Even if you owe money, and are having trouble paying your obligations, you still have rights. The Fair Debt Collection Practices Act was specifically designed to help protect you from unfair practice by debt collectors. And, as long as you are careful to properly document abuses, you may find that debt collectors owe you money. Here are some of the basics of the FDCPA, that can help you figure out if those debt collectors are breaking the law:

• No calls before 8 a.m. or after 9 p.m., unless you give permission.
• No calls at work if you have told debt collectors that you are not allowed to take calls there.
• Debt collectors must contact your attorney, rather than you, if you have indicated that an attorney will be representing.
• Debt collectors can only contact other people, and only do so once, if they are getting information on how to contact you. They cannot discuss the debt with them.
• A debt collector must send a validation notice, including how much you owe and the name of the creditor.
• If you want the calls to stop, you can send a written request, and debt collectors must honor it. The only change is to notify you, in writing, of legal action.
• Debt collectors can not threaten or attempt to intimidate you, or imply that you can be arrested for non-payment.

If debt collectors are using these tactics, keep track of each time it happens, documenting the date and time, what was said, and who you talked to.

A great feature of paying online is that it is usually possible for you to choose the day on which you schedule your payment. Schedule to pay on the day before the credit card payment is due, and you will not have a late payment. In some cases, it is even possible to set up recurring payments, so that your credit card payment is automatically deducted from your checking account.

Paying online will also help you save the planet. If you eliminate paper statements and take care of everything online, you are taking a step toward improved environmental sustainability.

One of the risks associated with using your debit card is the ease with which you can overdraw your account, running into overdraft fees because you do not have available funds to cover your purchases. However, this may soon be something you no longer have to worry about — it some in Congress get their way.

Opting in for overdraft fees

Banks allow you to overdraw your checking account as a “service”. Of course, you pay between $25 and $39 per transaction for this service. If you make a series of small purchases that go beyond what you have in your checking account, each one could continually add up. In such cases, you could conceivably end up paying $300 or $400 in fees before the bank finally starts denying transactions.

In order to limit this practice, Congress is considering requiring banks to get your permission before allowing overdrafts. If the legislation passes, you would have to “opt in” if you want the bank to allow you to exceed your checking account balance. This might go a long way toward saving some people money in overdraft fees.

With consumer credit dropping as people become increasingly interested in paying down debt, it is no surprise that the charge card is making a bit of a reappearance. This is because the charge card is a little bit different from a credit card. Mrs. Micah offers this on the difference between a charge card and a credit card:

But there’s a big difference between a charge card and a credit card. You have to pay your charge card off at the end of the month. Every month. Every billing cycle, to be specific.

You can’t carry a balance on a charge card without getting big fees. I’m not talking about interest. If you carry a balance on a charge card, you get hit with fees and risk losing the account.

So why get a charge card if repayment isn’t as flexible? That is a question that many people ask. However, the answer is fairly straightforward: For the credit card rewards. In many cases, a charge card has much better rewards than a credit card. Of course, many charge cards also come with annual fees (since they aren’t enjoying interest payments).

In the end, you might be better off just getting a credit card that you pay off every month. However, if you are disciplined and can pay of your account every month, and you can get a charge card with a good rewards program, it might be worth it.

1. Secured credit card. Credit card companies have changed the way they lend money, and it may be difficult to get an unsecured credit card. However, a secured credit card can help. Make sure that the company reports to the credit bureaus so that you get proper credit for making on time payments. After a few months of showing responsible behavior, you can get switched to an unsecured card, and really start to work on your credit.
2. Rent to own. Rent to own centers are pretty good about approving financing, as long as you have a job. These centers do charge more than regular retail, though. So try and get a small item that can be paid of in six months to a year. That way you are establishing credit, but not overpaying.

The numbers reflecting consumer credit in July have been released, and it appears as though credit is down. Indeed, the recession has encouraged many people to stop using their credit cards, and to even reduced their debt.

According to MarketWatch, consumers reduced their credit burden by a record amount in July:

Economists surveyed by MarketWatch expected consumer credit to decline by $4.3 billion. This is the longest consecutive string of declines in credit since the second half of 1991. In the subcategories, credit-card debt fell $6.11 billion, or 8.5%, to $905.58 billion. This is the record 11th straight monthly drop in credit card debt.

It is clear that a certain amount of introspection is happening right now. Consumers are worried about the future, and thinking that the spending habits of the last 15 years were not the best. A new movement toward frugality and debt reduction has been one of the more positive effects of this recession.

Of course, the new question is whether or not this new found interest in frugality and getting out of credit card debt will last. Are you reducing debt? Will you continue to reduce spending even after the recession ends?

Image via Wikipedia

Today is Labor Day, and it is a time to reflect on what others have done for us so that we can enjoy a nice holiday, and better working conditions. From a shorter work day, to the abolition of child labor, to the idea of equal pay for equal work, others have fought on our behalf.

There is an interesting presentation on Labor Day from The History Channel. This look at the history of Labor Day provides some insight into why we celebrate our workers today. It is long, but if you don’t have time to watch the entire eight and a half minutes, you can watch the first three and a half minutes, which provides a good overview and summary.

It is worth remembering that many of us get to enjoy a three day weekend thanks to the efforts of others. Many of us are even paid for it! So take some time off on Labor Day. Hopefully, you are one of those who gets to enjoy it with your family.

Happy Labor Day!

With consumers working to reduce their debt, department stores are looking for ways to make a little more money. Some of them have ramped up efforts to sign people up for department store credit cards. You can get as much as 15% off your purchases when you apply. It’s tempting, but here’s why you should avoid the temptation:

1. Department store credit cards are not considered as “good” for your credit score as major bank cards.
2. Interest rates on department store credit cards are usually higher.
3. Saving 15% on a purchase is usually not that much (especially on purchases of less than $50 or $60). And if you carry a balance, those savings are wiped out.
4. The temptation to rack up a bill by shopping at that department store for the “discounts” can lead to greater credit card debt.

In the long run, you are better off avoiding department store credit cards, and just shopping the sales. You can still save money, and you avoid the traps that come with department store credit cards.

Right now, many banks and credit card issuers are cutting the availability of credit. This can be disheartening for those who are looking for better credit scores. A cut to your available credit reflects poorly on your credit report, and can cause problems when you want to get a good interest rate, or if you want to get approved for a loan.

Getting a credit limit increase, on the other hand, can help your credit score, since it shows that you have more available credit, and that you are taking up less of your available credit. But credit limit increases don’t always come just for the asking. Jim at Bargaineering offers these thoughts on getting a credit card increase:

1. Wait at least six months to ask for a credit limit increase: You have to show that you are a good, responsible customer. Establish your reputation with the company.
2. Use the credit card: You also need to use the credit card regularly. Use the card and then pay it off. You might want to carry a small balance a couple of months in there, paying it off after paying a little bit of interest. But be careful not to get too far in. You don’t want your efforts to result in unmanageable credit card debt. Moderation and small moves is the key.
3. Ask for your credit limit increase online: Many credit card issuers will let you ask for a limit increase online. Some even give you an automatic increase after a certain amount of months if your account is in good standing. Be warned: Do not continue if you get a request for more information. This might mean a hard check on your credit, and you don’t want that, since it will damage your score.
4. Call and ask: You can also call and ask. While you are on the phone, you can also ask for an interest rate reduction.

You can do this every six to nine months to slowly build up your available credit and to increase your credit rating.

• Have sufficient, regular income to get a credit card.
• Use a secured credit card.
• Apply for a prepaid credit card.
• Get a co-signer for the credit card.

A student credit card can be a good tool for students. They are available to students who have no credit history to speak of. A credit card can help students start building a credit history. However, it is important to be wary of the dangers. It is vital that students exercise discipline when using credit cards, since they can result in a downward spiral of debt.

If you feel that you are ready for the responsibility of a credit card, but don’t want to wait until you are 21, you might consider getting one before February, when the new credit card rules go into effect.