High Rates, More Fees–Credit Traps are Here to Stay
A spokeswoman confirmed that Bank of America began charging an annual fee ranging from $29 to $99 for a “very limited” group of cardholders in February, while information gathered by LowCards.com shows that other issuers have recently hiked transfer balance fees, cash advance fees and foreign transaction fees in addition to annual fees.
Credit Cards and College Kids: It Doesn’t Have to be a Dangerous Mix
“If you are struggling to pay for your own food, housing, transportation and education bills, you can’t afford to carry a balance on a credit card,” says Bill Hardekopf, chief executive of LowCards.com and author of The Credit Card Guidebook.
VERIFYING BORROWER’S FINANCES
Mortgage brokers and lenders will often caution borrowers against charging up their credit cards or changing jobs before the closing date on a home loan. Now that advice seems especially prudent. On June 1, Fannie Mae, the government-sponsored company that establishes the underwriting standards for most of the nation’s mortgages, started requiring lenders to recheck a borrower’s finances shortly before closing the loan. If a broker or lender finds significant changes, the loan could be delayed, or in some cases, denied. Industry executives say the change should not have a drastic effect on borrowing, unless of course, the borrower is prone to running up huge credit card bills.
Story by Bob Tedeschi for the New York Times.
http://www.nytimes.com/2010/06/20/realestate/20mort.html
RECENT GRADUATES NEED FINANCIAL ADVICE
Millions of graduates are beginning life on their own, earning their own salary and paying their own bills. This is not an easy transition, and many young people are unprepared for this financial freedom. Parents should give a real-life course in money management to prepare their graduates for financial independence. Many graduates leave college already weighed down by debt. Of the two-thirds of students who borrowed money, the median debt was $20,000. The average starting salary for a new graduate is $30,000.
http://www.lowcards.com/blog/recent-graduates-need-financial-advice/
MERCHANTS WIN DEBIT CARD FEE BATTLE
Retailers stand to reap billions from the financial overhaul legislation being finalized by Congress this week, possibly giving them a long-sought victory by slashing the “swipe fees” that credit card companies charge merchants for every debit card transaction. Members of the House and Senate announced an agreement Monday to include the debit card fee cuts in the final version of the overhaul bill-a loss for the financial industry, which had mounted a furious campaign to eliminate or water down the proposed regulations. The legislation still only applies to debit cards, not traditional credit cards, and thus covers less than half of the annual interchange fees U.S. merchants pay, estimated at $48 billion by the Nilson Report, an industry newsletter.
Story by Miguel Bustillo for the New York Times.
http://online.wsj.com/article/SB10001424052748704256304575321162658897880.html?mod=rss_Today’s_Most_Popular
IS THERE A CURE FOR FINANCIAL LITERACY?
Uncle Sam wants to teach you how to manage your money. Tucked into the new financial-overhaul bill that Congress is working to finish is a new Office of Financial Literacy to help consumers learn about savings, debt and credit scores. So what do you want your children to know? A simple checklist should include helping them learn before high school about the difference between wants and needs, how to save, how much people really earn and how a simple budget works. Later, they can be introduced to the basics of insurance, taxes, debt and investing. You also may want to tell them it isn’t a good idea to run up massive debts, spend more than you bring in and fail to put money aside for the future–like a certain government we could mention.
Story by Karen Blumenthal for the Wall Street Journal.
http://online.wsj.com/article/SB10001424052748703280004575309143171720002.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsTop
LOWCARDS.COM WEEKLY CREDIT CARD RATE REPORT
Based on the 1000+ cards in the Lowcards.com Complete Credit Card
Index, the average advertised APR for credit cards this week decreased
to 13.60%, down from 13.63% last week. Six months ago, the average was 13.12%. One year ago, the average was 12.09%.
http://www.lowcards.com/ratereport/credit-card-rate-report.asp
CITI BANK OFFERS TEXT BANKING
Citi Text Banking is a new service that delivers account updates on
demand to bank and credit card customers in the United States. Customers simply text a command–such as BAL (for balance)–to MYCITI (692-484). Within seconds, they’ll receive a text message with the account information they requested Citi Text Banking provides updates for all Citi credit card accounts and for Citibank accounts linked to a Citibank ATM or debit card, including checking and savings accounts, home equity lines and loans, personal lines and loans, and mortgages.
http://www.marketwatch.com/story/citibank-customers-get-account-updates-faster-than-ever-with-citir-text-banking-2010-06-22?reflink=MW_news_stmp
HOUSE AGREES TO PUT CONSUMER WATCHDOG IN FED
The Federal Reserve, criticized for failing to protect consumers in the run-up to the credit crisis, would be the home of a new financial consumer watchdog under an agreement announced on Monday. U.S. House of Representatives Democrats said they will go along with a plan to put the watchdog inside the Fed as an independent unit operating within the central bank. The new watchdog, which would consolidate consumer-related duties now dispersed across several agencies, would oversee mortgages, credit cards and other consumer financial products that critics say were poorly supervised in recent years.
Story by Kevin Drawbaugh for Reuters.
http://www.reuters.com/article/idUSN2125049220100621
RUSSIAN LAWMAKER CALLS FOR LAW TO EXTEND USE OF CREDIT CARDS
Russia needs a law to encourage retailers to accept credit cards and penalize those who don’t, lawmaker Anatoly Aksakov told a conference in Moscow this week. “Many retail points, even large ones in Moscow, don’t accept plastic cards,” Aksakov, a deputy at the State Duma,
Russia’s lower house of parliament, said without providing any figures.
“I see this as a violation of consumers’ rights. Even a hundred-dollar
bill prompts questions in America.” Aksakov heads the Russian
Association of Regional Banks.
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 13.60% which was lower than 13.63% last week.
Here are the averages from the LowCards.com Complete Credit Card Index for the previous ten weeks:
June 17 13.63%
June 10 13.61
June 3 13.59
May 27 13.63
May 20 13.63
May 13 13.62
May 6 13.57
April 29 13.56
April 22 13.55
April 15 13.57
April 8 13.78
April 1 13.72
Mar. 25 13.72
Mar. 18 13.75
The average cash advance rate for this week was 21.59%
which was higher than 21.50% last week.
The credit cards with the lowest interest rates in the nation this week are:
1. 5.15% First Tennessee Platinum Premier Visa
2. 6.15% Illinois State Police Platinum
3. 7.15% Navy Federal Credit Union
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.
The LowCards.com Weekly Credit Card Rate Report June 24, 2010
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 13.60% which was lower than 13.63% last week.
Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:
June 17 13.63%
June 10 13.61
June 3 13.59
May 27 13.63
May 20 13.63
May 13 13.62
May 6 13.57
April 29 13.56
April 22 13.55
April 15 13.57
April 8 13.78
April 1 13.72
Mar. 25 13.72
Mar. 18 13.75
The average cash advance rate for this week was 21.59%
which was higher than 21.50% last week.
The credit cards with the lowest interest rates in the nation this week are:
1. 5.15% First Tennessee Platinum Premier Visa
2. 6.15% Illinois State Police Platinum
3. 7.15% Navy Federal Credit Union
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.
Two actions in Congress yesterday could put further strains on the profitability of banks. In response to these moves, some banks could very well add new fees to checking accounts to make up for this lost revenue.
Congress is much closer to passing new financial regulations which could limit the revenue that banks can make on debit cards. On Monday, members of the House and Senate reached an agreement to include debit card fee cuts in the financial reform bill, despite intense lobbying from the financial industry. The bill reduces the limits on fees Visa and MasterCard would have faced under legislation that passed the Senate last month.
This legislation only applies to debit cards, not traditional credit cards. It also allows merchants to offer discounts for use of cash instead of debit, and to set up to a $10 minimum for card transactions.
In arguing against the legislation, banks warned that they will be forced to raise other types of fees and eliminate rewards on debit cards to make up for a decrease in revenue from the lower interchange fee.
Also on Monday, House Democrats agreed to put the new financial consumer watchdog agency in the Federal Reserve. It will be an independent unit operating within the Fed. The compromise moved Wall Street reform legislation closer to enacting financial reform into law. The targeted date is before July 4.
The consumer watchdog agency would have its own budget, staffing and rule-making power. Supporters say that the agency will benefit consumers by reducing the cost of credit; that an increase in transparency and clarity would decrease penalty fees and surprise charges; and easy-to-read credit-card agreements would make it easier to select the cheapest or least risky card.
Banks are already preparing new fees on basic banking services as they try to replace revenue lost to recent regulatory rules. Starting July 1, Wells Fargo is ending its free checking account. Bank of America is testing account fees and options that will be added later this year. Other banks could join in.
Consumers have enjoyed years of free checking accounts. Fees will likely be added to the most basic checking accounts that don’t generate a lot of activity or money. The fee may be waived for customers with larger, active accounts or who use multiple services.
Banks have already lost billions of dollars in fees and revenue because of the CARD Act and overhauling the overdraft fee. The new regulations will also increase the losses. They have to make changes to increase their revenue.
“During this season of regulations, we have learned that banks and credit card issuers raise rates and fees in other areas to make up for any lost revenue. They have done this in the past and they will probably do it again. Regulations may be needed, but they are not free. Banks respond quickly when their income is restricted in one area,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Unfortunately, the first victims of these new fees will probably be the people with a basic checking account who need every dollar they make.”
Millions of graduates are beginning life on their own, earning their own salary and paying their own bills. This is not an easy transition, and many young people are unprepared for this financial freedom. Parents should give a real-life course in money management to prepare their graduates for financial independence.
Many graduates leave college already weighed down by debt. According to the College Board’s Trends in Student Aid study of 2007-2008, the median debt for all bachelor’s degree recipients was $11,000. Of the two-thirds of students who actually borrowed money, the median debt
was $20,000. The average starting salary for a new graduate is $30,000.
“Most college graduates are financially struggling before they even begin their career. This is the time to face reality and develop a budget, since financial pressures will only get worse,” says Bill Hardekopf, CEO of Lowcards.com and author of The Credit Card Guidebook. “It can take a lifetime to pay down debts incurred in college. The good news is this the best time of your life to set good savings and spending habits. For most graduates, this can be a time when they can
live cheaply and flexibly and develop a stable financial footing.”
Young graduates actually want financial guidance. According to a recent study by the National Foundation of Credit Counseling, as many as 43% of Gen Yers strongly agree that they could benefit from advice and answers to everyday financial questions from a professional. Nearly two in five Gen Y adults (39%) give themselves a grade of C, D or F in personal finance.
“It is the parents’ or guardian’s responsibility to prepare young people for taking care of their own finances. This is not an education they should learn by making their own mistakes. Even a few late payments can create significant financial damage that can put a young adult far behind,” says Hardekopf.
Here are some tips for a good financial start:
1. Budget everything and put every dollar in place. Start with your net income, not the salary number they give in the job offer. What is your income after taxes, healthcare, and retirement are taken out? This is the amount of money that you have to work with each month.
Expenses always seem to cost more than you estimate and this underestimating can be a budget buster. Ask questions. How much will utilities and healthcare really cost? Track your spending for a month to get an accurate understanding of where your money goes. This can help you plug the leaks where your money is slipping away.
2. Start saving immediately from every paycheck, even if it is only a small amount. There will always be a good reason to put off saving, but saving is a habit, and the sooner you start, the better off you will be. Open a retirement account at work or your own IRA. Time and compounding interest will help your small amount grow into significant savings by retirement.
“If you have been a starving college student living on a tight budget, continue to keep a tight lid on expenses. Even if you are start with a good salary, put as much as you can in savings,” says Hardekopf.
Open a separate savings account to save for an emergency fund. The goal should be three months’ income. If you lose your job or have sudden, unexpected expenses, your emergency fund, not your credit cards, should be your safety net. Using loans to pay for an emergency
simply adds to the cost of the emergency.
Nearly two in five (39%) Gen Y adults report having no savings. Of those with no savings, one in four say that, if faced with an emergency, they would charge that expense to a credit card (25%) or take out a loan (29%). (NFCC study)
3. Pay off your credit card debt. The average college student has 4.6 credit cards. The average (mean) balance is $3,173. Nearly 82 percent carried balances and thus incurred finance charges each month. (“How Undergraduate Students Use Credit Cards: Sallie Mae’s National Study of Usage Rates and Trends, 2009″)
If you carry a balance, do not put new purchases on your credit card. “If you can’t pay for it with cash, you can’t afford it, so don’t buy it,” says Hardekopf.
4. Set a payment schedule. If you are not trained in paying bills, it is easy to misplace a bill or pay it late. This can be punished by late fees and even lower credit scores. The easiest way for young people to pay bills is to do so online with scheduled reminders for payments.
5. “Study” to improve your credit score. Your credit score is more important than just about any other grade you received in college. It is the number that lenders, employers, and even renters will use to judge you. A high score (FICO 720) will get you the lowest rates and save money on auto, credit card and mortgage loans.
DEFAULT, NOT THRIFT, PARES COUNTRY’S DEBT
Consumers in the United States are paring down their debts faster than many economists had expected. The falling debt burden conjures up images of a nation seeking to repent after a decade of profligacy, conscientiously paying down mortgages and credit-card balances. That may be true in some cases, but it’s not the norm. In fact, people are making much more progress in shedding their debts by defaulting on mortgages and reneging on credit cards. The lesson seems to be that the way to get ahead in the world is to take huge risks–buy a house you can’t afford with no money down, or invest huge amounts of borrowed money in risky loans–but let somebody else pick up the bill if things go wrong. As the growing U.S. federal debt demonstrates, that’s not a sustainable way to run an economy.
Story by Mark Whitehouse for the Wall Street Journal.
http://blogs.wsj.com/economics/2010/06/12/number-of-the-week-default-not-thrift-pares-us-debt/
CARD ACT IMPACTS AD SPENDING, MESSAGES
Credit card reform legislation is impacting not only the revenues of credit card companies, but ad expenditures and messaging, according to a Kantar Media study. For the study, Kantar looked at historical marketing data stretching back five-plus years and covering TV, internet, magazine, newspaper, radio and outdoor. After peaking in 2005 at $2.17 billion, category ad spending declined by more than 35% during the next four years and finished 2009 at $1.40 billion. While total category spending has started to rebound and has posted two consecutive quarters of solid growth, it is due to two major advertisers: American Express and Chase. For the six months ending March 2010, Amex and Chase more than tripled their ad budgets versus the year-ago period and accounted for nearly 40% of total category spend. New credit card product launches contributed to the hikes. However, several major marketers have yet to restore their media budgets, according to Kantar. Most of the major card issuers continue to focus on rewards programs as the key selling point in their TV commercials.
Story by Tanya Irwin for Marketing Daily.
http://www.mediapost.com/publications/ fa=Articles.showArticle&art_aid=130029
BANK OF AMERICA RETHINKS FREE CHECKING
Bank of America, the nation’s biggest bank, is considering charging some checking customers additional fees starting next year as it tries to offset the cost of complying with new financial rules. Bank officials said they are still testing various pricing models around the country. So far, they said, they have ruled out charging all checking account customers a blanket fee, and are opting instead to offer a menu of account options. Bank of America, like many banks, is looking for new revenues as it faces additional financial regulations, which, for example, limit overdraft fees on debit cards. In addition, the bank faces increased assessments from the Federal Deposit Insurance Corp. to replenish the nation’s deposit insurance fund.
Story by Todd Wallack for the Boston Globe.
http://www.boston.com/business/articles/2010/06/18/bank_of_america_rethinks_free_checking/
CREDIT UNIONS BEGIN TO PROMOTE THEIR STRENGTHS
Now might seem a perfect moment for credit unions to shout from the rooftops about what makes them different from for-profit banks. For starters, most credit unions did not engage in the type of risky lending that led to the crisis. Generally, credit unions also did not charge the kind of sky-high interest rates on credit cards and exorbitant overdraft fees that fueled anger at their bigger competitors. Yet, despite growing antipathy toward big banks, most credit unions have stuck to their time-worn routines: gentle membership drives, bland advertising and contentment with the business they have. That slow approach makes the recent wave of cheeky, take-that advertisements from a handful of credit unions stand out all the more.
Story by Andrew Martin and Ron Lieber for the New York Times.
http://www.nytimes.com/2010/06/12/business/12credit.html?src=busln
FEDERAL RESERVE ANNOUNCES NEW CREDIT CARD PROTECTIONS
On Tuesday, the Federal Reserve announced new rules and credit card protections which go into effect on August 22. Under these new rules, there are limited and conditional protections against interest rate increases. Any increase in your APR must be re-evaluated by your issuer every six months, including any increases that took place after January 1, 2009. If appropriate, the issuer must reduce your rate within 45 days after completing the evaluation. Additional rules include capping late fees at $25 with some exceptions; limiting penalty fees so they cannot exceed the dollar amount of the consumer’s violation; and prohibiting issuers from charging an inactivity fee on cardholders who don’t use their credit card.
http://www.lowcards.com/blog/category/credit-card-press-releases/
SHOULD BANKS, MERCHANTS OR CUSTOMERS BEAR THE COST OF PAYING WITH PLASTIC?
It’s not that merchants dislike debit cards or, for that matter, credit
cards, which require them to pay processing fees of up to 3% of the sale price. They’re convenient for customers, and plastic payments don’t bounce like checks. Merchants just don’t want to pay for these benefits–they want banks to do it, as is the case for paper checks. At the very least, merchants want banks to lower their processing fees to something closer to what they believe is the actual cost of handling an automated transaction.
What’s “reasonable and proportional”? Unclear. But it would seem by the
nature of the amendment that however much it is, it’s less than what banks currently charge. The financial-services industry, needless to say, doesn’t like this idea one bit and has been unleashing its own lobbyists to have the amendment watered down or dropped from the legislation.
The LowCards.com Weekly Credit Card Rate Report June 17, 2010
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 13.63% which was higher than 13.61% last week.
Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:
June 10 13.61%
June 3 13.59
May 27 13.63
May 20 13.63
May 13 13.62
May 6 13.57
April 29 13.56
April 22 13.55
April 15 13.57
April 8 13.78
April 1 13.72
Mar. 25 13.72
Mar. 18 13.75
The average cash advance rate for this week was 21.50%
which was lower than 21.51% last week.
The credit cards with the lowest interest rates in the nation this week are:
1. 5.15% First Tennessee Platinum Premier Visa
2. 6.15% Illinois State Police Platinum
3. 7.15% Navy Federal Credit Union
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.
What to do About Your Credit Cards Now
The Fed has rolled out a new credit card comparison site (http://www.federalreserve.gov/creditcardagreements/) which offers a searchable database of current card agreements, allowing consumers to read all the small print before they apply for a card.
But it does not include information on rewards programs — you can usually find good information about that on comparison sites like LowCards.com.
The Federal Reserve announced new rules and credit card protections yesterday. It is the grand finale of the CARD Act, capping late fees and providing possible relief from rate increases. These rules go into effect on August 22.
Under these new rules:
* There are limited and conditional protections against interest rate increases. Any increase in your APR must be re-evaluated by your issuer every six months, including any increases that took place after January 1, 2009. If appropriate, the issuer must reduce your rate within 45 days after completing the evaluation. Ideally, lenders will reduce rates if the reasons for the increases no longer exist.
“Terms such as ‘evaluate’ and ‘reduce if appropriate’ leave wiggle room for issuers. Credit card companies need the income from these higher interest rates. That is one reason why many cardholders received significant rate increases before the CARD Act went into effect. It would be surprising if issuers re-evaluate and restore rates to previous levels for a large number of cardholders,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.
* Most late payment fees will be capped at $25. However, the fee can be as high as $35 if one of your last six payments was late or if the issuer can prove the costs incurred justify a higher fee.
* The penalty fees cannot exceed the dollar amount of the consumer’s violation. Hence, a credit card company can no longer charge a $39 fee when a consumer is late making a $20 minimum payment. In this example, the fee cannot exceed $20.
* Issuers can’t be charged more than one fee for a single event or transaction.
* Credit card companies can no longer charge an inactivity fees on cardholders who don’t use their card.
Here is the Federal Reserve’s website that explains the new rules:
http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules2.htm
Monthly Credit Card Data Signal Continued Turnaround
“Card issuers have already made pretty significant changes in their portfolio” to minimize the downside, said Bill Hardekopf, chief executive of LowCards.com and an author of The Credit Card Guidebook.
Airline Credit Cards Dangle Perks to Lure New Customers
“Card issuers are raising more money by getting annual fees, and they’re using the rewards as an add-on to justify the fee,” Bill Hardekopf, CEO of credit-card comparison site LowCards.com, tells the Detroit News.
If You Get in a Bind, There are Ways to Avoid the Payday Loan Trap
Most card issuers charge a fee to advance you money, and the interest rates are usually higher than you’ll pay for credit card purchases. In recent months, some issuers have raised cash-advance fees and interest rates, says Bill Hardekopf, CEO of LowCards.com. For example, in February, Citi increased its interest rate for cash advances to 25.24% from 21.99%.
June is the traditional “wedding season” and many newlyweds are dreaming of a happy life together. Agreement over finances and paying off debt are important preparations for a long-lasting union.
According to the study, “Bank On It: Thrifty Couples are the Happiest,” conflict about money predicts divorce better than any other type of
disagreement. Couples who disagree about finances once a week were
over 30% more likely to divorce over time than couples who only
disagree about finances a few times per month.
The study also says that perception about how well one’s spouse handles money is also a factor in shaping family life. If an individual feels the spouse spends money foolishly, they report lower levels of marital happiness. It increased the likelihood of divorce 45% for both men and women. Only alcohol/drug abuse and extramarital affairs were stronger predictors of divorce.
“Conflicts over money and the burdens of debt put a heavy strain on
marriage and can spread into other issues. It can erode your relationship and even causes the marriage to collapse,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Committing to a family budget and savings plan is making a commitment to your marriage.”
Before you get married, know how your future spouse will treat money. Don’t assume that your spouse shares your beliefs about money. Even if your future spouse is kind and respectful to you, he/she may treat money differently. The spending and saving habits may surprise you. A free spender before marriage will probably be a free spender after marriage.
To avoid surprises, have an honest discussion about money before the wedding day. This talk may be difficult to do, but it is necessary before joining life and finances together. If one partner has large debt or difficulties managing money, address these issues before the marriage. Debt can not only affect your financial future together, it can also severely damage your credit score.
Here are some financial tips for newlyweds:
* Before the wedding, show all of your cards. Be honest about your income, debts, and money problems. Bring out your bank statements from the past twelve months to show what you did with your money. Explain how your parents raised you to handle money and your strengths and weaknesses with money. Admit if you are a spender or a saver.
* Each of you should get a copy of your credit reports from the three credit bureaus. This will give you a clear picture of credit accounts, debts, and how creditors will judge you. Aim to get your scores over 750 to receive the lowest interest rates for your first mortgage and other loans.
* Have a wedding that you can afford. Do not start a life together by using a credit card to pay for a wedding that is out of your budget.
* 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.”
* Get one or two credit cards and stick with them. Use them for several
purchase each month and pay them off immediately. Building a long term payment history with one or two credit cards is an important 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 credit card balance, pay as much as you can over the
minimum each month. If you receive gift money, a bonus, a second job or a tax refund, use this to pay off your debt. The faster you pay it off, the quicker you can focus on saving and getting ahead. You can even make micropayments multiple times during the month to pay off your balance faster. Eat a meal at home and immediately apply the money you saved to your credit card balance.
* Before the first bills come in, make a plan for paying them and who will pay them. If you have separate accounts, know which account pays each bill.
* Reduce your debt-to-credit limit ratio. This will help improve your credit score. Your monthly debt, including your mortgage, should not exceed 35% of your gross income.
* Differentiate between your wants and your needs. Then simplify your wants.
The LowCards.com Weekly Credit Card Rate Report June 10, 2010
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 13.61% which was higher than 13.59% last week.
Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:
June 3 13.59 %
May 27 13.63
May 20 13.63
May 13 13.62
May 6 13.57
April 29 13.56
April 22 13.55
April 15 13.57
April 8 13.78
April 1 13.72
Mar. 25 13.72
Mar. 18 13.75
The average cash advance rate for this week was 21.51%
which was lower than 21.57% last week.
The credit cards with the lowest interest rates in the nation this week are:
1. 5.15% First Tennessee Platinum Premier Visa
2. 6.15% Illinois State Police Platinum
3. 7.15% Navy Federal Credit Union
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.
Carry Credit Card Debt? Watch Prices
The most effective way to get out of credit-card debt is to stop using your cards and pay off your balance as much as possible each month, says Bill Hardekopf, the chief executive of LowCards.com, a credit-card comparison site.
For those facing a rate hike, consider declining the increase. Under the new credit-card law, issuers must allow card holders a reasonable amount of time to pay off their balance at the old rate. However, by opting out of a rate hike, consumers won’t be able to make new purchases with their card. If they do, they’ll be automatically billed at the higher interest charge, says Hardekopf.
The monthly Consumer Credit report released yesterday by the Federal Reserve shows credit card debt fell for the 19th consecutive month.
Revolving credit, which is primarily credit card usage, declined $8.5 billion in April. This indicates that consumers continue to pay off their credit card debt as issuers keep tight limits on lending. Revolving credit has fallen an impressive $138 billion since October of 2008, from $976.1 billion to $838.0 billion.
The report also showed that consumer spending slowed in April and savings rose for the first time in four months.
This drop in credit card debt is good for consumers and issuers. Each of the six major credit card issuers reported small declines in the delinquency rates from March to April, indicating that consumers are getting debts to manageable levels and pose less risk of default. Issuers seem to have maintained the stringent credit card approval rates to minimize their risk.
“The economic downturn seems to have had an impact on how consumers are using their credit cards, at least in the short term. It is a good sign to see the revolving credit numbers continue to drop. Hopefully, we are getting back to a mentality where we only buy what we can afford to pay for,” says Bill Hadekopf, CEO of LowCards.com and author of The Credit Card Guidebook.
Best Deal in America: Cash Back for Charging
That said, if you’re looking for a cash back program, it pays to shop around. Fortunately, that’s easy to do. Lowcards.com has a nice listing of cash-back cards.
Got a Great Offer? How to Read the Fine Print
Most of the offers are going to consumers with good to excellent credit, says Bill Hardekopf, chief executive of LowCards.com, so if you’re getting a lot of mail, credit card issuers have decided you’re a good risk.
