This week the experts from Credit.com talked to the media about the latest news in prepaid cards, underwater mortgages, credit cards and paying the debts of a deceased loved one. Check out the highlights …

Susan Tompor of the Detroit Free Press is no fan of extra fees, and she definitely doesn’t want her family paying them to use a prepaid card. Prepaid cards are gaining popularity with celebrity endorsements and younger consumers are getting easier access to them. Credit.com’s credit card expert Beverly Harzog points out that these cards are even being marketed to young professionals. @freep @BeverlyHarzog

Those who have underwater mortgages know too well that relief can be hard to come by. The government run program HARP was created to refinance mortgages, but fell way short of helping its targeted number of U.S. households. Now with the latest iteration, HARP 2.0, there’s hope for more progress. Gerri Detweiler talks to NYT’s Bucks Blog about how the program does help mortgage holders refinance, but not in great numbers. This is a case of a well intentioned government program that hasn’t translated to a real momentum of relief to borrowers — yet. @nytimes @gerridetweiler

Beverly Harzog talks about all things credit on WOOD Radio. She gives great advice on how to obtain the best card by considering where your credit is, what rewards make sense for you and what your credit goals are. She also warns against having too many store credit cards. When encountering a pushy sales person who tries to get you to sign up for a card you don’t want or haven’t read up on: Just say no! @woodradio

Getting a credit card for the first time is something many of us view as part of becoming an adult. Parents who provide their children with credit should also provide financial education. Beverly Harzog points out that younger credit users don’t always know the consequences of their spending habits and how that can be a lifelong mistake. Building credit is an essential part of a strong financial profile, but there are very adult responsibilities that go along with it. Children should be prepared, mature and disciplined enough before their parents hand over that 16-digit card. Check out some good options for first-time credit cards here. @USNews @DanielBortz

Continuing the theme of educating the young on the pitfalls of credit, Beverly talks to Fox Business about five common credit report mistakes college students should avoid. She stresses that everyone should keep any document that could legally effect your credit score. Beverly also advises to review your credit report to make sure there aren’t any fraudulent accounts on them. Detecting fraud can help prevent further damage to your credit. @FoxBusiness @FoxBizMoney101

Getting saddled with the debt of a loved one who has recently passed can be hard to bear. Our debt expert Gerri Detweiler tackled the difficult topic of who pays the medical debt of the deceased. In the best cases Medicare and private insurance will cover the entirety of the medical bills, but others aren’t as lucky. Gerri explains that you have to examine all of the medical paperwork that was signed and to seek counsel from patients rights specialists in order to know where you stand. @njdotcom

Here are a few credit card highlights from the past week. A study showed that many people are using credit cards just to survive, that people seem to be choosing credit over debit when buying stuff, and that it’s essential to take steps to protect your identity before you ever leave your house. Oh, and as always, there’s news about prepaid cards.

More Americans Rely on Credit Cards for Basics Like Food and Gas

I hate hearing news like this. But I can’t say I’m surprised, either, because many people are still recovering from the Great Recession. A new study shows that 40 percent of low- and moderate-income families rely on credit cards just for basic needs. This percent goes up to 45 percent for families with incomes less than $50,000. According to this story, the restructuring of employment benefits has partly led to the crisis, especially for those who have been out of work for six months or more.

@TIMEMoneyland

3^rd Update: Visa Shares Slip As Debit-Card Spending Declines

This story caught my eye because it says a lot about our current spending habits. Debit card spending was down 12 percent in April and 8 percent in May. On the flip side, credit card spending increased 8 percent in April and 10 percent in May.

New regulations that decreased revenue on debit card transactions have resulted in credit card issuers encouraging consumers to choose credit more often than debit. This article does a good job of explaining how the market response to regulations can change spending patterns over time.

@AndrewRJohnson @MarketWatch

Protecting Your Identity On the Road

This article offers practical and smart tips for avoiding identity theft while traveling, such as alerting your credit card issuers before you leave and simplifying the number of cards in your wallet.

There are also tips for how to proceed if you do end up as a an identity theft victim while you’re on the road. Read this before you pack for vacation or for that next business trip.

@msnbc

Susan Tompor: Prepaid Cards Gain Popularity

Okay, full disclosure: I’m quoted in this story. But I wanted to highlight it because Susan Tompor, the personal finance columnist for the Detroit Free Press, does a great job giving consumers an overview of this industry.

Would you believe more than 7 million consumers use prepaid cards? And believe it or not, about $57 billion (yes, billions, not just millions) were loaded onto prepaid cards last year. Read the article for more insight into this popular, but fee-driven, industry.

@freep @tompor

Image: 401calculator.org

In recent months, mortgage rates have been hovering at or near all-time lows and home prices have continually declined, leading to greater housing affordability. That trend continued into March as a result of foreclosure activity.

New data from the Standard & Poor’s/Case-Shiller home price index shows that the cost of buying a property now stands at a recent low, having fallen 1.9 percent from the same time last year, according to a report from RealtyTrac. And that trend is largely being driven by foreclosures.

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Where these seized properties are concerned, there is a growing supply — homes that have been seized during the housing downturn, but have not been sold yet — and relatively low demand, the report said. As a consequence, prices remain extremely low and the supply-and-demand situation will likely only serve to drive them lower in the future, even as the rate of decline in this metric has slowed since the start of the new year. Currently, prices are still 35 percent below where they were at their height, just prior to the housing bubble bursting.

However, foreclosure activity has largely declined in recent months. In the 20 metropolitan areas the Case-Shiller index covers, the decline has been significant, the report said. In all, only seven of those markets — Charlotte, N.C.; Dallas; Denver; Detroit; Miami; Minneapolis; and Phoenix — have seen home prices increase. The other 13 saw them fall.

But because of the large amount of bank-owned properties, and the large amount of borrowers nationwide who still have underwater mortgages, it is difficult to believe a full-scale recovery of the housing market is going to come any time soon, the report said. However, these new lows could also be the point at which values bottom out and begin improving again, and it’s fair to be at least cautiously optimistic about the state of the market overall.

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In recent months, the amount of mortgage activity from one week to the next has been considered a mixed bag by experts. At some points, the number of homeowners seeking to refinance their existing loans en masse rises, and there are increases in applications for new financing in others, as well as occasional declines or increases in both.

Image: TaxBrackets.org, via Flickr

If you’ve never been rejected for credit, count yourself fortunate. Somewhere between 25 – 35% of most credit card applications are typically approved, “depending upon the pricing value proposition and other factors,” according to Robert Hammer, president of R.K. Hammer and Associates, a consultant to the card industry.

That means one out of every three or four applicants may be getting a rejection letter. With some issuers, the approval rate may be a mere 10% or so.

Image: Avenue G

If you’re not turned down for credit, you may be told instead that you didn’t qualify for the best rate. Either way, if a credit score (or credit-based insurance score) was used in the decision-making process, you must be told the main factors that contributed to your score.

Deciphering those reasons can be maddening though. “What do you mean I have no recent revolving balances?” Or, “So it says my account balances are too high. What does ‘too high’ mean anyway?”

Here’s a guide to some of the main reasons you may be turned down — and what you can do about them.

Keep in mind these are just some of the factors that may be used to evaluate your credit. Not all of them will apply in all situations, and there may be variations on these as well.

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Reason 1: Proportion of balances to credit limits is too high on bank revolving or other revolving accounts »

Proportion of balances to credit limits is too high on bank revolving or other revolving accounts

Image: Hans Splinter

What it means: The score likely looks at your total available credit limits and compares them to your outstanding balances, individually and in the aggregate. The greater the percentage of your available credit that you are using, the greater the impact to your scores. There’s no magic number here, though. In other words, getting your balances below 30% or 50% of your available credit doesn’t automatically eliminate this factor.

What you can do about it: Focus on paying down balances that are close to the credit limits as quickly as possible. What about transferring a balance from a maxed-out card to one with a smaller balance? While that might help, it’s not likely, since you still have just as much debt as before (another factor). If you can’t make headway on paying down your credit cards, you may want to talk with a credit counseling agency.

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Reason 2: Amount owed on accounts is too high »

Amount owed on accounts is too high

Image: Vladimer Shioshvili

What it means: This factor may look at your debt in comparison to other consumers, and if your debt is higher than optimal, it could show up as a reason why you weren’t approved.

What you can do about it: This one is particularly frustrating because you probably have no idea how much debt is too much, nor do you know which balances to try to pay down first. Typically, though, you’ll get the most bang for your buck, credit-wise, by focusing on paying down your credit cards with balances that are closest to the limits first.

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Reason 3: Too many recent inquiries last 12 months »

Too many recent inquiries last 12 months

Image: IvanWalsh.com

What it means: This reason appears when your credit report indicates a high number of credit applications (inquiries) within the last year. But not all are counted the same. Checking your own credit reports doesn’t count; nor do promotional inquiries, inquiries from employer and insurance companies, and account reviews by your current creditors. The impact of inquiries on your credit will vary, depending on your overall credit profile, but the typical inquiry can be expected to impact your score by about 5 points.

What you can do about it: This reason is more likely to appear when you have a limited credit history or strong credit, simply because there are fewer other significant negative factors affecting your scores. But it doesn’t hurt to lay low for a while. Avoid opening new retail cards. While all inquiries resulting from shopping for a mortgage, student loan or auto loan aren’t as likely to hurt your score as the same number of inquiries for credit cards, limit your applications to a short period of time, such as 14 days.

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Reason 4: Level of delinquency on accounts »

Level of delinquency on accounts

Image: Kevin Cortopassi

What it means: Delinquency refers to payments that were late. The general rule of thumb is that the further you fell behind, the greater the impact to your credit score.

What you can do about it:  If the information is inaccurate, you can dispute it. If it’s correct, you’re going to have to live with it for a while; usually up to seven years. Focus on making your current payments on time. If cash is tight, remember that all you have to do is make the minimum payment on time to avoid a delinquency on your report.

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Reason 5: Time since delinquency is too recent or unknown »

Time since delinquency is too recent or unknown

Image: Milos Milosevic

What it means: Recent late payments will have a greater impact on your score than older late payments. Typically, those within the most recent year or two can hurt your scores the most. If an account was delinquent a while ago, but the credit report doesn’t indicate the date, this factor can pop up as well.

What you can do about it: The good news is that as time passes, these delinquencies will carry less weight, especially when you are paying current bills on time. But the date is important here. If an inaccurate date (or no date) is reported for a charge-off or collection account, for example, make sure you dispute that with the credit reporting agency.

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Reason 6: Serious delinquency, derogatory public record or collection filed »

Serious delinquency, derogatory public record or collection filed

Image: Zach Klein

What it means: This can mean your credit report includes a bankruptcy, judgment, tax lien or collection account. Bankruptcy remains on your report 10 years from the date you file (7 years for a completed Chapter 13); paid judgments can be reported for 7 years but unpaid judgments can stay on there even longer; paid tax liens are removed 7 years after being paid, but unpaid tax liens can remain on your report indefinitely; while collection accounts may be reported seven years and 180 days from the date you first fell behind with the original creditor leading up to the account being turned over to collections.

What you can do about it: If the information is accurate, then this is also a matter of biding your time and making sure you have as many positive credit references currently reporting as possible. (A secured card may be an option if you can’t qualify for a regular credit card.) And while paying a collection, judgment or tax lien won’t likely change this factor in the short run, it could result in the public record item being removed from your report sooner, and protect you from being sued for a debt which could result in additional judgments or collections on your credit reports. If dates are incorrectly reported or payments are not being reported — not uncommon with collection accounts — dispute them.

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Reason 7: No recent revolving balances (or no recent bankcard balances) »

No recent revolving balances (or no recent bankcard balances)

Image: John Lambert Pearson

What it means: This reason may appear when your credit report doesn’t include any revolving accounts (usually credit cards), or when all your credit cards closed or are no longer being reported. If you have open credit cards, it may also appear when there are no balances on those accounts.

What you can do about it: Don’t worry. This doesn’t mean you have to have debt to have good credit. As long as you use your cards from time to time, this shouldn’t be a problem. But if you are avoiding credit cards all together, you’ll have a tough time getting a top credit score. Get a credit card and use it occasionally — even a secured card — and pay it in full and on time, and you should be fine.

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Reason 8: Lack of recent installment loan information »

Lack of recent installment loan information

Image: Wonderlane

What it means: Your mortgage was paid off years ago. You pay cash for your cars. You don’t have any outstanding student loans.  Guess what? The fact that you’re ultra-responsible here doesn’t help your credit scores.

What you can do about it: The strongest credit scores go to those with a mix of different types of accounts. Does that mean you have to rush out and take out a loan? No. But next time you go to buy a car, you may want to find out if you qualify for 0% financing, or a low-rate loan. Or you may want to see if you can get a low-rate personal loan to consolidate some higher-rate credit card debt.  On the other hand, don’t go overboard. You don’t want to pay a lot in extra interest charges.

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Reason 9: Too few accounts currently paid as agreed »

Too few accounts currently paid as agreed

Image: Aidan Jones

What it means: This reason appears when your credit report does not show enough accounts paid on time relative to the number of accounts with late payments. But if you haven’t been late with payments, this reason most likely means that you need more accounts reported on your file as “paid as agreed.”

What you can do about it: You may want to think about adding a current credit reference, or even a couple of them over time. If you’re having trouble getting approved for a credit card or personal loan, consider a secured card.

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Reason 10: Too many consumer finance company accounts »

Too many consumer finance company accounts

Image: Tadson Bussey

What it means: Consumer finance companies make relatively small personal loans, usually limited to several thousand dollars, and quite often at interest rates higher than those on most credit cards. Consumers who rely heavily on consumer finance company accounts tend to be riskier to lenders than consumers who do not have any.

What you can do about it: Paying off these types of accounts will not improve your credit immediately but it’s still a good idea to pay them off as soon as you can since the interest rates are probably high. Next time you need to borrow, try first to get a standard personal loan through a social lending website, for example, or your bank or credit union.

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Have you been turned down for credit? We’d like to hear from you. What was frustrating about the process? Did the notice you receive list a reason you didn’t understand or you didn’t think applied to you? Share your thoughts below.

Millions of consumers changed their credit card behaviors as a result of the financial concerns brought on by the recent recession, and the result of those new attitudes toward carrying debt is still being reflected as the economy makes significant improvements.

The amount of credit card debt carried by the average American has declined significantly in the last two years, even as the number of consumers with credit cards, and the number of households themselves, has increased somewhat significantly, according to a report from the consumer advice site NerdWallet. In all, the total amount of outstanding credit card debt in the U.S. stood at $803.6 billion at the end of March, down significantly from the $842.6 billion observed at the same time in 2010.

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But this change came even as the number of those carrying credit card balances increased to 46.7 percent of all households nationwide, from 43.2 percent in March 2010, the report said. Meanwhile, the number of actual households overall increased by more than 2 million to more than 118.6 million.

In all, the average American household now owes $6,772 on their credit cards, down from $7,219 two years ago, the report said. When excluding consumers who do not have a credit card, and those who do but do not carry a balance, the average debt per household stands at $14,517, down from $16,383 in March 2010.

These figures are in keeping with trends that have been observed since the end of the recession, the report said. Prior to the economic downturn, borrowers made a habit of steadily increasing their outstanding credit card debt, up to an all-time high of $17,936 in late 2008. That number has fallen significantly since, both because consumers are now more conscientious in paying down their balances every month, and also because the number of people who carry a credit card balance slipped significantly. March 2010′s percentage of households with a balance was the all-time low, having slumped from the pre-recession high of 47.8 percent, and that number has begun to creep back toward that higher point since the beginning of 2011.

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Consumers being more cautious about their credit card debt has come both because many have chosen to control spending in ways they did not before, and also as a result of increased efforts to reduce their balances.

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In recent years there has been a lot of scrutiny for credit card lending agreements between financial institutions and colleges across the country. And while many of those have gone away, a new type of partnership seems to have sprung up to take their place.

Currently, there are about 900 agreements between card issuers and institutions of higher learning to promote the use of prepaid debit cards, which typically carry sizable fees, among the schools’ student bodies, according to new research from the U.S. Public Interest Research Group. In all, these agreements effect more than 9 million students, roughly 42 percent of the total college population nationwide.

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Many of these agreements are struck with the nation’s largest institutions, as well, the report said. In all, 32 of the 50 biggest public, four-year colleges in the country have these agreements, as well as 26 of the 50 largest community colleges. Six of the nation’s 20 biggest private schools also have these partnerships, including Liberty University, the University of Pennsylvania, DePaul, Drexel, Western Governors, Johns Hopkins and Northwestern.

This practice can be especially problematic because some schools require students to use these cards to grant access to financial aid, the report said. As a consequence, many may end up actually paying fees to get the financial aid for which they’ve already qualified. Of further concern is that colleges may engage in aggressive marketing, and at least one fee charged by one of the most prolific issuers of these cards would violate rules set by the U.S. Department of Education.

The reason universities engage in these partnerships is the same as when they pushed school-branded credit cards on students, alumni and faculty: they make money for every person who signs up, the report said. Many schools are struggling with budget shortfalls and this can provide an easy way to increase revenue, and can also reduce costs that come with the managing and disbursement of students’ federal financial aid packages.

[Student Loans: Research and compare options for student loans at Credit.com]

The practice of requiring students to take on fee-heavy debit cards could be particularly troubling to young adults because many are already facing significant financial restraints to get their degree. Most are graduating with tens of thousands of dollars in student loan debts and many also have at least one credit card with a few thousand dollars in outstanding balances.

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Suddenly, and finally, everywhere we turn somebody is talking about the student debt disaster. Headlines scream it. The presidential campaigns are beginning to seriously talk about it. Congress is starting to focus on it, well….as only Congress does. Last week, once again demonstrating its ability to turn a simple box into a Rubik’s Cube, in two separate votes a majority of Democrats and Republicans rejected each other’s proposals to extend the low 3.4% rate on many student loans that expires in July.

While the extension would help a lot of struggling Americans, it is little more than trying to suspend a pup tent over a crater. It’s time to stop applying Band-Aids to this gaping hole in the body politic.  One meaningful solution is a new National Service Corps.

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Our banking culture has coaxed the last few generations of students into a false sense of security around the affordability of a college education. A new caste system emerged with the majority of our future workforces willingly entering into indentured scholarship to get a shot at the American dream.

With more dough loosened up via Federal guarantees, tuition rose in an institutional money grab that, even adjusted for inflation, is insane. For-profit colleges pushed loans that rivaled the marketing efforts of reverse mortgages and penny stocks. From 1978 to 2008, the cost of college education increased at more than triple the rate of inflation. Meanwhile, government aid to institutions of higher learning has nosedived in recent years.

The system of higher education in America is broken. That much is certain. But how could a National Service Corps fix this very complicated problem? The mandate is daunting: end the student loan crisis by shining a light on the dangers of skyrocketing student loan burdens while providing a framework to exert downward pressure on the cost of tuition with a workable alternative.

It starts with a change in mentality. People need to stop thinking of college as something they borrow for, and start thinking of it as something they work and save for. A National Service Corps could be the catalyst we need. The G.I. Bill worked in post-World War II America, in part because tuitions were so much more reasonable then, but also because people worked for it. I imagine an NSC that is part employment agency/part vehicle for personal growth and contributing to society.

The National Service Corps would be an umbrella organization that routes people to areas of service that best suits their personal interests and skill sets. People could serve before, during or after college. It would not be mandatory, but it should provide enough incentive for people to want to do it.  For roughly each year of service, the NSC would provide participants with the necessary funds to cover one year of tuition, room, board and fees at any public university, or comparably priced trade school (in addition to a modest salary). The amount could also be applied to the tuition at more expensive private universities, though I’d like to see the private universities give NSC participants a tuition break. If you don’t participate in National Service, and attend college right out of high school, it is appropriate for you to pay more, in order to keep tuition manageable for students receiving NSC subsidies.

[Related Article: For Middle-Age Students, Is College Worth the Risk?]

In terms of the types of service people could do. I envision the following:

• Military: Since members of the military risk the most, I think they should get a full ride after just three years of service.
• Philanthropic: The NSC should place people in organizations like the Peace Corps, AmeriCorps, and other service oriented entities.
• Public Service: The NSC should place people in roles that support the construction and maintenance of American infrastructure and communities. Law enforcement. Firefighters. Construction workers. National Park employees.

Placing these individuals would drastically alter what it means to work in the public sector, but it’s doable. Just as all government agencies must allocate a certain percentage of their private-sector contracts to minority-owned enterprises, participating agencies would be required to draw a set percentage of workers (no matter the skill level) from the NSC.

Essentially, these are real jobs for lower-than-typical pay in exchange for college tuition so they are competitive. Participants are able to replace benefits normally associated with such jobs–such as pension–with tuition credits. Job security, advancement and pay are merit based.

But the devil is in the details, and there are a lot more details to cover. Could the NSC be part of the Department of Labor, or would another agency be better? Can this be funded entirely (or to a large degree) by merging existing program budgets as well as position set-asides in various federal, state and local government agencies? And how can we help students make prudent decisions about what and where to study?

In securities law, brokers have to sell investments that are suitable to the financial circumstances and experience of their customers. This means not selling highly speculative growth stocks to widowers living on modest fixed incomes. The NSC would work in a similar way, requiring school guidance counselors to address the suitability of a prospective borrower’s choice of college and curriculum, in terms of their academic abilities, financial standing, and the likelihood that a loan will be repaid should one be necessary.

Choices would not be dictated by these reports. The purpose is to ensure that everyone who seeks financial assistance, whether it’s via a student loan or the National Service Corps, has at least talked to a professional about that choice.

[Related Article: Crowdsourcing the Student Loan Mess]

I realize that this will be somewhat controversial since there is serious talk about whether most guidance counselors have the chops or the bandwidth given the many tasks and distractions they face each and every day.  In other words, we’d need lots more guidance counselors, and they’d have to provide real guidance.

Furthermore, the Great Recession of 2008 was caused by a woeful lack of financial literacy. The centerpiece of the Dodd-Frank Act is the Consumer Financial Protection Bureau. One of its core missions is to help Americans learn something about the intentionally complicated financial transactions they are tricked into by savvy bankers.

A similar initiative should exist to teach kids about the loan they will have to live with for most of their lives. The material offered would require disclosures from loan providers and schools–in plain English–so there could be no mistake as to just how burdensome the prospective student’s plan is, or will become, over time.

In coming columns I will address ways to help bring down the cost of tuition (like borrowing limits on “per-credit” fees) and appropriate changes to the bankruptcy law that would create a less draconian approach to life with student debt.

Education is the life-blood of a civilization, and excessive debt is like cancer. We must rethink our approach not only to the student loan problem, but also to 21st-century education in America. The NSC and a new approach to the legislation of lending to students will help to solve the problem. Will Durant said, “Education is a progressive discovery of our own ignorance.” Today, we are charged with dispelling our societal ignorance, the ant and grasshopper situation of lending must end, and the hard work of creating a vibrant workforce from a level playing field must begin in earnest.

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Image: Hani Eriani, via Flickr

The Consumer Financial Protection Bureau (CFPB) announced recently that it’s taking a look at regulating the prepaid card industry. This decision has come at a really good time. Although these cards were originally targeted at the unbanked, now the whole world seems to be the target market.

There are a few reasons why we’re turning into a prepaid nation right now. Part of the reason that major banks, such as Chase, are getting involved, is that regulation limited the profits on debit card swipe fees, so they’re looking for other opportunities to bring in money. But beyond that, many issuers have simply realized that these cards are money makers. Even colleges see the value. According to this study released this week by U.S. Public Interest Group Higher Education Fund (U.S. PIRG), as many as 900 colleges, in partnerships with banks, are encouraging students to use prepaid cards.

What I also find interesting is how slick the marketing has gotten. The celeb-issued cards offer a cool factor. Facebook is even getting into the act and offering a FarmVille-branded American Express prepaid card. Gamers can load funds onto the card and when they use it, they get rewards to buy FarmVille stuff. American Express offers one of the least expensive prepaid cards out there, but it’s still not free.

[Free Resource: Check your credit score and report card for free before applying for a credit card]

To add to the confusion about what exactly these cards really offer, a major media outlet recently referred to these cards as “prepaid credit cards.” This whole thing is confusing enough without creating the impression that these cards are actually credit cards, too. And by the way, you do not build credit with a prepaid card because you’re spending your own money.

Anyway, the point here is that prepaid cards are everywhere. So at this time, all that matters is educating and protecting consumers. So thanks to the CFPB for having our backs. Now having said that, regulating an industry can cause unintended negative consequences so the CFPB is walking a fine line. But I get the impression that Cordray knows this and will proceed with care.

Okay, so here’s what I suggest to steady the ship without making things worse for the consumers who really have no other option:

Require a standard Schumer-type box for all fees. Some of the better prepaid cards are already presenting their fees in one place. But there are many issuers out there that take fine print to a new level. I’ve seen fine print sideways. I’m not kidding.

Let’s get all the fees out in the open so consumers can make a smart choice. Those inactivity fees hidden on page 12 of the disclosure statements? In the box! And make the box standard in appearance so consumers know what to look for.

[Related Article: Prepaid Cards: How to Become a Fine Print Warrior]

Take a hard look at the “out there” fees. Okay, I understand that banks are in business to make money and I’m fine with that. But there are some fees on these cards that are too crazy to tolerate.

The CFPB can’t eliminate all of them, but I hope it takes a look at some of the wilder fees, such as inactivity fees, excessive activation fees, $25 to withdraw cash at a bank counter, $25 check processing fees, and so on. All I’m suggesting is that some of the fees out there need to be reviewed–and at the very least–be explained to consumers in clear language.

Review the relationships between colleges and banks. I’m thinking a Credit CARD Act type of move here. Aren’t college students in enough debt without making them pay to use their own money? I mentioned the U.S. PIRG study earlier, which also says that student financial aid funds that are put on these cards are subject to convenience fees if used at an ATM. I’m sorry, but there’s something really wrong about this.

Take a look at consumer protections offered by prepaid cards. Some prepaid cards offer consumer protections, but many do not. Similarly, some prepaid cards are FDIC-insured, but some are not. I’d like to see the CFPB at least take a look at making funds in prepaid accounts FDIC-insured. For now, your only option is to read the fine print twice so you know what protections you have, if any. And if the fine print is sideways, you’d better read it three times.

[Credit Cards: Research and compare prepaid credit cards at Credit.com]

Image: apbeatty, via Flickr

These days, numerous Americans are now receiving significantly increased offers for new credit cards, and in larger volumes. Many may enter into these agreements, though, without carefully considering exactly how much this type of borrowing will cost them in the end.

Credit card offers are now coming with extremely attractive terms. Many offer significant rewards programs, or perhaps extremely low introductory interest rates that last for more than a year. And while those offers may be extremely generous and can be beneficial in certain ways, it’s also important for potential borrowers to carefully consider the other costs involved in opening such an account.

[Free Resource: Check your credit score and report card for free before applying for a credit card]

For example, one of the most important aspects to think about is how much of an interest rate you can expect to pay, either immediately after opening the card or once the introductory period expires. This will help to clarify exactly how much borrowers can expect to pay in interest charges if and when they carry a balance from one month to the next. And if that’s higher than what they currently pay for their existing credit cards, or would be more than the amount they earn in rewards points, it might be a better idea to look at other, similar offers that can be more affordable.

The same is true of annual fees, which are most common with rewards cards. These can cost $50, $100 or more every year, which can be difficult to manage unless borrowers are spending enough on their account annually to cover the added cost. Otherwise, they might end up paying for the privilege of earning rewards points, miles or cash back.

There are other fees to consider as well, such as penalty interest rates or fees that may be applied to an account in the event of a missed payment. These can be quite costly, even if the payment is just a day late. Penalty fees can also be applied for exceeding a credit limit.

[Credit Cards: Research and compare credit cards at Credit.com]

Finally, borrowers who obtain a credit card with a low or even zero-percent introductory interest rate will want to consider the transfer fee they face for moving an existing balance to the new account. Typically, this is around 3 percent of the total amount of debt being transferred, and must be properly planned for to understand the full cost.

Image: Anthrocopy, via Flickr

On a trip to Izmir, Turkey last November, Kathy Worley spent nearly $3000 for a silk rug. At least she thought she was buying a silk rug.

After returning home, a conversation with a retired Turkish rug merchant led her to believe she may have been misled about the rug’s authenticity. “He said that a ‘Silk on Silk’ rug was many of thousands of dollars and recommended getting an appraisal,” said Worley. She did, only to learn it was a fake.

Upset, Worley emailed the merchant in Turkey, stating that she wanted to return the rug. The merchant didn’t respond.

Next, she enlisted the help of her credit card company. She disputed the purchase and was given a temporary credit. Over a month went by before she received a letter from her card issuer stating that the merchant was disputing the chargeback because the rug had not been returned. It cost Worley nearly $300 to send it back via FedEx, and the merchant refused to pick it up.

[Free Resource: Check your credit score and report card for free before applying for a credit card]

Shortly after that, she received a letter from her card issuer stating:

…We are sorry that this is one of the few instances in which we cannot assist you. Please allow us the opportunity to explain more fully.

Due to the fact that this was a face-to-face transaction, you had the opportunity to inspect the merchandise before leaving the establishment with the purchased item. And since we have not been provided with a credit receipt or a valid second opinion or any documents stating that what was purchased differs from what was on the merchants invoice as requested; our further dispute rights have been negated. If you should continue to dispute the transaction, we can only suggest that you contact the merchant directly to obtain a favorable resolution.

We have rebilled your account for this amount. This charge adjustment will reflect on your next statement. Your understanding is appreciated.”

Not The First Time…

Worley reached out to us at Credit.com, asking for advice. Her situation immediately brought to mind another consumer I had helped years ago. He had purchased a “marble” statute in Italy. It was chipped during shipping, and he discovered it was really alabaster. He also got the runaround from his card issuer when he tried to dispute the charge, but we were eventually able to help him get a refund.

[Related Article: Traveling Abroad? You'll Need These Credit Tips]

How? The consumer in question, just like Worley, had written documentation from the merchant describing the item in detail. When it turned out that the merchant had sold him something different than what he was told he was purchasing, he was able to exercise his rights under the Fair Credit Billing Act (FCBA) to assert a billing error.

The FCBA is a powerful federal law that gives consumers the right to dispute billing errors on credit card statements. It does not apply to debit or prepaid cards. Errors include:

A reflection on a statement of goods or services not accepted by the obligor or his designee or not delivered to the obligor or his designee in accordance with the agreement made at the time of a transaction.

Does that mean that as long as you purchase something using a credit card you’re guaranteed a refund? Not quite. Worley had received a certificate of origin and content from the merchant stating the rug was pure silk. Without that, it would be her word against theirs.

If you’re planning on buying an expensive item when traveling — especially from some place faraway where it may be difficult to return the item — you’ll want to take the following precautions …

[Credit Cards: Research and compare credit cards at Credit.com]

Protect Yourself When Overseas Shopping »

Image: garycycles, via Flickr

Protect Yourself When Overseas Shopping

Ask the merchant about its return policies. Do not assume that an item is returnable. Practices in the country you visit may be very different than what you are used to in the U.S. If the merchant tells you it accepts returns, make sure you get that in writing. The same thing applies for return shipping charges: get them in writing.

Get a detailed receipt and keep it in a safe place. If you purchase more than one item but the receipt lists only a total, get an itemized receipt signed by the merchant.

Get an appraisal. If you are buying something unique or expensive (think jewelry or artwork, for example), get an appraisal from an independent third-party before you buy. If that’s not possible, make sure you at least get detailed information about the item in writing, signed by the merchant. The Fair Credit Billing Act won’t protect you if something is worth less than the price you paid for it. But it may protect you if the item turns out to be substantially different than what the merchant represents. As Worley’s case illustrates, however, even that may not be a slam dunk.

[Free Resource: Check your credit score and report card for free before applying for a credit card]

Don’t forfeit your purchase. Make sure you find out whether you will be able to legally bring the item back to the U.S. once you purchase it. Some items cannot be imported into the U.S. or your state and you won’t get a refund — even from your credit card company — if those items are confiscated. Even worse, you could be fined. The U.S. Customs brochure, Know Before You Go, provides information on restricted or prohibited items.

Find out whether you will have to pay duty. Some items are duty-free or may qualify under an exemption. But in some cases, including countries where a 100% duty is imposed, you could wind up paying as much in duty as the purchase price!  You’ll find details in Know Before You Go.

Get shipping details in writing and buy insurance if possible. Again, try to protect yourself by getting as many details in writing as possible. If a third-party other than the merchant is shipping the item, make sure you know where to complain or return the item if it is damaged during transit.

Choose your credit card carefully. Some cards assess foreign transaction fees of 2-3% of the purchase amount. While paying by credit card is the safest way to buy something overseas, that fee can be steep on a large purchase.

[Related Article: The Latest on Foreign Transaction Fees]

If you have purchased something overseas that you believe is a fake or has been significantly misrepresented, act quickly. Under the FCBA, you have 60 days (from the state the statement listing the charge was mailed to you) to dispute the charge. You can call the issuer to ask for details on how to dispute the charge properly, but always put your dispute in writing and send it certified mail, return receipt requested to the address on your statement for billing errors and inquiries. The issuer has up to two billing cycles to investigate your dispute. In the meantime, you can withhold payment only on the amount under dispute. Pay the rest of your bill or at least make minimum payments.

Worley’s situation had a (fairly) happy ending. We were able to put her in touch with someone at her card issuer who finally issued a refund. But she’s out the $290 she paid to ship the rug back. Still, she knows it could have been a lot worse.  After sharing news of her refund with me, she added,”I hope you still write about the dangers of shopping (overseas).”

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The credit pipelines for auto loans are thawing and that means more consumers are getting access to the cash they need just in time for car-shopping season.

A new analysis of automotive credit from Experian released Monday shows that average credit scores of car buyers dropped to near pre-recession levels in the first quarter of 2012. To put that in real terms, the average credit score in Q1 was 760 for new cars (down six points) and 659 for used cars (down four points).

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Another upside the report found was that interest rates on auto loans were down for both new and used vehicles to 4.56 and 9.02 percent, respectively. Credit scores can have a big impact on the amount of money borrowers pay in interest. Take a look at our breakdown of the extra costs of bad credit on auto loans and how they add up.

The Q1 report is overwhelmingly good news for car shoppers, as these factors are all signs that the credit markets are opening up to attract more borrowers who may not have been able to get a loan during the credit crunch.

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“Our report shows automotive lending is as healthy as it’s been since the market bottomed out in 2008,” Melinda Zabritski, director of automotive credit for Experian, said in a press release. “With consumers doing a good job of paying back loans on time and the percentage of dollars at risk reaching its lowest point in six years, lenders are able to extend terms and provide lower rates. This thawing of the credit pipeline has been good for everyone, from consumers to lenders to automotive retailers.”

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These days, the cost for a gallon of gas is well above $4 per gallon in many parts of the country, and that’s having a significant negative impact on consumers’ family budgets. However, using certain types of rewards credit cards that are now available will typically give borrowers the ability to slash their fuel budgets.

As gas prices continue to hold at the high levels observed for most of the last few months, more credit card issuers are now beginning to offer accounts that are specifically designed to help borrowers deal with these elevated costs. In many cases, gas rewards credit cards incentivize these types of purchases by granting consumers added cash back for every dollar they spend on fuel.

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Most rewards credit cards that consumers have dealt with in the past might grant them 1 percent cash back on all purchases, meaning that for every dollar they spend, they earn one cent. But gas rewards cards typically incentivize purchases by adding anywhere from 2 to 5 percent cash back, meaning that consumers earn more for a type of spending they probably have to do anyway.

And while the added value from these cards is largely indisputable, and can serve as a great way to defray some of the costs that come with fueling up, particularly for those borrowers who tend to drive a lot and therefore have to spend large amounts of money on gas every month, there can be some drawbacks to these accounts as well. For instance, all rewards cards, regardless of whether they incentivize gas, grocery or travel purchases, usually have higher interest rates than cards that come with no such perks. Many also carry annual fees that no-frills cards typically do not. This is to help lenders reduce the costs associated with offering these accounts.

[Credit Cards: Research and compare rewards credit cards at Credit.com]

As a consequence, consumers will have to carefully consider the various offers for gas rewards cards that are available to them. If they tend to carry a balance over from one month to the next with regularity, the added cost of the higher interest rate might end up being more than they earned in cash back. Similarly, if they tend to buy gas less often than other consumers, the annual fee they face every year may end up costing more than they received back.

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If your kids aren’t already out of school, they will be soon. And now the fun begins, right? At first, it’s easy keeping everyone busy. But summer lasts a long time and trying to keep families entertained can be a tall order. And even if you don’t have kids, the long, hot days can get tiring and make even the best of us cranky.

Thank goodness a few credit cards have come to your rescue. One of these cards can help you keep your summer humming along, with great rewards to make your summer fun a little bit cheaper.

[Free Resource: Check your credit score for free before applying for a credit card]

Best Card for Local Fun

Discover More Card

This card really knows how to give you a hand in the entertainment department. Through June, you earn 5 percent cash back on restaurants, movies and grocery stores on up to $1,500 in purchases. After that, you earn 1 percent on these categories.

The downside of this card is you only get .25 percent on everything else until your annual purchases exceed $3,000. After that, though, your cash back kicks up to 1 percent on everything.

If your kids are old enough to ride a rollercoaster, head out to Six Flags. You can earn 5 percent purchasing your tickets online and also on purchases around the park. This includes the FLASHPass, which can be expensive. If you’ve ever been standing in line for a ride when it’s 95 and humid, you’ll appreciate the beauty of the FLASHPass. You can get more details about this promotion here.

Variable APR: 10.99 to 20.99 percent, based on your creditworthiness

Annual Fee: None

Foreign Transaction Fees: None

Best Card for a Road Trip

Blue Cash Preferred Card From American Express

If you’re driving to a vacation destination (or just taking a day trip), you can save a bunch with this card. It all starts with a sign-up bonus of $150 when you spend $1,000 within the first three months. It only gets better from there.

You get 3 percent cash back on gas purchases. You also earn an amazing 6 percent on groceries, so if you have access to a kitchen during your vacation, you won’t have to spend a bundle eating out. In addition, you get 3 percent on department stores and 1 percent on everything else. Oh, and your rewards are unlimited.

Variable APR: 17.24 percent, 20.24 percent or 22.24 percent

Annual Fee: $75

Foreign Transaction Fees: 2.7 percent

[Credit Cards: Research and compare rewards credit cards at Credit.com]

Best Card for a Fabulous Vacation

PenFed Premium Travel Rewards American Express Card

You get 20,000 bonus points if you spend $650 within the first three months, which is worth $250 toward a round-trip airline ticket. You earn five points per dollar spent on airfare purchases and one point on everything else. With this card, you get an elite rewards card with no annual fee and a low APR. That’s an unusual combination of riches.

Special perks include 24/7 concierge service, world-class travel insurance and free airport lounge membership if you spend $15,000 annually.

You do have to join the Pentagon Federal Credit Union to have access to this credit card. All it takes is a one-time $15 fee to join Voices for America’s Troops. Or you can make a one-time donation of $20 to the National Military Family Association.

Variable APR: 9.99 percent intro rate through June 30, 2014. After that, the cap is removed and you’ll get a rate that moves with the prime rate.

Annual Fee: None 

Foreign Transaction Fees: None

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At publishing time, the Blue Cash Preferred Card From American Express and the Discover More Card are offered through Credit.com product pages and Credit.com may be compensated if our users apply for and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment.

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These days, many consumers are looking for ways to increase the value of their credit card accounts in various ways, and one method that has grown increasingly popular is the use of these cards to rack up miles or points that can be used to make travel more affordable.

Credit cards that grant consumers airline miles or hotel rewards points are now playing a large part in a considerable boom for the lending industry, as more consumers turn to rewards credit cards as a means of incentivizing the purchases they would have made anyway, according to a report from the luxury travel company Alpha Flight Guru. In all, major airlines and hotel chains now issue some $50 billion in points or miles annually as consumers flock to this type of account.

[Free Resource: Check your credit score for free before applying for a credit card]

As a result of this increased interest in travel or airline rewards credit cards, many lenders are now seeking to increase the values of their offers as a means of incentivizing consumers to start signing up, the report said. In some cases, this can result in borrowers having the ability to earn as much as 5 percent rewards, meaning that for every dollar they spend on the card – usually in certain categories – they earn 5 cents worth of miles or points.

But what can often differentiate one lender’s offer from another in a borrower’s mind is the perks they receive beyond the points or miles they rack up, the report said. In many cases, the rewards offers from one lender or another can be very similar, but things like the ability to have their baggage fees waived or bypass long lines at security can often sway a borrower’s opinion about which card works best for them and their unique situation.

Another important consideration many face is the ability to redeem their points or miles for the top possible value, the report said. In general, the greatest value for redeeming frequent flyer miles will be the less expensive business-class tickets that airlines typically make available.

[Credit Cards: Research and compare rewards credit cards at Credit.com]

Rewards credit cards of all kinds usually come with higher interest rates and annual fees that can make account maintenance more expensive, and consumers who are accustomed only to cards with little or no frills may find these added considerations difficult to deal with at first.

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Since the end of the recession, millions of consumers have tried to get a toe back in the water when it comes to dealing with their credit cards, and the way in which many may choose to do so is through rewards accounts that incentivize their purchases.

Rewards credit cards can be extremely beneficial to borrowers because for every dollar they spend, the account will grant them a small amount of money back in the form of cash, airline miles or rewards points. But it’s important for consumers who are now seeking a rewards card of any kind to keep in mind that not all of these accounts are created equal.

[Free Resource: Check your credit score for free before applying for a credit card]

In most cases, the way in which consumers receive offers for these cards is based on their credit score, and the better their score, the more beneficial the account will be for them. However, there are a number of things that borrowers will need to keep in mind when sifting through a number of offers for these accounts.

For instance, the most important difference between these cards and those that carry no frills is that they usually carry higher annual fees and interest rates, which will make the card more expensive than most borrowers are probably used to. Because of this, it’s important to examine your prior spending habits such as how much debt you tend to carry over from one month to the next, or how often you actually use your cards. Both of these factors can have an effect on the value of rewards points because they can cut into the total amount earned. If you’re not spending enough on your cards, you may not earn enough in rewards to balance the annual fee cost.

Along similar lines, it can be important to weigh the exact ways in which the offers will reward spending. Some cards now incentivize certain types of spending over others. The most popular these days grant two, three or even five times the rewards for spending on necessities like groceries or gasoline, and those who typically use their cards to buy these items might benefit the most from seeking accounts that reward them specifically. Similarly, those who fly often will want to find cards that reward credit card spending for travel arrangements.

[Credit Cards: Research and compare rewards credit cards at Credit.com]

When reviewing any credit card offer, it’s important to weigh all aspects of the account, not just the interest rates or rewards points that an account may carry.

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As you probably already know, it can be almost impossible to obtain a bank mortgage with bad credit.  If you otherwise can’t get a loan because you have a troubled credit history, one alternative to a traditional bank mortgage is to obtain one from the seller.  Seller financing has its benefits, as well as its risks. You also need to know how to find the right seller to meet your needs.

Why sellers might consider financing a mortgage

These days, real estate prices have dropped yet property owners are still having a hard time selling homes. That means more owners are desperate to sell.  As a result, more sellers may entertain using this unconventional approach.

Interest rates are also low. This can make seller financing more attractive to property owners, especially those who aren’t reinvesting in more real estate but are looking for income-producing investments. Banks offer investors less than 2% interest.  If you come along and offer 4%, that could be engaging for the right seller.

[Credit Score Tool: Get your free credit score and report card from Credit.com]

The benefits of seller financing

First, if you have some financial challenges in your history and need to build your credit score, conventional lenders may not be willing to give you a loan.  If that’s the case, this may be the only alternative you have to take advantage of the current low real estate prices.

Second, when you get a loan directly from your seller, you save all kinds of fees. These purchases are typically made directly. That means you save on real estate commissions on top of all the loan fees and points you keep. Compared to a conventional purchase, you could be saving tens of thousands of dollars when you consider all the commissions, points and fees.

On top of that, you could possibly arrange a much lower interest rate.  For example, if you have impaired credit, you might get a loan from a bank but it might be very expensive. On the other hand, a seller might be persuaded to view your credit history differently and extend a lower rate as a result.

[Related Article: 10 Mistakes New Homebuyers Make]

How to find the right seller

To be sure, most people who sell real estate are not in a position to back your loan. And even those who are may need to be persuaded. But you only need to find one seller who is willing.

You are looking for people who are downsizing and those with a ton of equity or better yet, no mortgage at all. Get the word out to friends and family. Spread a wide net. Use your social circles and social media such as Twitter and Facebook to get the word out.  Search ads in Craigslist and actually place an ad there and in your local paper.  Don’t give up and don’t stop there. Let people in your church, synagogue, or other communities know what you are looking for and ask them to keep their eyes open.

You can even approach real estate agents and brokers.  Let them know what you are interested in doing.  Speak to many brokers and follow up with them.  Ask friends if they know good real estate professionals who either specialize in this or who are seasoned veterans.  Realtors who have been active for many years have the greatest chance of knowing clients who might be the perfect match for you.

[Related Article: The Case for "Alternative Credit"]

How to convince a seller to do business with you

As I said, most sellers will be hesitant to carry your loan.  That’s because they don’t want to have to foreclose should you be unable to make your payments.  And they think you are a greater risk since they know banks won’t grant you a loan.

Your job is to help them overcome their fears.  You do this by coming into the deal with a very large down payment. Also, prepare a “resume” of sorts that shows them how stable your income is. Be upfront about credit blemishes and explain what you’ve done to correct your mistakes.

As a last resort, get another person to co-sign the loan. This is certainly far from ideal and it may be difficult. But like finding a seller to finance, remember, you only need to find one person to co-sign in order to make this happen.

Buying a home using seller financing is not without risk. If a bank feels it’s better off not making a loan to you, they might know something you don’t.  If you take on a debt that you can’t afford, you’ll end up losing the property, your down payment and your good credit score.

Make sure if you go this route you are sure you know how much house you can afford — then buy a home that is a bit cheaper than that.

Buying a house and having the seller carry your mortgage can be a great way to take advantage of today’s low real estate prices and interest rates. It’s not easy to pull off but it’s well worth it if you have no alternative.  And, while difficult, it’s far from impossible if you follow the steps outlined above.

[Featured Products: Research and Compare Mortgage Rates at Credit.com]

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Many years ago I wrote my original Seven Stages of Debt, as modified from the Five Stages of Death and Dying by Dr. Elisabeth Kubler-Ross.

Both experiencing the emotional loss of a loved one and the emotional loss of your financial life are similar in some distinct ways. However, the emotional stages of debt also have two additional components that a mortal death does not. And these stages are almost magical as they can lead to a new and better life for you.

When I was going through my financial troubles I distinctly remember passing through all the stages of debt. And in helping thousands and thousands of people over the years to deal with their financial issues I’ve clearly witnessed them passing though these same stages as well.

But people don’t pass through these stages in necessarily an orderly fashion, they may jump back and forth but in the end the healthiest way to deal with any debt problem is to acknowledge each stage of debt and be aware of how you are emotionally feeling at the moment. It will help you to understand how your emotional state at the moment may be clouding your judgment about how to deal with your debt.

[Credit Score Tool: Get your free credit score and report card from Credit.com]

If you are living with financial problems right now I challenge you to identify what stage you are in right now.

The Seven Stages of Debt

1. Denial

Denial begins a long time before the financial problem rears its ugly head and gets in your face. Denial distorts reality like a street drug. It’s addictive. As an impartial observer, I’ve seen bad situations brewing time after time. But the person about to land in the sticky stuff often says the same thing, “It won’t happen to me.”

Whatever you are in denial about will wind up smacking you in the face like a cinder block on a rope. Even if you don’t know what that’s like from experience, I think you can imagine what kind of a mark it will leave.

2. Anger

Anger is an emotional waste of time and energy in most situations, especially when it comes to money troubles. Remember what I said before? Your situation just is what it is. You can be angry all you want, but things will get better faster if you can turn that anger into a fire inside of you that creates intense motivation to properly deal with the underlying situation and take positive action to repair the situation.

3. Depression

There is no question that money troubles aren’t fun. They typically lead to some kind of loss and that makes us sad and/or depressed. The loss can be anything from cutting out the cleaning service to having to sell your home and moving to a cheaper area. There is no doubt that some of the things you might go through may be difficult, but rather than stew over them, let’s put them into perspective.

If you had your choice of either dealing with what you are going through right now or getting poked in the eye with a sharp stick, which would you do? It’s a no-brainer, right?

Also, for some depression is rooted in brain chemistry. No matter how hard you try to lift yourself up, you may just need to talk to a psychiatrist or or doctor about medications to help you slip the cycle of depression. I’ve watched the miracle of recovery from depression in ones I love after they worked with a medical professional and were prescribed specific medications. It took a while to tune the dosage but the results were lifesaving for them.

Here is the easiest advice to give but the hardest advice to follow: Suck it up or take action and get medical help and let’s move on toward a solution. Bad things happen to good people. Life is unfair and sometimes cruel. It is what it is. Heard that before?

4. Bargaining

Typically, this is the stage when your higher power is brought into the mix.

• “God, I promise I’ll make all the rest of the payments on time if you can help me get out of this jam.”
• “God, if you can just bring my credit card payment current somehow, I promise I’ll go to church every Sunday/be nice to my kids/work really hard for the rest of my life/never buy a $500 pair of shoes again.

You can bargain with your God (or the Devil) all you want, but you might as well go outside and look for a four-leaf clover or throw some coins in a fountain. Bargaining is nothing more than wishing and wishing is okay, so long as it’s not your only plan.

Bargaining also sets you up for trouble if you bargain the wrong way with debt collectors or creditors. Some people make bargains to resolve their debt by promising payments they can’t make. They feel if they tell them what they want to hear it will make everything better. It won’t. The first time you miss a payment all bets and deals are off, or you make a big payment thinking the balance of your debt will be eliminated. And speaking of deals, if you are bargaining with your creditors or debt collectors, get it in writing. If you don’t, any bargain they made with you is worthless and trust me, I’ve seen too many examples of creditors or collectors that later deny they made any such bargain.

[Related Article: For Middle-Age Students, Is College Worth the Risk?]

5. Acceptance

You made it. Congratulations. I’ve been waiting for you. This is my favorite stage, even though the next two are where you start putting the pieces back together. I love the acceptance stage. It is so full of peace and leads people down the right path. Until now, you’ve been like a long-distance runner going round and round in circles, lost. Once you reach acceptance, you are turned in the right direction and now, instead of being tired and going nowhere, every step you take is in the right direction toward your new life, whatever that may be.

Once people reach acceptance, they know that what I said before is a fundamental law: Life just is what it is.

If you got your hours cut and you are not bringing home what you used to, it just is what it is.

If you bought a home that was too expensive and now you are struggling to afford the payment, it just is what it is.

If you’ve been unconsciously feasting at the all-you-can-eat buffet of debt for the past few years and now it’s caught up with you, guess what? It just is what it is.

6. Resurrection

Some time will pass after you take action and seek a way to intervene in your financial troubles, but slowly you will notice that you are starting to rebuild your financial life. You can even resurrect your good credit rating by following this guide.

If you are careful, you will be able to start saving money and buy a few luxuries again. It’s OK. If you lost your last home to foreclosure, you’ll be able to buy another. If your last car was repossessed, after you take care of that situation, you’ll be able to get another. (After my bankruptcy I drove a $500 used Postal jeep until I could save enough money to buy a better vehicle. That jeep was an accident waiting to happen. I held my breath every time I turned a sharp corner, praying the darn death trap wouldn’t overturn!)

Gradually, you will start to see that what I’m telling you is absolutely true. Now, you might not have as much stuff as you used to — you might not have the three-car garage and beautiful home on ten acres — but you’ll have what life wants you to have and you’ll find greater joy in it.

[Free Resource: Check your credit score and report card for free with Credit.com]

7. Rebirth

Your life will have changed noticeably once you reach this stage. The experience of surviving your financial problems will have made you a stronger person; a different person; a better person.

I firmly believe you can lead multiple lives within the one that exists between the time you were born and the time you die. We grow, evolve, learn and change. We grow apart, grow together and just plain grow old. Your life can be so much more than the struggles you are going through right now. You didn’t get into debt overnight and it’s probably going to take some time to be reborn, but trust me, you’ll be a better person for it, if you want to be.

Click here to read the original article: The Seven Stages of Debt. Which Stage Are You In?

There was a time that getting a college degree was considered a necessity for a financially successful life, and while it may hold true that college graduates earn more than high school graduates, skyrocketing tuition, the accompanying student loan bubble  and an anemic economy means that higher education can pose a financial risk. A big one.

“We’re at a point where student debt is crowding out other kinds of spending, making it impossible for people to buy a house or a car,” says Mitchell Wiess, a former banker who co-founded the Center for Personal Financial Responsibility at the University of Hartford. “It’s not sustainable.”

That’s especially true for middle-aged students. People who return to school after age 40 have fewer years of employment to help repay expensive school loans, and they also need to be setting money aside for retirement.

“How do you compete with a 25-year-old with the same master’s degree, and you’re middle-aged?” Weiss says.

One way to compete is to minimize your costs from the outset. Here is Weiss’s seven-step plan for students — middle-agers and younger — to reduce or eliminate their student loan debt.

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1) Test Out of Tuition

Many people have heard of Advanced Placement tests, which smart high school students take to prove their mastery of math, English, history and other subjects. Less well-known are the College Level Examination Program tests, which are also used to show proficiency in various disciplines.

Perhaps the best thing about both AP and CLEP tests is that students who score well enough can submit their scores to their college or university. Many schools accept the tests in lieu of taking (and paying for) classes. At most schools, students can swap tests for up to 12 credits toward graduation, Weiss says.

That means you can save yourself a semester’s worth of tuition simply by taking a few tests.

“When you’re paying for it yourself, that’s a big deal,” Weiss says.

2) Start Cheap

Some people still look down on community colleges. Weiss has some advice: Get over it. The average community college charges just under $3,000 a year for tuition, according to the American Association of Community Colleges. Tuition at Sarah Lawrence College, meanwhile, costs more than 15 times as much ($45,900 for the 2012-13 school year, according to the school’s website).

But there’s a way to get the four-year degree without paying four years of astronomical tuition: Transfer in. Most elite colleges and universities accept up to two years’ worth of credits from less prestigious (and less expensive) schools. It’s the same route followed by one former student who spent two years at Columbus State Community College (tuition: $3,555), and transferred the credits to Harvard (tuition: $37,576), says Will Kopp, a spokesman for Columbus State.

“As an employer, I care more about where they end up than where they started,” says Weiss, who hired workers for the financial services companies he led until retiring four years ago.

3) Use Your Breaks

Most colleges and universities allow students to transfer credits from classes taken during winter and summer vacations. As long as you make sure beforehand that the classes are eligible, taking such intersession courses at a state university or community college is an inexpensive way to pick up credits.

“And you don’t have to knock yourself out,” Weiss says. “Just take a class at a time. That way you still get to have a vacation.”

[Related Article: For Middle-Age Students, Is College Worth the Risk?]

4) Tweak Your Schedule

At most schools, 12 credits is considered a full course load. But what’s to stop you from taking 15, or even 18? Nothing but your own need for sleep. Loading up on classes may be intense, but it’s also a way to earn extra credits – and graduate faster – without paying additional tuition.

Here’s another way to think of it. If you don’t load up on credits, and stick with the normal 12 credits per semester, “You’re paying 50 percent more per credit than if you take 18,” Weiss says.

What happens when you’re feeling burned out from an 18-credit semester? Take 10 credits the next. Dropping just below your school’s definition of a full-time student also means you pay much less than full-time tuition. Weiss advises students to take this waxing-and-waning approach as a way to graduate faster, stay sane, and save money.

Many college administrators don’t like it when students play such tricks. Weiss’s advice: Fight back.

“The schools like the current system because they get paid,” Weiss says. “You have to advocate for yourself.”

5) Look for Small Money

Here’s the simple version of this tip: Apply for scholarships. In return for a few hours spent writing essays, you can win lots of money to help pay your tuition.

Here’s the advanced version: Apply for small scholarships. Many students apply for big ones, which offer tens of thousands of dollars a pop. But there’s far less competition for smaller ones, which may five only $250 to $500 each.

That means you have a much better chance of winning. Weiss knows a student who strung together a number of such small awards to cover almost $5,000 of his first year’s tuition.

“It was a pain in the ass,” Weiss says. “But he had a great strategy.”

[Related Article: How I'm Repaying $120,000 in Student Loans]

6) Get a Job (The Right Job) First

People in the work force have a great advantage over people fresh out of high school: Their years of work experience can help them land jobs in which employers reimburse workers for going back to school.

This means that for people in middle age, the most important decision you make about college may have little to do with college itself. It may come years before, when you decide where to apply for work. Don’t consider just the up-front pay, Weiss advises. Employers who offer tuition reimbursement also tend to value their employees, and give workers the schedule flexibility they need to attend early night classes.

“You want to know that your employer has a stake in this,” Weiss says.

7) Apply Now

If you’re going to school in the hopes of landing a better job, don’t wait until you have your diploma in hand to start looking for that job. Apply now, making it clear that you’re still pursuing your degree. If you get a job offer, you’ll know you’re on the right track.

And if you’re roundly spurned by employers, you may discover that your degree isn’t taking you where you want to go (before you’re on the hook for several years’ more of tuition).

“Apply for the job first,” Weiss says. “You want to know you’re going to get a return on this investment you’re making.”

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Image: Ramunas Geciauskas, via Flickr

There has been much discussion in recent months about the coming increase in interest rates on federal student loans, and lawmakers’ attempts to keep that jump from happening have largely stalled.

Last week, two more attempts on the part of Republicans and Democrats in the U.S. Senate to freeze the interest rates on federally-issued student loans were stalled because lawmakers could not hit the 60-vote threshold that guaranteed the bills would pass, according to a report from the Washington Post. These problems are being caused because the two parties have been unable to agree on how to pay for the additional $6 billion loan subsidies that would accompany the rate freeze.

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Leaders on both sides of the aisle would prefer to extend the current student loan interest rates for at least the next year, but there has — perhaps not surprisingly — been a considerable amount of disagreement over how to do it, the report said. This comes even as President Barack Obama and frontrunner for the GOP presidential nominee Mitt Romney have both said that the rate needs to remain at its current level.

Democrats want to pay for the freeze — which would only last for a year — by ending a tax provision that allows some small business executives to collect their income as profits instead of wages, which helps them avoid payroll taxes, the report said. Meanwhile, Republicans want to subsidize the rate freeze by eliminating a fund to pay for preventative healthcare. The Democrat plan failed to pass thanks to a 51-43 vote, and the Republican proposal was overwhelmingly voted down 34-62.

If a bill cannot be passed to extend the current federal student loan interest rate of 3.4 percent, then it will double to 6.8 percent on July 1, and all loans taken out after that point will be more costly for students, the report said. However, federally-issued student loans that existed prior to July 1 would not have the higher rate applied.

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These days, the average college student seeking a four-year degree owes tens of thousands of dollars on their student loans, which can make it difficult for many to achieve financial independence soon after graduation. Often, federal student loans aren’t enough to subsidize their education, and borrowers also have to seek money from private lenders as well.

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Americans have made considerable strides in getting their finances and credit ratings back on track in the wake of the recession, resulting in better quality credit histories, particularly where credit cards are concerned.

At the end of April, the amount of money owed on all bank-issued credit cards slipped to $531 billion, down 28 percent from the record high of more than $730 billion observed in January 2009, indicating that consumers are being far more cautious with these accounts, according to the latest National Consumer Credit Trends Report issued by the credit monitoring bureau Equifax. And at the same time, balances on retailer-issued credit cards held more or less steady, at least on a seasonally-adjusted basis, despite the number of these accounts increasing 4.7 percent since December 2010 and available credit limits on them rising $5 billion since the start of 2012.

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Further, the “roll rate” — that is, the number of accounts that went from current to 30 days delinquent — in April remained at less than 1 percent for the second consecutive month, the report said. This was the first time in five years that roll rates remained below this level for two months in a row. Along similar lines, charged off credit card accounts — those so far behind on payments that they can no longer be considered collectable by the issuing lenders — have fallen by more than half between April 2010 and April 2012. Currently, the charge off rate stands at less than 6 percent, down from 13.2 percent two years prior.

“The combination of increased available credit and more timely payments among card borrowers has led to the recent growth in card lending,” said Equifax chief economist Amy Crews Cutts. “Consumers are starting to respond to increased credit availability both in cards and other tradelines, a signal of both their financial confidence and improving economic conditions. In turn, this increased consumer credit activity bodes well for U.S. economic growth through the second half of 2012.”

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Payment history and credit utilization are the two most important factors in determining a consumer’s credit score, together accounting for 65 percent of the rating in all. Payment history is the largest aspect at 35 percent, and experts recommend keeping utilization ratios at less than 30 percent to max out a score.

Image: jeeheon, via Flickr