Times are hard these days, trying to make in this world.
The creditors are calling. The bills are mounting. The panic is swelling. FACING A STACK of bills you can’t handle? Take heart. Despite the bad marks the credit counseling industry has been receiving lately, plenty of nonprofit organizations still remain true to their founding principle: helping folks get out of debt. Here’s how to get back on track. As Americans struggle to reduce debt, card companies are getting smarter about making us pay more. Merging your finances require a lot of work initially. Hope for the best and prepare for the worst…why you may need a prenup. A lot of investment guides will tell you that money-market accounts and CDs are the best way to go with your short-term money. But we won’t. We’ve found a reliable set of investments that pack a stronger punch. Taking a few easy steps will save you a lot of headaches — and arguing — in the long run. Here’s how to spend your hard-earned dollars wisely without running through your savings too quickly.
Slowly but surely, however, I’m paying those cards off. But as more people, like myself, dig themselves out of debt, the cards seem stacked against us. It’s appalling enough that the average annual percentage rate, or APR, on a standard credit card these days hovers around 13%, according to Bankrate.com. But worse, many people are still stuck paying rates of 25% or higher. And penalty fees can run as high as $39 a pop.
Does it seem as if you can trigger those penalties just by breathing these days? You aren’t far off: Over the past few years, credit-card companies have become increasingly dependent on the fees they charge users. In 2004, Americans paid a whopping $24 billion in credit card fees, according to CardWeb.com. That’s an increase of 18% over the previous year. So while it used to be that fees were applied to keep you on the straight and narrow, credit-card companies are now financially dependent on your breaking their rules — and paying the price. “It’s a fact that they are tacking on new fees and more expensive fees,” says Travis Plunkett, legislative director for the Consumer Federation of America. “Income from fees has become much more important for profitability.”
Credit-card companies are now required to disclose all their various penalties, including their penalty APR for late payments. They also need to state clearly (and in decent-sized print) the permanent rate on a card that comes with an introductory teaser rate. Most of this information is included in what’s known as the “Schumer” box (named after New York Democratic Sen. Charles Schumer), typically located on the back of an application.
But some consumer advocates say these rules don’t go nearly far enough. “It’s a bunch of baloney,” says attorney Howard Strong, author of “What Every Credit Card User Needs to Know.” “You can say in big letters, ‘I’m going to rip you off!’ or you can say it in small letters. It doesn’t make a difference.” Part of the problem, says Strong, is that credit-card companies are lightly regulated. Federal laws don’t control things like over-the-limit fees and late charges, he says, and the majority of credit-card companies are located in Delaware or South Dakota — two states that have lenient usury laws.
In all fairness, though, when you signed up for your credit card, you agreed to play by the rules of the issuer — who is, after all, giving you an unsecured loan. And while those rules may not be in your favor, they are indeed disclosed.
So do yourself a favor and read the fine print before you sign up for that Molybdenum UltraCard with the $65,000 credit limit and the 2.9% introductory APR. You might be surprised by what you find. And before you do, here’s my reader’s guide to that fine print — a list of the costly little devils often hidden among the details by credit-card companies.