Archive for Debt Relief
New Limits for Credit Card Payment Penalties
Posted by: | CommentsHi Friends,
Sorry I’ve been out of the loop lately. My Mom has been having some health challenges and it’s taken up much time. I will continue the Kiplinger tips this week but in the meantime, I wanted to share this article from Bottom Line Personal.
New Limits for Credit Card Payment Penalties
Josh Frank
Center for Responsible Lending
The Federal Reserve’s new limits for credit card payment penalties took effect August 22, which means that penalty fees for missing a payment on your monthly balance must be capped at $25 for the first violation, but this cap can rise to $35 if you miss paying again within the next six billing cycles or if your credit card issuer can prove that a higher charge is justified. Also, late-payment fees and other types of penalties may not exceed the amount of the violation.
Example: If you are late paying a $20 minimum payment, the missed-payment fee cannot be more than $20, or if you are $10 over your credit limit, you cannot be charged more than $10 in penalty fees. In the past, penalties of $39 or more were common.
Bottom Line/Personal interviewed Josh Frank, senior researcher, Center for Responsible Lending, Durham, North Carolina.
Kiplinger Financial Truth or Bunk-Round 2, Question 1
Posted by: | CommentsI Pinged this Kiplinger true/false quiz a couple of days ago, but it’s such a good one that I thought I’d put the questions/answers on my blog.
Question 1 : You should get out of debt before you start investing.
False is correct. The principle is a good one, but taking an all-or-nothing leap isn’t realistic. Paying off all your debt – student loans, mortgage, etc. – before you start investing for retirement will force you to miss out on years of compounding returns. A better rule: Pay down high-interest debt first. After all, it makes no sense to invest your money at, say, an 8% annual return when you’re paying 18% interest on your credit card.
To see the entire quiz: http://content.kiplinger.com/quiz/truth_bunk_2/index.html?qid=33
We always discuss this in our workshops. Start saving NOW (even a nominal amount) and continue paying off those high interest cards. As you pay off one card, reallocate the funds spent on that one to the next card. Eventually, you reallocate all the money you were paying to your credit cards to your savings account. http://MoneyAwarenessProgram.com
What You Need to Know About Debt Settlement
Posted by: | CommentsI know. You see the ads on TV where they tell you if you have more than $10,000 or $15,000 in debt, they can “settle” your debt for pennies on the dollar. Can they? Yes and no — leaning heavy on the no side. Can you settle your own debts? Absolutely.
Debt settlement means that a lender will accept less than the outstanding balance on a delinquent account as payment in full.
It is a negative on your credit report/score. Reports may indicate “partial payment accepted,” or “debt settled for less than the full amount due.” Any negative payment history associated with the account will remain. Debt settlement is considered negative to the same extent as a charge-off or an account incuded in bankruptcy or reposession.
What many people don’t realize is that at the end of the year you will receive a 1099 from the lender showing the difference between what you paid and what you owed as “income.” It is taxable.
Does this mean you should never settle a debt? No. It means don’t enter ANY financial transaction until you fully understand all the ramifications involved in it.
No one can take better care of your money than YOU.
