Fee Harvesting Credit Cards 5 Tips You Should Know About

Is a fee harvesting credit card ever a good idea for people with bad credit?

It depends, say consumer credit counselors and advocates, who generally advise against getting such credit cards. Fee harvesting or subprime credit cards are marketed to people with bad credit who are trying to improve their credit scores by showing good repayment habits. The credit limits are typically low, ranging from perhaps $300 to $500 and interest rates are higher to reflect the greater risk of these cardholders.
The trick is that the cards often have numerous upfront fees that significantly reduce the amount of available credit -- and thus limits the consumer's purchasing power on the card. Solicitation letters and marketing materials for fee harvesting credit cards often do not clearly disclose all of the potential fees. Consumers who get the cards are often blindsided by the fees, advocates say.
"It looks like it might be a good deal for them and ends up with all these hidden fees. It just puts them right over the edge," says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies (AICCCA), a nationwide group that represents 36 nonprofit consumer credit counseling agencies that operate 178 counseling offices in 38 states.
Adds Jones: "A consumer should be very careful to look at all of the fine print and card agreements and understand what they're getting into."

Federal regulators have targeted the cards for greater disclosure requirements, but some consumer advocates say fee harvesting cards should be banned outright as deceptive and unfair. Banks that issue the cards say they are providing a service for the unbanked and for those who could not qualify for credit elsewhere.

Consumers should set a goal of finding "a card with a single-digit interest rate and no annual fee," says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. "Anything higher than that could indicate the card is a subprime product."

The National Consumer Law Center, a Boston-based consumer rights agency, and credit counselors offer the following advice for anyone considering fee harvesting cards:

1. Read the fine print. Be aware of the upfront fees. Asks Cunningham: "What is the interest rate and is it fixed or variable? What is the grace period for payments? What is the late fee if a payment arrives late or is missed? Will the interest rate increase in the event either of those things happen? Can the card be used anywhere (or just through a catalog they offer)?"

2. Shop around. There may be better offers from other issuers.

3. Find alternatives. Prepaid or secured credit cards may help you rebuild your credit without a bunch of fees. Secured cards require that you put your own money into an account. You then use the funds on a credit card and repay the amounts due each month. Debit cards may be another alternative to consider.

4. Don't believe the hype. Many of the marketing materials for fee harvesting credit cards come in the mail or through Internet, television or telemarketer ads and pitches. People desperate for a credit card may fall for slick advertising that may fail to reveal information needed to assess whether the offers are good deals for you. "If a credit card offer seems too good to be true, it may turn out to be a very bad deal," warns a National Consumer Law Center study.

5. Ask yourself why you need the card. If you need to repair a bad credit history, consider other options first.


Beware Of Credit Card Skimming

Credit card skimming is an international problem accounting for losses of over one-billion dollars a year. This type of credit card scam is common in Europe, Asia and Latin America and is starting to show up more in the United States.

This scam is easy to run - it can happen when you give your credit card to a store employee to make a purchase. That employee may not only swipe your card for payment, but also swipe the card with a small machine they hold in their hand known as a skimmer. This small device will store the information from your card into its system. The skimmer is equipped to hold information on hundreds of credit cards and from this information, the crooks are able to produce counterfeit cards.

There are skimming rings working all over the world and once your information is put into the skimmer, it is then downloaded into a computer, ready to be emailed to anyone worldwide.
A decade ago, this fraud was not as easy to accomplish as it is today, due to the fact skimmers were very large and had to be hidden under counters. However, with the advance of technology in the past ten years, they have been able to streamline the skimmer, making it small enough to be hand-held and out of sight of the unwary customer making a purchase. These skimmers are easy to buy; in fact, they can be purchased over the internet at around $300. The machine needed to make counterfeit credit cards is a much larger investment - costing $5,000 to $10,000.
Another form of this scam is done by actually pulling information directly from the credit card terminals. A skimmer bug is placed into the terminal and later retrieved with credit card information on it. Only the older terminals can be violated in this way and with the onset of new credit card terminals, this has alleviated much of this bugging.

As soon as the crooks have their needed information on you, they will start their shopping sprees using your credit card number. They purchase all types of merchandise and charge it to your credit card. Over half of credit card fraud is done over the internet with online purchases. With shopping on the internet becoming more and more popular, card fraud on the internet has also increased.

The crooks will also use the internet to verify the card information is valid. They will purchase many low-ticket items through various websites, checking to see if the card is active. Internet processing of card purchases is done by real-time processing and not handled by a person; thus, no chance of them being caught trying to use a stolen card number.

The cardholder is a victim of this crime and is responsible for up to $50 of the total amount charged on his card, while the real victim in all of this is the merchant whose employee did the skimming. The merchant is held 100% responsible and risks losing the merchandise, and is responsible for paying the fees of the investigation. Investigation fees paid by consumers and businesses in 2003 amounted to an estimated half-billion dollars in annual revenue for credit card companies. This money is used by the card companies to offset costs to investigate charge back claims by their customers.

The crook who perpetrates this card fraud, for the most part, goes unpunished. There is a limit of $2,000 before a criminal investigation can be started; the crooks know this and will not exceed $2,000 on their purchases from any one business. Thus, they are pretty much free to continue to victimize consumers and businesses.


Who Get's My Money After Gift Card Expiration?

Did you get a gift card for Christmas? Since it was given to you, you probably think the money should be spent by you. However, if you wait too long to spend that gift card, it could end up in the state's unclaimed-property account.

Why? Well, even though you might not think you've abandoned your gift card, if you don't use it after a certain amount of years it might be subject to laws that allow the money left on that card to revert, or escheat, to your state's piggy bank.

So, when does the gift card money become the state's money? That depends on your state's escheat laws.
There are basically three models of escheat laws.

1. No expiration or escheat model.

This is a very consumer-friendly model used in several states including California, Washington and Massachusetts. This model never gives up the money to the state. The gift card is good from now until eternity. In this model, there is a reserve fund specifically for redemptions set up by the retailer. By setting up this reserve fund, the retailer recognizes that the consumer can eventually redeem the gift card for merchandise. Retailers in these states are not required to have the money escheat to the state.

2. 60/40 model.

This is a more traditional model stating that gift certificates can come with expiration dates and when they do expire (usually between three and five years) retailers are responsible for having 60 percent of the value of the card escheat to the state. The retailers are allowed to keep the other 40 percent. The state acknowledges that retailers have costs that come with gift cards and allows them to keep a portion of the leftover money. Indiana and Iowa use this law.

3. No gift-card expiration dates, escheat laws apply.

This model is somewhat confusing since the states involved, such as Connecticut, have eliminated expiration dates on gift card and certificates. However, even though consumers will not find expiration dates on their gift cards, they are expected to use their gift cards within three years. Otherwise the state views the gift card as abandoned and the money escheats to the state. However, if a customer comes in after three years and obtains merchandise from the store using their unexpired gift card, the retailers can apply to get the money back from the state.

According to George Delta, counsel to the Incentive Marketing Association, a trade organization of businesses in the incentive industry, "States require businesses to give them some type of periodic report of the amount of unclaimed property they are holding. This allows the state to monitor this potential source of income."

Dan Horne, professor of marketing at Providence College, says consumers ultimately benefit from state escheat laws because the unused money that is not claimed goes into the state Treasury.

With 50 states, there is no easy, uniform answer to questions of escheat. If you are wondering about how your state handles gift cards, the Incentive Gift Card Council offers a link to check your state's escheat laws.

By Kristin Arnold

Tips For Responsible Credit Card Use

These days it seems the use of credit is running rampant. So many people are purchasing things they don't have the money for. This is quickly ensuring a generation of people who will spend a majority of what they earn just to may down their debt, instead of using their hard-earned money for other things.

Credit is an important part of buying the necessities in life, such as a home, or a vehicle. The more credit you're able the build, the better, so a credit card is an easy avenue to get there. Credit used irresponsibly, however, can do serious harm to your credit status. Therefore, a serious look at responsible credit card use is important.

The first thing to remember when using your new credit card is to go by a budget. Decide just how much you can comfortably afford to absorb and try not to go over this total. Just because you have a limit of $5000, doesn't mean you should max this number out each month. It is ultimately your money that you are spending, so keep this in mind when developing a budget.
Pay the full balance on your card as often as possible. If you are sticking to your monthly budget, this shouldn't be a problem. Keeping your balance paid in full will ultimately boost your credit rating much quicker, as creditors will see you as a much lower credit risk. Paying in full will also help you to avoid costly interest charges. Paying just a minimum monthly payment will ultimately cost you many times over in interest charges, so it is important to pay your balance in full to avoid those extra charges.

Pay close attention to your statements. Credit companies can normally change interest rates with advance notice. Read your statements thoroughly to ensure you're well aware of any changes in your account and act accordingly.

Keep track of the due date for payment and be sure never to be late in making your payment. This is where credit companies earn a majority of their profits. They will charge a late fee, even for being one day late with your payment. Always try to get your payment in well in advance to avoid a late fee.

Save all of your transaction receipts. Hold onto your receipts and check them against your monthly statement to ensure there are no mistakes. This will ensure you have physical proof in case the listing in your statement does not match up with your receipt. The last thing you want is to pay extra for something because you misplaced your receipt.

Never give your PIN number to anyone. There is no valid reason for a bank, credit card company, or any merchant to request your PIN number. Disclosure of your PIN number can lead to credit card fraud and the possibility of you being stuck with charges you never made.

When paying with your card, keep a keen eye on the merchant accepting it. Be on the look out for any suspicious activity. Card skimming is becoming a highly lucrative form of fraud and could potentially cost you a lot of money if you are hit. If you suspect you have been the victim of skimming, or any other form of credit card fraud, contact your credit card company immediately to have it deactivated.

Following the tips outlined above should help you make responsible choices when using your credit card and will hopefully help you avoid pitfalls many do not. A credit card is a very convenient tool when used responsibly.


What Is Bank Secured Credit Cards

Even though there are many types of credit cards out there for consumers, there are few for those with bad credit. Those who are looking to repair their credit have a few options available, one of which is the bank secured credit card. This credit card can help you to repair your credit, as it works in conjunction with your savings or checking account.

Bank secured credit cards look and work just like traditional credit cards, although they use your bank account as collateral. Anytime you arent able to pay your credit card bill at the due date, the bank will take the money out of your account. This way, there is always money there for the bank, in the event that you are unable to make your payment.

credit card reportBank secured credit cards are also ideal for those who have a bankruptcy or simply dont qualify for a line of credit due to bad credit or no credit history. These credit cards show your bank that you are able to pay your monthly dues, and that you are taking the necessary steps in rebuilding or building your credit. Over time, if you remain responsible and pay your bill on time, your bank may give you an unsecured line of credit - known as a standard credit card with no collateral.
Due to the fact that bank secured credit cards only allow you to spend what have in your account, you dont need to worry about debt. When you cant make a payment, the bank simply takes the money out of your account. Although this is a great back up plan, you should always pay your bill and never let this happen.

Just like other credit cards, bank secured credit cards do have disadvantages that can hit you like a ton of bricks should you use the card irresponsibly. Anytime you dont pay your bill on time, the bank can hit you with high interest charges and late charges. These charges and fees can get higher and higher if you dont start paying your bill, which can eventually cause you to drain your account that you set aside. If you pay your bill on time though, you wont have to worry about being hit with these types of charges.

For those who have bad credit or need to start building credit, a bank secured credit card is a great place to start. These cards can lead you to an unsecured credit card, providing you pay your bill on time. Almost all banks offer these credit cards, all you have to do is ask. Once you have kept your credit card in good standing for a period of time - youll have the satisfaction in knowing that you are taking the right steps in rebuilding your credit.


Credit Cards And Credit Reports

Over the years, credit cards have become very popular. When they were first introduced, they were popular, although these days millions of people use them. There are many types of credit cards available, including those that help people who have bad credit. You should always keep in mind that even though credit cards are great to have, they will also have quite an impact on your credit report.

The credit report is extremely important, especially when it comes to credit cards. Banks and lenders use your credit report to determine if you meet their criteria for a credit card or a loan. Your credit report is the determining factor for your credit, which is why you should never let your credit cards do any type of damage to your report. To avoid this, simply pay your bill on time.

credit card reportMost people will use their credit cards responsibly and wont damage their credit report. Doing this will show lenders that you are responsible, and that they can trust you with loans and credit - which in turn will raise your credit score. Keep in mind however; if you have a lot of open accounts, it may tell lenders that you have a lot open and that you wont be able to pay them back. Although this may count as good credit, lenders look at several open accounts as being potentially damaging to your credit report.
Although you may be tempted to have more than one credit card, it can actually be a downfall in the eyes of the lender. Most lenders will see this as you having a way to spend all of your limit, and will fear that you may do so. Even though you may not have this intention, credit card lenders will almost always fear the worst case scenario, and it eventually lead to you damaging your credit score - simply because a lender will turn you down for a future offer you apply for.

Something else you need to keep in mind is the fact that it can be really easy to miss a payment on your credit cards. Although this doesnt sound bad, it can have a very negative look on your credit report. If you start missing payments or paying them late, the lender will eventually enter it in your credit report. This can have a negative impact, lowering your beacon score and eventually bringing down your overall credit rating.

If you play it safe and only get one or two credit cards and keep a track of how you use them, you wont need to worry. Your credit report should always be a primary concern, and you should always do your best to ensure that it stays free of negative ratings. If you keep up things up to date - youll enjoy the benefit of a positive credit report.


Options For Your Credit Cards

Those of you who are looking to get the best options with your credit card, should first look into the terms associated with that card. There are a lot of different features that you can get with credit cards these days, including low APR, rewards, no annual fees, and several other perks designed to keep you using your credit card.

There are several credit cards that you can choose from as well, giving you a slew of different options. There are credit cards with instant approval, credit cards with low interest rates, cash back credit cards, reward credit cards, and even prepaid credit cards. If you have good credit, you wont have a problem getting any type of credit card you desire.

Most people think of the best options with credit cards being the rewards. Reward credit cards are great to have, as they give you extra incentives for the money you spend. Whether its cash back or points to redeem towards hundreds of items, cash back cards make it worth your time and interest to use your credit card. These cards are becoming very popular, as they offer you features that other types of credit cards generally dont offer.
Another great option for credit cards is low APR rates. Your APR, or annual percentage rate, is the amount of money that you pay at the end of the year for your credit card. If you can get a credit card with low APR and low fees, you should hang on to that card. Credit card companies and banks are always competing for your business, and you can normally find credit cards these days with some truly impressive features.

To get the best possible options for your credit card, you should always shop around and compare what each company or bank has to offer. Most options found on credit cards will vary from company to company and bank to bank. If you have access to the Internet, you should use it to find yourself the best possible credit card. There are literally hundreds of credit card offers found on the Internet, many of which offer you some truly great options with their credit cards.

Before deciding on your credit card, you need to determine which options are the best for you. This way, youll know exactly what to look for. The better credit cards will include several different options, such as low APR, low fees, and certain rewards as well. These types of credit cards are easily the best investment, as they give you a lot of bang for your buck. If you play your cards right and look for the right credit card - youll get the options you desire with a credit card that youll be proud to use.


How To Raise Your Credit Card Limit

Nearly everyone who has a credit card always has the goal of a higher line of credit. A higher credit card limit will enable you to make much higher purchases, normally purchases that you are unable to get with your current line of credit. There are ways that you can get a higher credit limit. Below, are some tips that will help you raise the limit of your credit.

The most important thing to do when improving your credit limit is to improve your overall level of credit worthiness. This tells banks and lenders that you can be trusted with credit, and that you are little to no risk for them. When lenders and banks look at your credit report, this is the first thing that they look for.

You can attract a lot of positive attention with a credit card company or bank with your finance purchases. You should pay them every once in a while, although you shouldnt go out of your way to make a habit of it. Normally, this should be done as a last resort when all else fails to increase your overall chances of raising your line of credit.
Once you prove to a bank or credit card company that you can be trusted to borrow money, they may raise your line of credit. You should be careful with this strategy however, as this could only apply to your bank or current credit card company. Having a higher credit line may allow you to have more purchasing power, although it can also leave you with more fees and even an increase in your current interest and APR charges.

Another great way to increase your credit limit is to use your credit card every chance you get. When you have a credit card, dont use it just for emergency purposes. If you save your credit card for emergency purposes only, youll rarely use it. When this happens, your company will begin to wonder about your spending behavior and ability to pay it back, therefore they will start to think twice about giving you a higher line of credit.

When you send in your payment, always try to pay more than just the minimum amount. If you can afford to, you should try to pay the whole outstanding amount. Doing so shows credit card companies and banks that you are striving for better credit. This way, youll show them that you deserve to have a higher line of credit.

If you follow the above tips, youll get your credit limit higher in no time at all. Once you get your limit raised, you should protect it at all costs. If you continue to strive for perfection - youll get a higher line of credit than you ever thought possible.


3 Easy Steps To Lower Your Credit Card Debt

Are you like millions of other people who are being suffocated by immense credit card debts? If you have any common sense you will realize that it is time to stop creating more problems for yourself and that it is time to change your financial situation for good.

Let’s face it - when you are burdened with huge credit card debts it becomes an all out fight between you and the credit card companies to get what you want. It’s time for you to find the right information and figure out exactly how you can settle up with all of your credit card debts. First off, it’s important that you do not close any accounts right away. You will be losing a lot of leverage that you will eventually need. What you should do instead is pay off the card that has the highest interest rate first. Read on and use this valuable advice to help you gradually reduce your credit card debt.

First, it’s time to figure out what you owe. You can do this by calling the banks you have credit cards with and asking them what the balance outstanding is today. Make sure you write everything down and keep track of what you owe to each company on a sheet of paper. Also, make a note of what interest rate each company is charging you. Keep track of all this information in a file folder for future reference.
Now that you have a good idea of what you owe, it’s time to figure out your monthly payments. If you are simply making the minimum monthly payment chances are you will never be out of debt. You should never pay less than the previous months’ interest charge. Never forget that interest is always accumulating, therefore you should never skip a payment. This can land you in a lot of trouble with fees. Gather up all of your statements for the last year, sit down and add them all up to come to a reasonable conclusion in regards to what you are paying monthly on average. It will definitely take a lot of time and effort to figure out what monthly payments you will need to make in order to reduce your credit card debt. However, if you can find a reasonable amount that you can pay each month to gradually chip away at your credit card debt you will be well on your way.
Next, you should contact a credit counseling service. There are a variety of credit counseling companies that can help you through your battle with the credit card companies. It can be tricky to get everything working properly on your own. Credit counseling can help you in many ways because it takes a lot of guesswork out of the situation. They lay everything out for you in plain English and help you get on the right track to reducing your debt. They also have a lot of connections within the industry, which can give you some extra leverage. Credit counseling is usually very inexpensive if not free in some instances. Therefore, it would be a waste not to take advantage of this service because it can help you out.

In short, if you have found yourself, like so many others, with a high amount of credit card debt and are unable to pay it off before the next millennium then hopefully you have found the information you needed. It is important, however, that you continue researching and discovering your rights as a customer of the credit card companies. You can even get started today by calling up the credit card companies and getting some information about your account. Make sure that you ask them all the questions you have and get the answers you are after. Good luck.


How To Choose Credit Card, I Mean The Right One

If you are like most people, you are subjected to numerous credit card offers each and every day. Credit card companies target people not only via email and the post but also on television and the Internet. When you see these credit card offers, you may be thinking about getting another credit card, or maybe even your first credit card ever. However, always be careful when applying for a credit card. True, a credit card can make life easier financially, however, it is very easy to fall into debt when they are not used responsibly.

Before applying for a credit card, it is essential that you decide which type of card you need or want. Always be sure to look at your greatest monthly expenditure, which will help you make this decision. You may need an air miles card, a gas card, or a simple rewards card (for almost any other type of purchase). When you choose a credit card based on what you spend the most money on, you can increase the likelihood of rewards, rebates, or credits that can end up saving you money in the long run.
Another factor you should look at when considering a particular credit card is the interest rate associated with purchases and cash advances. Many credit cards have an introductory interest offer of 0% for a limited time however, that percentage rate will end after a certain amount of time. Obtaining a credit card with a 0% introductory offer is great when you can transfer balances over and pay them off, thus saving money on the interest on the other card. Or, if you need to make a large purchase, you can do so affordably while paying the balance off before the interest rate incurs.
If you are looking at a rewards card, you should review what kind of rewards you can get from using the card. Many rewards cards talk the offers up, but in the long run do not offer you much at all. Others are incredibly generous. Always read the fine print and details of the rewards program to see what exactly is involved. Some cards will offer one to three percent rewards on what you spend for groceries, gas, medicine, and other purchases. The rewards may come in the form of cash back, discounts, or rebates. The type of reward that you may get usually will depend on the type of credit rating you have.

Another important feature of the credit card you are considering is the possibility of any hidden or extra fees. Every credit card is different. While some credit cards will have an annual fee, others will not. Furthermore, many credit cards do have an application or processing fee; and even hidden membership fees later on. Always be sure to read the fine print.

Once you have read through the entire credit card offer and examined the different introductory offer details, go ahead and apply for the card. Once you do get your credit card, be sure to always make your payments on time and pay as much of the balance as you possibly can.


Is there a new rules for credit card minimum payments?

The proposed Regulation Z revisions cover two different kinds of disclosures designed to warn consumers who make the minimum payments on their accounts. Paying only the minimum amount each month lengthens the amount of time credit cardholders can take to pay off their debts -- and increases the amount of interest creditors earn from accountholders.
The Fed proposes alerting consumers on monthly (periodic) statements about the consequences of minimum payments. The proposal requires credit card issuers to: "provide (1) a 'warning' statement indicating that making only the minimum payment will increase the interest the consumer pays and the time it takes to repay the consumer's balance; (2) a hypothetical example of how long it would take to pay a specified balance in full if only minimum payments are made; and (3) a toll-free telephone number that consumers may call to obtain an estimate of the time it would take to repay their actual account balance using minimum payments."
The National Retail Federation, a trade association that represents more than 1.6 million retailers (discount and department stores, catalog distributors and Internet sites), says the Fed should clarify this requirement. Retailers may grant several different lines of credit (called sub-accounts) to a single customer based on general purchase items or big-ticket merchandise. These accounts each often carry different interest rates and terms.

"It is not clear whether the proposal contemplates a separate minimum payment disclosure for each of these sub-accounts," the retail federation writes. "Some credit grantors may want to disclose only the longest applicable period, while others may wish to specify the maximum time."
Revolving lines of credit
Regulators also want to make revolving credit plans -- those credit accounts opened at furniture or appliance stores or other retail outlets selling "big-ticket" items -- more consumer-friendly. These types of accounts may not issue credit cards but make lines of credit available to customers. "The monthly minimum payments associated with the purchase are often advertised as part of the offer," according to the board.

You've probably seen or heard ads that promote "zero down" or $50 a month" and it's yours to take home. "Some consumers agree to the financing on the basis of a certain advertised minimum payment but are later surprised to learn how long the debt will take to pay, and how much the credit will cost them over that time period," according to regulators.

There are currently no rules requiring creditors to disclose repayment terms in the ads. The Fed wants to change that. Regulation Z revisions would require all advertisements for these credit plans to give equal prominence to the minimum payment as well as the amount of time required to pay off the balance and the total amount of the payments if consumers pay only the minimum monthly installments.

Retailers object to this provision as well, citing concerns that the minimum payment disclosures do "not provide consumers with a realistic assessment of the time required to complete minimum payments."
However, Chase bank has asked the Fed to reconsider this rule change because banks and credit card issuers are the wrong targets for such regulation. "We believe these changes should be limited to sellers of goods and services, or those under common control with those sellers."
The National Consumer Law Center points out potential loopholes in both disclosure proposals, and notes: " ... [T]here may well be a sales pitch without an 'advertisement' ... "


How to flee from holiday credit card debt

Climbing out of holiday debt isn't easy, but it has to be done. The holidays bring a flurry of emotions and obligations, and people find it easy to get lost in holiday spirit. You may feel guilty if you can't afford to buy your loved ones what they want, so you put presents on the credit card.

Come January, the holiday joy turns into debt regret. It's important to shed this debt quickly, and to learn how to prevent the same troubles next year.

Drowning in debt after the holidays is all too common. "It's important to first take a deep breath and realize you're not the only one struggling with looming holiday debt," says Michael Gold, a certified financial planner who works in investments at Wachovia Securities. The average American household is already saddled with debt before holiday spending, so "digging an even bigger hole of debt during the holidays is a major concern for most."

First step: Tally the damage
To sort through your post-holiday debt, write down your total outstanding balance, interest rate and minimum payment for each credit card. Gold suggests paying off the balance on your credit card with the highest interest rate first, and continuing to do so with all your cards until you end up with the lowest interest card. This is the only card that should not have a date with the scissors -- or at least temporarily retired.
You also have the option of consolidating your balances onto one or two cards with low or 0 percent interest rate. Many balance transfer cards carry their low rate for up to a year. As you pay the other balances off on the higher-rate cards, consider closing the accounts -- although that is a step to take slowly and carefully because closing credit accounts can hurt your credit score. See the story "Do's and don'ts for closing old credit card accounts" for details.

Some people have an alternative to credit cards. "If you're a homeowner, set up a home equity line and use that cash to pay off your credit cards. This can save hundreds, if not thousands of dollars in interest charges," Gold says. Be aware, however, that switching a debt from credit card to a home equity loan or line of credit is trading unsecured debt for secured debt. In other words, you could lose your home if you default.

If you feel like you can't go it alone, contact your creditors, or find an accredited credit counselor. Many creditors are willing to work out a repayment plan with you -- either directly or through the credit counselor -- if that will help them get their money without the help of debt collectors. Be mindful that changing your credit terms or paying anything less than you originally agreed can have a substantial negative effect on your credit score.

Whack unnecessary frivolity
Reducing discretionary expenses and cutting back on unnecessary spending and frivolous activity is a wise idea until your finances are back on track, Gold says. He suggests bringing lunch to work and eating out one less night a week. "You'll be surprised how quickly you can save up cash to get rid of that looming debt and begin a truly happy new year," he says.

In order to determine where unnecessary purchases are happening, you should track your spending. Manisha Thakor, co-author of "On My Own Two Feet," a personal finance guide for young women, has many years of experience in the financial services industry. She says it's time for a "financial reality check," which is like a diet diary. This is done by keeping a piece of paper in your wallet for one or two months and writing down everything you spend. "At the end of each month, tally it all up," Thakor says.

"If you find that you are spending as much or more than you make -- and many people do -- whip out two different colored highlighters. With one, highlight the true essentials. In another color highlight all the fun expenses."

Rough budget benchmarks
Thakor says that for most people, balanced spending of your total gross income should be as follows: roughly 25 percent goes to taxes, 15 percent to savings, 45 percent to foundation expenses and 15 percent to fun expenses. "If your budget pie slices are out of whack, slow down and look item by item to see what you can cut back on," Thakor says. Some of her suggestions are getting rid of magazine subscriptions you don't read and no longer going out for drinks with people you don't like.

Once your post-holiday finances have shifted from red to black, learn how to prevent yourself from ending up with the same debt next year. While it may sound early, Gold says you should prepare a budget for next holiday season now. List every possible person you will give gifts to. Look at what you spent this year, inflate it by 2 or 3 percent and use that as your budget. "Divide that number by 12, for 12 months, set up a separate account and have that number automatically deposited into that account. Come December 2008, you have your holiday money," Gold says.

Plan now for '08 holidays
You should also purchase all of your gift-wrapping, cards and decorations in all the post-holiday sales, when everything is heavily discounted, and save them for next year.

Gold also suggests comparing prices on the Internet before going to the store, as you can find some of the best deals this way. Avoiding frequent dining with friends and family during the holidays is another way to cut back. "Instead of going out with every couple in the neighborhood at fine restaurants, consider having a neighborhood potluck dinner," Gold says. "Each couple brings over a dish they prepared and you'll be surprised at how much fun you can have while saving a tremendous amount of money."

A final suggestion is to do a "Secret Santa" or "Secret Hanukkah Harry" gift-giving method. Instead of every single relative buying each other gifts, each person picks a family member's name from a hat (which stays secret) and buys that person a gift. You can place a price cap on how much everyone can spend. This can save you and your family hundreds if not thousands of dollars, depending on how big your family is. "You might be surprised by how many family members feel the same way you do when it comes to spending for the holidays. Trust me, your loved ones will be relieved that they won't have the daunting task of shopping and spending for so many relatives this year," Gold says.

Crawling out of debt isn't easy, so don't keep doing this to yourself every holiday season. Tackle the debt wisely now, and plan way ahead of time for the holidays next year. There's nothing like starting off a new year fresh.


How to claim expired gift card funds

My gift card survey showed that most gift cards issued by major retail chains do not expire. But some do. What happens to that unclaimed money is increasingly the subject of a tug of war between retailers and states, many of which have passed laws forcing retailers to turn the money over.

"There is an increasing chess game between issuers of these cards trying to find ways to reduce abandoned property exposure and states trying to increase ways to get their hands on what they view as legitimate abandoned property," says attorney Duncan Douglass of Alston & Bird, LLP in Atlanta, who specializes in gift cards and the state laws that apply to them. Catherine Fox-Simpson, a partner in the retail and consumer product practice at consulting firm BDO Seidman, LLP, is more blunt. "I expect a showdown," she says. "It is a matter of time."
As of November 2007, according to the National Conference of State Legislatures Web site, more than 30 states have unclaimed property laws that apply to unused gift card balances. In Michigan and New York, unused balances go to the state (escheat). In Texas and Illinois gift card balances are reverted to the state with certain conditions, while in Florida open-loop, network-branded gift card balances go to the state when unused. People who bought cards in those states may try to initiate unclaimed property claims, usually through the state’s treasurer or similar post. The National Association of Unclaimed Property Administrators’ Web site can link you to the appropriate office in every state.
A minority of states, including the largest, California, do not presently make any effort to reclaim gift card money into state coffers.

There is a third party in this competition over unspent gift card money: The consumer who paid for it in the first place.

How can these consumers make sure that neither the retailer nor the state gets to keep their money? Experts and states recommend the following steps:

  • When buying or receiving a gift card, read it carefully. In some cases, the retailer may not make it entirely clear if or how the gift card expires. "We encourage people to read the fine print regardless of what the merchandiser tells them," says Elizabeth Kupchinsky, spokeswoman for the Pennsylvania Treasury Department.

  • Hold onto the physical card itself and any receipts. Very often, it is unclear to whom the expired gift cards funds belong. "The difficulty in gift cards is that there is no name attached at the point of sale unlike, say, having a deposit for your utility service," says Rochelle Stewart, bureau chief for Citizen Services at the Montana Department of Revenue. Having the card and receipt in your possession can help.

  • Learn how gift card expirations are treated in your state, because the issuer may be prohibited from imposing an expiration date. In states with such laws, funds on expired gift cards no longer have to be turned over as unclaimed property.

  • If the state permits expiration and the date is past, talk to the retailer first. "We encourage people to go to the business and say 'Will you honor this?'" says Kupchinsky. Even if they won't, some card issuers may allow the gift card funds to be transferred to a new card.

If the retailer has already turned over the money, look to the state for help. Every state maintains an online database of unclaimed property. Additionally, a call to the Department of Revenue, state Treasury Department or other government branch in charge of unclaimed property could help.