10 Signs That You are Headed Into Credit Card Debt Danger
If you haven’t noticed, unless we make some drastic changes, our nation is headed into a literal Credit Card Debt tsunami. As credit has tightened and banks are seeing the errors of their ways, (i.e., easy credit approvals) more and more credit card companies are raising interest rates if you even smell like you are having financial problems.
The reverberating effects can be chilling; consumers are waking up and finding out that credit card debt has put them in the dreaded financial danger zone. There are some distinct signs to let you know if you are headed into trouble. Heed this advice and you’ll surely avoid the stress and strain that comes with credit card debt.
Credit Cards Nearly Ruined My Life
One credit card customer (I’ll call Bradford) wrote me to explain how credit card debt nearly ruined his life. He had a wallet full of credit cards, 15 in all! An American Express, 3 Visas, 3 MasterCard’s, 2 gas cards, 4 credit cards from major retailers and 3 credit cards from national jewelers.
All of Bradford’s credit cards except 2 of the jeweler’s cards had balances; eight of them were maxed out. Since he was only paying the minimum monthly payment on each account, it would be around twenty years before he would have most of the balances paid down. And that was provided that he stopped accumulating new charges.
What Happened To My Credit Line?
Bradford’s wake up call came one day when he attempted to make a major purchase (a vehicle no less) on a Visa credit card that had a line of credit at $10,500.00 and was declined. He called his credit card company to find out what was going on and that was the first time he heard about the company’s credit card policy. Every credit card company has one. It’s written in very small print and is always neatly tucked away so that it is hard to find and even harder to read.
In his case, the small print stated the credit card company had a right to alter his credit line and interest without notice, period and end of story. In an instant, in accordance with their policy, his bank chopped his line of credit down from $10,500.00 to $1500.00. Plus, they raised his interest rate from 8.5% all the way up to 23.75%.
Why? Because they ran a credit check, (which they have a right to do) and saw that Bradford’s credit card debt was no longer in a safe income to debt ratio. Right after that company cut his credit line and raised his rates, all of his creditors followed suit. Bradford was now in the credit card debt danger zone. In the rest of this session, let’s talk about how he got there. When Bradford took our test and failed; he knew he had to make changes and fast! To measure where credit card debt has taken you, take the test now.
Test #1
Do you generally only pay the minimum payment on your credit card or other loan balances?
Test #2
Are you habitually sending your payments in late?
Test #3
Do you have one or more credit cards that are maxed out?
Test #4
Do you find yourself skipping payments so that you can have cash on hand?
Test #5
Do you use credit cards to pay for things you should be paying for with cash?
Test #6
Are creditors calling you regarding late payments?
Test #7
Are you spending more than 10% to 15% of your take home pay on credit card debt and other loans?
Test #8
Have you ever taken credit card cash advances to meet living expenses?
Test #9
Is your credit card debt bothering you, emotionally, mentally or spiritually?
Test #10
If you had no credit card debt, would you be able to save money every payday?
If you answered, “Yes,” to just two or more of these test questions, you are definitely headed into debt trouble, if you are not already there. If you find yourself in trouble, stop what you’re doing and seek help now!
Watch the video related to credit card
Here’s a story I wrote about a certain credit card company. I hope you all like it. I was going for a Johnny Cash sound and beat (Boy Named Sue, One Piece at a Time, etc). Let me know what you think! Also, feel free to check out my other videos or subscribe. Or both. Or neither, really. It’s a free country.
Help answer the question about credit card
How is a credit card considered a written contract instead of an open account?I am being sued by a collection agency for an old (over 3 years) Visa credit card debt. I live in Alabama and the Statue of Limitations on Open Accounts is 3 years. I hired an attorney but he says that I probably will have to settle because it is not an open account but a written contract account which has a SOL of 6 years. He says this because the collection agency produced a piece of paper that I signed when I opened the account (basically it's the credit card application). I researched on my own and most information that I found says that credit cards are always open accounts. I did find one place (Wiki Answers) where someone said that credit cards could be written contracts. Is my attorney wrong or can this indeed be a written contract in some way. I really need to know before I go to court. Please give me some type of solid backup to your answer and not just your opinion.
May 30th, 2010 at 9:21 am
The credit card company won't know you're planning to leave the country! Even if they did know, they can't stop you, unless they first sue you and get a court order saying you can't leave. But it is highly unlikely that any judge would grant such an order for a credit card debt.
Yes, they could sue you in court for the debt. They would have to serve you with the court papers before they could have a trial.
May 30th, 2010 at 9:59 am
That is acceptable, but it's easier if you go online and apply for really any type of credit card that you want. Some companies will not want to give you a card unless it is secured if you don't have any previous credit. You're best bet it to try a department store first, even though their interest rates are the highest. This way once you get a card and make a purchase, you can pay it off quickly. Keep doing this and your credit will be established. jsut don't go overboard and end up like the rest of us who are in debt up to our ears.
May 30th, 2010 at 12:45 pm
there are a couple of ways you could start building credit, you could get a small personal loan which you might need a cosigner or the best way will be getting a credit cards, you could get a credit card and use it for your every day expenses but make sure you pay in full at the end of the month that way it will show pay in full everytime the credit card company reports to the credit beuros. At the begining you will only be approved for the lower end credit cards but once you build credit in about 6-9 months you should be able to apply for a better card with better benefits such as free miles or cash back. Check out http://www.fastcreditcardapprovals.com and go under bad or no credit section and you will find a few choices. But if you are a student apply of a student credit card these cards have no annual fees and low rates.
May 31st, 2010 at 11:33 pm
Stop applying for the cards, you will only be denied. You will have to start building your credit rating with secured credit. Make sure the banks report to the credit bureaus, otherwise it does no good.
Go to the bank you do business with, ask them if they have a secured credit card, if they do open a new account with $300 – $500 tell them you want a secured credit card against that account. Use the card for small purchases like gas or food and pay the card off entirely each month on time.
Also you can take your savings account and save until you have $1,000. Tell your banker you want to take a installment loan out against the savings account. Take the money you receive and put it in your checking account to repay the loan. Pay it off in 12 months. Lenders like to see a mixture of credit, revolving, installments, personal loans.
After a few months you can try for an unsecured card again. Retail store cards and gas cards are normally easier to get.
It takes 24 months of consistent on time payments to build a good credit rating.
June 1st, 2010 at 9:42 am
Congrats, on your cleaning up your debt and your credit score. What you want to do is compare credit cards and the good news is there are many internet sites that will allow you to.
Check http://www.creditland.com, http://www.bankrate.com, http://www.credit.com On these sites you can look and compare the credit cards that have no annual fee and a low APR. Also if you belong to a credit union, they have excellent rates. You may also consider doing a search for LOW credit card rates in search engines. USA Today does a comprehensive list every year.
I hope this helps you out.
Good Luck
June 1st, 2010 at 6:25 pm
A credit card can be a really good thing to have, or it can be a nightmare. Try to find one that charges no annual fee and that gives you some kind of reward…airline miles, cash back, something. Then…and listen closely…PAY IT OFF IN FULL EVERY MONTH!! You do that, no problem. you start missing payments, then you can quickly get in over your head.
They may occassionally send you the most boring looking documents you have ever seen in the mail. Read them. The credit cards can change the terms of your agreement, and these boring looking notices are the only way they tell you. If you use the card after theyhave sent out the change of terms, you have accepted the new terms.
Good luck.
June 1st, 2010 at 8:03 pm
The money in your savings account would not be available while using your debit card making normal purchases unless you have selected an overdraft protection program and the funds are not available in your checking account. I highly recommend adding this to your account, in the event that you make a purchase that is greater than the amount available in your checking account, the bank will use money from your savings account to cover the purchase. This way you don't aquire all those overdraft fees or have bounced checks (while writing checks). Pay close attention to your funds! Alot of debit cards can also be used as a credit card. Its basically the same thing in this case, where in both cases the monies will be deducted from your checking account, debit takes the funds immediately while credit will take sometimes up to 4 days to completely withdraw. The difference between your debit card, and a credit card, would be that credit cards are an open balance of money availably ready to be lended from banks, purchases using a traditional credit card also incrue interest on the amount you spend. (you have to pay back more than you spend) Debit cards are attatched to your bank account and will just deduct money from your account to pay for the things you've purchased
And though you didn't ask for it… After you've accrued a larger sum of money in your savings account, speak to your local financial director and check into special savings account that give you back more money for allowing the bank to use it, such as locked savings accounts and bonds! 
June 2nd, 2010 at 10:08 am
The sure-fire way of NEVER being turned down for a major credit card would be to apply for secured credit card. Basically what type of card this is, is that you give them money up front (say you ask for a $500 limit), and everytime you use that card, the money will already be in your account with that card and it will just come out. This secures to both the credit card company and to yourself that the money will always be in there, therefore there will never be any over-ages, late fees, and the the like and will guarantee you a strong credit building account. I hope that my answer has helped you.
June 2nd, 2010 at 6:06 pm
Definitely NOT Bank of America.
They recently upped peoples APR without any explanation or reason; it was all over the news. Try a company that's a little less shady. There are plenty of horror stories of what this company has done to their consumers.