Credit.com - April 2009 Newsletter

Welcome to Tidbits^®, the Credit.com newsletter!

Welcome to the Credit.com newsletter!

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Quick Tip

As credit card issuers continue to cut credit limits and close accounts, many are seeing their credit scores drop as a result.

Having several open credit cards with low balances is one way to help minimize the damage to your credit card debt-to-limit ratios.

Why not open a new credit card account to help safeguard against these unwanted account changes? Orchard Bank offers credit cards for those with good, fair or even bad credit.

Apply for an Orchard Bank Card today!
http://www.credit.com/r/orchard-bank-cc

Three Smart Ways to Spend your Tax Refund

The average tax refund was $2,500 in 2008. If you’re getting a big check from the IRS this year, develop a plan to make the most of the money. Use the opportunity and make healthy money management decisions. Credit.com recommends three ways to spend your tax refund wisely.

1. Open a Secured Credit Card

Opening a secured credit card is one of the easiest and safest ways to rebuild damaged credit. And we all know just how important good credit has become these days. Secured credit cards are easy to open, report to the credit bureaus, and will help add positive information to your credit reports when they are used responsibly. http://www.credit.com/r/tidbits_cards_secure

Here’s where the tax refund comes into play: You need at least $200 to deposit in a savings account in order to open a secured card. The savings account balance serves as “collateral” for your credit limit on the new credit card; a $200 deposit will translate to a $200 credit limit. You can add more to your savings account to increase the limit.

After about a year of responsible use, many secured credit cards will switch to being unsecured and you’ll receive your deposit back plus interest. Not only will you have boosted your credit, but you also will have created a nice little nest egg.

2. Reduce your Debts

Now is the time to get rid of your high interest credit card debts. You might not be able to pay off all your debt with your tax refund, but it can certainly make a dent or help you kick start a new repayment plan. For example, if you have $8,000 in credit card debt at 16% APR, you can save $6,800 in interest and 18 years of repayment time just by increasing your monthly payment from 2.5% to 6.5%. That’s only $300 more each month.

Use our credit card repayment calculator to see how much you might be able to save by increasing your payments or reducing your interest rates. http://www.credit.com/r/creditcardcalc

3. Create an Emergency Savings Account

Is your family financially prepared for a job loss or illness? How would you pay your mortgage, credit cards, loans, and insurance if you lost your income? Our experts recommend building up an emergency account with enough to cover six to eight months of your basic expenses.

Putting all or part of your tax refund into a savings account is a great way to jump-start your emergency savings plan. When you’re creating the savings account, try setting up a direct withdrawal from your checking account each month. Even if it is just for $20 a month, it’s a quick and painless way to save. https://www.credit.com/r/tidbits-banking

How do you plan to spend your tax refund? Share your ideas in Credit.com’s Community Forum.
http://www.credit.com/r/forum_main

Hot Topic

The Credit.com Community Forums are a great place to share your stories and get answers about credit cards, credit reports, credit scores, loans, debt and more! http://www.credit.com/r/forum_main

This month's hot topic:
Glenwood Lending Group: New Scam Alert
We received a report this morning about a loan scam using a new business name: Glenwood Lending Group. Here are the details... Read More » http://www.credit.com/r/hot-topic-april09

In the News

Credit Card Limit Reductions Impact 16% of the Population According to FICO

A new FICO report on credit data from the second half of 2008, revealed that 16% of the US population had some reduction in their credit card limits. A majority of these consumers didn't have any late payments, collection accounts or other negative records to trigger the change ... Read More » http://www.credit.com/forum/posts/list/99.page

On the Blog

Credit CARD Act passed by senate banking committee

The Senate Banking, Housing and Urban Affairs Committee has passed S. 414, legislation to regulate credit card policies. The Credit Card Accountability, Responsibility and Disclosure Act ("the Credit CARD Act"), introduced by Senator Christopher Dodd (D-CT) aims to protect consumers from confusing, misleading, and predatory practices by credit card companies. Among other provisions, the legislation will ... Read More » http://www.credit.com/r/tidbits-card-act

Ask John

Credit Card Issuer Closed My Account Because It Was Unused – Why?

This month John explains why credit card issuers are taking these actions and what you need to know in order to protect your credit scores in the process.

Get the real story from John Ulzheimer:
http://www.credit.com/r/tidbits-vol43

Quote of the Month