Usually, when a credit card company sees that a person is close to going bankrupt, they will allow a credit card holder to pay off a percentage of the amount they owe on their balance. This is only due to certain factors that the credit card companies take into consideration. There are certain qualifications and requirements that a card holder must meet before the credit card company will allow them to arrange a settlement.
The criteria that must be met before you can get a credit card to settle for a percentage of your debt will differ from company to company. Each credit card company will evaluate you and your credit situation differently, and may very well give you very different offers. Here are a few of the things that would qualify you for, or sway the creditor’s opinion on whether or not you meet the requirements to arrange a debt settlement.
1. Credit Crisis
The main thing that credit card companies look at when you request to make a percentage payoff is what kind of trouble you are in with your credit. If you owe a bunch of money on your credit card, and you have a credit history that reflects bad payment habits, they will be more likely to accept your request.
This will also determine what percentage they allow you to pay off. This plays a huge role because if you have had an easy time making your payments on time, you havea great payment history, and you have been easily paying your other creditors as well, the credit card company you are requesting a settlement from will assume automatically that you can just as easily continue to make the payments you are currently making.
2. Income and Assets
Credit card companies will take into consideration what kind of money you are making, and what items you have within your possession that are of a descent value. They do this, because, in the worst case, if they were to sue you for not paying your credit card bills, they would want to know how much they would be able to get. They may compare that to the amount you would pay them if they were to allow you to pay just a certain percentage of your debt. It is a morbid thought, yes, but it is still possible.
3. On the Verge of Bankruptcy
What credit card companies often see is that you are at a high risk of going bankrupt. Because credit cards will often choose not to sue, they would like to choose a debt settlement over bankruptcy. This is because, if you pay a percentage of your credit card debt, though it may not be the full amount, it is better than the amount they would get from you if you went bankrupt. If you chose bankruptcy over a debt settlement, they would not end up getting any money from you. So naturally, they would rather that you paid a partial amount of the debt you owe than none at all.
Credit card APR is the actual percentage of interest you will be paying yearly on your credit card. APR stands for Annual Percentage Rate. This is an estimate, and can be changed any time by the credit card company if you make late payments on your credit cards.
The Annual Percentage Rate is what will determine how much interest you pay through a year, rather than just the first flat interest rate that they often advertise, that will only calculate the interest from month to month, which calculation may be quite different from the yearly payment. The APR calculates the actual cost of the loan. However, it is dependent upon conditions concerning the payment regularity of the credit card holder and other conditions unique to the company.
One thing the APR does is it does not allow credit card companies the right to any hidden fees. It prevents them from giving you a freakishly low interest rate and then socking it to you in fees. A few of the fees that they are restricted from charging on the Annual Percentage Rate are: Escrow fees, notary fees, appraisal fees, recording fees, and transfer taxes. That is just to name a few.
How Annual Percentage Rates are calculated is a process that differs from credit card company to credit card company. There are several factors that contribute to this complex calculation, and each factor depends on the individual credit card company. One company may give you a great interest rate, but the APR could be totally out of your payment ability, when another company may give you the same interest rate with a lower APR.
There are certain fees that may be included and taken into consideration when credit card companies calculate your Annual Percentage Rate. These fees can also differ from company to company based on that company’s policy and your credit eligibility. Here are a few of those fees and how they work:
Origination Fees
Origination fees are charged to you for the work that is done by the credit card company in your behalf. It basically pays their employers for the time they spend handling your account and working with you to straighten out mistakes. This type of work they do includes checking your credit and preparing the legal documents that have to do with your credit card account.
Loan Processing Fee
This is the fee they charge you when you open an account. This is charged to you for the work they do to gather information so that they can process the loan, and the actual processing itself. This is also something that will affect the Annual Percentage Rate.
Underwriting Fee
Another fee they have is called the underwriting fee. This takes care of any of their expenses when considering you for a loan. It also takes care of the expenses they have for lending you the money on credit.
Tags: annual_percentage_rate, annual_percentage_rates, appraisal_fees, credit_card_companies, credit_card_company, credit_card_holder, credit_eligibility, escrow_fees, interest_rate, late_payments, notary_fees, transfer_taxes
Credit Cards | Mack Bartlett, 18 Oct 07 | 
Comments (0)
COMPLETE
Maybe your credit score is kind of lacking a high number, and you wish to do something about it. In fact, you want to know everything you could possibly do to help it get back into the high range as soon as possible. But how do you do that?
One way you could help improve your credit score is by signing as an authorized user on a credit card along with someone else. Though the good credit they currently have will not reflect yours, the fact that they will keep paying their bills on time will reflect on your score and make it improve. That is, only if you do not use that credit card account unwisely yourself.
If you were to sign with someone on a credit card, it is important that both of you agree to have good credit behavior. If you sign on with someone who is great with credit cards and has an awesome score, their good habits will reflect back onto your credit score simply because you share the same account. But if you use that credit card in a bad way, it will not only make your credit score even worse, but it will decrease theirs as well.
Being an authorized user allows you to gain a better credit score, but when it all comes down to it, you are not responsible for the debt. So, really, if you messed the credit card account up for the person you are signed up with, it is their responsibility, not necessarily yours, to pay the debt. Still, no intelligent credit card holder with a good credit score would allow someone who would inevitably ruin their credit and drag them into debt to be an authorized user of their credit card account, so you have to be trustworthy and try to break your bad credit habits.
You will not want to stay on these accounts any longer than you have to, especially if you are applying for a home loan. Though it improves your score, it can decrease your chances of getting approved for a home loan. So when you are signed on as an authorized user of someone else’s account, stay on only as long as it takes to improve your score enough to be on your own again.
One bad thing about being an authorized user on someone else’s account is that you put yourself at risk of being joined with someone who may not have the greatest credit history either, and who may not use the credit wisely. This will end up costing you even more of your credit score and leave you in a worse predicament than you were in to begin with. This is all usually determined by your judgement of the person who you are planning to share the account with, so you must be careful of who you associate your credit score with.
complete
Credit card limits allow us to set a range of the amount of money we can spend on credit. When used appropriately, this limit will help keep us from spending beyond our means to pay back the amount owed plus interest. So why have so many people gotten into credit card debt by spending on a high credit limit when they knew that they would not be able to pay it back?
Sure, a high credit card limit can be alluring because it makes it look like you can spend all you want and have whatever you want. But a smart credit card holder would know the difference between what looks good, and what will save them money in the long run.
Top 3 Myths Surrounding Your Credit Card Limits
There are a few misconceptions that people often experience when they set their credit limit. Credit card companies can lead them into believing myths that will eventually get them into financial trouble. Here are a few of those myths:
• The Higher Your Credit Limit Is, The Better
Credit Card companies would like you to believe that it is good to have a high credit card limit, and that is true… it’s good for them. High credit limits increase the possibility of excess spending, or spending beyond your means. That leads to larger amounts of money to be paid on your bills, which may cause you to make late payments. Of course late payments result in higher interest rates, making it even harder to pay your dues. Eventually it will take you longer to pay off your credit card debt because you spent more than you can pay back.
• Going Over Your Limit Is Okay If Your Credit Card Company Approves It
Whether or not you pre-approve a purchase that will go over your limit with the credit card company, it will still hurt your credit score dramatically. Your credit score doesn’t depend on whether or not you have authorization to go outside your credit card boundaries, it depends on whether or not you can stay within your limit, no matter what it is, and efficiently pay back what you owe. So even if the credit card company says it’s okay, you still appear unreliable because you went over your set limit, therefore significantly lowering your credit score.
• A High Credit Limit Will Not Threaten Your Ability To Pay Off Your Credit Cards
The best way to stay out of debt is to not allow your spending opportunities to go beyond your reimbursement abilities. If you can easily see that you could not pay back the money you would owe if you spent up to the amount on your credit limit, you simply should not set your limit that high. Keeping your debt as minimal as possible is everyone’s goal, and the debt you incur is more likely to increase if your credit limits are high enough to tempt you to spend beyond your means.
complete
Students in the UK need to establish credit history as much as students in the US. Far be it from credit card companies in the UK to pass up on this lucrative market. Here is a quick review of three cards you could pick up while you’re away at university.
Barclaycard Student Credit Card
Barclaycard is a well known credit provider in the UK. Their student credit card offers some decent benefits, but before you apply they want you to fit a few qualifications:
- Credit history without major blemishes (as in bankruptcy or multiple missed payments on credit lines).
- You can’t be a current Barclaycard credit card holder.
- You have to have a permanent address in the UK.
- You have to be at least 18 years old, and you you have to be heading into college.
If you meet those requirements, you should apply and you’ll be entitled to some good benefits. They offer 20% discounts with certain retailers, 2 for 1 leisure vouchers (not sure what that is), and prize draws for cardholders.
Their interest rates are reasonable – coming in around 14.9%.
Graduate Barclaycard Credit Card
They’re looking for you to have all the same requirements as the normal student credit card, but they also want you to have at least 10,000 pounds annual income.
If you qualify, here are a few benefits:
- There’s no annual fee.
- They offer fraud protection.
- Purchase Delivery Protection which ensures your mail order or online purchases against loss or damage until they get to you.
- Online account management.
- Text notification of payment due dates (if you want them).
This isn’t a bad card for the graduating student to pick up as you leave college and enter the workforce.
Natwest Student Credit Card
A prominent UK credit provider gives students a great offer for what may be their first credit card. Here’s a brief summary of the benefits:
- Great discounts with online retailers.
- A grace period that may last as long as 56 days.
- Daily cash advance limit of up to 300 pounds.
- No annual fee.
- Use your card worldwide when you travel.
The final benefit I see is they offer a maximum credit limit of 500 pounds. This will keep you from getting yourself in trouble while you’re working toward your degree.
Which reminds me, I have a few recommendations for any student getting a credit card. The most important one is to understand what a credit card is, and what it isn’t. A credit card isn’t free money. They’re going to make you pay them back, and if you’re late or if you even carry a balance your best case scenario is paying high interest rates, you’re worst case scenario is paying high interest rates and high fees. Sounds good right?
It doesn’t have to go that way though. You can use the cards wisely and your credit card will be your best friend. Enjoy those rewards!
