This is a guest post from Katrina Ramser, a freelance writer who contributes to various websites, newspapers and magazines. She also writes about swimming at SquidKid.
Did you know an average of six credit card offers are sent to each American household in typical month? That’s five billion advertisements a year. If you had a company where one-third of your profits came from penalty and non-penalty late fees alone, you too would be able to jam mailboxes full of rigmarole about your product, making sure yours was one of the 8.6 credit cards the average American has stuffed in her wallet.
It’s simply not enough to pay your balance in full and on time. Credit card companies are looking for ways to penalize you for paying your balance off. They can cancel a card if you are not using it, which can hurt your credit score. Did you know they can raise your APR on one card simply because they found out you were late on a payment to another? Did you also know that the fine print on contracts states they can increase your APR at any time they want, for any reason? Has this happened to you as of late due to the credit crisis?
Fighting back doesn’t take one borrowed dollar. Here are ten aggressive tactics to turn the tables on credit card companies.
#1: Understand when and where the credit card debt cycle begins
Credit card companies start recruiting before skepticism or experience develops; college students being a prime target. With education costs and student loans at an all-time high, youth are the perfect profile of a needy, unsuspecting victim. If fact, a large number of college students have reported they didn’t even know the credit being offered to them wasn’t free of charge.
Currently, 96 percent of college seniors have at least one credit card, but many have as many as six credit cards, with an average Annual Percentage Rate (APR) of 18 percent and an average balance of $3,200 (no matter the number of cards). When students graduate, get a job, and move into the 25-to-34 age group, their credit average revolving card debt becomes $4,088. Only 29 percent of this age group can actually pay off their balance each month. When finally married, the debt figure can double as finances merge, so looking into the great American debt melting pot, the average household credit card debt becomes around $9,312.
This brings us to total American credit card debt: $800 billion. No one is left out of the credit card debt hook — from dogs to the deceased, you’ll get offers to join the chains of debt slavery, so watch where, how, and when you begin to be picked off by credit card companies.
#2: Pay off your credit cards in an effective manner
The best thing you can do for yourself and your debt is to pay it off and never tango with credit card companies again. There is just no substitute or excuse for taking up the financial reins of your own life. This will give you the greatest power, as well as let you help others later who have fallen into the trap.
#3: Send back any credit card offers or additional debt-inducing advertisements
You know all those little ads that are mailed with your bill? Stuff them in your bill’s return envelope to send them back. Let the credit card companies be responsible for their own paper waste and noise. Get calls on the phone from credit card companies? I like to put them on hold and leave them there for an indefinite amount of time.
#4: Destroy all your credit cards — emergencies call for cash, not plastic
Credit cards are not a necessary part of life. Although credit cards — when used wisely — can render a user cash-back and other reward benefits, you don’t need to have a credit card in case of an emergency. You need to have $1,000 cash in a high-interest online savings account like ING Direct that issues debit cards so you can have the money in a snap. Another idea is to take a Sharpie and write a goal on your credit card, as suggested by Jim at Blueprint for Financial Prosperity.
#5: If you choose to keep a credit card, don’t be a debt recidivist
Personal finance television spokesperson Jonathon D. Pond, author of Grow Your Money, calls a person who lapses back into revolving debt a “Debt Recidivist.” More than half of credit cards users can’t, don’t, or won’t pay the balance in full at the end of the month.
#6: Stop the credit card companies from contacting you
If you go to the National Do-Not-Call Registry, you can register so you won’t get credit card offer calls. To stop your mailbox from being filled up with offers, contact OptOutPrescreen.com.
#7: File a complaint against the credit card companies
Consumer Reports advises consumers top register a complaint with your state attorney general. (Contact information is available at The National Association of Attorneys General.) Also lodge a complaint with the Office of the Comptroller of the Currency, which you can reach by phone at 800-613-6743. If the OCC doesn’t regulate the card issuer, it will help you find the agency that does.
#8: Realize revolving balances support credit card corporations and their causes
From 1990 to 2004, almost $8 million from credit card companies was contributed to both political parties. Aside from achieving personal relief and control over your financial life, another value-based and entirely beneficial reason to pay off your credit cards is to stop giving funding to organizations who will not use your money to lobby for laws on your behalf. In a sense, when you use credit cards, think of yourself as inadvertently giving money to a cause you might (or more likely might not) support.
Remember, penalty and non-penalty fees (late fees, interest rates) make up whopping one-third of total revenue for credit card companies — that staggering total for the top ten credit card companies is around $16 billion a year.
#9: Support government regulation for credit card companies
Because credit cards are currently unregulated by federal law, these companies do not have a watchdog to keep their business practices in check. This lack of regulation is also the reason for changeable interest fees, late fees, transfer balance fees, foreign currency conversion fees, membership fees, and other “universal default” penalty and non-penalty fees. Currently 29 states have no limits on credit card interest rates. Grace periods (the amount of time you have to pay your bill before the APR kicks in and you owe more due to the balance) are becoming non-existent.
Some legislative issues at hand are to require credit card holders to have a cosigner unless they can prove they have a regular income. Congress could also require credit card issuers to disclose important information, such as the fact it could take 30 years to pay off $2,500 in credit card debt if you only pay the minimum.
Organizations campaigning against consumer debt include Institute for American Values, the Institute for Advanced Studies in Culture, the New America Foundation, Public Agenda, Demos, the Consumer Federation of America, the National Federation of Community Development Credit Unions, and CreditCardReform.org.
#10: Vote in the next election
In 2004, the last Presidential election, 64% of Americans turned out to vote — up from 60% in the 2000 election. We saw a huge surge in all races, ages and genders showing up at the polls. But flip the pancake and you’ll find the numbers of those not still voting are staggering. For example, more women voted than men in 2004…but 40 million women still did not vote. I’ll give you the same simple speech my father used to give me when I was younger and disconnected to the process: “Voting is not a choice; it is your civic duty.”
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