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ISSUE #195

Email Newsletter  

  February 3, 2009  

Scott Bilker
Scott Bilker, founder of DebtSmart


This letter is coming to you one day early because I'm heading to Ireland tonight for four days. It is my first time traveling to Europe. I'll be able to report firsthand on the debt situation over there. ;) Especially after a few pints of Guinness.

Did you know that credit marketers can review your credit file? Yep, they can, and they do--mostly for the purpose of pre-screening you for their credit offers. I must say that I enjoy getting these credit offers. I find them to be a great source of credit options. However, you may not feel the same way. So, if you're tired of getting offers in the mail and having your credit reports reviewed when you're not looking for credit, you can opt-out officially here.



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In This Issue

Cool Quote
Pickup Payments
STATISTIC: Debt Collector Complaints
The Case for Walking Away
Avoiding The Credit Card Over-The-Limit Fee
"Another bank 'shafting,' courtesy of BofA"
Banks Make Rewards Plans Less Rewarding
Household Math™: Before the tip
Teaching children the value of money
The new rules of car buying

Cool Quote

"There is no class of people in the world, who have such good memories as creditors."

--P.T. Barnum

More cool quotes from past issues

Pickup Payments
by Scott Bilker

Mr. Bilker,

I really enjoy reading your newsletter and have gotten several good tips from it. My problem is that I have a Dodge pickup (pre-owned) which I owe about $13,000 on, and it is only worth around $9,000. I am about halfway through a five-year loan and am paying $524.00 a month.

I married recently and am having a baby soon, so I need to find a way to either get rid of this pickup or lower the payments. What would you recommend?

Any advice would be appreciated.

Thank you.


Finish reading the article

STATISTIC: Debt Collector Complaints

In 2007 consumers filed 70,951 complaints against debt collectors up from 13,950 in 2000. The bulk of the complaints were for the misrepresentation of the amount, nature or legal status of the debt by demanding a larger payment than was permitted by law--a violation of the Fair Debt Collection Practices Act (FDCPA).

More credit card and debt statistics

The Case for Walking Away

Normally I'd say suck it up, cut spending and repay your debt. But not if you're going broke.

In January, we're supposed to sit down and organize our personal finances. This year I'll risk my good-girl reputation with a subversive idea: go bankrupt in 2009. If you're reaching the end of your rope, don't try to hold on. Save what you can.

It's painful and humiliating even to consider bankruptcy, let alone join that crowd in the courthouse corridor, waiting for your name to be called. Normally I'd say suck it up, cut spending and repay your consumer debt. But that's not always possible, especially with an economic tsunami rolling over your home, job and health insurance.

See story here

Avoiding The Credit Card Over-The-Limit Fee
by Jeffrey Strain

One of the most troublesome credit card fees that you can run up against is the over-the-limit credit card fee. Unlike most other credit card fees where you pay one time for the offense, after you breach your limit, you can end up paying this fee month-in and month-out. Once you exceed your credit card limit, the over-the-limit fee is an automatic, computer-generated fee that will be applied to every statement until you bring your credit card balance below your limit. While these fees typically range between $25 and $35, they can be as high as $40, which means you will be paying $300 - $500 a year for this fee all by itself.

This fee comes into play when you try to make a purchase that is over the limit that has been set on your credit card. When this happens, the credit card issuer has three choices...

Finish reading the article

"Another bank 'shafting,' courtesy of BofA"

Dear Scott:

You wrote and thanked me for my earlier message about Chase's latest "sneaky trick" to raise revenue by shafting customers, so I thought I'd let you know the latest we're experiencing.

Bank of America tried to raise the rate on a "life of balance" deal I had with them from 7.9% to 16.49%. When I called and complained, they said I could reject the change as long as I did not use the card again. I said okay.

Suddenly, a few days later, we got SIX letters--one for each Bank of America account my wife and I had (mainly as a result of acquisitions of other banks with whom we had credit cards by BofA over the years). Three accounts that had just been paid off fully because the teaser rates were about to go up were closed. The other three that had "life of balance" rates all had their limits reduced to just above what we currently owed.

So effectively, my wife and I now have no BofA credit cards any more. This after many years of always paying early and above the minimum - to them and everyone else. Not a single late payment on our entire credit reports. Pretty amazing!

It appears that they've taken the attitude that if they can't abuse their customers, they don't want them. Fortunately, as was the case with Chase, this doesn't cause us any difficulty in the short run. However, I feel for the others to whom I'm sure they're doing this and can't easily escape. Disgusting!

Thanking you for your excellent work,
Gerry Manning

Learn how to "Talk Your Way Out of Credit Card Debt"

Banks Make Rewards Plans Less Rewarding

The latest currency devaluation is happening in your bank's and credit card's reward programs.

Airlines have been devaluing their frequent-flier programs for some time, stepping up the number of miles required to qualify for free flights and adding restrictions. But until recently, banks had still been sweetening their rewards programs -- adding more flexible redemption options and bigger cash-back bonuses to snag customers.

Now, with the economy contracting and fears rising about credit-card delinquencies, banks are trying to cut costs and bolster profits. Many card issuers have been testing shorter expiration periods, higher redemption fees or earnings caps on rewards. "You'll start to see all of those put into place starting in 2009," says Megan Bramlette, a London-based managing associate at Auriemma Consulting Group.

See story here

Household Math (TM): Before the tip
by Scott Bilker

Rachel was telling Jack about her romantic date with Dave. Jack is a man that is more concerned with the cost of the frolic than the details of their amorous evening. Jack asked Rachel how much the tab was for food only (tax included). Rachel was too focused on Dave to remember the amount for the actual dinners, but she did remember tipping the waiter 16% and that the final bill, tip included, was $159.50. Jack was quite amazed that Rachel would remember so much but not recall the cost of the dinner before the tip. Of course, Jack knows his math and can easily figure it out. Can you? What is the cost of the dinner before the tip?

Answer this math problem

Teaching children the value of money
by Gregory Thomas

We take it for granted that children know how money gets into our wallets. The tips below will guide you through teaching your children the value of money.

Now I'm not referring to the value of stocks and bonds, compounding interest, or the current market value of a U.S. dollar.

What every child should be taught at some time is: the purpose of jobs (how we earn money), saving for goals (how to save money), limit needless spending (how to budget).

It's up to you to decide when and at what age it is appropriate to discuss these topics. But keep in mind that if you don't teach them the skills to make educated, responsible decisions with their money, you will be holding back a valuable lesson that should be taught.

Learning how to successfully manage money is a skill they will have for life...

Finish reading this article

The new rules of car buying

You've seen the headlines: automakers on the brink, sales slowing to a crawl, credit tighter than ever. Yet amid all of this gloom there's a silver lining: deals of a lifetime. But to snag one, you have to learn how to navigate today's uncharted market.

You can hardly escape the grim news surrounding the car industry: an 11th-hour federal loan package to help General Motors and Chrysler survive to the new year, frugal consumers shying away from big-ticket purchases - especially four-wheeled ones - and tighter credit making it tougher for the few willing buyers to borrow. November auto sales plunged 37% from a year earlier, according to Autodata, a sales tracking firm. Even after production cutbacks, ports are stacked high with new cars that can't fit on dealer lots.

See story here

The author(s), Press One Publishing, and DebtSmart.com shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly by the information contained in this email newsletter and/or at the DebtSmart.com website. The information, methods and techniques described may not work for you and no recommendation is made to follow the same course of action. Every effort has been made to verify the accuracy of all content contained herein. However, there may be mistakes; typographical, mathematical, or in content. This email newsletter and the DebtSmart.com website have been created for your entertainment only. You must always seek the proper professional advice before taking any financial or legal action. You have been warned. Copyright ©2009 Press One Publishing. All rights reserved. Please do not reprint, or host on your web site, without explicit permission. However, if you found this newsletter helpful, we grant you permission, and strongly encourage you, to e-mail it to a business associate or a friend. Thank you.

The DebtSmart Email Newsletter, ISSN 1538-6740, is written and published by Scott Bilker and edited by Larissa Bilker and Denise Troy. Please contact comments@debtsmart.com with any comments, problems, or concerns. (See the very bottom of the email to make changes to your subscription.)

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