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Holiday Credit Trap – Don’t Spend What Isn’t Real

This weekend I was sitting in a local restaurant enjoying a quick lunch with my wife. As we were waiting for our food to arrive I couldn’t help but over hear what the couple behind us was talking about. It was obvious they were planning out their holiday shopping strategy and it was clear they were planning on spending more than they had.

Using Credit Cards for Gifts

Christmas Credit Trap

During their conversation the wife pulled out her wallet and laid out a stack of credit cards. She took one in particular and called the customer service number on the back. So while she was eating she was also having a desperate conversation on her cell phone about how much her line of credit was and how much was available versus what was needed. She told the rep on the other end that she has some special gifts to purchase and anything they could do would be great. In the end the wife received the good news, credit limit was raised, great gifts would be had. But from my perspective the only thing being had was the middle aged couple that was leveraging their future in order to have a great Christmas in the family!

Granted I don’t know the whole story and may be judging without cause but at this time of year I fear that the meaning of Christmas has become how big, expensive, or cool a gifts we can get our families. And given the continued state of the economy we all ought to be more realistic about our gift giving and expect to receive less at the same time. The gift of yourself is always the best way to express gratitude and it’s free.

My gift to each of you is to ask you give yourself a gift of a savings account for next Christmas’ budget. If you already back online or need to sign-up for a savings account it is very easy. I recently opened an account at AMEX Savings just for this purpose. Think about putting 50 to 100 dollars in your account every month. And for next year you’ll have over $600 saved for purchasing gifts with cash or even give cash as a gift. How powerful is that?!?

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Which Creditor pulls from each Credit Reporting Agency?

This is absolutely the most asked question I get from visitors!

What credit reporting agencies are used by which creditors?

Many moons ago the banks used to isolate the credit file pulls/checks to regional providers near where applicants live. But with today’s low cost tri-merged files available to creditors, they are now tending to pull the tri-merge and go with the average or middle score. So if you are were Trans Union 640 – Experian 700 – Equifax 660, then likely 660 would be the score used for the decision.

With recent personal and member audits and investigations I think it’s not going to be easy to just isolate a single credit reporting agency partnered exclusively to any one credit card bank or lender. Keep in mind that the only possibility is a soft inquiry to a CRA that might result in a proactive credit card offer to a consumer as yourself. To that end it’s vital to always keep a high score with one of your credit reporting agencies.

The Creditmaniacs have been helping me keep a list of creditor/CRA combinations and this database is not 100% accurate for each of us. But it is a good starting place. Check it out here… CRA LIST.

Wish I had better news… live life richly today my friends!

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New Rules for Credit Cards

Credit CardsBy now you probably already have received notices of changes from the various credit card companies that you do business with. I received one last week in fact from one of the hold outs. Below are a few of the highlights and you can always go to the Fed’s website to learn more as well. CLICK HERE

Interest Rates and Fees
o 45 Day Notice: Companies must now give you 45 day written notice on fee changes. (Good)
o No Arbitrary Rate Increases in First Year: If you are a responsible card user the card companies can’t increase your rate. (Good)
o Balances Treated Differently: If your rate were to increase and you have purchases on balance from the old lower rate, your monthly rates are based on the rate of the original purchases. (Good)
o Over-Limit Fees: Now you will have to opt in for the fee if you would like the card company to allow you to make a purchase knowing you’ll be over limit. (Good and Bad)
o Fee Caps – Non Penalty: You cannot incur more than 25% of your credit limit in fees. (Good)

Payments
o Statements Enhanced: Statement will now show more info such as how long it will take to pay off a balance if you were to only keep paying the minimum. (Good)
o Payment Dates: You must have at least 21 days to pay the bill once it’s mailed and if the pay date falls on a holiday it is due the following business day. Cut off times for payments can’t be earlier than 5PM of the due date. (Good)

These are the major changes that I wanted to call out. However, one of the biggest changes is if you are younger than 21 years old you will now have to prove you can pay back a credit card before it is issued. A cosigner will be needed if not.

As always use your cards wisely and stay tuned to Your Personal Worth to learn more key strategies to keep yourself credit worthy while at the same time striving to thrive in the world “Debt Free”! You’ll hear more about this in future posts.

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