How to Restructure Credit Card Debt

Posted by administrator | 12/01/13 | Tagged Credit Card Debt

How to Restructure Credit Card Debt
News from Fox Business:

For consumers struggling to make ends meet and racking up credit card debt and barely making minimum payments, hardship programs might provide a welcome relief.

Many credit card companies offer these programs that target borrowers who have fallen behind on payments. They typically offer debtors lower interest rates as well as reduced payments, fees and penalties. In general, most hardship programs fall into two categories: short-term, which could be for a few months or up to a year, or permanent which is until the credit card balance is paid.

Credit card companies don’t publicize these programs because they hurt revenues due to the lowered interest rates. But for most banks, these programs are a better option than not getting any money back as a result of an individual’s default or bankruptcy.

Delinquency: Not a Good Strategy

There are a couple of things to keep in mind when approaching a credit card company about enrolling in a hardship program. Most creditors will want to look at your income and expenses so be prepared to explain your budget. The company will evaluate your ability to pay your debt to determine your eligibility.

They will also look at your account history, so it is a good idea to inquire about the program before falling behind on payments. Using delinquency as a strategy to get your creditor to work…………… continues on Fox Business

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Rewards Conundrum Raising Costs for Credit-Card Issuers

Posted by administrator | 12/01/13 | Tagged Credit Card

Rewards Conundrum Raising Costs for Credit-Card Issuers
News from Fox Business:

Membership has its privileges–and its costs.

Moves by credit-card issuers to make it easier for customers to use the rewards they earn from spending are helping increase customer loyalty, experts say, but are also driving up expenses for some of the industry’s biggest names.

American Express Co. (AXP) is the latest lender to take a financial hit. The company on Thursday announced a $ 342 million quarterly charge tied to its Membership Rewards program.

The largest credit-card lender based on customer spending said its customers are essentially using up the rewards points they receive for each purchase made with an AmEx card at a higher rate than it previously calculated. That is forcing the company to record a larger liability on its balance sheet to pay for the points it doles out to cardholders, and will increase rewards expenses by $ 40 million annually going forward.

AmEx executives say the higher costs are a good sign: higher participation in its flagship rewards program, which is attached to most of its proprietary charge and credit cards, reflects strong customer engagement. This bodes well for the lender, they say, as other banks aggressively court the well-heeled consumers that are AmEx’s bread and butter.

“It’s almost a high-class problem, in a way,” said Donald Fandetti, an analyst with Citigroup Inc.

AmEx Chief Financ…………… continues on Fox Business

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