Canceling Your Credit Cards – The Right Way

Buying A HomeSo you’re thinking of canceling a credit card or two? Before you do anything, make sure you’re doing it for the right reasons. For instance, many people incorrectly think that canceling a credit card will help their credit score. But because canceling a credit card may reduce your credit allotment – and thereby your debt-to-credit ratio – canceling a card could actually hurt your overall score.

Bottom line – before you go about canceling credit cards, make sure it’s for the right reasons and won’t cause you to enact any credit repair tactics to build your score back up. Canceling a card, particularly an older one, may also hurt your credit history, another factor that goes into your FICO score. Good reasons for canceling a credit card, for example, are because of poor customer service, annual fees or if you just plain don’t use a particular card anymore.

Closing Your Card: Contacting the Company

After you’ve made the decision to cancel your card, your next step should be to contact the credit card company and inform them of your choice. From here, the initial representative that you make contact with will likely transfer you to their retention department, where a specialist is tasked with keeping you as a customer of that particular credit card.

If you’re not interested in speaking with a specialist, whose goal is to keep you a customer, see if you’re able to close your account online to avoid the hassle. Often times, retention representatives will offer additional award points, waive annual fees or offer some sort of other incentive to keep you as a customer. If you’re dead set on canceling, you’ll just have to keep declining their offers.

Tie Up Loose Ends

Regardless of the reason behind why you’re canceling your credit card, there are various loose ends you’ll have to tie up. For instance, if there’s a remaining balance left on your account, you’ll need to settle that before you can officially close it. Secondly, you’ll want to be sure that you’ve cashed in or transferred any reward points that you hold with your credit cards – that is, if you don’t forfeit any earned points by closing the card out.

Finally, after you’ve paid off any balance and redeemed any reward points, don’t forget to destroy the card. Even though your account is closed and the card is inactive, it can’t hurt to discard of anything that a potential hacker could track back to you.

As you can see, closing out a credit card isn’t a complicated affair – you just need to make sure that you do your due diligence and that you’re canceling for the right reasons. Canceling for the wrong reasons may actually hurt you more than it could potentially help you.

Debt Consolidation – What is it?

Yes, there are many misconceptions out there about what debt consolidation is. For example, many think it involves the likes of credit counseling or debt settlement, but that’s not the case. So just what is ? It’s simply the act of taking existing debt and paying it off with a new loan with one monthly payment.

Benefits

Now that you know what it is (and what it is not), let’s take a look at some of the major benefits of it, of which there are several. These include:

Easier to manage: Because all of one’s existing debt will be consolidated, payments are generally much easier to manage. That’s because instead of making payments to several lenders, you now only have to worry about making one monthly payment to one lender. Remember, one of the largest factors in your FICO score is making payments on time. Debt consolidation makes this a whole lot easier to do.
Lower interest rates: It’s is especially helpful if you make high interest payments to lenders. One of the goals of a successful program is to do it with one, new lender at interest rates that were lower than with previous lenders. That’s when consolidating debt is really, truly worth it. This helps you save money in the long run and, ideally, pay off the amount more quickly than you would have before.
No negatives to your credit score: As we noted earlier in this post, many people confuse debt consolidation with debt settlement. Debt settlement is the act of negotiating a reduced balance payment amount with lenders to settle outstanding money owed. It also can take a hit on your credit score if you have to come to that. Debt consolidation is simply combining several payments into one monthly payment, ideally at one overall lower interest rate. As long as you make the one monthly payment on time, it won’t impact your credit score.

Now that you know about it, think about whether or not you may be a good candidate for it. If you have several, smaller loans that you’re paying off at high interest rates and believe you could consolidate them into one, cheaper monthly payment, then it’s time for you to take a hard look at this option. While debt consolidation doesn’t eliminate debt, it can help people feel more confident and at ease about their financial situation based on the money that they’re ideally saving from achieving a lower interest rate. At the same time, however, it’s important for individuals who go the debt consolidation route to be cautious not to take out any more debt before the consolidated loan has been paid off. If that’s the case, then the cycle will just start all over again.

Statute of Limitations on Debt Collection – Power Advice

Statute of Limitations on Debt Collection: In an effort to control debt resolution duration, the court system created and enacted statute of limitations codes. The statute of limitations on old debt indicates the amount of time, in years, that creditors have to file a claim for money owed on the account. Court officials in each jurisdiction assigned a particular length of time for debts owed in that area. Once the debt ages past the indicated limitations, the creditor cannot pursue payment through the court system. Understanding the history of the statute of limitations on debt along with current regulation standards can help debtors handle their debts appropriately.

History of Debt Limitations

Modern statutes regarding debt collection come from ancient Roman laws, including the Twelve Tables. The laws started to ease disputes regarding oral debt contracts that were tying up the court system and delaying proceedings regarding criminal matters. This system worked well for the Roman perception of property ownership and debt creation.

English interpretation of Roman laws changed the definition of ownership to rely less on possession and more on contractual exchange between individuals. As a result, written contracts became the preferred way to handle business between two or more parties. The value placed on each type of contract varies from state to state, resulting in differing laws for each modern jurisdiction.

Current Regulations

Without a time limit on old debt retrieval actions, creditors pass their clients’ accounts from collection agency to collection agency without an end in sight. All of those agencies file collection requests with the court, which often jams up the system, especially in busy jurisdictions.

Each state developed their own code system with a certain number of years for oral and written contracts. With the exception of open accounts, the time limit starts counting down the moment the debtor defaults on the account. The debt timer countdown restarts each time debtors make a payment on the account, however.

Most debt limits range from three to seven years, with several states on the extreme side of the spectrum. For example, Kentucky enables creditors to pursue written contracts for fifteen years. On the other side, oral contracts in California must be resolved within two years or the debt is forgiven at the end of that time span.

States have the right to revisit the assigned statute of limitations on debt any time. Landmark court cases, in particular, have the power to influence state-level change of the debt laws. Unless the laws infringe on citizen rights, however, lawmakers do not usually challenge the code as it is written.

Statute of Limitations for Each State (in number of years)

State	Oral	Written	Promissory	Open-ended Accounts
AL	6	6	6	3
AR	5	5	5	3
AK	6	6	3	3
AZ	3	6	6	3
CA	2	4	4	4
CO	6	6	6	3
CT	3	6	6	6
DE	3	3	3	4
DC	3	3	3	3
FL	4	5	5	4
GA	4	6	6	4**
HI	6	6	6	6
IA	5	10	5	5
ID	4	5	5	4
IL	5	10	10	5 or 10***
IN	6	10	10	6
KS	3	5	5	3
KY	5	15	15	5
LA	10	10	10	3
ME	6	6	6	6
MD	3	3	6	3
MA	6	6	6	6
MI	6	6	6	6
MN	6	6	6	6
MO	5	10	10	5
MS	3	3	3	3
MT	3	8	8	5
NC	3	3	5	4
ND	6	6	6	6
NE	4	5	5	4
NH	3	3	6	3
NJ	6	6	6	6
NM	4	6	6	4
NV	4	6	3	4
NY	6	6	6	6
OH	6	15	15	6
OK	3	5	5	3
OR	6	6	6	6
PA	4	6	4	6
RI	10	10	6	4
SC	3	3	3	3
SD	6	6	6	6
TN	6	4	6	6
TX	4	4	4	4
UT	4	6	6	4
VA	3	6	6	3
VT	6	6	5	4
WA	3	6	6	3
WI	6	6	10	6
WV	5	15	6	4
WY	8	10	10	8

** Georgia Court of Appeals came out with a decision on January 24, 2008 in Hill v. American Express that in Georgia the statute of limitations on a credit card is six years after the amount becomes due and payable.

*** An Illinois appeals court ruled on May 20, 2009, that the statute of limitations on a credit card debt without a written contract was 5 years.

**** State law doesn’t specify the limitations on open accounts.

Source: bankrate.com

Responsibility Of Debtors

While the debt sits within the given time limit, debtors have the responsibility to pay it as instructed. The payment schedule is either spelled out in the written contract or hashed out verbally between the debtor and creditor representative. Defaulting on the account can result in collection actions, including a court judgment and issue of wage garnishment actions.

Once the debt passes the given limitation time, debtors do not have the obligation to pay the debt. Making a payment on the account will reset the time limit to the date the payment was received, however. Creditors may attempt to intimidate or threaten debtors in an effort to receive payment and reset the clock. As a result, it is important to refuse to make a payment and ignore collection calls and letters after the original time limit passes.

If debtors can afford to do so, it is smart to pay off past debts to maintain a good credit score. However, if that is not possible, it is important to retain documents that list the last payment received by their creditors to keep track of the age of each account in default. If creditors or collection agencies claim a different date than the one held in the records, it is important for debtors to file a dispute to obtain proof of money owed on the account and date of last payment. A dispute will keep creditors from moving forward with collection actions, including filing a report with the national credit tracking agencies.

Forgiveness Of Debts

Creditors cannot file a claim with the court after the account reaches the end of the statute of limitations for that jurisdiction. As a result, debtors are not required to make any further payments and the debt will drop off the credit report. Creditors can write off the forgiven debt on their taxes that year. Depending on the account type, debtors may still owe taxes on the forgiven amount. Credit scores will not immediately jump back up after the debt drops off. Instead, debtors will need to work on paying bills on time to increase the score enough to qualify for future accounts. Alternatively, debtors can open a secured credit card to bring their score back up to a functional level.

Credit Repair Procrastination – Why do we wait?

It’s not uncommon to be afraid to dig into your finances. Many people feel that they don’t properly understand their finances or that it’d be difficult to learn. Not sure what is holding you back? Read on to learn common reasons that people avoid .

Why Are You Avoiding Repairing Your Credit? Credit Repair Procrastination

1. You think it’s too difficult.

If you did not get a good education in personal finance, you may not know a lot about credit. Luckily, there are many resources to help you learn. Knowing what goes into your credit score can help you predict the outcome.

2. You think your credit doesn’t matter.

If you pay in cash for everything, you may think your credit score doesn’t matter. However, bad credit can affect every aspect of your life from where you can get a job to how much you pay for insurance.

3. You don’t know how much you owe.

Not sure what your debt is? You’re not alone. According to The New York Times, people tend to report in surveys only about half as much as credit card companies say is owed to them.

4. You don’t have the funds to pay off old debt.

A recent study found that, on average, people with delinquent debt owe over $5,000 in credit card debt, past medical bills and other types of debt. can feel impossible if you don’t have the money on-hand to pay back your creditors.

5. You don’t know where to start.

If you’ve never examined your credit, you may not even know how to start to repair credit scores. Look online for credit tips to find out what you owe and how to start debt management.

6. You don’t know what to do about erroneous debts.

Looked at your credit report and found that you don’t know what some of the entries are for? As many as 42 million people have errors on their credit reports.

7. You think you don’t have the time.

can be a time-consuming activity. But, with the help of quality companies, you can outsource some of the leg work while reaping the benefits of a better credit score.

8. You are embarrassed.

Many of us have had debt management issues due to youthful disregard for financial responsibilities or getting in over our heads with credit card debt. But, your bad credit won’t go away unless you confront the issue head on. Credit Repair Procrastination is common.

9. You don’t want a significant other to know.

There aren’t any hard figures on how many people are hiding debt from a husband or wife, but, the issue is common. By confronting your debt and working to repair your credit, you can build a better relationship and better possibilities for your shared future.

10. You feel alone.

Few people talk about their debt issues, so, you may feel like you are the only one who has struggled with bad credit. Caring companies can help you through your struggle and help you overcome any feelings of isolation, while giving you credit tips and the tools to build a better financial future.

For additional information on how you can start repairing your credit, feel free to Sign Up for $0 Today.

Reasons for Credit Repair – Blog

If personal finance issues make you want to pull the covers over your head, it can be hard for you to know whether you’re coasting along okay or whether you need help with your credit score.

The top signs that you need credit repair:

1. You’ve been turned down for a job.

Many companies will only hire people who have good credit. They believe that good debt management skills points to a higher level of responsibility.

2. You pay more for car insurance.

Insurance companies take your credit score into account when determining your rates.

3. You were denied a car loan.

It is generally easier to get approved for an auto loan than other types of credit. Car loans are good to have, since keeping up with an installment loan over time significantly improves your credit score.

4. You lost a promotion.

Does your company do work with the federal government? These companies often require that employees over a certain level be able to qualify for security clearances. And, you can be denied clearance if you have excessive debt or a low credit score.

5. Debt collectors are calling and harassing you.

When you fail to make payments to your creditors, they end up selling your debt to a collection agency, which then can call you and request payments. The account will be reported by the three credit bureaus as a collection and will affect your ability to get any loans or open a new credit card, as well as damage your credit score.

6. You were turned down for a mortgage.

This is the big one. Homeownership is linked to greater financial stability, a feeling of psychological stability and even tax advantages. Having a good credit record is necessary to achieve this common goal.

7. You’ve been denied for a credit card.

Opening a new revolving account is not as easy as it used to be. If your credit card application was denied, you may need credit “clean-up”. The credit card company is required to let you know the reasons why your application was denied, so you can take the necessary actions to fix your credit.

8. You need to save more than most for a vacation.

No credit card means that you are at the mercy of airlines and may miss airfare sales. Rental cars and hotels hold hundreds of dollars of your money for deposits. Limited or complete lack of access to credit can make every aspect of a vacation more of a hassle.

9. Your application for an apartment was turned down.

Not only can bad credit keep you from buying a house; it can prevent you from finding a place to rent.

10. You feel trapped by a lack of access to credit.

Many everyday financial interactions are made more difficult by a lack of access to credit. But, you can learn how to repair your credit and enjoy more and better opportunities. Visit Key Credit Repair to educate yourself about credit and find helpful credit tips.

For additional information on how to repair your credit, please Sign Up for $0 Today.

Tax Season – Best Time to Repair Your Credit Score

Why is tax season the best time to repair credit? As important as credit repair is, this process repeatedly slips to the bottom of many people’s to-do lists. They make excuses, telling themselves that it’s not quite the right time to get around to addressing credit issues.

If this situation sounds familiar, there’s good news. Tax season is a great time to take strides toward resolving your credit issues and improving your FICO score. Take a look at why you should seize this opportunity to improve your financial future.

Financial Issues Are Already On Your Mind

Whether you’re doing your taxes yourself, hiring a tax professional or using tax preparation software, the tax filing process requires you to evaluate your overall financial picture. Many people with credit issues find that this first step toward credit repair can be the most difficult part of the process.

Because you’re already taking stock of items such as your earnings, loan interest, charitable donations and expenses when you do your taxes, this is the perfect time to continue that process and delve deeper into your financial picture. While you’re researching and calculating, add up your total debt, take stock of your debt payment history, order copies of your credit reports and review them. Create an organization system for all of this information so you’ll have an easier time keeping track of your progress as you work toward improving your credit.

Daunted by the idea of tackling it yourself? Gathering all your records can also be the first step you take before turning to a professional credit repair company that can put you on a better financial path.

You Can Get a Head Start at Paying Down Debt

If things go well, tax season means you should receive a tax refund. While it may be tempting to spend that money on a new purchase, a few nice dinners or a vacation, it’s a better idea to put the cash toward improving your credit score.

If unpaid debt is one of the issues that has contributed to your less than ideal credit score, putting your tax refund toward one of those outstanding balances can be a significant step in the right direction. Don’t fall into the trap of getting discouraged if your tax refund is only a small portion of your total debt. Every little bit helps and puts you closer to your financial goal of having less – or no – debt weighing you down.

Using your tax refund to pay down debt can also inspire you to use future lump payments to cut back on debt. This small effort could be the first of many tax refunds and bonuses that go toward chipping away at your debt and making a big impact over the long term.

You’ll Eliminate a Common Barrier with an Emergency Fund

Maybe you’ve tried to repair your credit in the past, but you were thrown off track by an unexpected car repair bill or health expense. One of the main reasons people continue to damage their credit score is because they aren’t prepared to handle emergencies like these.

If this situation sounds familiar, you can use your tax refund to create an emergency fund. This will give you more security and flexibility to improve your FICO score without your having to worry about getting sidetracked by unexpected expenses and financial setbacks.

You Can Invest in Professional Credit Repair

If you’re not sure where to start when it comes to fixing your credit – or if you feel that you simply don’t have the time to research credit repair strategies – consider using your refund to invest in credit repair services. Credit repair professionals offer services that include disputing erroneous items appearing in your credit history, providing personalized advice for your particular situation, closely tracking your progress and ensuring that you stay on the right track even after you’ve achieved a good credit score.

If you have a large enough tax refund, you may have enough money to invest in affordable professional credit repair and still have money left over to put toward other uses. Even if you feel confident in your ability to repair your credit on your own, using a credit repair company gives you access to resources that can significantly speed up the process.

Now is Always the Best Time

Perhaps the best reason to address your credit during tax season is that putting off this important financial step can have several negative consequences. For one thing, it takes time to fix poor credit, so when you put off addressing the problem, you’re delaying that positive outcome. Regardless of what your finish line goals are – purchasing a home or freeing yourself of bad debt – you’ll reach that finish line sooner if you take the first step as soon as possible.

There’s another major problem with procrastinating when it comes to fixing your credit. Bad credit costs you money. Individuals with poor credit are charged more in fees, interest rates and deposits. The longer you wait to repair your credit, the more unnecessary expenses you’ll incur. Hold on to your hard-earned cash by starting to build a better credit picture today and paying less in unnecessary charges and fees.

Tax season can be a pain for many people, but it can also provide a timely opportunity to evaluate and improve your credit situation. No matter what stage of the tax-filing process you’re in, take the time to carry out these extra steps so you can embark on a rewarding journey toward better credit and a better financial life.

FDCPA - Fair Debt Collections Practices Act

Fair Debt Collection Practices Act (FDCPA) – Fighting Bad Debts?

The Fair Debt Collection Practices Act (FDCPA) has protected debtors from their creditors since 1977. It establishes certain rights that you have to protect against aggressive debt collection practices. The FDCPA is quite complex, but understanding it is extremely important for those that want to fight their bad debts.

What is covered under the FDCPA?

Debt collectors cannot contact you before 8 a.m. or after 9 p.m., and they must stop contacting you by phone if you ask them to.
Debt collectors are not allowed to call you at work if they are told not to, and they cannot contact you if you have told them you have legal representation.
Debt collectors cannot call you within 30 days after you’ve requested written proof of the debt.
Debt collectors cannot speak with third parties regarding your debt or put false information on your credit report.

There are other rights that consumers have under the FDCPA as well; these are simply the major ones.

What should you do when you’re confronted by a debt collector?

When you’re confronted by a debt collector, you can ask them to send written proof of your debt. You should also direct them not to call you any longer, and to send all future correspondence by mail. If they do contact you after this, you may file a lawsuit against them and take legal action. The FDCPA is enforced in the federal court, and companies that violate FDCPA may be subject to significant fines and penalties. Document any instances of FDCPA violations.

Once you have told the debt collection agency to stop calling you, you will want to contact a credit repair company and check your credit report. You will want to ensure that your credit score is not reflecting anything that is not correct, such as an incorrect payment history, as this would also be in violation of the Fair Debt Collection Practices Act. The credit repair company will be able to direct you as to your next move and begin working with you to repair your credit.

Finding out more about your debt.

Once you have stopped debt collectors from contacting you, you will need to review your debts. Another part of the FDCPA is that the debt collection agency cannot charge you unreasonable amounts over your initial debt. You should study your debt carefully to ensure that it is actually owed. If it is not, your credit repair agency can help you dispute the debt. Remember that some credit collectors have actually purchased your debt from someone else. If this is the case, your credit agency may be able to help you negotiate down from the actual cost of the debt. It’s very important to work closely with a credit agency at this time, as they are the experts in dealing with debt collectors and are well-versed with regard to the FDCPA.

Your credit agency has a variety of tools that it can use to help you fight your debt once you have already dealt with your debt collectors through the FDCPA. Your credit agency may be able to help you in settling your debt for a lower amount than what is owed, and it may be able to get unfair fines, penalties or interest removed entirely. Each person’s debt situation is different, and so it will depend on a case-by-case basis. If the debt is entirely incorrect, the credit agency will work with you to help you prove that the debt either was never taken out by you or that the debt has already been paid by you. A credit agency will do everything it can to ensure that you are not unfairly taken advantage of by a debt collection company.

Can you sue your debt collector?

If your debt collector has violated any element of the FDCPA, you may want to seek counsel as soon as possible. As mentioned, it’s important to document any contact with the debt collector that you have, including the initial communications during which you requested that they stop calling you. When you sue a debt collector, you can sue for damages. Often, the reward may be upward of $1,000, and you can also pursue the cost of your legal fees. However, keep in mind that suing the debt collector will not dissolve your debt; you will still need to work with your credit repair agency.

You may also be wondering if your debt collector can sue you; this is highly dependent on the state that you are in. According to the FDCPA, once a debt is 10 years old, a lawsuit cannot be raised, but this time period is much shorter in many states. If you feel that you may be the target of a lawsuit, you will want to contact a legal professional immediately. There are ways that you can defend yourself against a debt collection suit.

Your credit score is incredibly important, and every action possible should be taken to ensure that it is not adversely affected by the debt collection process or that it is rebuilt as soon as possible. Credit repair agencies not only specialize in helping you build your FICO score back up, but they also work with you to protect you against debt collection agencies and bad debt collection practices. It’s important that you know your rights and that you defend your rights.

Debt – Good vs Bad

We are accustomed to perceive of debt as 100 % derogatory. And also, it can make sense: all financial obligations, regardless of the kind, can be bad number in your possessions, lowering your family’s net worth. Yet, the comprehensive review is not that simple. Some forms after a while, will aid the stability, your possessions as well as your ability to earn money. A few typical kinds of financial obligation and their impact on your economic well-being.

Home loans

Without a mortgage, you are not able to actually take advantage of the real estate market. Mortgage is reasonably low-interest lending that can permit you to develop equity & your individual monetary declaration in time.

As your wide range increases, your monetary ability might increase too. With the majority of routine payments and also a normally cherishing real estate market, a residence can permit you to build a protected location to retire or a nest egg to make use of toward your retirement destination.

Of course, not every home mortgage situation is constructed alike. If you bought a couch throughout a time of high real estate prices or obtained a finance with a changeable rate of interest, you might end up with a property that deserves much less compared to you owe. Always study lasting fads and research your home loan contracts very carefully prior to you dedicate.

Sallie Mae Loans

It utilized to consistently be presumed that pupil financing were good debt due to the fact that they resulted in a greater paying occupation. But, enhancing education and learning costs and also transforming work markets mean that it should be participated in meticulously.

Study increasing fields to make sure that your degree will certainly result in the very best feasible job leads. In general, college grads gain greater than those that lack degrees. Yet, majors and the areas where you eventually prefer to live will identify exactly how important a student loan is as an investment in your future.

The “Worthless” Bank card Financial obligation

Vacations, clothes, precious jewelry as well as technical playthings is almost always an unfavorable. These things are almost never possessions that will expand in value. Whenever you would like to purchase something on credit, ask whether you have the money to pay the financial obligation off completely when your bank card declaration comes. If the solution is no, carefully take into consideration whether future you would certainly enjoy living with less money because you of today would like to splurge.

Car Lending

Automobile finances are another group of lending that, generally, will not assist you construct your net worth in time. However, there are a couple of various other factors to consider that can make them worth your while. If you live much from your task and also require an especially reliable auto, a car loan can be rewarding. It might enable you to get a newer model, which improves your job protection. Additionally, if you are in the procedure of rebuilding your credit rating, an installment financing could assist enhance your score. Simply make sure that you choose a funding with inexpensive settlements that has no charges for prepaying as well as will offer you the possibility to make adjustments as your credit report enhances as well as you increase your monetary worth.

While most of us can not live completely debt-free, there are significant distinctions between just what is considered “great” financial obligation as well as “bad” financial obligation. Though some financial obligation come under a bit of a dirty location, great financial obligation is merely specified as money obtained to spend for choices you really need or that value in worth, and also uncollectable bill is built up for products you simply really want and that usually drop in worth.

A write-off is a quantity owed by a company that is extremely unlikely to be paid due, for example, to a company entering into liquidation. There are numerous technological meanings of just what makes up a bad financial obligation, depending upon accounting conventions, governing procedure as well as the establishment provisioning. In the U.S.A, bank loans with more than ninety days’ defaults end up being “trouble financings”.

For more information about how charge offs can affect your credit score you can contact one of our team members. We would be happy to help you challenge those records that are no longer collectable per the FDCPA. The consumer has rights. But you must choose to exercise them.

Consumer Debt – A Quick History Lesson

10 Fun Facts:

About 50% of Americans carry credit card debt each month. But, despite the ubiquity of credit card debt, it is actually a relatively new phenomenon. Learn more about the history of consumer debt below:

Consumer debt didn’t begin with credit cards. In the eighteenth and nineteenth centuries, people would have credit accounts with individual stores. This was frequently used by farmers to keep up day to day living expenses while waiting for the year’s harvest to come in. Generally, credit was extended on the basis of a relationship; there was no formal nationwide system to determine credit worthiness.
Pawn shops as holders of debt have existed since ancient Greece. While there was always the potential for usury, pawn shops also sometimes acted as charities. In Peruga, Italy in 1450 CE, a Franciscan monk began a pawn organization where interest-free loans were secured with possessions.
Modern Americans are not the first to be held down by out of control consumer debt. Public opinion in pre-Revolutionary France turned against the previously popular Marie Antoinette due to her high gambling debts, lavish parties and expensive fashion clothing. Although she became less extravagant with age, she was still convicted of treason.
While having an account with a store could be a boon to individuals, there was also potential for abuse in the era before credit regulation and consumer protections. In mining towns, for instance, prices of goods from the company store were often inflated and carried interest rates high enough that workers would wind up owing money even after wages were paid.
When Bank of America offered the first credit card in the early 60s, they would just send out fully functioning credit cards in the mail, unsolicited. The first widespread case of identity fraud soon followed. Organized crime groups in Chicago bribed Postal workers to reroute cards. Thousands of area residents soon got bills for cards they’d never seen.
In 1950, household debt was close to nil. In 2012, it was nearly $13 trillion.
Consumer debt grew in the post-War era as more people moved to urban areas and purchased more luxury goods.
Between the years of 1982 and 2000, household debt rose from 43 to 62 percent of the country’s GDP.
Some low-income people who cannot qualify for credit cards carry consumer debt in the form of payday loans. In 2012, there were over $2 billion in payday loans serviced in the US. These loans have a hefty cost; annual interest rates can go over 3000 percent.
Studies show that people who carry large amounts of credit card debt are more likely to go through bankruptcy, have less in retirement savings and are less likely to make moves like starting a small business.

Don’t let consumer debt keep you from your dreams. Talk to us about how to manage your spending and put your home ownership ambitions into action. Sign Up for $0 below.