“Credit Cards” Archive
Dec
13
With the heart of the Holiday season rapidly approaching (or in some cases already over), gift giving and the expense of gift giving can often be a problem for folks. I know holiday spending was an issue for me, particularly when my illness wasn’t being treated properly.
This week’s poll poses the question: How Will You Pay for Your Holiday Shopping? With debit cards now providing much of the same purchase protection as credit cards, I’m curious to see if the majority of folks will use credit cards rather than debit cards. Next week’s poll will likely look at the question about how much do you spend and will have a spin associated with the answers to this week’s poll.
Oct
3
I think just about any reader of this blog will agree that having access to a credit/debit card and the associated convenience makes it much easier to spend, spend, spend, sometimes very carelessly and impulsively. I’ve also made my opinion clear that debt and weight gain/being overweight are also related and this led me to establish my other blog.
Well, a study conducted by Visa, detailed over at Bankrate.com, seems to confirm my hypothesis regarding credit cards and weight gain. As more and more fast food outlets have started accepting credit/debit cards, it appears that the fast food business is booming. McDonalds posted some amazingly strong sales month over month and year over year as seen in this press release
The study done by Visa not only confirms that people are much more likely to head to their local fast food drive-thru as they no longer have to worry about carrying cash with them. Not only are people more likely to hit the fast food outlets, but people will spend 30% more when they use credit/debit cards as opposed to a cash transaction.
As you might imagine, spending 30% more at a fast food outlet will also translate into more calories and a larger waistline. I can attest to the fact that when I used to frequent fast food outlets, I always ordered what I ‘wanted’ because I had my debit/credit card with me. I would imagine if I had only cash with me, I wouldn’t even head for the drive-thru and would likely avoid fast food altogether.
There are probably two lessons to be learned here:
- If you think you might hit a fast food outlet, use CASH only so you can limit your choices a bit
- Alternatively, avoid the fast food altogether and cook at home, presumably something healthier
Sep
24
Well it looks like I have some good news to report. My lawyer called me today and the collection agency who is handling my larger AMEX account–a balance of just over $12K–has apparently agreed to settle for 50% of the balance. In addition, they have also agreed to remove any negative reporting to the credit agencies once the payment is received.
My lawyer and I both agreed that no payment will be sent until the offer is confirmed in writing along with the agreement. The collection agency indicated they would faxing over the settlement letter tomorrow.
So for a little over 6K, I will eliminate nearly 12K in debt, which will absolutely jumpstart my running totals. We still have some work to do on the other AMEX account, but it will certainly feel good once both of those account are retired and I can focus on managing my monthly budget/finances.
Hopefully I will have a confirmation to report tomorrow. I am also considering posting the letter–details blurred out of course–so folks can see what a proper settlement offer should look like in case you don’t have the resources available to you to use an attorney.
Sep
18
Okay, so here is some more good news on the debt front. I spoke with Bank of America today regarding the unsecured credit account I have with them and they were willing to give me a 5-year payment plan at 4.5% interest. I do of course plan on paying this back sooner than 5 years but overall this is one of the better deals I have gotten from any of the banks.
Nearly all my debt is now at 6% interest or less with nearly 25K of debt with Citicards at 0%. I have done MUCH better than what any of the debt counseling services would have been able to do for me.
So, if you are a reader who finds yourself behind in payments or overwhelmed by the astronomical default rates–I had one as high as 34.99%–here is my ‘playbook’ for you:
- Before calling any creditors in an attempt to negotiate, spend time gathering your financial picture, i.e. your net income and all expenses. If you already have a budget, like I now do, this should be an easy exercise.
- When you call the customer service number, be prepared for the ‘hard sell’ to make a payment today to bring the account current etc. Calmly but assertively explain that you are experiencing and financial hardship and are looking for a long-term solution.
- My experience has been you will then be transferred to a special department that handles these types of situations. Be prepared to share your financial information, i.e. expenses and income. You DO NOT have to tell them your employer, no matter how hard they insist. If the person refuses to proceed without that information, ask for a supervisor.
- If you are indeed in a financial bind, the creditors I have worked with generally offer a 48-60 month repayment program with interest rates as low as 0%; I have 0% 4.5% and 6% programs active with Citicards, BofA and Chase respectively. Make sure you sign up for something you can actually afford as you don’t want to put yourself right back where you are. If the payment truly is too high, even if it MUCH lower than what you pay today, speak up and you might get an even lower rate assuming they are charging you interest.
- Be sure to ask about the fine print. What kind of communication will be sent? How are payments to be made? When are payments to be made? Most importantly, get EVERYTHING in writing.
- Ask whether or not your account is eligible for re-aging. In a nutshell, this process will clear up those past due entries on your credit report after you make 6-12 months of payments ontime, but there are some limitations to this, some of which are federally mandated. Not all creditors will re-age accounts but it certainly doesn’t hurt to ask. Even if a creditor doesn’t agree to re-age initially, you can always write a letter after the fact asking for this. I have been successful with this technique.
Given how much better the deals I secured have turned out in comparison to the rates the credit counseling agencies were offering, my final piece is advice is to always try and negotiate DIRECTLY with the creditors first. Yes, some are more willing to work with you than others, but you need to try and think like a creditor. They DON’T want you going bankrupt or having things written off to collections as that almost always means less money for them. Keep this fact in mind and keep a level head and you can almost always reason with these folks; I did say ALMOST always as AMEX has made quite clear 
Aug
3
It has been a while since I have had any dealings with American Express so I wanted to keep my loyal readers (and my new ones) abreast of the situation. The latest, and most interesting development, was having my one other account with AMEX–which I have been paying on-time each month–sent to collections without any notification whatsoever. Fortunately, it was sent to the agency that my lawyer has already been dealing with so the negotiations should be swift.
As I reported in an earlier post, my lawyer had sent letters to the collection agencies asking for verification of the debts. To date, they have not responded and, as I come to find out, aren’t legally required to respond. This is interesting, given I have the legal right to dispute the debt under the Fair Debt Collection Practices Act (FDCPA).
Regardless, I have advised my attorney to start the negotiation process with both collection agencies. There are two key things that I would like to get from the process:
- Settlement of the debt for less than the total amount due as I simply don’t have the means to pay that amount in a lump sum.
- Deletion of any negative credit reporting to the major Credit Reporting Agencies (Equifax, Experian and Trans Union). This is commonly referred to as a “pay for deletion”.
My lawyer has indicated that both of these are quite possible, particularly given the amount of the debt I owe to AMEX. The process will probably take another few months to completely wrap up, so in the meantime I am stashing away funds so I can pay whatever settlement is reached in short order.
I will keep you all posted as things move forward.
CLARIFICATION: Although there is no legal time limit for the collection agencies to respond to the debt verification request, they cannot continue to pursue the collection of the debt until I am given a written verification of the debt.
Jun
8
Thank goodness for my legal plan and the fact that in a few days, I will not have to have any further contact, phone calls or otherwise, with the collection agencies that AMEX has assigned to my account. The first firm, is clearly an outsourced operation to India. The folks that call me sound like they are 10,000 miles away and have a clear Indian accent. The thing that most amuses me about this firm is that the representative’s name is Ken Smith; how nice of him to choose such an American name. This company, which will remain nameless for now, absolutely refuses to send me ANYTHING in writing regarding a settlement. They constantly try to pressure me into settling directly with them, without any review of documents by my attorney. Hmmm, I wonder why? Could it be that my attorney is going to abide by the law and also use her negotiating skills and drag this thing out a bit. Of course!
The other firm is equally as slimy but since these folks are located in New Jersey, they choose to take the east coast, no nonsense, rude, in your face approach which frankly carries no weight with me since I too am from the East Coast. I just let these folks read their ‘riot act’ and tell them ‘have a good day’ or ‘ you can speak with my attorney’. These folks claim that in order to be able to offer me a settlement of less than 50%, they require a documentation regarding my hardship. When I say ‘okay, can you send me that in writing’, you get the run around and excuse after excuse why they aren’t going to do that. My favorite line is ‘you are the debtor here, you don’t dictate terms’. That is where they are wrong. If these folks want to get paid, then yes, they will indeed have to negotiate and agree to some of my terms as well. They just try and talk tough and perhaps they think I am bluffing about having an attorney. Oh well, soon it will all be out of my hands and the only thing I will have to respond to is my attorney’s questions and emails. That will be a nice relief. I am a very strong willed, educated person who understands the law and my rights in these matters but I can certainly imagine how these firms try and strong-arm people who don’t know their rights and understand what these clowns can and cannot do. I’d put a collection agency up there with a used car salesman in a strip mall. You can’t trust them as far as you can throw them.
May
23
So I met with the attorney this morning regarding AMEX, who I have now fallen behind with by 60 days given their astronomical rates. She told me something I frankly expected, which is they won’t really want to deal with me until they get close to a charge-off situation. This is essentially what their internal collection folks told me without being explicit. So I have a few options:
- Go directly to Consumer Credit Counseling and enter a DMP
- Wait to see what can be worked out once AMEX feels they truly will not get paid from me. This means a black eye (perhaps a temporary one) on my credit report for sure. The other danger here is that my other cards, all of which are current could evoke a “universal default”, although Citibank and Bank Of America, at least on my accounts, don’t have this clause. Chase does but I have already had that account closed in an effort to keep my interest rate down
- Keep paying the other cards and do everything possible to get back on track with AMEX. This is unlikely given how much money they want from me at this point unless I make a withdrawal from my 401K: a possibility I am looking into. I would pay off one or more of my cards in hope of securing a good balance transfer rate; such a rate may or may not materialize
As I am not a homeowner, nor do I frankly plan or desire to buy anything in the next 3-4 years, the DMP is sounding like the more reasonable option to be honest. It avoids bankruptcy and will certainly get my interest rates down, including those with AMEX. I’m a little torn between waiting it out and playing hardball with AMEX, as they will inevitably try and work something out before charging it off to a collection agency.
On this matter, I’m seeking YOUR feedback. Did my lawyer give me bad advice? I’m really uncertain as to what to do. I’m willing to work hard, taking on extra jobs to get the debt paid off but AMEX is really screwing me up. With my credit already in the tank, I almost feel like it is worth waiting it out with AMEX and seeing what kind of settlement we come to.
UPDATE: Made use of my telephone legal services and have found an attorney who will make a proactive attempt to negotiate with AMEX, using my potential for bankruptcy as a lever. This is what I wanted. The worst AMEX could say is no, at which point I will consider other options, i.e. DMP.
May
23
This morning I will be meeting with my attorney to discuss options to deal with AMEX. I’ve made it clear to my attorney that I don’t want any kind of debt settlement or partial payment of the debt unless she feels this is the best way to go. I would only agree to some sort of partial, “lump-sum” payoff if AMEX agreed to report the account as paid in full and current. I anticipate we will be discussing several options during our meeting so I will try and keep an open mind about things. My meeting is at 11AM Pacific Time, so hopefully before the end of the day for those readers on the East Coast, I will have some news. If nothing else, I will be able to report what the go forward strategy is with AMEX. Look for an update sometime later today.
May
16
Okay, so I had an opportunity to speak with AMEX and they offered me 25.9% interest rather than the 30.24%. An improvement? Yes. That said, it isn’t what will allow me to get this debt paid off and allow me to meet my basic living expenses. So, next stop is the attorney to see what she can do for me. I have fallen behind on AMEX because the interest rates are astronomical and they are getting very impatient about getting paid. I got one of those “14 days or else” letters in the mail yesterday, which is another reason I am seeing an attorney.
I’m also contacting my family members to see if I can get a loan from them in order to pay off AMEX and get rid of these jokers once and for all. The fact that they are completely inflexible really annoys me. They honestly WOULD like to have me go through credit counseling or declare bankruptcy rather than try and work out something reasonable. Oh well, lesson learned. I will have to have credit again, but it won’t be through AMEX that is for sure.
May
16
I got a voicemail message this morning from AMEX regarding my request for a lower interest rate. The message read in part “I’d like to discuss your letter you sent to discuss a lower interest rate and payment arrangements”. Interesting, considering they mailed me a letter saying there was nothing that they could do for me. I’m not too optimistic but from a logical perspective it makes much more sense to work directly with me rather than getting lawyers or potentially a Credit Counseling Agency involved. I will be calling these folks during my lunch hour and will report back on my results. Wish me luck!
