Local Bank Offers Tips For Controlling Holiday Credit Card Debt
Many people find it difficult to find the extra cash they need for holiday expenses. They use their credit cards, planning to pay off the balances quickly but then find themselves with credit card debt months or even years later.
Mark Tasy, first senior vice president and chief sales officer of OceanFirst Bank, says, "It's not a good idea to incur credit card debt for holiday gift buying. Most people don't plan to run up high balances on their credit cards but it happens. Using credit cards can lead to impulse spending, overspending and increased credit card debt. Often it becomes hard to pay off the credit cards after the holidays."
Here are six tips to help control credit card debt during the holidays:
Make a List - Think about how much you can afford and make a written plan for holiday spending and gift giving. Don't forget to include special gifts, decorations, holiday meals and travel expenses. Use your creativity and consider homemade gifts and home baked goods.
Set Spending Limits - Decide how much you can spend on each person as well as the other anticipated expenses. Shop for bargains. Talk to family and friends about setting dollar limits on the gifts you exchange.
Decide on One Credit Card - It is easier to control your spending if you use only one credit card. Leave your other credit cards at home so you won't be tempted to use them.
Stay Within Your Limits - Write down your spending limit and keep it with your credit card. After each purchase, deduct the amount from your limit. When you reach zero, stop using the credit card.
Make Timely Payments and Don't Skip Payments - When the holidays are over, some credit card companies may offer to let you skip a payment or reduce your minimum payment. Don't be tempted to do either. You will pay more in the long run.
Check Your Credit Report - Pay attention to what is on your credit report and resolve any discrepancies as they come up. The more accurate your credit report, the better off you are.
McCaskill Renews Resolve for Credit Card Reform
U.S. Senator Claire McCaskill today renewed her commitment to advancing meaningful credit card reform amid inconsistencies in the testimony of credit card executives at a hearing of the Senate’s Permanent Subcommittee on Investigations.
During the subcommittee hearing on unfair interest rate increases, consumers described how credit card companies raised interest rates on them without notice and despite their clean records of payment. Prior to the hearing, subcommittee chairman Senator Carl Levin (D-MI) checked in with these credit card companies to inquire about those hikes. The companies admitted to participating in a common industry practice of increasing interest rates based on changes in a customer’s overall credit rating, regardless of the payment record on their specific card. But later, when directly questioned by McCaskill about this questionable practice, each testifying credit card executive denied that their company used the tactic.
"People deserve to know where they stand when it comes to credit card debt. These companies are profiting off the confusion they create for consumers. That's just not right," McCaskill said.
McCaskill asked the consumers testifying at the hearing whether they had received notice that their interest rates had changed; all three replied that they had not. In one case, the consumer explained that although the credit card company claimed they gave notice, the company admitted that they could not give any proof or site the format or date of the notification. In fact, they told her that they had no responsibility to provide such documentation.
In addition to overall credit scores affecting changes in interested rates, the consumers testifying cited additional reasons that they had been given to explain the interest rate hikes, including signing up for other credit cards, approaching, but not exceeding, the credit limit, and paying the exact minimum balance, but not more than the minimum balance, too many consecutive months. None of these reasons had been explained plainly to the consumers and, in one case, the consumer testified that the credit card company could not give him a reason at all each time he inquired about his rate increase.
“Don’t you have some obligation to tell the consumer that if you take out this credit card, because you have four credit cards already, the interest rate might go up for all of them?” McCaskill asked the executives at the hearing. “Do you feel no obligation to explain to the consumer that reality?”
McCaskill, a co-sponsor of two pieces of credit card reform legislation currently pending in the Senate, talked about the experiences of her own mother who found herself in credit card debt, and told the consumers testifying that they are not unlike many of their fellow Americans.
“You are there with the rest of American. I think most Americans don’t understand that they are in a hole in terms of minimum payments, and I think, frankly, we are not preparing for what could be the next sub-prime disaster. I believe the next sub-prime disaster is the debt that is out there within the credit card obligations in America.”
In the end, McCaskill said that the current situation could be fixed without a legislative mandate, but that would require action from the credit card companies. “This is not that complicated, and it could be done by these companies without Congress doing a thing, if they wanted to do it,” McCaskill said at the hearing.
But until she sees reform from within the credit card industry, McCaskill says she plans to move forward with legislation. McCaskill is a co-sponsor of the Stop Unfair Practices in Credit Cards Act and the Student Credit Card Protection Act.