In response to the credit crisis and years of complaints, the Federal Government enacted new laws in February this year that changed the rules for credit card issuers.  Not suprisingly though, the credit card compaines have figured out new ways to increase their profits at the consumer's expense.

Now that credit card companies have to give you fair warning that they are increasing your interest rates or changing your terms in any way, you need be aware of the terms of your cards but not everyone reads the fine print!  A recent article in Consumer Reports Magazine detailed several ways that credit card companies are making up for lost revenue.

In one instance they found a bank offering a card with an annual percentage rate of 79.9%! Most credit card interest rates are based on prime plus a spread.  The prime rate is currently very low and yet we have seen credit card interest rates rise an average of 13%.   Based on the current spreads, if the prime were to return to the 8.25% high in 2007, some credit card interest rates could go as high as 35% even for borrowers with good credit.

And adding insult to injury, more and more credit card companies are now charging annual fees, balance transfer fees, hefty late fees, and some have even implemented "inactivity" fees charging you for NOT using your card.  With millions of customers those fees can really add up to a lot of dough.

I recently read an article in Time Magazine about a new trend of Americans "going without".  More than just fueled by the economy many of these people are trying to be more purposeful about their lives.  Spend less, waste less, cost less.  The idea is catching on...at least in some areas.

Many of these "experiments" are being chronicled in blogs and one even turned into a book.  The blogs allow others to join in the experiment with a built-in support group and exchange of ideas.

Many people are doing less out of necessity but at the start of a new decade this may be something that lasts longer than the "recession".  With the idea that we don't need to buy everything we want and that we can have less of an impact on the environment, these bloggers may be onto something.

After decades of excess, it may just be time to re-evaluate the priorities and what really matters.  Are we going to give up shopping or driving completely?  No way.  But a more careful and thoughtful plan may benefit is all in the long run.

Maybe less really is more.

Credit cards have been around for years and have become a way of life.  Originally designed for convenience, most credit users paid their bills in full every month and used their cards for the ease of not having to carry cash or a check book.  Somehow over the decades though that convenience has turned to habit—a bad spending habit as more and more consumers used their credit cards to buy things that they didn’t need or have the money for.

These spending habits lead to paying high interest on items which adds significantly to the cost of the item.  And the ease of use made it all too easy to find oneself in debt.  Thus the statistics and issues we face today as more and more Americans struggle to pay off debt each month that is more than they can afford.

Hence the return of the charge card.  Originally offered by American Express, the charge card allows you to use your card for purchases same as the credit card but that bill must be paid in full each month or you will pay steep fees.  It’s mainly a convenience card.

This enables you to make sure that you are not over-spending or buying things that you can’t afford.  A good option for people working hard to stay on a budget and stay out of debt.

The Charge Card lost popularity for a while as consumers switched to Credit Cards wanting the ability to carry a balance or finance something that they could not pay off in one month, but with the struggling economy that’s no longer the priority. More and more people are shying away from large unnecessary purchases and re-evaluating their spending habits.

A Charge Card may help you stay focused on that goal.

It’s no joke.  There really is such a thing and it could be costing you a lot of money.  Behavioral economists have studied the spending habits of Americans and come to the conclusion that many of us have a dissociative spending disorder.

Dissociative means a partial or complete disruption of the normal integration of a person’s conscious or psychological functioning.  It is a process that severs the normal connection to a person’s thoughts or can disrupt normal cause and effect thinking.

I know that sounds pretty serious and in the case of some folks it can be if the spending disorder gets them into financial trouble.

How many times have to been tempted to buy something just because it was on sale?  It didn’t matter that you didn’t need it because it was 50% off and that was too good of a deal to pass up, right?  So you whip out your credit card and “save” a lot of money…

Not really because you just “spent” money on something you didn’t really need because your brain is focused on the “deal” you just got not the “money” you just spent.  This is especially true if you purchase with credit.  Using plastic money does not register in the brain as money out of your pocket the same way cash does.  If you have $100 in your wallet and you spend $60 of it, you can see what is gone and how little you have left.  When you use your credit card, you get the card right back and the money you spent is not tangible or real.

Merchants and advertisers have also figured this out and rely on you to impulse buy when they put up big signs that say “sale”. 

You can out-smart them though with just a few small changes.  Pay with cash whenever possible to avoid the credit card/plastic trap.  Don’t buy things you don’t need no matter how good the deal is.  Don’t buy anything expensive on an impulse.  Take a day or two to analyze if you really need and can afford the purchase and how you are going to pay for it.

by guest writer Robin Williams

Have you ever wondered that debt helps too? This may appear absurd but if you delve deep into the brighter side of debts, you will discover how debt can help you to revamp your finances. This is what majority of the debtors do; they reorganize their finances when they are in debt. In other words, you learn from your mistakes. Had you not been in debt, you wouldn’t have realized that the way you are handling your finances is wrong. So, this is how debt helps you.

Once you discover that your way of handling your cash is not giving you much savings, you will try to change your financial habits. Debts are common. Not only that they don’t last forever. They are a passing phase and once you learn it the hard way, you are spared.

If you are anticipating a financial crisis in near future or if you have already missed your bill payments, talk to a financial expert or a credit counselor about your finances. The credit counselor will assess your debts, income and other expenses and suggest ways that can help you to get out of debt. Some of the debt help options include the following –

•    Debt consolidation
•    Debt management or DMP
•    Debt settlement
•    Self- repayment plan
•    Bankruptcy

An example of how debt helps:

Let’s say, you are using your credit cards randomly. To add to the woes you have not been regular with your payments. You receive a demand letter from a collection agency one fine day. This has been continuing for quite sometime. Meanwhile you are juggling your finances as your income isn’t enough to meet all your financial obligations, you borrow from Peter to pay off Paul. So, you are in a debt trap. Unable to live with your debt burden, you approach a credit counselor who suggests that debt settlement may help. If not you may have to file bankruptcy. The credit counselor suggests how you should restrict your spending habits and what needs to be done to better your financial stability.

You were able to find out your financial mistakes because falling in debt helps you to realize and recognize your financial drawbacks.

Here are some sobering statistics about American debt.

• About 1.6 million U.S. households -- one of every 73 -- filed for bankruptcy in 2004.

• Average per household debt in the U.S., not counting mortgage debt, is about $14,500 -- especially noteworthy because before the 1930s, most middle and working class people had no major debts.

• Some 40 percent of American families spend more than they earn each year.

• Average personal wealth of a 50-year-old American, including home equity: less than $40,000.

• Nine of 10 Americans claim credit card debt has never been a source of worry.

• But 47 percent would refuse to tell a friend how much they owe.

• Twenty-three percent of Americans admit to maxing out a credit card.

• Eleven percent of Americans admit card debts went to collection.

• Thirteen percent of Americans have been 30 days late paying credit card bills in the past year.

• The average graduate student has six credit cards and one in seven owes more than $15,000.

• The personal savings rate in the United States has dropped from 8 percent in the 1980s to just below 2 percent since 2000.

Are you in debt and suffering from stress because of it?  If so, you are not alone.  The stress and associated problems that accompany it are becoming a major pain in the neck -- and the back and the head and the stomach -- for millions of Americans.

The problem has become so prevalent that there is even a new name for  it – Debt-Stress Syndrome.  When people are dealing with mountains of debt, they're much more likely to report health problems, too which only makes things worse as people try to navigate their difficult situation. And not just little stuff like loss of appetite of trouble sleeping; this means ulcers, severe depression, even heart attacks.

It is estimated that there are between 12 to 16 million who are suffering some type of medical or health issue that is related to their debts.  And the tough economic times and rising costs of living are just making things worse.

In a poll conducted last summer, people reporting high debt stress claimed the following:

·         27 percent had ulcers or digestive tract problems, compared with 8 percent of those with low levels of debt stress.

·         44 percent had migraines or other headaches, compared with 15 percent.

·         29 percent suffered severe anxiety, compared with 4 percent.

·         23 percent had severe depression, compared with 4 percent.

·         6 percent reported heart attacks, double the rate for those with low debt stress.

·         More than half, 51 percent, had muscle tension, including pain in the lower back. That compared with 31 percent of those with low levels of debt stress.

People who reported high stress also were much more likely to have trouble concentrating and sleeping and were more prone to getting upset for no good reason.  Stress is very harmful to the body. Stress is an alarm system designed to get you to recognize a threat to your survival. When you're constantly worrying and stressing over your debt, you put your body in a constant state of alarm. The body responds by releasing stress hormones such as cortisol and adrenaline, resulting in increases in your heart rate, blood pressure, breathing pace, muscle tension, and inflammation, and dumping fuel (glucose, fats) into the bloodstream.

Revolving consumer debt, almost all from credit cards, now totals $957 billion, compared with $800 billion in 2004, according to the Federal Reserve and that can lead to a lot of stress for those who do not have the money to pay for it.  Sometimes it’s a health crisis that puts someone into debt but the debt can also lead to  a health crisis which makes the situation far more dangerous than just facing bill collectors.

If you are in debt and suffering undue stress, there are several programs that can help you BEFORE it becomes a health crisis.  Let the professionals at First Rate show you what we can do to get you out of debt and keep you healthy for 2010!

The New Year is a time of new beginnings.  A fresh start and a renewed outlook.  Most Americans participate in the age-old tradition of making New Year’s Resolutions and not too surprisingly, we all share similar goals when it comes to improving ourselves and our lives.

Below are ten of the most common resolutions. See how many are on your list too.

1.  Lose weight and/or eat healthier
2. Quit smoking
3. Exercise more/join a gym
4. Spend more time with friends and family
5. Get out of debt
6. Enjoy life more
7. Quit drinking
8. Get organized
9. Learn something new
10. Help others/donate/volunteer

While all of these resolutions are admirable, it’s not likely that the average person could accomplish all of them in one year if it that was their goal.  It’s actually best to choose one resolution—the one most important to you and make that your top priority.  Or maybe choose your top three but work on only one at a time in order to be successful.  The key to achieving your goal is to make it realistic.  Saying something like I’m going to lose 50 lbs by Valentine’s Day is only setting yourself up for failure (and frustration).

Statistically most Americans have given up on their resolutions by early spring and don’t revisit them again until the next year but by breaking it down to just fixing one thing in your life; you have a much better chance of being successful.

If getting out of debt is high on your list, First Rate Debt Solutions is here to help.  With millions of dollars in debt settled in 2009 and a wide range of programs we can tailor to fit your needs, 2010 can finally be your year to become DEBT FREE!

Happy New Year!

On behalf of all of us at First Rate, I would like to take a moment to wish everyone a happy holiday season.  This past year has been challenging for many Americans including many of the staff at First Rate as we navigate our way through these challenging economic times.  But we remain committed to providing real solutions for those with severe financial difficulties and top notch customer service to all those who have enrolled in our programs.

Many are predicting that 2010 will be a better year economically.  This is not to say that we should expect a huge improvement but that hopefully the worst is over and the economy can start to rebound.  No one is expecting huge increases in housing prices or for the credit crunch to go away but in some ways that's okay.  Interest rates should remain low and that will help some people who do have large amounts of debt.

For all those Americans that are still struggling financially, our wish for you is that 2010 brings relief to those problems.  As always, we are available for a free personalized consultation to evaluate your situation and see if one of our debt relief programs would be of value to you.

Above all, have a safe and happy holiday and best wishes for a healthy and prosperous 2010!

Economists are predicting that the worst of the recession is over but this holiday season may be the make or break for many retailers depending on how much they sell.  It could also be the make or break for many Americans if they over-spend and find themselves in too much debt.

Hype for "Black Friday", the biggest shopping day of the year is already in full swing as retailers try to lure you in with door-busting bargains all while hoping you will buy much more once you are in the store.

Recent surveys show that most Americans plan to spend the same or less this year due to the economy.  So if you're like most Americans and you are looking to keep spending under control this year, here are a few websites and ideas that might help you achieve your goal.

Make a list of everyone you want/need to buy for and try to set a reasonable budget.  If you total it up and it's more than you can afford, start paring back on either names or dollar amounts.  Once you know who you are going to buy for, check out these bargain hunting websites for great deals, valuable coupons, and gift ideas.  It may take a little extra time but worth the effort to save you money.  Give yourself the best gift of all by not over-spending.  You'll thank yourself in January!

www.RetailMeNot.com

www.CouponCabin.com

www.CouponCode.com

www.froogle.com

www.shopzilla.com

www.best-buy-deal.com

www.pricegrabber.com