i The Frugal Law Student | Credit Cards

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Crouching Debt, Hidden Credit Card Fees

Written by Brett McKay

When you sign up for a credit card, make sure to read the fine print. You may be agreeing to fees that might bite you in the butt if you’re not aware of them. Here’s a quick list of hidden credit card fees you should be on the look out for:

  1. Credit limit fee. When you ask to raise your credit limit on your card, come cards charge you as much as 50% to make the bump. While having more available credit is good for your credit score, the fee might not make it worth it.
  2. Residual interest. This happens when you’re paying down debt over time and you’re paying off a whole balance. If you carried some balance the previous month, the following month credit card still assess interest on the balance from the previous amont. It’s a pretty sneaky interest calculation system. Keep your eyes open for it.
  3. Foreign transactions. Credit cards can definitely make foreign travel easy because most major credit cards are accepted everywhere. But be careful, some companies will charge you extra for transactions in foreign countries.

What you can do to avoid these fees

If you have a card that charges you these sneaky fees, you’re not stuck with them. Congress has recently done investigations into hidden fees and are cracking down on companies using them. If you believe you’re being charged hidden fees, call up your credit card company and threaten to report the company. If that doesn’t make them change their tune, just tell them you’ll take your business else where if the fees stay.

Featured Resource

It is true that almost all Credit Cards actually have hidden fees in the fine print, particularly Late Fees. When you are choosing a Credit card, it is always smart to compare Credit Card Offers to find one with minimal hidden charges and a low APR.

How To Make Your Credit Score Suck

Written by Brett McKay

Last week, I posted on the difference between a credit report and credit score. We learned that your credit score is an important number that decides not only your interest rates for loans, but can also effect whether you can rent an apartment or even get a job. If you really want a sucky financial life, all you have to do is have a sucky FICO score.

Here are 3 ways to make your credit score suck

  1. Not paying your credit card bills on time. Your payment record accounts for 35% of your FICO score. Just one missed payment can send your score down and your interest rates up. Flaky payment is a warning to creditors that you’re a risk. If you have missed a payment, focus on paying all your bills on time. That will help aleviate the damge you’ve done to your score.
  2. Canceling credit cards. This is probably the most counterintuitive idea, but canceling credit cards actually hurts your score. Say what? The length of your credit history accounts for 15% of your credit score. By canceling a long held credit card, you wipe out a large part of your credit history. Additionaly, your debt to credit ratio makes up 30% of your score. The more available credit you have, the better your score wil be. If you cancel a card, you reduce the amount of available credit; thus, your score goes down. If spending on a card is too tempting, cut it up instead of canceling the account. That you don’t have the card, but you still have your credit and credit history intact.
  3. Opening lots of new credit accounts. Everytime you open a new credit card or take out a loan, credit companies do a “hard pull” on your credit history. If you have lots of hard pulls on your credit history, it’s a red flag for potential lenders. Because hard pulls indicate taking on new loans, lots of hard pulls suggests you might be taking out more loans or credit than you can handle paying.

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Laws Every Consumer Needs To Know About Debt Collectors

Written by Brett McKay

Here at The Frugal Law Student I constantly encourage people to avoid credit card debt as much as possible. Because credit card debt is unsecured, it can create the biggest problems for consumers.

If you fall behind on your payments, creditors will often hire debt collectors in order to get their money back from you. While the majority of debt collectors are civil when collecting your debt, many are abusive and coercive. Thankfully, we have the Fair Debt Collection Practices Act to protect consumers from these debt collecting bullies. But if you want to protect yourself with this law, you’re going to need to know the law.

Disclaimer: As of this writing, I am not a licensed attorney. I’m still in law school. I’ve taken this information the Federal Trade Commission’s website. This article is for general education only. If you need legal advice, consult a lawyer licensed in your jurisdiction.

  • You can stop a debt collector from contacting you. Debt collectors can be a persistent bunch because their pay depends on whether they get money from you. However, many overstep the bounds of being persistent to being stalker-like. If this becomes a problem, write the debt collector a letter telling them to stop. Make sure to keep the copy of the letter for yourself. You should also ask for a confirmation when you mail the letter so you can have proof that the debt collector received the letter. Once the collector gets the letter, they can no longer contact you. However, this doesn’t mean your debt is gone. If you still don’t pay, a creditor can take you to court and sue.
  • If you have an attorney, a debt collector MUST contact your attorney. If you’re behind on your debt payment, chances are you can’t afford an attorney. But if for some reason you can afford an attorney, make sure to direct debt collectors to them.
  • Debt collectors cannot use threats of violence or harm in order to collect. If a debt collector happens to do this, make sure to record the day and time of the call.
  • Debt collectors cannot publish a list of names of people who refuse to pay debts.
  • Debt collectors cannot use obscene or profane language. If a collector does, make note of the date and time of the call.
  • Debt collectors cannot repeatedly use the telephone to annoy you. Again, record the date and time of every call made to you by a collector.
  • Debt collectors cannot call you before 8AM or after 9PM.
  • Debt collectors may not state that you will be arrested if you don’t pay your debt.
  • Debt collectors may not state that they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so.
  • Debt collectors may not state that you will be sued if you don’t pay your debts.

These are a few of the regulations that debt collectors must follow under the Fair Debt Collection Practices Act. See this link for a more detailed list.

What if you think a debt collector has violated the law?

If you think a debt collector has violated the law, you can sue them in a state or federal court within one year the date the law was violated. If you have a stong case, you can be rewarded damages plus up to $1,000. In order to make your case, you’ll need evidence. That’s why it’s so important to keep a record of all your interactions with debt collectors.

You should also report any problems with debt collectors to your state Attorney General’s office of the Federal Trade Commission. These guys will bring criminal charges against the crooked debt collector and punish accordingly.

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Featured Resource

When dealing with financial Laws it may be prudent a reputed Lawyer. If your personal or business credit is in dire straits, a Bankruptcy Attorney may be advisable. It is also smart to choose a specialist by state like a Florida Attorney for trouble in the sunshine state.

What’s the Difference Between a Credit Report and a Credit Score?

Written by Brett McKay

You see the commercials all the time on TV. You call a 1-800 number and you get a free credit report. Then the commercial mentions something called a credit score. If you’re not paying attention, you might think that a report and score are the same thing. Well, they’re not. Today we’ll discuss the differences between a credit report and a credit score and why those difference matter to you as a consumer.

What’s a credit report?


Credit reports explain what you do with your credit. It states when and where you applied for credit, whom you borrowed money from, and whom you still owe. Your credit report also tells you if you’ve paid off a debt and if you make monthly payments on time.

Federal law mandates that all three major credit reporting agencies have to give you a free credit report each year. So, when those TV commercials talk about getting a free credit report, you’ll find out the information discussed above when you apply for one.

There are several sites out there from which you can get a credit report. FreeCreditReport.com and AnnualCreditReport.com are examples of those sites.

What’s a credit score?


You credit score is determined by the information in your credit report. Credit scores are used by companies and banks to evaluate the potential risk posed by lending consumers money. Your credit score determines if you qualify for a loan, what your loan’s interest rate will, and what your credit limit is.

The company that came up with the idea of a credit score was the Fair Isaac Corporation. That’s why you’ve probably heard credit scores referred to as a FICO score.

Credit scores range from 500 to 850. If you have a FICO score of 500, you’re going to have a hard time trying to get a loan extended to you. Even if you manage to get one, the interest rates will be high. Any score above 720, you’ll receive the best rates available.

Unlike credit reports, which are free, credit scores cost you money to get. They cost about $15 to get access to and you’re given the offer to purchase your credit score after you get a credit report. Bankrate, however, offers a free FICO score estimator. The estimator asks you 10 questions about your loans and credit card balances and then spits out an estimate for your credit score. While not 100% accurate, you’ll at least have an idea of where your score is at and make adjustments in order to improve it.

How your credit score is determined

When coming up with your FICO score, credit reporting companies look at several factors. In no particular order here are some of those factors:

  • Payment record. If you have a record of bills being paid late, your credit score will go down.
  • How much credit you have and how much credit you’re using.
  • How long credit accounts have been open. The longer you have a credit account, the better your score will be.
  • “Hard” Credit Pulls. A pull is a type of inquiry into your credit. Hard credit inquires are made by lenders for the purpose of extending you credit. Inquires by lenders lower your score because lots of hard inquires is a signal that you’re looking for loans and are possibly a poor credit risk.
  • Signs of responsibility and stability. Pay your bills on time, keep your job for longer than two years, and enjoy a higher credit score.


OK, so the difference between a credit report and credit score boils down to two things: a credit report shows what you’ve done in your credit history; a credit score determines your creditworthiness. A credit report is free; a credit score costs money.

There, now you know the difference between the two. No more getting confused when those commercials come on.

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Additional Resources

There are many ways in which your Credit can be effected, from various bill Payments, like car loans and heating bills to your Business Credit Cards. Your credit score can even be influenced by store credit and Gas Cards that you may have for miscellaneous purposes.

4 Symptoms of Living Beyond Your Means

Written by Brett McKay

Many people don’t realize they’re in financial trouble before it’s too late. Individuals who end up bankruptcy often say the same thing: “How did I get here?” More and more Americans are living beyond their means, especially younger Americans. The problem is that living beyond your means has become a societal norm. Consequently, many people don’t recognize that they’re living beyond their means. So, for your consideration, I present 4 symptoms of living beyond your means. As soon as any of them show up, make the needed adjustments, i.e. spend less, in your financial life immediately.

  1. You use loans to pay debts. If you’re using debt to pay old debt, then you’re definitely living beyond your means.
  2. You only use credit to make purchases. You can’t afford the lifestyle you’re living with cash anymore, so you move to credit cards. To make yourself feel better, you pay with cash that’s drawn from your credit. Cash from credit is the same as just using your credit card- you’ll have to pay it back.
  3. You get overdue notices everyday. The only thing you get in the mail is letters from creditors wanting their money, but you don’t have the money to pay them. It might be time you start reining in on your spending.
  4. You don’t know how much you’re spending. If you never have money and you don’t know where it has gone, you’re probably in trouble.

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[tags]debt, frugality, bankruptcy, credit cards[/tags]

Ask Mr. Credit Card Cash Back Credit Card Calculator

Written by Brett McKay

My wife and I have been interested in getting a credit card that gives rewards for using it. However, with so many to choose from, we never knew which one would be the best for us. Thankfully, Mr. and Mrs. Credit Card have developed cash back credit card calculator that takes the guessing out of choosing a cash back credit card.

Their calculator takes into account your spending habits. All you need to enter is how much you spend a month in the following categories: super market, gas, drugstore, cable, utility, travel, dining, and other. You then have the option of maximizing your rebate by using multiple cards or if you like to keep things simple, just one card. When you hit enter, the calculator not only tells you which credit card would be best for you, it also tells you how much money you’d get back using the card.

I tried using the calculator. It’s very straight forward. Based on my wife’s and I spending we should be using the Chase Freedom Cash Visa Card. We’d only make $11, but that’s $11 we don’t have.

I think Mr. and Mrs. Credit are on to something here. I suggested that that they include a link to a credit card review they have done for the card(s) that the calculator spits out. I think it would be useful to know why the Chase Freedom Card is the right cash back card for me. I also think it would be cool if they included reward points for those who aren’t interested in the cash back program. That might get a little tricky, but it would be a nice touch. Also, if you leave a field blank, the calculator won’t work. You have to type in a number in every field even if it’s a zero. It would be nice if they could configure the calculator so that if one leaves a field blank, it automatically puts a zero in. It’s a not a big thing, but I think it would make the tool more user friendly for people like me who consistently leave fields blank when they don’t have to enter anything in it. Again, I think overall this tool is really awesome. These small suggestions would be icing on the cake.

If you’ve been interested in getting a cash back credit card, but have been left in inertia by all the choices, go by Ask Mr. Credit Card and try their cash back credit card calculator.

[tags]cash back credit card calculator, credit cards[/tags]