Credit Cards and Children

by C Brassel | Apr 26, 2022 | Miscellaneous Articles

INTRODUCTION

“Where’s my money? Where’s my money? Where’s my money?” asks (demands?) my eight-year-old nephew of his beleaguered father when the week is through, and chores are done (or not done as the case may be). As with many of us, getting an allowance from our parents was our first introduction to the fantastical world of finance.

Sometimes we got the money, other times we got a spending limit for a toy at the store. The idea was the same, to teach us at a young age some sort of fiscal responsibility. Being part of the electronic age, it seems paper money is going by the wayside, being replaced more and more by plastic, crypto, and now apps on smartphones.

As technology continues to expand and children are having it thrust upon them, the question that now begs to be asked, is allowing children access to financial instruments (credit/debit cards or financial apps) a good idea? Let’s see.

WHY SHOULD CHILDREN HAVE CREDIT CARDS?

An immediately disclaimer must be made abundantly clear at this point. Under no circumstance is this author or article implying or stating outright that children should be given access to unlimited funds on a credit or debit card or in a smartphone app.

This process should be a learning opportunity in money and responsibility. It must come with a set of ground rules that must be followed by both parent and child. With that being said, why should children have a credit card?

Builds Credit

The primary reason most people agree upon as to why get a child a credit card is that it helps build the child’s credit score. And as most of us know, credit scores (approximately 15%) are partly based on the length of time a person has been using credit. The earlier the start, the longer the credit history, the better the score – in theory.

Learn to Use Credit

Another top-notch reason for providing children with access to credit cards is that it instills in them the how(s), why(s), and when(s) to use credit. It provides them a roadmap of sorts with time being spent in places such as Proper-Borrowing-Habits-ville, Budgeting town, Learn-Interest-Rates-burg, and the little hamlet of Paying-It-Back.

ADDITIONAL BENEFITS

Instilling Healthy Financial Habits

As well as learning how to use a credit card, as described above, this process can be a great jumping off point to instill in your child(ren) healthy financial habits that go beyond responsible spending. This is a great opportunity to introduce the young credit card holder to saving and investing. All things that help prepare as the child eventually transitions from minor to an adult that needs to provide for a family and fund a retirement.

A Soft Safety Net

Another positive benefit for starting your child off with a credit/debit card while under your care is to provide a nice soft financial safety net for them. That is, since you are able to monitor their spending habits you may have the opportunity to intervene before a major financial blunder occurs. And if such a blunder does occur, again you are there to help them navigate through those turbulent financial waters and make it safely to a calm harbor.

WHAT ISSUES CAN ARISE

Reckless Spending

While the goal is to teach and instill health financial habits in your children, some minors may still be unable to avoid the historical pitfall of credit cards – reckless or overspending. This is a very easy trap to fall into for adults let alone children. Parents must be vigilant not only at the end of the month when the bill arrives but also during the month via monitoring the child’s spending habits.

Lost or Stolen Cards

It has happened to the best of us and most certainly will happen to the child with a credit/debit card. Said card will get lost! Before that happens putting a plan in place as what to do if and when a card comes up missing is a must. That plan should contain a folder of some sort that contains all appropriate contact numbers for the credit card companies. It is always best to be over prepared for a lost or stolen card scenario.

HOW TO MAKE IT WORK

Outline Rules

To make this enterprise, like any other endeavor, work there must be some basic groundwork rules put in place. A key part of having all parties agree to and work within said rules, is to be sure all parties have a say in what the rules shall be. Writing down these rules in easy to understand, concise language is a huge must.

Outline the rules for spending, what is and is not allowed to be purchased, repayment options, online usage, and weekly spending amounts are just some examples.

Spending Limits

As stated above, spending limits should be a vital part of the rules. You should decide on the total amount of spending allowed for the month should be as well as breaking that amount down into weekly and daily spending. This would go a long way to teaching the children about spending habits, delayed gratification, and money management.

Paying the Bill

Probably the most important lesson in this process is who and how the bill at the end of the month is to be paid. Will the child be responsible for the entire amount? Will it be taken out of an allowance? Will they be able to do additional chores to earn additional income? Will the parents pay a percentage of the bill, matching the children’s contribution? Again, this is a critical learning stage for the child and can be a great opportunity to lay solid financial foundations for the future.

HOW TO GET CREDIT CARDS FOR CHILDREN

So now you have reached the point where you decide is getting my child(ren) a credit card a viable option. The first step in deciding to move forward is deciding if your child(ren) is mature enough to handle the responsibility. Let’s say yes. Now what?

Add to Adult’s Account

Some credit cards can be open in the child’s name only assuming they meet the requirements (ie. minimum age) of the issuing company. Another option is to add them to the adult’s account in which they would be issued a separate card. Keep in mind that it is important to make sure both parties understand the policies and what is expected of them with regards to the ownership of the credit card.

Research Child Specific Cards

In today’s technological online focus, many companies have seen an untapped market (ie. children) and have develop a slew of credit/debit card options designed specifically for the younger crowd. Be sure to spend some time sifting through the various options and find one that matches what you want to accomplish with regards to your child’s financial education.

IN CONCLUSION

So, should your child or children in general have access to credit/debit cards? That is a serious conversation for each family to handle in their own homes. There are many pros and cons and they should be discussed with all seriousness and decorum. It is a big undertaking and an even bigger responsibility. A responsibility that both parent and child alike must be up to the task.

The bottom line is that allowing your child access to credit is a wonderful opportunity for them to learn responsible financial management, but it can also be a powerful temptation to go down the reckless spending path. A decision like this should not be made lightly as it can impact the future of both parent and child.

The Five Ws of the Credit Card

by C Brassel | Jul 26, 2021 | Miscellaneous Articles

We all have had them, used them heard about them, read about them, knew someone who knew someone that had them, so it is no big secret. The credit card or more correctly the credit / debit card. The monetary miracle panacea. But what do we really know about that little roughly three inches by two inches plastic monster living inside so many wallets worldwide? Answering this has been relegated to the confines of this article and I will be doing just that by following the tried-and-true journalistic method of the five w’s. Yes, this is the who, what, where, when, and why of the credit card.

The Credit Card ‘Who’

One of the first questions, as obvious as it may be, often to be asked is who actually issue credit cards. And the answer is pretty simple and straightforward. The main institutions that issue credit cards come out of the financial sector, banks and credit unions. An added layer of complexity comes into play sometimes when people confuse credit card companies as a bank or credit union – take for example Visa.

Visa, itself, does not issue credit cards nor does it set any of the rates associated with credit cards. What Visa does do it offer its own branded products to banks or other financial institutions who then extend credit and rates. Many times, separate credit card companies will be setup to handle all the processing and billing for a credit card – servicing the card holders’ account.

Finally, many businesses, for instance retail stores, also issue credit cards – known as store credit cards. Although the vast majority of these cards are co-branded, that is they are issued jointly by the store and a bank or other financial institution. So once again it is generally the bank that is extending the credit and not the store directly.

The Credit Card ‘What’

What exactly is a credit card?

 One would think this is a pretty straightforward and simple answer – and it is. According to Investopedia, “credit card is a thin rectangular piece of plastic or metal issued by a bank or financial services company.”

What is the difference between a credit card and a charge card?

The terms (credit and charge) on the surface seem interchangeable – and in practice they are used in that manner. However, I bet you didn’t know that there is a difference, and it is kind of a big deal. According to the Wallethub, charge cards must be paid at the end of the month in full; whereas with a credit card one only needs to make a minimum payment and may carry forward a balance to the next month.

What are credit cards used for?

Also, according to the Investopedia website, credit cards allow “cardholders to borrow funds with which to pay for goods and services with merchants that accept cards for payment.”

What types of credit cards are available?

The genre of credit cards has exploded since their inception in the early 1950’s and they can be found in a variety of business sectors and uses. The folks over at Experian list and explain a multitude of versions of the credit card including but not limited to, Rewards, Premium Rewards, Big Purchases, Transferring Debt, Student, Bad Credit, Establishing Credit, Retail, Charge, Gasoline, and Business to name but a few!

The Credit Card ‘When’

When did the use of credit start?

Most of us don’t really give the concept of credit a second thought. It has always just been there. And we all learned late in high school that it was important and something we needed to establish and keep in good standing. Good credit would be our gateway to a brighter and more comfortable future. But if you stop to think about it, when did credit start?

According to Mr. Jonathan Kenoyer, a historian, credit (defined as “a valueless instrument to represent banking transactions”) existed some 5,000 years where the Mesopotamians used tablets made of clay to conduct trade with the Harappans. Using clay tablets to keep track of financial transactions was far more efficient then traveling with immense quantities of copper coins. This practiced continued through the 1800s when the clay tablets had evolved into credit coins or charge plates.

When did the credit card first appear?

As it has been stated already, credit cards have had a fairly long and storied past. A case can be made that the first credit cards were the Mesopotamians’ clay tablets or the charge plates used by merchants in the 1800s ( where the merchant extended credit to customers that they trusted as a form of payment until those customers crops or cattle sold.)

The early 1900s bore witness to a small group of department stores and oil companies dispensing their own branded or proprietary cards. Then in 1946 a banker, John Biggins, issued a Charg-It card, where all charges would be forwarded to his bank where then his bank would reimburse the merchants and obtain payments from the card holders.

However, it is the 1950s Diners Club card that stakes claim to being the first credit card to be in pervasive use. Although if we are to get technical, the Diners Club card was not a true credit card – it was a charge card. The full balance amount of the card needed to be paid at the end of each month.

The Credit Card ‘Why’

Why was credit started?

As started early, the use of credit has been around for a very long time starting back some 5000 years ago. So why was credit needed? What was its purpose? Let’s find out. Historians and researchers believe credit was extended for agricultural consumer loans. With these ‘loans’ interest and laws (the Code of Hammurabi in 1800 BC Babylon) were developed. The Romans used credit for land purchases (Cicero sold 625 acres for 11.5 million sesterces – which wa11.5 million tons of coins) among other things.

As time trudged forward, credit and the laws surrounding it changed as well as the uses for it. Thus, the birth of credit reporting came about in England circa 1803. Credit evolution has continued until present day with credit being extended for a wide variety of consumer goods and services as well as what is reported on an individual’s credit report. It is virtually impossible to get a mortgage or car loan or a job with a poor credit report.

The Credit Card ‘Where’

Where was credit first implemented?

The use of credit can be traced back to ancient times. 5000 years ago, the Mesopotamians used clay tablets as a way to track financial information while trading. The Sumer civilization in 3500 BC used credit to extend agricultural loans. In 1800 BC Babylon, laws dealing with credit were first formalized. In 50BC the Roman empire used credit as payment for land transaction among other things. Reforms and advances to credit continued through the Dark Ages and into the 1800s in England right through the late 1800s in Atlanta, USA.

Where did the first credit cards appear?

The first things that resemble the modern-day credit card were introduced in the Old West in the 1800s. These charge plates allowed ranchers and farmers to get the supplies they needed and then pay for those supplies at the end of the month (technically making them charge cards and not credit cards) when their crops or cattle sold.

The early 1900s saw the advent of store specific credit cards. John Biggins, the Brooklynn banker, developed and issued the first bank Charge-It card in 1946. In 1950, Frank McNamara issued his Diners Club card in New York City. Californians were the proud recipients of credit card offers via mail from Bank of America starting in 1958. And now virtually every zip code in America and first world counties you can find credit cards and credit card offers.

Conclusion

And there you have it. As we worked our way, in the journalistic style asking the Ws, we learned that credit and credit cards have a very long and interesting history. From humble beginnings some 5000 years ago in ancient Mesopotamian right up into modern times, credit cards have almost been and become part and parcel to human existence.

In fact, it would appear that credit cards and virtual money (ie. cryptocurrencies) seem to be the wave of the future and it may not be long before cash and checks are totally phased out and go extinct like the dinosaurs. Although that is debatable, what is not up for debate is the history and the continued use and evolution of credit for modern day consumers.

Understanding the Debt Collection Process

by C Brassel | Dec 29, 2020 | Miscellaneous Articles

Many of us have had the experience of opening a letter or answering a phone call only to be greeted with those most terrifying of words, “this is an attempt to collect a debt.” Almost immediately your heart begins to thump a little faster, beads of sweat starting to form on your brow, your eyes start darting from side to side, scanning for a debt collector possibly hiding in the shadows. Your mind starts racing with a thousand questions like, “what happens now? Will I be sued? Will my wages be garnished? Will I lose all my stuff? Am I going to jail?”

Admittedly these are all frightening questions; however, it is very unlikely that being in collections is the end of the world. And to calm your fears, keep reading to get a better understanding of what it means to be in collections, the collections process, and your options and rights while you are in collections.

What does it mean to be in collections?

According to Credit Karma, being in collections means that a creditor that you have conducted business with, has sent or more specifically sold your account to a third-party company or person. This third-part entity is known as a collection agency. You are now officially in collections. Now the third-party entity will try to collect on the debt usually contacting you via mail, email, in-person, and/or phone calls. Phone calls are the collection agency’s preferred method of contacting a debtor.

All manner of debts can be sold to third-party collection agencies; however, the most common types include credit card debts, medical bills, utility bills, loans (both business and personal), student loans, or cell phone bills to name but a few. There is no limit to how many accounts associated with you can be placed in collections. Basically, if you are delinquent in payments or if you have simply stopped making payments, the creditor holding that debt can legally sell it to a third-party collection agency. The more accounts you fall behind on; the more accounts can be placed in collections.

How does having an account that goes into collection affect my credit score?

So now you have an account or two that has been placed with a collection agency. The big question here is how does having an account that is sent to collections affect a person’s credit score. The plain, simple, straightforward answer is that an account that has gone into collections will negatively impact your credit score, every time! The more accounts that get sent to collections, the more negatively your credit score is impacted. The silver lining here is that not all collection accounts on your credit history are created equal.

According to Credit Sesame, collection accounts that have been on your credit report for less than two years have the most negative impact. Older collection accounts that appear on your credit history still have a negative impact, but it is far less than the ones of the 24 month and under variety. Ideally, it is best practice to not let your accounts get to the collections phase; however, if they do, the sooner you do something to resolve them, the quicker your credit score can start to heal.

How long do negative accounts remain on my credit history?

You have begrudgingly accepted the fact that you now have accounts (assuming you have more than one) in collections and they are negatively impacting your credit score. The next big question that should come to mind is just how long will each of these negative impacting accounts remain on your credit history report? Generally speaking, negative accounts will remain on a person’s credit report for an average of seven years from the date of the account’s reported delinquency, according to Credit Sesame.

However, if you do have negative accounts on your credit report, you should do a little due diligence and check the statute of limitations for the state you live in; each state may have different lengths of time that negative accounts can remain on your credit report. Also, and this is very important, where the account was first opened (the state you lived in) is where the account falls under the statute of limitations.

For example, if you opened a credit card account while living in Georgia that goes into collections, but you now live in Texas — it is the statute of limitations from Georgia that apply to that account, not Texas.

What can I expect while having accounts in collections?

You now have accounts in collection, what can you expect? While having accounts in collections you can expect to be contacted, via mail, text, email, and/or phone calls, by the collection agency that now owns that debt. Most debt collectors prefer, almost to the point of obsession, the phone call. They will call whatever phone number they can find. They will call your home, your family, your friends, your employer (past and present). They will leave messages or not. They will call several times a day and will continue to call. The phone will be accompanied by the letter stating that “this is an attempt to collect a debt.” The debt collection agency is hoping to push you into paying this debt off, going so far as offering you potentially great discounts!

Do I have to pay a collection agency?

Well, I cannot tell you that. You must make your own decision as to whether you will work with and pay a collection agency. But before you do decide to pay, here is a little background on how the collection agency makes money. The collection agency buys debts from original creditors for pennies on the dollar!

Let’s say your original debt was $600. The original creditor then sold that debt to the third-party collection agency for $60. Now the collection agency is offering you a pay-off amount of $300, a 50% savings on the original debt. Sounds like a good deal for you and if you take it the collection agency makes a cool $240 profit. Keep in mind that paying it would end the collection letters and calls but it may not necessarily remove the negative account from your credit report — at least not immediately. Always remember that you have rights throughout this process and collection agencies must follow the law when attempting to collect a debt.

What is the fair debt collections act?

The collection process is not a one-sided affair by any means. There are rules and laws that collection agencies must follow. And if they don’t you do have certain legal recourses to take against them — that being the Fair Debt Collection Practices Act.

Going into great detail about this piece of legislation is beyond the scope of this article, however, I will give you some basics and broad overviews. Basically, a collection agency is not allowed to harass you in the attempt to collect the debt (at this point it should be noted that the debt is only alleged). You have the right to request the collection agency prove (in writing) that the alleged debt belongs to you. You have the right to demand that the collection agency not contact yourself, family, friends, or employers by telephone (this includes cell phones). You also have the right to demand that the collection agency not report any negative accounts to the three major credit bureaus. And if they already have, you can demand they immediately remove those negative reports.

All of this should be done in writing (not email) and tracked with certified mail. Also keep a record of all phone calls with day, time, and any other information. The reason for this is if they should sue you and you go to court, you now have evidence. There are financial penalties that the collection agency accrues for each violation of the Fair Debt Collection Practices Act.

Conclusion

Receiving a letter or a phone from a collection agency can be a downright terrifying event. No one likes to be hounded and hassled over a debt — especially when the very existence of the debt is in question. There is hope though. The Fair Debt Collection Practices Act levels the playing field by protecting consumers from harassing and intimidating collection practices employed by the less than reputable third-party collection agencies.

Obviously, the best way to avoid this is to keep all your accounts current with the respective creditors. And if you should fall on hard times, contact your creditors. They are far more likely to work with you if you are up front and communicate with them. Sticking your head in the sand to avoid your responsibility or an uncomfortable or embarrassing conversation is not a realistic solution. Everyone faces struggles from time to time. Just remember to keep moving forward because this to will pass.

Am I prepared to apply for a credit card?

by C Brassel | Nov 17, 2020 | Miscellaneous Articles

It is always a big day in a person’s life when it happens. Even from when we were little kids, most of us dreamt of it. We pretended to use them. We watched in awe as our parents pulled them out. We instinctively knew someday that would be us! So just exactly what is this mystical thing that has held our fancy through all of our childhood and into adulthood? Yep, you guess it, credit cards. We love them! But just how do we know exactly when we are ready, really ready, for them. When are we ready for the responsibility? The simplest answer is that there is no set time that is the same for everyone which dictates when a person is ready to open a charge account. However, there are some markers than can help a person decide if and when they are ready, or should I say, when they are more prepared to handle the demand of that little three by two plastic demon.

How old do you have to be to apply for a credit card?

Although it has been said that age is just a number, in cases of legally binding contracts or decisions that may affect your life for many years, just a number is really not an acceptable answer. The official answer is that a person must be a least 18 years old to apply for and obtain a credit card. Remember, a credit card is a legal contract between two entities. In America, the age of 18 is widely considered reaching adulthood; where a person can legally vote, go to war, and sign contracts among other things.

While most credit card companies are more than happy to sending out thousands of offer mailings to all those 18 years old and above, they may apply stricter guidelines as to who can qualify for their card, especially if you are between the ages of 18 and 21. Just because you have just celebrated your 18^th birthday does not guarantee that you will get that credit card you have been dreaming of since your childhood.

How much should your debt to income ratio be?

A person’s debt to income, or DTI, ratio can be a pivotal factor in that person’s ability to obtain loans or lines of credit. So, what exactly is DTI? Let us find out together. Firstly, let me define DTI for you; DTI is found by taking a total of all your monthly debts (ie. rent, utilities, insurance, etc.) divided the total of all your combined monthly income. This ratio is your personal DTI. This number is important because financial and credit lenders use this number to help them determine if you will be able to pay back loans or other financial obligations. So, what is a good DTI to have? Here are a few percentile benchmarks to give you an idea and whether your DTI will help or hinder you borrowing efforts.

1. 36% and below: You should be in good shape. A DTI in this range most likely indicates that you are managing your debt well or at the very least have sufficient income to stay on top of paying your debts.
2. 36% to 42%: You might need a little work. A DTI in this range causes some caution lights to appear for lenders. If you can, you should probably work on getting your DTI down before trying to get a loan or credit card. If not, lenders may impose other restrictions (ie. having a co-signer) for you to obtain the loan or credit card.
3. 43% to 50%: You need a lot of work. A DTI in this range can severely limit your access to loans or credit cards without significant restrictions or limits. When lenders see DTIs in this range, they see red flags!
4. 50% and up: If you are in this range, you need to spend a considerable amount of your time paying down your debts and put the idea of getting a loan or credit card onto the back burner. Lenders will consider you a very high risk if you DTI is in this range and most likely will decline your application out of hand.

Do you need to have a job before applying for a credit card?

Although all lenders will sleep better at night if their card holders have a verifiable job; most credit card companies do not require proof of employment before issuing a credit card. However, you may have to provide some sort source of income before being accepted. Again, a credit card company may add on other restrictions or requirements (ie. a co-signer) if you do not provide them with employment or other source of income details.

There are certain types of cards, called Secured Credit Cards, that an applicant can apply and obtain without having a job, providing the applicant can provide a deposit equal to the line of credit to the card lender institution.

Who should or should not apply for a credit card?

Even though you may be able to meet the requirement on paper to apply for a credit card that does not necessarily mean that you should. There is more to obtaining a credit card than just being of age, having a social security number, and having a job. There are several other considerations that a person should think about before jumping into a relationship with a credit card. How are you with your money? Are you being responsible (ie. paying bills on time, saving) or are you barely living paycheck to paycheck? Do you have a budget, and do you stick to it? What is your attitude towards money (ie. conservative or frivolous)? Do you have an impulsive personality, or can you stick to delayed gratification?

In Summary

The question was asked, when is a person ready to apply for a credit card. And as you have just read there are a myriad of factors that come into play when considering if a person is prepared to get the plastic timebomb. Things like a person’s age and ability to pay are just a few things that go into getting a credit card. There are also things like DTI (debt to income ratio) that credit card companies look at as well before extending a credit card.

However, most people only consider these ‘on paper’ factors; and they really need to take a personal inventory before applying for a credit card. A person’ personality and maturity level can and will play a huge factor in determining whether they are prepared for the responsibilities of managing that plastic taskmaster. A credit card can give a person a sense of freedom. But when the bills turn up at the end of the month, that sense of freedom may turn into a life shackled to your new plastic masters.

Is my personal debt affecting my personal health?

by C Brassel | Sep 21, 2020 | Miscellaneous Articles

Introduction

As the old saying goes, “at least you have your health.” But do you? Do you really? With all the craziness happening in the world today, it is almost impossible to stay, keep, and/or get healthy. There are many stressors in our daily lives that impact, to some degree, our health and well-being. Money and finance issues rank among the biggest when it comes to causes of stress and anxiety in our lives. Why is that? What are the numbers? Just how much does carrying personal debt impact our mental and physical health? Is it really a huge issue or is it more a matter of individual perspective? Let’s find out together.

What is the average debt average people carry?

In June of 2020, it was reported by the Federal Reserve that the total consumer debt was slightly under $4.1 trillion, with revolving debt coming in at just under $1 trillion and nonrevolving debt being just over $3.1 trillion. So just to be clear, let me define those terms starting with consumer debt. Consumer debt has been defined by Investopedia as, “… personal debts that are owed as a result of purchasing goods that are used for individual or household consumption. Credit card debt, student loans, auto loans, mortgages, and payday loans are all examples of consumer debt.” Revolving debt, also known as revolving credit has been defined by Investopedia as, “… a situation where credit replenishes up to the agreed upon threshold, known as the credit limit, as the customer pays off debt.” And finally, nonrevolving debt “is also known as installment debt because you typically repay it in regular monthly installments featuring a fixed amount,” per the folks over at The Nest.

What are some of the health issues linked to carrying excessive debt?

The human body is a wonderous and mysterious creation. It really is a remarkable piece of work; however, it is not without its flaws. The body can succumb to a wide array and variety of maladies but physically and mentally. The human body is susceptible to attacks physically and emotionally; what I mean is that the stressors that affect can come in the form of something tangible (like a fall or punch to the face) or intangible (like worry or verbal abuse). For our purposes here, we are dealing with almost exclusively the intangible and their effects on health.

So, what are some of the more common types of health issues that are related to debt or carrying debt. One study conducted by Sturgeon et al. published in 2016 determined that financial issues can elevate psychological stress, play a factor in lower self-esteem, increase strained interpersonal relationships and increase difficulty being productive and focused at work.

A study conducted by Gunasinghe et al. published in 2018 concluded that there was evidence supporting a link between exposure to debt and common mental disorders. Clearly there is no shortage of evidence linking your health with the state of your finances.

How does your personal debt affect your personal health?

According to a study conducted by The American Psychological Association (APA) in 2017, it was concluded that money came in one percentage point below the number one stressor, which was concern for the future of the nation, as the most common source of stress among Americans. Money ranked higher, in order, than “work, current political climate, and violence and crime”!

So how does this impact people’s health and lives? Believe it or not, according to the survey, the reported levels of stress has remained about the same across 2016 and 2017, averaging 4.8 on a scale of 1 to 10. However, those that reported feeling the effects of stress did increase, 40% in 2016 to 45% in 2017. “Around one-third of adults reported experiencing feeling nervous or anxious (36 percent), irritability or anger (35 percent), and fatigue (34 percent) due to their stress,” as recorded in the study.

Statistics on health and debt.

Quite obviously stress affects many of us daily. Let’s delve into the numbers for a bit. What are the numbers and how do they look for who? According to the APA’s 2017 study, women, more so than men, reported experiencing higher levels of stress. In the same vein, Hispanic and Black men reported higher levels of stress than their White counterparts. Even older adults have reported an increase in their stress levels. The group with the highest across the board stress levels are Millennials. And the effects of stress, according to the data, knew no boundaries as the reported levels were fairly consistent no matter what part of the country the data came from.

What are some of the ways to deal with debt related health issues?

As with any issue or problem there are usually many different ways to deal with or overcome the circumstances that you are facing. And fortunately dealing with the effects of debt on your mental and physical well-being is no different. Although some of these options may be hard to see or implement due to debt induced stress or anxiety; nevertheless, they are still viable options. You might just need an objective by-stander to help you realize them. So, what are some commonsense options to dealing with debt induced health issues.

The first step is to create a budget. This a straightforward, relatively simple task that helps organize your income and expenditures in a concrete fashion. There are plenty of online resources to help you get your budget up and running. Check out this Debt Elimination Blueprint from the team at Debt Reset US. It comes in a downloadable pdf and even has a couple of downloadable Excel budget sheets. Once you have a budget, then you can attack your debt by reallocating resources currently going to unnecessary expenditures and apply those resources to paying down your debt.

Another option is putting together some type of emergency savings. For example, I like to keep around $1500 in a separate savings account just for emergencies. This is in addition to my regular checking, savings, and investment accounts. In my situation, I know that I have at least 2 months’ rent in reserve. And speaking of reserves, a goal of six months’ rent, and essential bills should be in place.

Thirdly, try and avoid plopping down the plastic. Again, having one or maybe two credit cards for emergencies is not a bad thing. But try not to rely on using credit cards when money is tight. Credit cards are certainly a fickle master and getting into the habit of using them instead of working within your budget can lead to problems down the road.

Lastly, asking for help and working with a company, like Debt Reset US, can be and is a viable option. Legitimate debt relief companies can help eliminate your debt and even help you repair your credit. But be sure to do your due diligence before signing up to work with any company.

Summary

As we can clearly see, whether we like to admit it or not, stress impacts a large swath of people living in America. It, being stress, knows no boundaries; it does not discriminate between locations, socioeconomic levels, race, age, or gender. It is an equal opportunity annoyance. The sad fact is the current societal conditions, including how to handle personal debt, have a negative impact on the health and well-being of each of us to some degree. But there is hope!

There are plenty of ways to help relieve the stress; things like exercise, meeting with friends, and connecting with family. The biggest way to eliminate stress is to admit that you feel stressed! Like with any other issue, once you acknowledge that it is an issue, you can start the process of dealing with it appropriately. Don’t let the blues cast a dark hue over your life. Get out that and get the appropriate help if you need it. The world is filled with beautiful colors even during our darkest times.

How Safe Is It To Apply For A Credit Card Online?

by C Brassel | Aug 19, 2020 | Miscellaneous Articles

Is it ok to apply for a credit card online?

I just received a credit card offer in the mail and it made me wonder, how safe it is to apply for a credit card online, really?

So, I set the paper application down and picked up my laptop and started digging into just how safe it is to apply for a credit card online. The long and short of it is, yes, it is safe to apply for a credit card online, well, sort of. I know, not a very helpful answer, right? Trust me, I felt the same way. So, I continued to dig to get a more fulfilling answer. And here is what I found. It really depends on how reputable the website is that you are providing your personal information too. Okay, great, but what does that mean? Below are some of the answers that I came up with as more questions sprang out from the original question.

What type of safety measures do websites use to protect my personal information?

The big factor to look for is what type of encryption the website is employing. There are a variety of different encryption types which include, DES, which is a low level encryption and not widely used anymore, TRIPLE DES, which is simply DES run three times, ADVANCED ENCRYPTION STANDARDS or AES, which has been the United States of America standard since 2002 and is the most widely used, and TWOFISH, which is free to use for hardware or software and as far as algorithms go, it is one of the fastest available.

So most, if not all, reputable websites use some type of encryption software to protect the personal information that you are keying in their electronic application form. Most websites use what is called SSL (Secure Sockets Layers) encryption. This basically “scrambles” the information while it is being transported from the computer you are entering it into the end terminal, say the company collection the credit card application.

Do websites that collect my personal data have privacy policies in place?

YES! Many countries have laws in place that mandate companies that use websites or online forms to collect personal information from their current or potential customers have a Privacy Policy in place. So, what is a Privacy Policy and what must it state? Simply put, a company’s privacy policy is an agreement between a company and its website visitors. In the most basic sense, it must state how the company collecting the information will use that information and how they intend to keep it safe.

Some of the things Privacy Policies cover are 1) the types of information to be collected, 2) why that information is being collected, 3) how that information will be stored, 4) how that information will be kept safe, 5) if the company plans to use cookies, and 6) if that information will be sold or shared with any affiliates or third party organizations. For more in depth information about privacy policies, check out this blog.

Are there benefits to applying online versus over the phone or with a paper application?

Yes, there are several advantages to applying for a credit card online rather than with a paper application. The biggest advantage to filling out an online application form, or any online form really, is ease. Many paper applications may have smaller areas to fill in and if your handwriting is large or sloppy this can be a pain. Online forms remove those obstacles instantly. Which leads right into the second advantage, accuracy.

With online forms if you make a mistake filling it out, the mistake can be easily and quickly fixed, before submitting it. Also, the person processing the information on the other end will not have to “figure out” illegible handwritten applications. A third advantage is that you don’t have to sit face to face or even talk to a person over the phone when filling out an application. It is often more convenient to be able to fill out one of these online forms while still in your pajamas. Also, sometimes people may feel uncomfortable, like the other person taking the information is judging them on their financial situation.

One final advantage is speed. With a paper application after you fill it out, you must wait for your local post office to collect it, sort it, and ship it to the credit card company. Then you must wait for the company to open your letter and process your application. Then you must wait even longer to get a response as to whether you were accepted or rejected. However, by filling out the application online, once you have completed it and proofread it for accuracy, you can simply click the submit button, and away it goes, being delivered almost instantly to the credit card company. And nowadays, many times you will get an acceptance or rejection response in a matter of hours, usually via email.

What information will I need to apply online?

The information may vary a little from company to company that you may be applying with online. However, you should expect to provide these five basic essentials at a minimum:

1. Full Legal Name
2. Current Mailing Address
3. Date of Birth
4. Social Security Number
5. Annual Income

Depending on the type of credit card or the company offering said card, there may be other questions you may be required to answer. Usually, though, these five questions are enough for the company to start the review process of your application. I hope this helps answer your questions about whether it is safe to apply for a credit card online and to alleviate some of your security risk concerns upon doing so.

Explaining Charge Offs on Credit History Reports

by C Brassel | Jul 13, 2020 | Miscellaneous Articles

What does it mean when you see a credit card account charge off on your credit report?

So, if you are like me, you recently got your free credit report and while perusing through it you may have seen the words ‘charge off’ after an account or two. So, what does charge off mean? The simple answer is that it means the creditor to whom you owe the debt has decided to no longer pursue you, in an attempt, to collect the money owed to them. Sounds like a good thing, right? Not necessarily and here is why. Please, keep reading.

What happens when a creditor charges off an account?

Like I said early, a creditor will charge off the debt you owe them after failing to make your minimum payments, usually after several months, anywhere from 120-180 (months not days) typically. Basically, the creditor is giving up chasing after you. They will just classify your account as a bad debt, and it will appear as a loss on their profit / loss financial sheet. Once this happens, they will officially close your account and move on from. This sounds like a good thing, but do not start jumping for joy just yet.

Am I still responsible for the debt after it has been charged off?

You may very well be (I warned you not to start the celebration)! After your account has been charged off, the original creditor may then transfer (or sell) that account to everyone’s favorite industry, debt collection! There is considerable debate, however, on whether or not you would owe a collection agency that has bought your debt any money. But that is an answer for another question in another blog.

The fact remains though the even though the original creditor has charged off your account with them, it does not really mean that the debt has been forgiven let alone forgotten. If they haven’t sold off your bad debt to a collection agency, their collection efforts may take one more swing at you, that being suing you in small claims court.

To relieve this debt after it has been charged off you can try to agree to a settlement with the original creditor, file for bankruptcy, or roll the dice and hope the statutes of limitation in your State runs out before they take you to court.

How do charge offs effect my credit score?

Once a company classifies your account as a charge off your credit score can take some serious damage. Sadly, charge offs can be one of the most egregious offenders to your credit score. Even one missed payment or a late payment can affect your credit score, sometimes lowering it as much as 100 points depending on the type of account the payment was intended for.

Remember, the biggest factor comprising your credit score is payment history. That is why late or missed payments hurt your score so much. And, in fact, with a charge off, you get hit with both; late and missed payments for that account! With charge offs it may take as long as three years to recoup the points lost on your credit score.

How long do charge off accounts remain on my credit report?

Charge offs can also remain on your credit report for up to seven years, making it incredibly difficult to raise your score over that time frame. I do not want to even imagine how incredibly difficult it would be to raise a credit score with multiple charge offs. If you do have more than one charge off on your credit report, the thing to remember is that date of your last missed payment on each charged off account is when the seven-year timeline begins for each account. There is one saving grace to this process and that is that the seven-year timeframe does not reset if the debt is moved into a collection agency. The big glaring negative to all this is that the timeframe will reset if you make a payment to that debt collection agency (or original creditor). One final remark on this, if you have multiple charge off accounts and make a payment on one of them (whether intentionally or not), that payment only resets that particular account and does not effect the seven year timeframe of any other charge off accounts on your report.

Can I get charge off accounts removed from my credit history?

Well, yes and no (sorry, I know everyone hates wishy-washy answers). As mentioned earlier, charge off accounts will automatically be removed from your credit history after seven years have passed from the date of your last missed payment. With that being said, it is still a good (no, great) idea to review your credit report every year to double check that those accounts actually are removed from your report! You might as well, remember you get one free credit report from each of the big three credit reporting bureaus.

Another thing to remember is that paying off a settlement that you have agreed to with the original creditor or collection agency does not remove the charged off account from your credit report. It simply changes that account from ‘charged off’ status to ‘charged off-paid’ status. Any way you slice it, charged off-paid accounts will still remain on your report until that magic number of seven (years) has been reached.

There is one way to get a charged off account removed from your credit report without waiting the seven years, and that is by contacting the original creditor and begging and pleading! That is if they a have not sold your account to a collection agency. Collection agencies have no souls or hearts (this is a bit of tongue and cheek sardonicism), so begging will fall on deaf ears for sure. Seriously though, collection agencies are less than willing to just forgive a debt they have bought. They are going to want you to pay the full amount; however, on occasion (when a certain hot region freezes over) the collection agency will be willing to make a deal and take full payment for a percentage of the amount owed.

So, contacting the original creditor and discussing how and what you need to do to have them remove the charge off from your report is a viable option. Most times you may be able to reach an agreement (a lower total balance or a payment arrangement). Besides, it never hurts to ask!