Tip 1: They Don’t Know What You Don’t Tell Them

As unlikely as it may seem, banks do want to work with their customers. Many have instituted special programs for customers who are behind on their credit card debt and facing tough financial times. Call your credit card company – preferably before you default, but definitely if you can’t make payments – and see what they can so for you. If you simply stop paying, they won’t know that you’re facing special circumstances.

Tip 2: Tell It Like It Is

Tell the collector that you’re unemployed and cannot afford to make payments at this time. That’s really all they need to know. If they push you to set up a payment plan, cut in and tell them you’ll call back when your situation improves.

Tip 3: Keep Written Records

Make a note of the date and time when you called. Also take down the first and last name of the person you spoke to, and a summary of what was said during the call. If any collector harasses you or does not adhere to the rules for debt collection, keep records that you can refer to if you decide to go to court.

Tip 4: Plan for the Future

Right now, getting an income is more important than setting up a payment plan with a creditor. Of course, late payments and closed accounts will hurt your credit score, but sometimes you have to make hard choices. Focus your energy on finding a new job rather than fighting with debt collectors.

Tip 5: Pay What You Can Afford

When you’re back on firm financial footing, call the collection agency and make an attempt to settle the debt. Some will settle for pennies on the dollar. Others will resist your efforts to negotiate a lower pay-off. Offer them a lump sum or monthly payment amount that you can reasonably live with. If they refuse, get a qualified credit counselor to deal with them.

by: Janna Weiss

Surely there is no one who would prefer to PAY the IRS at tax time, so it’s better to get the refund. With some careful adjustments, however, you can reduce the size of the refund and see more in your check throughout the year (without danger of having to pay at tax time).

Visit your human resources or accounting department at your place of employment. Ask to look at your w-4 to see what your withholdings are. If you’re getting a large refund, you can increase the number of withholding allowances you claim. The payroll people should be able to help you find the break-even point; and show you how much more you would get in each paycheck throughout the year rather than waiting to get it all at tax time.

You have a few choices as far as what to do with the extra money changing your withholdings would cause in your paycheck:

Automatic debt repayment: If you are looking to pay off credit card bills or other debts, the best thing you could do is set up automatic payments to your highest interest account each pay period, for the amount of extra money that will be in your paycheck. You won’t miss the money since you hadn’t been receiving it before, but those small extra payments will do wonders to paying off the credit card bill faster. If you do this, you will want to continue sending your normal monthly payment as well.

Automatic savings: If you’re not in very much debt, or can get a high interest rate on savings (higher than the interest you pay towards debt), you may decide it makes more sense to put the extra money into a savings account. Each pay period, automatically transfer the extra money into the savings account of your choice. This way, you earn interest on the money all year round instead of letting the IRS hold on to it for you interest-free. Also, if you should miscalculate your break-even point with your taxes the first time you make a change to your withholdings, you will have the money in your savings account available to pay for it.

If you’re not convinced that it’s more valuable to receive the money throughout the year rather than in one lump sum at tax time, leave everything as it is except for what you do with the refund when you get it! Often, people use the refund to take a vacation, make a down payment on a vehicle, or deposit it into their bank accounts to slowly whittle away on purchases here and there. A better method, for people in debt, is to take the refund and apply it to your highest interest debt, to pay it down faster. Do this every year until you are debt free; and then you can use the refund for the fun purchases – like vacations or cars, without guilt!

by: Debbie Dragon

When you open a credit card account, you enter into an agreement with the card issuer. You have the right to use the card to make purchases, and the responsibility to pay off the card’s balance in a timely manner. This holds true regardless of when the charges were made. Typically, any charges made by one party before the marriage took place will be the legal responsibility of that party.

Some situations are a little trickier. For example, if you’re the sole account holder and your spouse is an authorized user, you are responsible for all the charges made to your account by yourself or your spouse. To avoid further charges during and after divorce proceedings, you can simply remove the spouse from your account and ask the card issuer to have their card deactivated.

If your spouse is the account holder and has added you as an authorized user, your spouse is the one who is legally responsible for the account balance. You can dispute any account activity that shows up on your credit report. Contact the credit bureaus and let them know that this is not your account, and that you are disputing the items.

In the case of a joint account, both you and your spouse can be held responsible for the balance. The judge at your divorce hearing might require one of you to pay the full balance, or might split the debt between both parties. Speak with your divorce attorney to figure out how best to proceed.

Your divorce decree might stipulate that one party or the other is responsible for paying off the credit card debt that exists at the time of the divorce. Any charges made to credit card accounts after the divorce will be the responsibility of the account holder.

To avoid making a bad situation worse, speak with your spouse or attorney about your credit card debt before your divorce hearing. Be prepared to provide paperwork and proof of the account’s ownership and purchase history. The more you can do to straighten things out beforehand, the less likely you’ll be held responsible for all of the debt.

by: Janna Weiss

Every state has its own statute of limitations on debt. That is, the debt cannot be collected after a certain amount of time has elapsed. (This time limit varies by state, so check your local legislation to know your rights.) The tricky part comes when you make a payment or otherwise acknowledge the debt and attempt to deal with it: the statute of limits timer resets to the most recent date of activity on the account, and the debt is once again fair game for collectors.

Some consumers are content to let the old debt fall off of their credit reports, which it will do after 7 years. But there are plenty of reasons to pay off your old debt, even if it has technically expired. Consider these points:

Paid debt is better than unpaid. If you’re planning to take out a loan or make a major purchase, pay off your unsettled debts to save your credit score. Lenders look at resolved accounts much more favorably than old, unsettled debts. Also, your credit score won’t suffer as badly if you pay off your old debts.

You could be taxed. Collectors are within their rights to report any unpaid, uncollectible debt as income – for you. They can notify the IRS of this ‘income’, in which case you’ll be responsible for income tax.

It’s just the right thing to do. When consumers default on their credit card debt, it causes hardship for all cardholders. Credit card companies raise rates and tighten their lending criteria to recoup their losses, preventing new cardholders from qualifying for good credit card terms – or any credit cards at all.

Should you pay off your old credit card debt? The choice is up to you, but many consumers find it worthwhile to pay off their delinquent accounts for the sake of repairing their credit score. That three-digit number defines you financially, and a low credit score may keep you from getting a loan, an apartment, or even a job. Keep that in mind when you choose how to handle old debts.

by: Janna Weiss

These cards allow accountholders to withdraw money from your own 401K account, with permission from your employer, instead of the typical “loan” some people would get from their 401K plans.

A 401K debit card is actually more closely related to a credit card than a debit card, because you end up paying for a large number of fees and penalities for the priviledge of using a debit card linked to your 401K account.

How do 401K debit cards work?

Because they are essentially a loan that you access with the debit card, you must first get employer approval for the 401K loan. In some cases, the employer will approve the loan one time, or as a revolving line of credit. If you set up the loan as revolving, that means you can borrow against the approved amount as you pay it down – while a non-revolving 401K loan is money you cannot borrow again after repaying it. The amount of money you can borrow from a 401K loan is based on how much you’ve deposited into the account, and your vested balance according to IRS rules. You are limited to borrowing 50% of your vested account balance, or $50,000 whichever is less. At times, an exception can be made for a $10,000 loan out of your 401K account, even if that exceeds your 50% limit. Your employer is actually able to limit the amount you’re allowed to borrow and for what purpose you use the borrowed funds for.

If the employer approves your request for a loan and offers a debit card to access it, the approved amount is then transferred into a money market fund and the debit card is given to you for your use. There are some plans that also allow you to write checks from your borrowed funds. If you use the card or checks multiple times, each day’s transactions are considered separate loans and each are subject to individual terms of repayment.

How 401K Loans are Paid Back

Each month, you’ll receive a bill – just like you do your credi tcards – that shows you the total amount of your approved loan, how much you’ve used on a daily basis, and how much of it you need to repay. Because the 401K loan is in fact a loan, even though it’s being accessed with a debit card or check, you will make payments that go to the principal balance borrowed and the interest youv’e accrued. There are two types of interest rates you pay for 401K loan debit card use – a variable fee which is based on the margin, which is calculated based on the amount you withdraw each month, and paid to the vendor providing your debit card, and the interest charged to your debit card use which is tied to the prime rate. Also, like credit cards, your loan repayments have a due date and a minimum amount which most be paid.

Are 401K Debit Cards a Good Idea?

There are a few advantages to using the debit cards with a 401K loan, if you disregard the disadvantages associated with taking money out of your 401K before retirement to begin with.

Advantages of using the debit card to access the loan over other alternatives include:

* faster access to the funds once approved
* the money from your loan is deposited into another money market account when you are going to access them through a debit card, so they will continue to earn interest until you actually withdraw or use them with the debit card. When you get a 401K loan as a check, they withdraw the full amount of the loan and send to you, meaning you have that much less earning interest for you immediately.
* Once approved for the loan amount, you can withdraw money as needed from that account rather than getting approval each time.

Disadvantages of 401K debit cards

In addition to the major disadvantage of withdrawing money in ANY format from your retirement fund before you retire, there are a few other disadvantages to withdrawing the money using a debit card, including:

* Potential to pay more interest than a traditional 401K loan, since each debit card transaction from one day to the next will be treated as a separate loan.
* Most 401K loans are repaid automatically through payroll deductions, but with debit card 401k loans, you have to make payments on your own, the same way you would a credit card payment. If you miss three payments in a row, your loan will be considered a default, the full amount borrowed becomes taxable and you’ll get hit with a 10% early distribution penalty by the IRS if you’re younger than 59 and a half years old when you default.
* Unlike credit cards that offer a grace period on purchases where no interest accrues, money used through a debit card on your 401K account is charged interest as soon as it is withdrawn.

by: Debbie Dragon

Credit card offers list the terms and conditions of various cards. When you compare credit cards, look at the interest rate, also known as the APR. It might be listed as 0%. If so, you can bet that it will be much higher in six months to a year. 0% interest cards have introductory phases. After that phase has ended, they are subject to regular interest rates. Most cards offer 12-24% interest rates. The lower the rate, the faster you’ll be able to pay off your debt.

Also make note of the type of interest rates on your credit card offers. Some rates might be “fixed”, and some might be “variable”. Choose fixed-rate interest whenever possible. Variable interest rates can change with little warning from the card issuer. If you do choose a credit card with a variable interest rate, make sure you know when and how much that rate can change.

When you compare credit cards, you’ll notice that some of them come with quite a lot of fees. There can be application fees, processing fees, annual fees, late fees, and fees for going over your credit limit. Fees can also apply when you close your account or make a balance transfer to another card. The credit card industry is competitive, so don’t waste your time on credit card offers that indicate exorbitant fees.

Your next step when you compare credit cards is to look at the credit limit each one is willing to give you. Some might offer low limits, while others might offer you thousands of dollars. Higher credit limits can improve your credit score, but they can also tempt you to spend money on things you can’t really afford.

Always check the small print on credit card offers. Companies should tell you their policies regarding interest-free grace periods, late payments, and how you will be informed if changes are made to the terms of your contract. If you have questions about specific policies, call the card’s customer service division and ask to speak with a representative. Most card companies are only required to give 14 days’ written notice when making changes to your account. There is pending legislation that seeks to compel card issuers to give more notice before such changes are made.

Don’t just accept the first credit card offers that come along. Take the time to compare credit cards. They can be great for building up your credit, but they can also leave you with a heap of debt if you don’t use them wisely. Look for good deals with low fees and interest rates. The research you do in the beginning can save you a lot of financial heartache down the road.

by: Janna Weiss

0% APR means that no interest charges are applied to purchases during a specified period. These periods can vary in length, but competition has urged most card issuers to offer about a year of 0% interest. If you know that you can pay off your balance within that time period, 0% APR credit cards can be a boon. If you’re not so sure, watch out; interest rates are climbing, and you’ll get hit with them once your 0% period runs out.

So when is it a good idea to apply for a 0% interest card?

If you’ve got a situation where you’ll be making lots of one-time purchases, a 0% APR credit card can really make life easier. Consider moving expenses. You’ll need to hire movers, pay a deposit or rent at your new address, and probably make deposits on utilities. If you’re replacing some furniture and other items, tack on extra expenses. Instead of using a regular credit card to pay off those purchases plus interest, think about opening a 0% interest card. That way, you’ll have up to a year to pay off the purchase price without paying extra. You can always cancel the card once the balance is paid off.

Holidays are also good times to indulge in some guilt-free shopping. Use a 0% interest credit card to pay for gifts and entertaining expenses. As long as you can pay off the balance before the holiday rolls around again, you’ll have saved quite a bit of money on interest.

Emergencies happen, and it’s like adding insult to injury (sometimes literally) to have to pay interest on medical bills and car repairs. If you’ve been hit with big expenses like these, you might want to get a 0% interest card and use it to pay. Another alternative is to transfer your existing balance from other cards to the 0% card. But watch out for balance transfer fees. You want to make sure that you’re actually saving money by transferring your balance.

When shopping for a 0%APR card, be sure to do your homework. Some cards have hefty fees for enrollment, or even monthly membership fees. You don’t want charges like that to minimize the money you’ll save with 0%APR. There are plenty of good cards out there. Some card issuers even extend special 0% offers to their loyal customers. Check with your bank and your card company to see if they have a deal that’s right for you.

by: Janna Weiss

Affinity credit cards play on our desire to help others. These credit cards are branded with the credit card company’s logo, as well as the logo of a charity. When card holders make purchases using their affinity cards, the card company donates a percentage to the partner charity. There are affinity cards that support all kinds of good causes. That’s the good news.

The bad news is that the donations generated by these cards don’t amount to much. Card holders would be better off donating cold, hard cash to help the needy. Some of the leading affinity cards donate about fifty cents for every one hundred dollars of charges. If you charged two hundred dollars a month in hopes of supporting animal rights, your affinity card contributions would add up to twelve dollars a year. Every little bit counts, but any given charity would be better served by larger up-front donations.

Since we’re more likely to part with our money passively than actively, these affinity cards do ensure that we give something. And when thousands of people give a little, the benefits can add up to a lot. Target, for example, has generated over 19 million dollars for Take Charge for Education. The cards are also great conversation-starters. People like to show that they care, and they like to talk about the organizations they support. As word spreads, more card holders come on board, and more donations are generated.

Before you get an affinity card, you should be aware that they usually come with higher rates and fewer perks than other credit cards. Also, since your donations are made as part of a contractual obligation, they are not tax-deductible. Still, it feels good to add your drops to the financial bucket to help those in need, which is why affinity cards are still hugely popular despite their less-than-stellar terms and conditions. Some of the most popular affinity card causes include child welfare, animal welfare, crime, public education, and environmental causes.

If you’re the type to give big, you’re probably better off making a donation to the charities of your choice and keeping your regular credit cards. But if you’d like to donate some spare change just by using your credit card for everyday purchases, an affinity card could be the right choice for you.

by: Janna Weiss

First, keep only the credit cards you really need. If you already have credit cards or plan to apply for new ones, be sure to read the fine print on the agreement. Credit card companies will slip details into the agreement that aren’t easily noticed. Read every word, and call customer service if something seems too vague.

Once you start using your cards, keep an eye on your interest rates. You might be paying a punitive rate if you’ve made late payments, or an inflated interest rate if you have cash advances from your credit card. Be clear about which types of charges incur interest rates above your base rate. And if you see that your interest rate has gone up without explanation, call your card company to ask why. They are usually very helpful in explaining charges, and will negotiate better terms with you if you stick to your guns (and possibly threaten to take your business to one of their competitors). You can also ask the card company if they will let you opt out of the higher interest rate, but this means that you can only pay off the balance of your card at the previous rate, not make new charges.

It should go without saying, but do pay your bills on time. Earlier is even better. Some cards start racking up late fees if you’re even one day late with the payment – ouch. Those fees are on the rise, too. It’s best to pay credit card bills as soon as you get them.

Don’t neglect your other bills, either. You don’t want bruises on your credit score because you didn’t pay your bills on time. Reports of default on your credit report can cause your credit card rates to rise. To be safe, check to see if you can set up automatic online payments for your bills. This will ensure that your payments are made in full, on time, every month. (Just be aware that fees sometimes apply for this method of payment.)

And if you’re a good customer who makes timely payment, don’t forget to call your credit card company to request better terms. Consider how much delinquent debt there is in America right now, thanks to the sub-prime mortgage crisis. Creditors are reporting record defaults. Your credit card issuer should value good customers. Let them know that you value good service. Competition is stiff in the credit card world, and they will want to keep your business. As long as your demands are reasonable, the card companies should agree.

If 2007 took a toll on your finances, you’re not alone. But with a fresh perspective and a few new habits, you can shine up your credit in the new year.

by: Janna Weiss

That’s why it’s so important that you establish disciplined credit card practices from the first day you get your card. Responsible credit card use can build you a great credit history and help you toward a great future, but reckless credit card use can throw your finances off-course for years. Start on the right foot with your credit card, and side-step the worries. The most valuable piece of advice you can when it comes to responsible credit card use is so simple that many people overlook it: never carry a balance. Especially when you’ve only just started using your credit card, you should never make purchases with it that you don’t already have the money to pay off. This might seem counterintuitive. If you already had the money, why would you be using a credit card? Learning to use your credit card intelligently when you first start out requires a little re-thinking of what your credit card can provide you. You should think of it as a means to build good credit, possibly get rewards points, and a source of funds for extreme emergencies—and that’s all.

Most credit cards available to first-time users don’t have the best interest rates, so overextending your budget on your first card is never a good financial move. You’re paying more interest on the loaned money than you should, and by paying more interest, you’re making it less likely that you’ll be able to pay off your balance. If you can’t pay off your mandatory minimum, you’re incurring even heavier fees, making it even less likely that’ll you’ll be able to pay off your balance. To add insult to injury, if you’re falling behind on your payments it will affect you’re credit score, making it less likely that you will be able to get a credit card or loan with a better interest rate in the future. Sound like fun?

This might all sound like an extreme example, but exactly this is happening to more and more people every day. Don’t get caught up in the cycle of bad debt. Keep careful track of your credit card expenses, only using it when you are certain that you will have the money to pay your balance at the end of the month. Make sure that you always make your payments, and always make them on time, to avoid costly an avoidable fees and penalties.

It might seem difficult, but a little discipline will go a long way toward protecting your financial future. By using your card sparingly, you will be building a stronger credit history, making yourself eligible for better credit cards and loans with lower interest rates. Then, if you absolutely have to, carrying a balance won’t be as costly. Not only that, but you will be teaching yourself highly valuable budgeting skills that will help improve your quality of life, for the rest of your life. So which sounds better—budgeting carefully, or a new flat-screen tv that you wouldn’t be able to afford without your credit card?

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