New Credit Card Law Bans Deceptive Allocation Practices
June 16, 2009
By Mike Wayman
The recession has American Citizens in an uproar and for good reason. As people throughout the country lose their homes to foreclosure and the unemployment rate continues to increase, watchdogs and legislators are on the lookout for companies, especially credit companies, who typically earn money from the misery of others.
When families fall behind in payments, often times, they engage in balance transfers on credit cards to avoid paying high interest payments or they simply acquire more credit cards to compensate for a lack of household income.
In the past, these strategies may have worked, however, sometimes at a very high cost. This is because credit card companies have had the power to “allocate” the payments made to the credit card company as it feels it should. What this means is that the credit cards you typically use have at least three different rates for the types of transactions we engage in: typical purchases, balance transfers and cash advances.
Allocation refers to the practice of the credit card issuer dividing your payments between these three types of “bills within bills” in your monthly statement. So, as an example, if the rate on a cash advance is 25%, purchases 9.9% and balance transfers 2.5% and you pay $100.00 as a payment, the credit card issuer controls how much of the payment goes to pay down the balance of each type of transaction. Guess what? They don’t allocate the payments in your best interest!
This new law bans the credit card companies from allocating the least amount of money going to the highest rate balance on the card. This is the most profitable form of keeping you in debt within the credit card industry.
If you find yourself in a situation where you need cash advances and balance transfers please read the credit card’s agreement that you signed to determine what the rates are. Call your issuer to ask if they are in full compliance with the new law enacted in May of 2009 that bans them from misappropriating your payments away from the highest interest rate due and by all means…avoid the cash advances if you can. These are the most expensive types of transactions you can make on a credit card.
From CreditCards.com:
Here’s an example of how the new law will work:
Say you have a $3,000 balance on your credit card and a $39 minimum payment. That balance includes $1,000 in purchases at a 12 percent interest rate, $1,000 in balance transfers at a 0 percent interest promotion rate and a $1,000 cash advance balance at an 18 percent rate.
If you make a $500 payment, the first $39 will most likely go toward the zero percent interest balance transfer, leaving that balance at $961.
The remaining $461 will go toward the $1,000 cash advance balance, leaving that balance at $539.
None of the payment will be applied to the purchase balance.
Missouri AG Sues Credit Solutions of America
June 10, 2009
By Mike Wayman
Credit repair companies don’t have the greatest image in the eyes of many consumers and governmental protection agencies. It isn’t necessarily because credit repair is a scam in general, but that a few rotten apples can really tarnish the image of the industry.
It surely doesn’t help when credit repair companies take in a bunch of fees and utterly fail to perform any of the services they promise to perform.
Choosing a credit repair company wisely is important especially in difficult economic times. Recently, the Missouri Attorney General sued Credit Solutions of America for failing to perform adequate services for their clients. The Missouri AG claims Credit Solutions of America took in a great amount of fees but never really did work on behalf of their clients.
From OzarksFirst.com:
The Texas-based company advertises to consumers it could get people out of credit-card debt and lower their monthly payments.
The Attorney General’s investigation found that the company took customers’ money, but did little or nothing to solve their debt problems.
Here’s some tips when considering a credit repair company:
Ask them to explain the entire process of repairing credit. Who will be handling your file? How will you receive updates and notifications on progress?
What is the timeline for the credit repair process?
Can the company provide you with testimonials or referrals from other clients?
Do they put their claims and guarantees in writing?
These are just a few of the strategies you can use when considering the right credit repair company to handle your case.
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Contact Certified Credit Repair today at 1-888-854-8351 or just fill out the Contact Us section right now and one of our representatives will call you right away!
Credit Repair Vs. Credit Deletion
The main difference between credit repair and credit deletion is that in credit deletion, derogatory credit is permanently removed from your credit profile. At most credit repair companies the process of improving your credit score is virtually identical. A representative from the so-called credit repair company will author letters of dispute on your behalf. These letters of dispute are intended to provoke a creditor to respond to the dispute within 30 days. If the creditor fails to respond, then the derogatory trade line is supposed to come off of your credit report. This strategy is poor at best. Here’s why:
There are multiple credit bureau’s and this strategy may not work with all of them. Therefore, your overall credit score average will still remain low.
Whenever the creditor decides to report the same derogatory credit item to the credit bureau’s in the future the same trade line will most likely reappear.
Finally, this strategy is contingent on your creditors not responding to disputes and not on the skill or effectiveness of the so-called credit repair company. This is perfect for most of these “credit repair” companies because what they are really after is to charge you a monthly fee for AS LONG AS IT TAKES to get not just one creditor…but all of your creditors to “forget” to respond to a dispute. You could literally spend thousands of dollars and multiple years waiting for your credit to improve.
Don’t fall for the claims of the so-called credit repair guru’s. Get your credit repaired permanently today via credit deletion.
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We can permanently delete foreclosures, mortgage late payments, revolving debt payments, and all bankruptcies except an open Chapter 13 filing
