Mortgage Modification Madness

A recent report from the nation's mortgage bankers revealed that mortgage delinquency rates have fallen to the lowest level since the end of 2007, which was the beginning of the recession, but we are still not one of the homeowners who are making payments on their mortgage again.

I received an email today from our mortgage negotiator, who once again told me that there was nothing she could do to help us, but that she would review the file with management and try and find a solution. The primary problem is Bank of America wants us to settle on our business credit cards that were charged off with them. The other being of course, that our loan is with Freddie Mac. Unlike our investment property, which is with Fannie Mae, and with which we received a loan modification with the greatest of ease.

I was recently reading an article in "O The Oprah Magazine," yeah, whatever, I read "O," where Suze Orman worked with a couple that had a similar situation to ours. In the article, the couple had debt payments and a mortgage payment very close to our own. They had a mortgage payment of $2,641 and monthly debt payments of $2,475. Now these are not an exact match to our own debts, but the average is pretty darn close.

The couple was put on a trial payments and waited 14 months for an answer for approval of a loan modification, but were ultimately declined. The bank then wanted the couple to pay the back payments and difference between the modification trial payments and their regular payments. The couple could not afford to make the back payments and now face foreclosure. Does the couple have any hope of saving their home?

Here is the 6 point action plan that Suze recommended for the couple:

1. Don't pay the mortgage. Suze recommended, since the bank is foreclosing, that the couple stop paying the mortgage. However, she said the money they were paying monthly on their trial modification needs to be put into savings. It could be two months, six months, or even longer before they actually need to move out of their home and they should save as much as they can. 
2. Do pay back the credit card companies. Since they have not missed credit card payments it was the best way to raise their credit scores.
3. Scale back. Find even more ways to save money. The couple was paying a combined $250 on their cell phones, landline, and cable. She suggested they get that combined total down to $100. She also recommended they reduce their eating out budget and taking no vacations.
4. Get more protection. The couple already had term life insurance, but not even close to half of the $1,000,000 each she thought they should have. She feels they both could get coverage for less than $100. 
5. Focus on saving. The couple needed to take the extra money they were saving once they moved to create their 8 month emergency fund. After that they needed to get going on their retirement.
6. Accentuate the positive. Even though they were losing their home they had to look at the money they would be saving as the beginning of building a brighter future.     

Suze felt the couple was doomed from the beginning and that they never could really afford their home. With us having similar income and debt as the couple mentioned, does that mean we can't afford our house either? Should we just give up and let our house go into foreclosure? That's a hard pill for me swallow.

Our debt snowball is about begin with the first of our debts to be paid off in just the next few months. After that, by this time next year we will have paid down at least another $25,000 in credit card debt and have several more accounts and loans paid off. At that time we will have an extra $1,000 a month available to us to either easily pay our mortgage or put more towards our debt and speed up our five year balance liquidation plan. I only hope we can hold on another ten months, but I am begging to feel like our time is running out.

(Via O The Oprah Magazine March 2011)

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Pride Month Celebrates Lesbian, Gay, Bisexual, and Transgender Diversity.

June marks Pride Month, and as celebrations around the world promote lesbian, gay, and bisexual and transgender (LGBT) diversity awareness, Bank of America not only supports diversity through associates awareness but through its products and services.

Bank of America was one of the first financial institutions to incorporate sexual orientation and gender identity into its nondiscrimination policies and offer comprehensive domestic partner benefits. The bank also was one of the first to offer an LGBT affinity credit card, these products now include the Elton John AIDS Foundation card, the Human Rights Campaign card, the Atlantis card, the Rainbow car, and the Olivia World Points card.

The bank will begin offering Human Rights Campaign deposits products on June 12 and Rainbow branded deposits products in August.

Merrill Lynch adds a robust set of wealth management products and services that deal with the issues faced by the LGBT community, helping customers work through the legal and financial maze of estate and retirement planning for domestic partners.

"Bank of America is proud to be one of today's progressive companies recognizing the unique needs not only of our LGBT associates, but also those of LGBT clients that we serve," said Jim Eckerie, Global Quality and Productivity and Enterprise Transition executive. LGBT Pride Resource Group executive sponsor and Global Diversity and Inclusion Council member.

"There is one of the many ways Bank of America reinforces the core value of doing the right thing," he added, "whether we are helping every customer and client pursue their financial goals based on their unique needs or creating an inclusive work environment that enables our associates to achieve their full potential."

The bank has received recognition from prestigious external groups for its commitment to LGBT associates and customers. Bank of America and Merrill Lynch have both consistently achieved a perfect score of 100% in the Human Rights Campaign Corporate Equality index, based on their domestic partner and work life benefits, recruiting efforts, associate resources groups and supplier diversity policies. The bank also placed the No. 14 in Diversity Inc's overall ranking of top companies.

Obama Makes The Credit Card Smackdown A Reality

Last Tuesday the Senate voted 90-5 to approve the bill that makes it tougher for credit card companies to raise fees and interest rates starting in the first quarter next year.

"To have the industry reaching and be as abusive to consumers, it needed to stop and it needed to change," said Senator Chris Dodd, a bill sponsor.

The bill targets credit card rate hikes and excessive fees."The President has created a strong impetus for immediate action, "said Travis Plunkett with the Consumer Federation of America.

President Obama signed the bill on Friday making it tougher for credit card companies to raise fees and interest rates.

The new law was a culmination of several years of work by consumers groups and Democrats to rein in what they say are abusive practices that prey on consumers. During the bill signing ceremony President Obama praised the new law.

Starting in February 2010 the bill will put a stop to:

- Charging consumers to pay by phone

- Sudden surges in interest rates

The bill also makes changes to:

- Applying payments made over the minimum due to balances with the highest interest rates first.

- Information in tiny print must be made clearer.

- Let consumers know how long it would take to payoff a balance if they only pay the minimum payment.

Credit card companies have been raising fees and interest rates. From November 2008 to February 2009, rates increased from an average of 12.02% to 13.08%. Because of this people have not been able to make their payments on their credit cards and are walking away from the debt.

President Obama stated the bill is not designed to protect those who are financially irresponsible, and that credit card companies do deserve to make a profit.

"We do not excuse those, and do not condone folks who have acted irresponsibly," he said.

Although, the bill is now law it doesn't go into effect until February 2010. Watch out for credit card companies trying to raise rates and charge as many fees as they can before the bill goes into effective.

President Obama Signs New Credit Card Bill Into Law

Everyone Has a Credit Card Horror Story

Be Careful When Transferring Your Balance To A Lower Interest Rate Credit Card

I love reading articles from Gerri Willis, CNN personal finance editor and author of the book "Home Rich: Increasing the Value of the Biggest Investment of Your Life". Mainly because she has the same view on personal finance that we do.

We've discussed many time at being aware of the possible cost, higher interest rates, and excessive fees when you apply for a balance transfer with a new credit card.

Most people now the term APR (annual percentage rate) but the number of credit card holders should really pay attention to "effective APR."

"An effective APR represents your total cost of credit. Now, keep in mind, this may be more than just an interest rate. If you are paying an annual fee, if you incurred a balance transfer when transferring the balance to that card...those are costs that will add to the interest rate that you're effectively paying, effectively raising the cost that you pay on that balance." says Greg McBride, senior financial analyst at bankrate.com.

Gerri suggests to beware of:

- Introductory rates

- Payment schedules

- Cash advance fees

- Late Fees

- Default rates

Be sure you crunch the numbers when determining the best credit card for you.You can manage these expenses very easily by following these simple rules: make your payments on time, keep an eye on your rate schedule and avoid cash advances whenever possible.

Where To Find The Best Credit Cards

Finding the best credit cards can be confusing, but here is what we found on CNNMoney recently. Picks that offer great perks to suit your spending habits.

1. Balance Transfers
The Card: iberiaBank Visa Classic
Website: creditcardsiberiabank.com
Rate: 6.25%-8.25%
This card offers zero interest on balance transfers for six months- and there is no balance transfer fee.

2. A little cash back
The Card: Schwab Bank Invest First Visa
Website: Schwab.com
Rate: 13.99%
Earn 2% unlimited cash back on every single purchase you make. You must have a Schwab One brokerage account, but there are no fees to open or maintain it.

3. A lot of cash back
The Card: Blue Cash from American Express
Website: americanexpress.com
Rate: starts at 7.99% plus prime
Charge at least $6,500 a year, and your cash-back percentage zooms from 1% to 5% on purchases at gas stations, supermarkets, and drugstores, and from 0.5% to 1.5% on everything else.

4. Cash at the pump
The Card: Pentagon Federal Visa Platinum
Website: penfed.org
Rate: 13.99%
Get 5% unlimited cash back at the pump, plus 2% on supermarket purchases and 1.25% on everything else. You must join a credit union to get the card.

5. Travel Miles
The Card: Escape by Discover
Website: discovercard.com
Rate:10.99% to 18.99%
Earn two miles for every dollar spent, plus 1,000 bonus miles each month you make a purchase for the first 12 months. Drawback: a $60 annual fee.

Senate deal on credit cards slows!

The smack down on credit card companies had grown very popular and President Obama has stated that he would like to have the bill on his desk by Memorial Day. The Senate's new bill is tougher than a similar bill passed in the House last month. The Senate bill still faces possible amendments and could change further.

The current Senate Bill would:

- Go into effect nine months after passage, which is sooner than the House bill.
- Ban gift card issuers from charging "dormancy fees" on cards redeemed too late: the House bill doesn't address gift cards
- Prevent those under 21 from getting a credit card unless they can prove they have an income stream to pay off debt or have their parent's signature; the House bill places less onerous restrictions on those under 18.
- Allow credit card issuers to raise fees if a consumer is 60 days late on a payment, the House bill and Federal Reserve rules allow fee hikes after payment is 30days late.

Credit card industry advocates caution that the Senate bill won't be the final word on the issue, and they plan to fight some of the provisions.

"We have serious concerns with the Senate bill, and we oppose any amendments to the bill," Scott Talbott, a lobbyist for the Financial Services Roundtable, an industry group.

At the rate things are moving it will end up being next year July before this gets done. That's when the original bill was scheduled to go into action. If you think this is the right thing to do, press to have this bill passed.

10 Things Credit Card Companies Don't Want You To Know. Part 9 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 10 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

Think your credit card transaction will be declined if you go over your limit? Think again. If you do go over your limit you have regret having done so. It could raise credit card interest rate sky high.

Many people learn the hard way when they go over their credit card limit and their interest rates sky rocket to 29%. An event like this, among others, can push you into credit counseling and into a debt-management plan.

Keeping you in the hole forever, banks may continue to charge an over limit fee against maxed out credit cardholders. A penalty of $30 every month your credit card balance remains over the credit limit. A lot of credit cardholders will deal with the fee rather than the embarrassment of being declined.

Over limit fees can simply be another way for banks to make money at the expense of the unknowing consumer.

If banks are willing to allow charges over the limit then they should accept he profit that comes from the increased interest rate charges and be satisfied with that.

10 Things Credit Card Companies Don't Want You To Know. Part 9 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 9 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

A credit card with great incentives, a low interest rate and just the right mix of perks and fees that are the just the right fit for you might be what you think you have, but looks can be deceiving. The credit card company can change the terms of your Utopia credit card agreement at any time.

Consumer groups report this is a sore spot with credit cardholders, and with good cause. many lenders and credit card companies defend this practice saying things like, "A credit purchase is an unsecured loan. It's the riskiest sort of lending we do, which is why it's expensive. The banks are protecting themselves."

Unhappy credit cardholders will almost always seek alternatives and credit card lending is a highly competitive market.

How do you protect yourself from having the wool pulled over your eyes? Be vigilant and pay attention to all the mail you get from your credit card company. even if it looks like junk mail.

10 Things Credit Card Companies Don't Want You To Know. Part 8 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 8 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

Credit card statements are crystal clear about what day your payment is due, but they're not so forthcoming about what time on that due date. Some banks have triggered consumer complaints by setting a 9 a.m. deadline on the posted payment date- which is before the mail arrives.

Chi Chi Wu, an attorney with the National Consumer Law Center, says a number of class-action lawsuits have succeeded in getting most banks to push back their payment deadline to 2 p.m., the traditional bankers closing hour, a time by which most mail delivery is complete. Even so, a spokeswoman for the American Bankers Association is unsympathetic, saying bills are due upon receipt and that banks spend a lot of money giving consumers options such as paying via phone, online, or auto bill pay. She does not understand why it's an issue to pay your bills on time, it's very easy.

You have to admit she has a point: If you cannot allow time for the U.S. mail delivery, you can always take advantage of an online or pay by phone option and if you are really in a pinch you can always overnight your payment via Fed Ex or UPS delivery, its worth it to avoid a late payment.

10 Things Credit Card Companies Don't Want You To Know. Part 7 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 7 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

Remember travelers checks? Yes, I know those are a blast from the past- and now days credit cards has pretty much replaced travelers checks as the preferred method for making purchases abroad. Credit cards are widely accepted overseas, and they can be used in ATM's all over the world to dispense cash in the currency of whatever country you may be visiting at the time, making it very convenient. But buyer beware of hidden charges. Some banks have recently raised the rates on currency conversion from 1% to 3%. On top of that, ATM usage has its own fees attached.

Consumers Union recommends studying your credit cards' policies on foreign currency purchases before you leave home, then adjusting your spending accordingly. Credit cards issued by smaller banks may have lower fees, as do certain brand-name cards. American Express, which has long positioned itself as a card for travelers, charges a flat 2%.

10 Things Credit Card Companies Don't Want You To Know. Part 6 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 6 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

Banks generally calculate interest charges in one of two ways: based on average daily balance or on something called two-cycle billing. The latter, which more card issuers are not adoption, penalizes consumers who carry a balance, even if it's only on occasion.

Here's how it works: Say you start your month with a zero balance and charge an amount that you don't pay off in full at the end of the month. If your card uses the average daily balance method to calculate interest, you are charged nothing for the month you made the purchase and interest only for subsequent months in which payment is outstanding. With two-cycle billing, interest charges begin with the day you make the purchase.

Banks defend two-cycle billing as correcting the true interest charges for credit card purchases. Ron Brooks, a spokesman for National City, says it's a way to make sure card users pay interest should they suddenly go from being transactors (those who pay every month) to revolvers (those who carry a balance).

One way to avoid the issue is to stay away from credit cards that use two-cycle billing to calculate interest charges and stuck with those that go by average daily balance. Unfortunately, it's not a permanent solution. Your card provider can switch between the two with just a 15 day notice, so you'll have to keep checking.

10 Things Credit Card Companies Don't Want You To Know. Part 5 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 5 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

A few summers ago, Vicki Jacobson's college-student son, Craig used his debit card to pay for a taxi ride in Italy. The driver ran his card three separate times as a credit card and three time as a debit card , not knowing that the previous transaction had gone through. Well, I am sure you can guess what happened - Craig paid for that cab ride six times. It took months to clear up the credit card charges, which finally got resolved, but it was much more difficult to get the debit card transactions cleared up.

Why was there so much trouble with the debit card transactions? Debit cards resemble credit cards in all visible ways, but offer the consumer less protection. Some debit cards offer purchase protection, meaning you can replace a damaged item within 90 days, but many did not.

And although unauthorized transactions, such as the three charges on Craig's credit card should be refunded by the issuer, banks are less motivated to speedily resolve cases involving debit cards then credit cards, why is that? Well, debit cards draw on a checking account, meaning they are essentially checks in plastic form. Credit cards are in constitute a loan, so it's the banks money , giving it more reason to protect it.

10 Things Credit Card Companies Don't Want You To Know. Part 4 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 4 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

In this hyper competitive credit card marketplace, rewards are a way for banks to target big- spending niche audiences. For instance- frequent flyer's, frequent hotel stayers, or big time shoppers! But what people don't know is that these programs come with catches, such as high interest rates and/or high annual fees, so do your homework, a good rewards card done not always make financial sense for just anyone.

Before signing up for a rewards card figure out how much you have to spend to ear the incentives from any given card. If the math works out to anything less than one penny earned per dollar spend (or a mile per dollar, in the case of mileage cards), then you can do better.

Also, be sure to look for rewards that best suit your needs, For example if you want an abundance of options, from retail goods and services to charitable donations. American Express Membership Rewards cards let you accumulate points at the rate of a penny per dollar spend- and double that at gas stations and drugstores. Or if it's air miles you are after then look into the United Mileage Plus Signature Visa is one card that stands out from the pack, with its one-mile-per-dollar ratio and host of travel benefits, including upgrades.

10 Things Credit Card Companies Don't Want You To Know. Part 3 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 3 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

Most parents send their children off to college knowing that they will be bombarded with credit card offers, but what parent's don't know is that credit card companies are taking their marketing one step farther, they are hitting up high school students. College students are considered "good risks" to creditors, because they are just starting out and they have unlimited earning potential and now high school students are being put into that category as well.

Robert D. Manning, author of "Credit Card Nation" and a professor at the Rochester Institute of Technology says that most parents do not realize how early a child's name, address, and other information, can turn up in the databases used by credit card companies to market their products- or that children as young as 16 can get credit cards without parental consent.

Creditors know that if kids get in trouble that their parents will usually pay to bail them out.

So as a parent what can you do to protect your child's financial future? Protect your child's information and assume that all requests, however legitimate, will land in a database somewhere. Gift cards, for instance, may offer protection if lost or stolen, but they do require personal information. Manning and other experts advise teaching teens about credit well before they get their first credit cards and monitor their spending as they learn to use them.

10 Things Credit Card Companies Don't Want You To Know. Part 2 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We continue with Part 2 with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

2. "When it comes to identity theft, we're part of the problem."

Tony Sciulli of Santa Barbara, an identity theft victim, says it all started with a forged credit card application. A $3,000 balance was mysteriously transferred to a new credit card in his name, followed by a ready made check billed to one of his other cards. What can you do to avoid this sort of low tech thievery? Buy a shredder, and minimize the credit credit applications coming to your house by registering at OptOutPrescreen.com

But paper solicitations are only the beginning. As Internet security expert and author Bruce Schneier warns, "Data about you is not under your control." He points to examples such as May 2005 case involving Bank of America and Wachovia, in which a man posing as collection agent paid bank employees for customer data in New Jersey. The banks notified customers their data may have been compromised and offered to help watch their accounts for suspicious activity. (The man, Orazio Lembo, pleaded guilty in March 2007 and was sentenced to five years in prison and fined $20,000.)

But John Hall, a spokesman for the American Bankers Association, insists that banks have "Pentagon level security." His advice:"Monitor your accounts. Protect your passwords and your computer."

10 Things Credit Card Companies Don't Want You To Know. Part 1 0f 10

April has been Credit Card Question and Answer month here at Financial Elite. We are going to end the month with information provided from an article from SmartMoney about the little known rules that are costing you money and putting your credit, your identity and your family at risk.

1. "We're just waiting for you to screw up."

Many things can cause your credit card interest rate to go way up into the stratosphere, but nothing faster than universal default. You can make all your credit card payments month after month for a long time, but fall behind on your utility bills and all of a sudden you are a deadbeat and you will be charged accordingly. Interest rates can change at a moments notice, from low and reasonable to up to 35%.

Credit card companies say the reason they do this is to manage risk. Consumers groups disagree, because many people in universal default aren't deadbeats by any means. For example, you dispute a medical bill or are waiting for an insurance snafu to be resolved. If a billing clerk kicks it to collections, you're in universal default. Or let's say your credit score drops--a common event that may be entirely unrelated to your bill paying behavior. That's also likely to push your interest rate higher.

The best way to avoid this problem is to pay your bills on time. Bankrate.com, a personal finance Web site, further advises that if you have a disputed bill, resolve it before it reaches collection status.

Should I Stop Contributing To My 401K If I Want To Pay Off My Credit Cards?

Not really. Especially if your employer offers a company match. No matter how much credit card debt you have or how out of whack your finances are. Don't miss out on this free money. No matter if your employer matches dollar for dollar, matches half of what you contribute, or matches even a quarter of what you put in, you don't want to pass this up.

Obama Continues Credit Card Smackdown Against Credit Credit Card Companies

Credit card companies met with President Obama on Thursday to discuss the smackdown against interest rate hikes and excessive fees on consumer credit cards.

Consumer groups and congressional Democrats are rewriting the rules of lending practices by credit card companies, banks, and other lenders. The house bill led by Rep. Carolyn Maloney, is similar to one passed last year.

"This bill cracks down on some of the most outrageous abuses," Maloney said. "My bill levels the playing field so consumers have more control over their credit."

Bank of America Global Credit Services President Ric Struthers, along with 14 other financial services executives and representatives from the American Bankers Association (ABA), met with President Obama, Treasury Secretary Timothy Geithner, National Economic Council Director Larry Summers and other officials at the White House to discuss important issues regarding credit cards.

The group discussed the importance of credit cards to consumers, small businesses and the U.S. economy. They also covered trends in credit card use and lending. They also talked about the economic factors affecting the credit card business and consumers, including rising unemployment and the recession.

"It was a productive meeting, said Struthers. "I'm glad we had the opportunity to talk with the president and his administration. We look forward to ongoing dialogues with the administration on this important topic."

According to Struthers, during the meeting the president stressed that he wants a set of rules for credit cards that are sustainable, clear and include strong consumer protections. And he asked the industry leaders to be mindful of impact its actions are having on businesses.

One of four executives chosen to make formal comments, Struthers' message to the president focused on the effects of the economy on the credit card industry:

- We understand fully the severe impact these conditions are having on the health and stability of the U.S. economy, businesses and our customers. What at first was assumed to be a short, relatively shallow slowdown, has become much longer and deeper than anyone anticipated.

- The current economy is also affecting all credit card issuers. Credit card issuers lost money in the fourth quarter of 2008 and first quarter of 2009 driven by increased pressure on consumers from rising unemployment, declining consumer confidence and slowing discretionary spending.

- Our goal is to find the right balance in meeting the credit needs of our customers, providing a reasonable return for our shareholders and continuing to do all we can for consumers who are in financial distress.

- To support economic growth and the health of the American consumer, financial services companies recognize the importance of continuing to lend. And in this difficult environment, we are making every good loan we can. For example, Bank of America extended $8 billion of unsecured consumer credit during fourth quarter of 2008 and another $6 billion in the first quarter of 2009.

Following the meeting, the ABA issued a statement: "The president did raise concerns about certain issues surrounding credit cards. The card executives listened carefully to those concerns and agreed to work with the administration to address them."

See the question and answer session with Bank of America's Ric Struthers regarding the impact of the economic environment and increased regulations against credit card companies.

I Haven't Paid My Credit Card Bills In Years. Why Am I Being Told I Still Owe Money?

Well, you do. But there is only so long a debt collection agency can hassle you. You need to see what your state's statute of limitations is on debt collection. Every state has a time when the clock starts running on the statute of limitations on your passed due credit card debt. This time frame begins starting with the date you failed to make a payment that was due, as long as you never make another payment on that credit card account. The best way to determine when the statute starts against your debt is to get a copy of your credit report. It shows the dates you were late and when it was reported by your creditors. So if your states statute of limitations is say five years, and your last payment was April 24, 2004, then on April 24, 2009 your statue of limitations on the debt would have run out. That is assuming you haven't made another payment on that account. Also, be aware that the statute of limitations applies to different types of debt. The statute of limitations is different on credit cards, mortgages, car loans, or personal loans. Another thing to consider is if you actually make a payment to a collection agency or even tell them you are going to make a payment your statue of limitations may start all over again.

To find statutes of limitations in your state visit fair-debt-collection.com

Bank of America Answers Questions Why There Are Interest Rate Hikes On Credit Cards.

With credit card horror stories every where and legislation trying to get passed against interest rate hikes and excessive fees, Bank of America gives us the reason why banks do all that.

With the overhaul of credit card issuers announcing rate changes, the credit card industry has been the main topics discussed around office water coolers as well as in public sector. The changes in the credit card industry were recently discussed during Bank of America's Global Town Hall on April 20th. The following is a discussion with Bank of America Global Card Services President Ric Struthers on Bank of America's credit card pricing and what the company is doing to help struggling consumers.

Today, you and several other credit card execs along with the American Bankers Association are going to a meeting at the White House to discuss the current state of the credit card industry. What do you expect?

Struthers: I'm looking forward to a meaningful dialogue about the current economic environment, credit card lending and the impact that the credit card regulations recently issued by the Federal Reserve will have on the industry and consumers.

There have been a number of headlines about credit card issuers increasing interest rates on credit cards. What is Bank of America doing?

Struthers: In the beginning of April, we notified a small portion of our customers that we are increasing rates on their accounts. Some accounts were repriced because their interest rate is currently 10% or lower, a rate significantly less that our cost to do business in the current market. Another group of accounts were repriced due to our business-as-usual process of adjusting account pricing based on periodic review of account risk. It's important to not that these two changes affected fewer than 10% of our total portfolio. Incidentally, there's a third business-as-usual strategy that we use to reprice accounts that we refer to as "trigger", which happens when an account falls past due or goes over limit more then two times in 12 months. We understand that in the current economic environment increased in credit card rates can be an emotional issue for many of our customers, including our family and friends. As Bank of America associates, it's important to keep in mind that in a given year, the vast majority of our customers experience no rate increase. For example, in 2008 more than 90% of our customers had the same or a lower rate at the end of the year than they did at the beginning of the year. In fact, during the first quarter alone, we brought down prices on 400,000 customer accounts.

It's also important to be aware that when we do need to make a pricing change, we make every effort to be as transparent and as clear as possible in our communications, making sure our customers are fully aware of the increase and the choices they have- one of which is choosing to reject the rate increase. If they choose to opt out of the increase, we have several processes that make it as convenient as possible for them to do so, including opting out by phone.

Why did you increase the pricing on accounts with rates less than 10%?

Struthers: It was a difficult decision for us. Our customers are our top priority, and we understand that many of them are under financial strain in this difficult economy. However, the credit card industry is also operating under difficult conditions that are resulting in significant increases in our costs of doing business. And, unfortunately, low credit card interest rates that were set in a better economic environment, such as rates lower than 10%, are just not sufficient to cover these rising costs. Therefore, on this small group of accounts, we increased the rate to 13-14% on average.

At the end of the day, it is our responsibility to do all we can to operate profitably so that we can help ensure the strength and stability of Bank of America, continue to lend in support of the economy, and provide the level of value and service that our customers need and expect.

Why are your costs rising?

Struthers: The credit card industry is facing a number of challenges that are leading to increased operating costs.

As you might expect, as the economy has worsened, losses have risen to historically high levels as customers have been unable to make payments on their loans. In Global Card Services, we saw $5.3 billion in losses during the first quarter of this year. That is on top of losses of $4.5 billion in the fourth quarter of 2008. Banks also are required to set aside reserves to guard against future losses. As you can imagine, that's continuing to grow into a pretty big number.

At the same time, we are preparing for significant changed in the way we do business because of the new federal regulations that will become effective in July 2010.

What are you doing to help customers in this environment?

Struthers: We are doing all we can to help as many customers as we can. In the first quarter, we modified more than 375,000 accounts across all our businesses. We expect to modify 1.5 million to 2 million accounts in 2009, compared to fewer than 1 million in 2008. We have many programs that can help customers even before they fall behind.

Unfortunately, there are some circumstances where we cannot modify an account. We make every effort to be as flexible as we can; however credit card workout programs are closely regulated by the Office of the Comptroller of the Currency, with strict rules and guidelines around how much we can modify accounts. We are constantly working with our regulators to improve and create new programs to better meet our customers' needs. In fact, we are working closely with the National Foundation for Credit Counseling in support of increased flexibility in workout programs across the industry. In addition, we provide financial support on an actual basis of more than $30 million to nonprofit credit counseling agencies that help people work their way out of financial distress.

The commitment to help out customers is consistent in our businesses around the globe. For instance, in the U.K. we recently partnered with the government and our industry to introduce a 60-day "breathing space" principle for customers who are working with a not-for-profit money advice organization. And in Canada, we regularly work with the nonprofit Canada Credit Counseling Services agencies across the country to help consumers who are experiencing financial difficulties.

Can you share your thoughts on the future of credit card business?

Struthers: Over the next few years the credit card business will undergo considerable change. The cumulative effect of regulatory by the Federal Reserve, pending legislation in both houses of Congress, shifting consumer behaviors and a deteriorating economy will alter the way banks think about consumer credit. While we are still working out all the details of how our operations will be transformed, we have some initial thoughts about what the new credit card environment will look like:

- As we are beginning to see today, banks are spending much more time assessing the risk of people they lend to and, in turn, consumers, are more thoughtful about their spending and borrowing habits.

-Credit card terms and conditions, including the costs of using credit cards, will be communicated in ways intended to make them clearer and easier to understand.

- Restrictions on our ability to change interest rates will likely result in a normalisation of credit card rates, we'll see fewer customers at very low or very high interest rates and a greater concentration of customers somewhere in the middle. In general, this likely will mean consumers will have a higher rate than they do today.

What won't change is the value of the credit card product to consumers around the world. And, at Bank of America, we are- and we plan to lead the way in- ensuring the delivery of exceptional products and services. No other financial product is a safer and more flexible payment tool, enabling customers to make a purchase today and pay it back over time as they choose.