Preferred Financial Services

Andover, Massachusetts August 24^th, 2010 – If you are like many Americans you have faced years of overdraft fees on your ATM/Debit Cards after charging a purchase when you did not have the funds in the account to cover the purchase. For the past 15+ years banks and credit card issuers have been making a fortune off of peoples honest mistakes without any way to stop it but now they finally can. . In the past, if your account didn’t have the funds, you were charged a $20-$35 overdraft fee every time without exception. The new rule that went into effect on August 15th is part of the 2009 Credit Card Overhaul bill and will likely save consumers as a whole millions of dollars each year in overdraft fees.

The new rule automatically bars consumers from over charging on their accounts unless they opt into an overdraft protection plan. This change is finally giving Americans the choice of whether they want to overdraft their account, not forcing them to pay a fee when they do. For those who routinely do overdraft and consider the fee worthwhile it is still very easy to opt into this plan. But for the majority of people who have been robbed left and right in the past because they didn’t realize they were over drafting this law is very much needed. Gone are the days of hundreds of dollars in fees because of a few badly timed purchases. No longer will you be paying $35 in fees for a purchase that over drafted your account by $2.

Where do you stand on this? Have you opted into the plan or are you glad that finally you will be prevented from buying goods and services when you don’t have the cash in the bank to pay for it?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

Is this the news we have been waiting for or just a temporary drop? Have you been asked to take over tasks at work that used to be done by someone else?

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Marketing Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

stavernini@pfs1.net

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Credit Card Debt Help, Personal Finance

Andover, Massachusetts August 23^rd , 2010 – The average interest rate on credit cards rose to a 9 year high last quarter eclipsing 14.7%. This is over 1.5% higher than in the same quarter a year ago and indicates that credit card companies continue to charge fees and interest rates to make up for lost revenue due to the economy and more government regulations.

This average rate hike was followed up by news that credit card spending in the last quarter was the second highest ever recorded, falling just short of the spending level reached in third quarter of 2008. While some may see this record spending as good news for the economy I believe that this is an indicator that Americans are having trouble meeting their obligations and thus are relying on credit cards to make ends meet. This can have disastrous consequences in the when many of these people will default on their obligations. As credit card usage dipped over the past 2 years the credit card companies have done everything possible to remain profitable. The increased interest rates were the easiest way to do this and it appears to be working as many of these companies are posting strong quarterly earnings and rosy forecasts for the immediate future. While this is great for shareholders it is not very good for the average consumer with thousands in credit card debt. It is making their life increasingly difficult as more and more of each monthly payment is going towards interest and not the principle balance. This means that they are paying more and staying in debt longer than ever, just what the credit card companies want to happen as an in debt consumer is the most profitable for them.

Readers, have you noticed your rates reaching new heights? Have you said enough is enough and paid off your cards and closed the accounts? Where do you see this trend heading over the next few years?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Marketing Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

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Credit Card Debt Help, Financial News

What are the key measures of financial health? Is it how much money you make? Is it how much money you spend? Or is it a combination of the two things? While attempting to get at your financial health, you can’t measure just income or expenses you have to measure them both as they relate to one another.

Loan officers or mortgage brokers commonly refer to your debt to income ratio or DTI. Credit card companies and counselors also talk about debt to income ratio which begs the question what is it? And why is it so important?

In short your debt to income ratio compares how much you make to how much you owe. The purpose of the calculation is for lenders to be able to determine how much more debt you can take on without overextending yourself. To do the math, take all of your fixed monthly expenses and divide the total by your gross monthly income. Why is this information important to lenders?

Lenders want to figure out what type of risk they are taking when they are lending you money, your risk factor to the banks is manifested in your interest rate if they approve you for a loan; the higher the rate the more risk the bank assumes it is taking when it is lending you money. Mitigating risk is important for banks, but understanding how you should be managing your finances is critical to you… Here are some general guidelines:

Your DTI should be under 36% when shopping for a mortgage
Your total housing expenses should be less than 29%
FHA & VA loans allow up to 40% when evaluating loans

Paying off your debt is always a good idea. If you’ve found yourself in a position where your debt has started to get out of control look into your options…. Ultimately, you’re looking for the best debt elimination tool that you can find. Eliminating credit card debt should almost always be your top priority. There are lots of services that offer you the ability to resolve your debts effectively.

Debt consolidation services like consumer credit counseling may work for some people, while debt settlement may work best for others. Consumer finance is complicated; there are lots of questions you need to ask. Preferred Financial Services offers a debt settlement service that helps reduce your debt quickly and effectively. Keep all options open and above all keep your eye on the amount of debt you are taking on.

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Credit Card Debt Help preferred financial, preferred financial services

If you’ve ever wondered why finance charges on a credit card accrue so quickly, look no further than your card holder agreement. Credit card companies have come up with a series of elaborate ways to bill finance charges adding to their bottom lines, while taking away from yours. The double billing cycle method is one of six complex ways credit card companies tabulate interest.

Double cycle billing is a method of calculating finance charges based on the average balance owed over the past two billing cycles. Credit card companies use this method of billing to increase revenues billed to card holders that pay off their balances quickly, but has been scrutinized as a result of fees billed on balances that may have been already paid off.

The Math:

Standard interest rate calculation:
Average daily balance * Annual Percentage Rate * Days in Billing Cycle/Days in year

$1,000 * .135 * 25/365 = $9.24

Double Cycle Billing:
Two-cycle average daily balance * Annual Percentage Rate * Days in Billing Cycle/Days in year

$1,500 * .135 * 25/365 = $13.87

The example is based on a cardholder with a $1,000 balance currently due, that held a $1,500 balance but made a $500 payment. In this case the credit card company made an additional 50% in interest for the period even though a third of the balance had already been paid. The disadvantage to consumers is obvious; even if you already paid your bill they are still billing you interest as if you still owe them.

The Impact:

If you follow the math you’ll notice that tabulating interest in this manner puts consumers at a significant disadvantage. The math detailed in the example above speaks for itself, paying interest on money borrowed that is already paid seems intrinsically wrong. That being said the impact on cardholders that carry similar balances on a month to month basis isn’t very significant, the greatest impact is felt by consumers that pay their debts off aggressively. The double cycle bill method looks as if it was designed to get greater interest payments from those consumers looking to eliminate their debt quickly.

Overall this billing scheme puts consumers behind the eight ball when it comes to reducing or eliminating their debts. Credit card companies under this billing structure have an advantage that consumers may not be able to overcome, putting them in a position where they are consistently getting behind with their credit card debts.

Information on ‘Double Cycle Billing’ is available on the Federal Reserve’s website: www.federalreserve.gov, there you’ll find a complete overview of consumer debt trends and an overview of new credit card rules and how they may apply to you. For more help on understanding your creditors or eliminating your credit card debt, feel free to contact Preferred Financial Services.

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Credit Card Debt Help debt reduction, preferred financial, preferred financial services

NEW YORK (AP) — It’s no mistake. This credit card’s interest rate is 79.9 percent.

The bloated APR is how First Premier Bank, a sub-prime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It’s a strategy other subprime card issuers could start adopting to get around the new rules.

Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card’s credit line.

In a recent mailing for a pre-approved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn’t set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.

“It’s the highest on the market. It’s the highest we’ve ever seen,” said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.

The terms are eyebrow raising, but First Premier targets people with bad credit who likely can’t get approved for cards elsewhere. It’s a group that tends to lean heavily on credit too, meaning they’ll likely incur the steep financing charges.

So for a $300 balance, a cardholder would pay about $20 a month in interest.

First Premier said the 79.9 APR offer is a test and that it’s too early to tell whether it will be continued, according to an e-mailed statement. To comply with the new law, the bank said it will no longer offer the card that has $256 in first-year fees as of Feb. 21, 2010. However, customers will still be able to use their existing cards. The bank said “no final decisions” have been made regarding any rate changes for those cards.

First Premier noted that it needed to “price our product based on the risk associated with this market.”

The bank declined to specify how many people were offered the 79.9 APR card.

According to First Premier’s Web site, the credit cards are serviced by its sister organization Premier Bankcard. The company, based in Sioux Falls, S.D., says Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers.

In a mailing sent to prospective customers in October with the revamped terms, First Premier writes “…you might have less-than-perfect credit and we’re OK with that.” The letter notes that an online application or phone call is still required, but guarantees a 60-second status confirmation.

The letter also states there are no hidden fees that aren’t disclosed in the attached form. That’s where the 79.9 percent interest rate and $75 annual fee are listed. There’s also $29 penalty if you pay late or go over your $300 credit limit.

Even if First Premier doesn’t stick with the 79.9 APR, it will likely hike rates considerably from the current 9.9 percent to offset the lower fees, said Shahani of Synovate.

The revamped terms may not be the only changes; First Premier also appears to be moving away from the riskiest borrowers.

The bank typically mails offers to sub-prime households, meaning those with credit scores below 700. In the third quarter, however, 84 percent of its offers were sent to subprime households, down from 91 percent the same period last year, according to Synovate.

First Premier could be cleaning up its credit card portfolio since the new regulations will limit its ability to raise interest rates. That could mean First Premier won’t issue cards as liberally to those with bad credit.

As harsh as First Premier’s terms seem, that could be a blow to those who rely on the card, said Odysseas Papadimitriou, CEO of CardHub.com.

“Even when the cost of credit is astronomical, for people in true emergencies, it’s much better than not having access to credit,” said Papadimitriou.

Until Feb. 21, First Premier is still offering its even-higher-fee card online. So the price for credit the bank charges is at least $256 in first-year fees.

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By Candice Choi, AP Personal Finance Writer

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Credit Card Debt Help

Wednesday, Dec 2, 2009
By Jennifer Hewitt – Bills.com

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Credit Card Debt Help