Debtmerica Debt News

Identity theft scam could create credit card debt for power company's customers

Tuesday, July 20, 2010 10:00 AM

Customers of a major power company in Utah are being targeted in an identity theft scam that could cause them to rack up thousands in fraudulent credit card debt.

According to a report in the Salt Lake City newspaper the Deseret News, identity thieves are trying to rip off customers of Rocky Mountain Power by calling their homes posing as employees of the power company. The criminal typically asks for the customer's credit card number to prevent an interruption of service at their home. Often, they say the reason for the problem is the customer's last check did not include a signature.

"These calls are in no way associated with our company, and we want to make sure our customers are aware that anything that seems unusual is just that — unusual," Karen Gilmore, vice president of customer services for the company, told the paper.

Consumers should be aware that legitimate representatives of any company would never call to ask for credit card information. Businesses that do take sensitive financial information over the phone would typically have several safeguards in place to reassure consumers that they're really with the company. Add a comment

Two senators push for greater protection from the Fed on credit card debt

Tuesday, July 20, 2010 10:00 AM

In recent months, many consumers may have found themselves hit with penalty rates and fees for a late payment, which has only added to their ever-mounting credit card debt. And while new Federal Reserve rules will soon be enacted to help alleviate the problem, two U.S. senators say they don't go far enough.

According to a report from the Associated Press, Senators Charles Schumer of New York and Tom Harkin of Iowa wrote a letter to Federal Reserve Chairman Ben Bernanke, urging him to add extra rules that would prevent credit card companies from hitting consumers who are behind on payments with exorbitant penalty rates.

"Credit card companies can still double or triple the interest rate when a consumer falls two months behind on payments," they wrote.

The senators say that if the new rules, which go into effect on August 22, are not altered to comply with their request, they will seek legislation to compel the Fed to change them, the AP reported.

While these rules do not govern penalty rates, they do prevent credit card companies from charging excessive penalty fees. Add a comment

More Americans' retirement savings to fall short

Monday, July 19, 2010 10:00 AM

According to the latest projections, it seems as though many Americans are at risk of running out of savings within a decade of retirement.

According to the latest report from the Employment Benefit Research Institute, a nonpartisan group that monitors how financially ready Americans are for retirement, at least 43 percent of people in all three age groups measured could hit financial problems early in retirement. A significant number of Early Baby Boomers (47.2 percent), Late Boomers (43.7 percent) and Generation Xers (44.5 percent) are considered "at risk" for running out of the basic amount of savings required to provide for themselves and cover medical expenses for the uninsured within 10 years, assuming a retirement age of 65.

The report said 70.4 percent of households in the bottom third of pre-retirement income are "at risk" for this eventuality, and 41.6 percent of the middle third are in the same situation. Only 23.3 percent of the highest-income group are "at risk."

Many Americans may have run into money troubles thanks to a number of factors, like high unemployment rates or mounting credit card debt, that caused them to dip into their retirement savings to make ends meet. Add a comment

Falling credit card debt causing lenders to introduce incentive programs

Monday, July 19, 2010 09:00 AM

As more people across the country are paying off their credit card debt, it is forcing lenders to more aggressively pursue new accounts.

According to a report in the Chicago Tribune, credit card companies haverecently begun to roll out new incentive programs in an attempt to entice new accounts and poach consumers that keep their balances with competitors. Lenders have also started marketing those new programs rather aggressively.

The report said that Discover Financial Services is increasing its marketing budget for the third quarter to levels not used since the same period of 2008, and Chase launched its new "Ultimate Rewards" program with a nationwide ad campaign earlier this month.

Fortunately for consumers, the new rates they get for opening or switching their account to a new lender will have to last for quite awhile. The new Credit Card Accountability, Responsibility and Disclosure Act requires all lenders to maintain introductory rates and incentives for at least a year. Banks will also have to give significant notice before they can change those offers. Add a comment

New requirements for credit report checks worry mortgage lenders

Friday, July 16, 2010 01:00 PM

When Fannie Mae announced it would require a second check of a consumer's credit score before it would allow them to close on a mortgage, it may have given Americans some cause for concern.

According to a new report from the Washington Post, it wasn't just consumers who were worried. Mortgage lenders, too, say that this new requirement is causing logistical nightmares that are slowing home sales at a time when the housing market is as bad as it's been in over a decade. They say even small, short-term debts can affect a consumer's credit report enough to cause them to be rejected.

The report said Fannie Mae is now already reviewing its policy thanks to the flood of feedback from lenders, and will offer new guidance by the end of July. The company also noted that it didn't intend to actually require the second credit reports, but to merely emphasize existing policies related to due diligence.

According to a report in the Chicago Tribune, Fannie Mae also recently tightened restrictions for appraisals of single-family homes because of a number of questionable loans recently given out by lenders. Add a comment

Consumers with credit card debt get help from new financial reform bill

Friday, July 16, 2010 10:00 AM

While many Americans have piled up thousands of dollars' worth of credit card debt in the months since the recession began, there is help on the way thanks to the new financial reform bill.

The bill, which passed the Senate 60-39, will add new help for Americans in the form of the Consumer Financial Protection Bureau, which will operate as part of the Federal Reserve System. The new body will help to govern the way banks can lend to consumers, and will have the unprecedented ability to rule on rates and fees that it deems harmful.

"From now on, every American will be empowered with the clear and concise information you need to make financial decisions that are best for you," said President Barack Obama, who is expected to sign the bill before July 24. "It will reinforce the new credit card law we passed banning unfair rate hikes, and ensure that folks aren’t unwittingly caught by overdraft fees when they sign up for a checking account."

In addition to credit card lending, the new bureau will have oversight of several other types of loans, including mortgages. Add a comment

What your credit score means

Thursday, July 15, 2010 11:00 AM

Most consumers know that they have a credit score, and many are aware of what it actually is. However, a lot of people probably don't know exactly what that number means.

As more consumers' credit scores sink below 650, the basic cut-off rate between prime and subprime borrowers, it's important that they know the consequences of their lower score. According to a new report from consumer financial advice website Mint.com, consumers with a score under 650 are likely to be denied for credit or, worse, given loans with seriously unfavorable rates and terms.

Because many Americans may have ugly looking credit reports, it should also be noted that those negatives will stay on the report between seven and 10 years. However, bad marks do eventually have to be removed from it, and as negatives age, they matter less to lenders, meaning that credit scores can improve over time all by themselves.

However, there are steps consumers can take to improve their credit scores, including making their payments on time - which accounts for 35 percent of a score by itself - and paying more than the minimum on their credit card bills. Add a comment

Alliance says it wrote off less credit card debt in second quarter

Thursday, July 15, 2010 09:00 AM

Many credit card companies across the country have seen an increase in the rate at which they've written off delinquent credit card debt as irretrievable in recent months. But one company that issues cards for major retail chains actually reported a decrease in its charge off rate.

Alliance Data Systems, which controls credit card and loyalty rewards programs for chains like Ann Taylor, Victoria's Secret and Pottery Barn, said that the rate at which it wrote off credit card debt as uncollectable declined in the second quarter of the year to 9 percent. That rate was at 9.8 percent for the same period of last year, and 9.4 percent for the first quarter of 2010.

Like most major lenders, Alliance also reported a drop in delinquencies. Payments that were 30 days behind or more dropped from 5.9 percent through June of 2009 to 5.4 percent for the same period this year.

However, those lenders have reported lower delinquency because they have written off those debts, whereas Alliance has managed to lower both delinquency and charge off rates. Add a comment

June retail sales fall as consumer spending dips

Wednesday, July 14, 2010 01:00 PM

Sales at retail and food service businesses declined slightly in June, thanks to a drop in consumer spending.

According to the latest figures from the U.S. Census Bureau, retail and food services had sales of $360.2 billion, a decrease of 0.5 percent - though that number is within the margin of error - from May. The figure, however, is a 4.8 percent increase from the same month last year.

The Census Bureau said that retail and food services increased significantly for the quarter, despite the June losses. Sales were 6.8 percent higher than they were in the same quarter of last year.

According to a report from the Wall Street Journal, most economists were not surprised by the losses in sales. Consumer spending declined, they said, because of a combination of volatility in the stock market and the continued elevated levels of unemployment.

One economist said that the underlying numbers showed this decline was a long time coming because "household balance sheets [are] still over-leveraged," and that's the largest determining factor in consumer spending growth. Add a comment

Peer-to-peer lending offers help with debt consolidation

Tuesday, July 13, 2010 09:00 AM

Many consumers that have been considering debt consolidation might have found it difficult to get a loan from traditional banks thanks to the tighter lending restrictions forced by the economic downturn.

Butthere is a new trend that has helped many Americans get the money they're looking for called peer-to-peer lending. According to CBS News, the movement is taking hold because consumers now recognize it as a cheaper alternative to borrowing from banks for a number of reasons. While peer-to-peer lending sites do take into account credit score, credit history, income and employment situation, they have less stringent restrictions for who they will lend to, and lower rates as well.

While there are fees involved with using these sites, those seeking a loan for debt consolidation should be aware that they are typically lower than those credit card companies charge for balance transfers, the report said. There's also no fee for paying back the loan early.

According to the consumer advice website Bankrate.com, debt consolidation loans are typically difficult to pay off when they are issued through banks. Peer-to-peer lending might alleviate some of those troubles for borrowers. Add a comment

Many New Jersey residents face bankruptcy

Monday, July 12, 2010 01:00 PM

Millions across the country have faced the possibility of having to declare bankruptcy. For increasing numbers New Jersey residents, that possibility is becoming reality.

According to a report in the Times of Trenton, the number of bankruptcy filings in the state increased considerably - by 27 percent - in the 12-month period ending in May from the previous year. Those numbers hit their peak in March, when 4,166 state residents filed for bankruptcy. That was the highest monthly total since the federal bankruptcy laws were changed four years ago.

Exacerbating the problem is that many of these filings have been by individuals, and that number is climbing all the time. Salaries have stayed flat, and many homeowners have lost their jobs, which has wiped out their savings as their income dried up. That leads to more credit card debt, making their financial situation worse every month.

Nationwide, consumer bankruptcies increased steadily in the first six months of the year, climbing 14 percent over filings in the same period last year. But according to the American Bankruptcy Institute, there have been three months of slight decline in the number of bankruptcy cases. Add a comment

American credit scores sinking all the time

Monday, July 12, 2010 01:00 PM

More consumers are seeing their credit scores drop off this year.

According to a report from the AP, which cited new statistics provided by FICO, 25.5 percent of Americans - about 43.4 million - have a credit score below 600, meaning lenders view them as a risk, leaving them unable to qualify for credit cards, auto loans and mortgages. Over the last two years, the number of people in the lowest credit score category increased by about 2.4 million.

The report also said that this trend is likely to get worse before it gets better due to millions of unemployed Americans going longer without full-time work. Millions more face foreclosure, which can lower a credit score by 150 points. An ugly credit report takes considerably longer to repair than it does to ruin.

A new report from Fox Business said that new changes in lending laws are designed to help consumers out a bit, but that they will also force lenders to tighten their restrictions even more, locking out larger numbers of Americans. Add a comment

Consumer spending declines despite holidays

Friday, July 09, 2010 11:00 AM

Thanks to worries over the state of the economy, even holiday discounts weren't enough to push consumer spending forward significantly.

According to a report from Marketwatch, a number of retailers saw June sales push ahead slightly as consumers shopped both for the holiday discounts and as a result of rising temperatures nationwide, while others flagged unexpectedly. Department stores led the way, with retailers like J.C. Penney, Macy's and Nordstrom posting better-than-anticipated sales numbers, though Kohl's fell short.

Discount retailers, on the other hand, saw sales fall short of expert forecasts, Marketwatch said. Target's sales rose, as did those for Costco and BJ's Wholesale, but those increases were less than they expected.

Marketwatch said that these results mean retailers will have to increase their promotions for the back-to-school season, which is the second-largest sales period after the holiday season.

A report in the financial times said that June was an important month because it comes in the middle of the quarter and numbers from it will determine whether retailers will have to significantly discount inventory to offload it before the end of July. Add a comment

Credit card debt getting worse, despite numbers

Friday, July 09, 2010 09:00 AM

All the latest numbers make it look like a success story. Credit card debt and delinquencies have declined in recent months, and experts hail these numbers as a sign that Americans are pulling themselves out of financial trouble.

But a new report in the Wall Street Journal says a deeper look tells the opposite story. The real reason for these sharp declines over the past few months, despite rates of joblessness remaining rather high, is that credit card companies are simply writing off long-delinquent debt as money they will never collect.

The evidence, the Journal says, is found in the quarterly numbers from the Federal Reserve Board and the Federal Deposit Insurance Corporation, which show that despite $19.5 billion in debt reduced in the first three months of the year, $18.7 billion of that - almost 96 percent - was actually written off as being irretrievable.

A Forbes report on the drop in debt and delinquency said that unemployment and delinquency figures are usually closely connected, but that trend didn't hold last month as delinquencies dropped while joblessness held steady. Add a comment

Consumers can lower their credit card interest rates

Thursday, July 08, 2010 09:00 AM

With credit card debt mounting and bills piling up, many Americas may wonder what they can do to help their financial situations.

According to an article in U.S. News and World Report, one thing that consumers may now consider is trying to lower the interest rates they pay. There are several ways to attempt to do so, but the report says the easiest is to simply call the credit card company and ask for a lower rate. If a consumer mentions that they saw a low rate on a card from another company, their current lender may be inclined to offer a lower rate in an attempt to keep the business.

However, this does not always work, and consumers should be prepared to transfer their balance to a card with a low introductory rate. Often these new rates last for a year, and allow consumers to pay off nothing but the principal for up to a year. There is, however, often a fee associated with balance transfers.

Consumers should be aware that lenders have tightened requirements for borrowers thanks to the new credit card laws, which can complicate matters for consumers because new rates may simply be impossible to find. Add a comment

Consumer spending drops in June

Wednesday, July 07, 2010 12:00 PM

Despite the fact that there have been a number of signs that the economy is slowly improving, daily consumer spending dropped between May and June.

According to a new poll from Gallup, Americans spent $67 per day during June, in stores, at restaurants and gas stations, and online. That number marked a decline of $5 from the previous month, but is up $6 from the same month in 2009. The $67 a day is more or less in line with recent months, which are near the highs for 2009. But it is well below the standard set in 2008 before the recession hit, when consumers spent between $81 and $114 a day.

Gallup said that Americans in the East spent less per day in June than either the previous month or June of 2009. Those consumers spent $62 a day, down $13 from the previous month and $3 from last year. Spending in the Midwest, meanwhile, increased dramatically from last year.

A report from financial news website 24/7 Wall Street said that the data suggests the job market is improving. Because Gallup polls are self-reported by consumers, this may signal that confidence is on the rise. Add a comment

ABA: Credit card debt declines in first quarter of 2010

Wednesday, July 07, 2010 09:00 AM

Yet another sign that the American economy is starting to recover came recently and showed that more Americans are paying off their credit card debt on-time.

The most recent report from the American Bankers Association said that the number of consumers with delinquencies on their bank-issued credit cards dropped to 3.88 percent in the first quarter of this year. The ABA defines a delinquency as a payment that is 30 days or more overdue.

The report said that this is the first time the national delinquency rate on such cards has dropped below 4 percent since the second quarter of 2002, and is also slightly below the average delinquency rate over the last 15 years, which is 3.93 percent.

"It's clear that consumer balance sheets are improving. People are borrowing less, saving more and building wealth. These are all positive signs," ABA chief economist James Chessen said.

Unfortunately, unemployment remained high at 9.5 percent in June, so this trend may not necessarily continue into the second quarter of the year. Add a comment

Jobseekers' credit histories shouldn't be an issue

Tuesday, July 06, 2010 01:32 PM

Many out-of-work Americans who are actively looking for jobs may find it hard to get a callback or an interview despite meeting many of the requirements set forth in the job listing.

One reason could be that about 60 percent of employers examine the credit reports of their applicants, and if one has a spotty or bad credit history, they can be disregarded very easily, according to the San Francisco Chronicle. This practice is unfair because many out-of-work people have bad credit reports because they don't have a job, which creates an unfortunate Catch-22: They can't get a job because not having a job ruined their credit.

Because more than 6.5 million Americans have been unemployed for six months or more, the paper says, those people may pay more bills late. Doing so can seriously damage a credit score and make a credit report look awful.

Lawmakers in Oregon felt the practice was unfair as well, and passed a law prohibiting it as of July 1. According to Oregon Business, several other states across the country have either passed or introduced similar legislation. Add a comment

Hacking strikes hotels hardest

Tuesday, July 06, 2010 10:00 AM

Consumers that stay in hotels may sleep soundly, but when they do, they have opened themselves up to a serious hacking threat.

Hotels are targeted by hackers looking for credit card information more often than any other industry, according to a new report in the New York Times. A study by a data-security consulting company found that 38 percent of all credit card hacking cases in 2009 involved hotels, while the financial services industry (19 percent), retail (14.2 percent) and restaurants and bars (13 percent) came in well behind.

One security expert told the paper that hackers zero in on hotels because the industry has a well-earned reputation for lagging behind others in terms of protecting, storing and transmitting its customers' credit card data starting with the point of sale. He added that this information is available to hackers using even "the most simplified methods."

Those who travel a lot are more likely to fall victim to identity theft because of the infrequency with which they check their statements or their credit report. Because of this, hackers can get away with fraudulent charges for months before their victim notices a discrepancy. Add a comment

How to finance college without drowning in debt

Tuesday, July 06, 2010 10:00 AM

As any consumer who has tried to pay their own or someone else's way through higher education can attest, getting a degree is expensive.

But there is a way for consumers to pay for college without taking on large amounts of credit card debt and massive private student loans, according to television station KNDO in Yakima, Washington. The first and most important step, the report said, is understanding the "true cost" of a college degree. Tuition is expensive everywhere - though public universities are more than $11,000 cheaper than private schools per year, on average - and those costs don't include things like housing, meals, textbooks and supplies.

The station also recommends consumers look into getting help from the federal government to pay for tuition. Filling out the Free Application for Federal Student Aid can open the door for nine federal student aid programs and more than 600 others administered by states and various institutions. Students can also seek scholarships, and not just those for academics. The report says that there are scholarships for everything from left-handed people to those whose parents work in certain professions. Anyone interested in getting a scholarship should seek them out online.

The report says that there are long-term savings accounts called 529 education savings plans that can help those who want to plan for the future education of young family members. The earnings of these accounts are tax-free in every state but Alabama. Further, there is grant money available for some students, though these are often not big enough to cover the entire cost of an education. A recent law was passed that limited federal Pell Grants to $5,500. The upside of these grants, though, is that they do not have to be paid back.

And for those currently in college looking to save some money, the report says that reining in credit card spending, or cutting it out entirely, is the best way to do it. Credit card debt is not easy to pay off thanks to high interest rates, and, because of the soaring cost of education, bills can pile up in a hurry even if students try to live within their means.

A 2009 poll from Sally Mae said that 92 percent of undergraduate students with credit cards use them to pay for things like books, supplies, and other school-related expenses. Thirty percent use them to pay their tuition as well. Add a comment