54%
which was up sharply from last week at 20.09%.

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

1. 3.25% Fifth Third Bank Platinum Prime MasterCard
2. 4.24% American Quarter Horse Association Business Credit Card
3. 5.24% Farm Bureau Bank Platinum MasterCard

The LowCards.com credit card rate report is compiled weekly
using data from 1060 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 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.

Fewer Credit Card Offers in the Mail, But More Fees

The LowCards.com Weekly Credit Card Rate Report June 4, 2009

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 11.63% this week and was unchanged from last week.

The average credit card rate six months ago (December 4) was 11.80%.
Nine months ago (September 2), it was 12.00%

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

June 4 11.63%
May 28 11.63
May 21 11.64
May 14 11.65
May 7 11.65
Apr. 30 11.61
Apr. 23 11.60
Apr. 16 11.55
Apr. 9 11.55
Apr. 2 11.57
Mar. 26 11.69
Mar. 17 11.70
Mar. 10 11.69

The average cash advance rate for this week was 20.09%
which was unchanged from last week.

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

1. 3.25% Fifth Third Bank Platinum Prime MasterCard
2. 4.24% American Quarter Horse Association Business Credit Card
3. 5.24% Farm Bureau Bank Platinum MasterCard

The LowCards.com credit card rate report is compiled weekly
using data from 1060 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 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.

It is the wedding season and many newlyweds are about to start their life together. While they have the same dreams and goals as newlyweds before them, many are going to find it much more difficult to get credit to finance those goals. New credit card regulations and the reaction by issuers are likely to have a big impact on those who are just staring out and applying for credit.

“This a difficult financial time where easy credit is no longer available to everyone. It is now more difficult to get loans for homes and credit cards. Your credit scores, history, even spending activities are now closely watched and you will have to prove to credit issuers that you are not a risk for defaulting on a loan. The sooner you start planning for this, the more prepared you will be. Your engagement period is a good time to start building a financial plan,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Your spouse is “business” partner as well as your life partner. Your credit, good name, and financial future will be tied to this person. Don’t assume that your spouse thinks the same way you do or shares the same beliefs about money. Their spending and saving habits may surprise you.

“Have an honest discussion about money,” says Hardekopf. “If your partner has difficulties managing debt or spending, it will not only affect your finances, but could also affect your credit score.”

Talking about money is difficult for anyone, but discussing finances before the wedding is a good way to test the relationship. If you can’t have an honest discussion about finances before the wedding, then this may not be the person you want to join together with for the rest of your life. Finances are one of the biggest causes of stress in a marriage. You will be better off if you can confide in each other and create a financial plan.

Here are tips for avoiding the stresses of marriage and debt:

* Before the wedding, show all of your cards. Tell your spouse about your income, debts, issues you have with money, how your parents raised you to handle money, your strengths and weaknesses with money, and admit if you are a spender or saver. A good place to start is to use a budget or bank statements from the past twelve months to show how you used your money. Your monthly debt, including your mortgage, should not exceed 35% of your gross income.

* Have a wedding that you can afford. This is not the time to start running up large credit card bills and still be paying for your wedding on your fifth anniversary.

* Each of you should get a copy of your credit reports. This will give you a clear picture of how you both handle money and it will help avoid any future surprises. Aim to get your score over 750 to receive the lowest interest rates for your first mortgage and other loans.

* Avoid credit card debt. The best rule of thumb is simply, “if you can’t pay for something with cash, you can’t afford it.” Don’t fall into the trap of buying something with a credit card with the intent of paying it off in just a few months.

* Get one or two credit cards and stick with them. Building a good payment history with one or two credit cards is a positive factor in your credit score.

* Each spouse should have a credit card in his or her own name to build your own credit score.

* If you have a balance, pay off as much as you can over the minimum each month. If you get gift money, tax refunds, etc., use this to pay off your debt. The faster you pay it off, the faster you can focus on saving and getting ahead. Reducing your debt-to-credit limit ratio also improves your credit score.

* Before the first bills come in, make a plan for how the bills will be paid and who will pay them. If you have separate accounts, know which account pays each bill.

June marks the beginning of “wedding season” and many newlyweds are about to start their life together. While they have the same dreams and goals as newlyweds before them, many are going to find it much more difficult to get credit to finance those goals. New credit card regulations and the reaction by issuers are likely to have a big impact on those who are just starting out and applying for credit.

Whereas credit used to be available to the masses, it is now more difficult to get home loans and credit cards, experts say. Credit issuers are watching credit scores, history, and even spending activities to make sure you are not at risk for defaulting on a loan. Experts suggest utilizing the engagement period to start building a financial plan.

Your spouse is “business” partner as well as your life partner. Your credit, good name, and financial future will be tied to this person. Don’t assume that your spouse thinks the same way you do or shares the same beliefs about money. Their spending and saving habits may surprise you.

Experts suggest having an honest discussion about money; if one partner has difficulties managing debt or spending, it will not only affect the couple’s financial situation but could also affect the other’s credit score.

Talking about money is difficult for anyone, but discussing finances before the wedding is a good way to test the relationship. If you can’t have an honest discussion about finances before the wedding, then this may not be the person you want to join together with for the rest of your life. Statistics show that finances are one of the biggest causes of stress in a marriage, so you will be better off if you can confide in each other and create a financial plan together.

Here are tips for avoiding the stresses of marriage and debt:

* Before the wedding, show all of your cards. Tell your spouse about your income, debts, issues you have with money, how your parents raised you to handle money, your strengths and weaknesses with money, and admit if you are a spender or saver. A good place to start is to use a budget or bank statements from the past twelve months to show how you used your money. Your monthly debt, including your mortgage, should not exceed 35% of your gross income.

* Have a wedding that you can afford. This is not the time to start running up large credit card bills and still be paying for your wedding on your fifth anniversary.

* Each of you should get a copy of your credit reports. This will give you a clear picture of how you both handle money and it will help avoid any future surprises. Aim to get your score over 750 to receive the lowest interest rates for your first mortgage and other loans.

* Avoid credit card debt. The best rule of thumb is simply, “if you can’t pay for something with cash, you can’t afford it.” Don’t fall into the trap of buying something with a credit card with the intent of paying it off in just a few months.

* Get one or two credit cards and stick with them. Building a good payment history with one or two credit cards is a positive factor in your credit score.

* Each spouse should have a credit card in his or her own name to build an individual credit score.

* If you have a balance, pay off as much as you can over the minimum each month. If you get gift money, tax refunds, etc., use this to pay off your debt. The faster you pay it off, the faster you can focus on saving and getting ahead. Reducing your debt-to-credit limit ratio also improves your credit score.

* Before the first bills come in, make a plan for how the bills will be paid and who will pay them. If you have separate accounts, know which account pays each bill.