Student Credit Card and Credit Education Blog

Re-aging is something more and more credit card companies are agreeing to do with their delinquent cardholders. It’s not something they broadcast, but if you ask they may hook you up.

Re-aging is a technique used to clean up your credit history, particularly if you had a brief problem and you’re back in control.

Here’s how it works. Say you’re behind or were behind in your payments by a few months, under the re-aging process the credit card company would agree to wipe away the late payments and fees if you agreed to a new payment amount or agreed to send in a large payment immediately.

Why is it useful? It helps to have those late marks removed from your record because they weigh down your overall FICO score.

You have absolutely nothing to lose by asking.

Did you know that credit card regulations require a credit card company to write off debt which has been delinquent for 6 months?  Now you probably understand why you get those harassing calls almost immediately after you’re late with just one payment.  There is major incentive for these companies to collect that debt quickly.

American’s are now nearly a trillion dollars in credit card debt, and, according to an April Nilson report, 15% of Americans have been late with a credit card payment.  Those are scary numbers for lenders, but good for you.

Call your credit card company and wheel and deal if you’ve been having trouble making payments.  Armed with your new found knowledge (6 month rule) you know they will be anxious to collect as much of the debt as they possibly can before the six month mark strikes.

They may forgive a major portion of your debt if you agree to an accelerated payment plan.

May saw another record topple down, but not in a good way. U.S. credit card defaults rose to record highs last month.

Delinquency rates, an indicator of future credit losses, fell across the board which was great. But the more sobering news was that this drop was expected. It is typical based on seasonal data for delinquency rates to drop this time of year as a large percentage of people allocate tax return dollars to due or past due balances. Unfortunately delinquency rates are expected to be on the upswing again in the coming months.

Perhaps the most important indicator that more unsettled times loom ahead is the unemployment rate which has increased steadily over the past 14 months from 5% in April of 2008 to 9.4% today. Many of the unemployed are using their credit cards like debit cards and running up astronomical bills they know they can not repay, at least not at this time.

I can’t really say I blame those who are charging every penny available to them either. The pastic serves as a neceassry evil. When the choice is between don’t eat or charge groceries I know which one I’m picking. Credit cards serve as a means to an end for so many. Economist say we are poised for 2010 turnaround – can we hit fast forward to January 1 please?

Regulations are going to get a whole lot tougher in the credit card industry beginning next year.  The changes center around more transparency, which means a lot of companies will be altering their terms of agreements and incentive programs.

If you have accumulated reward points on an existing account, consider cashing them in sooner rather than later. Some credit card companies have hinted that they may terminate or significantly change their rewards system.

I have a Visa card that accrues Disney points, so I better move fast if I want that Donald Duck lithograph.

The Credit Card Accountability Responsibility and Disclosure Act of 2009, which amends the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit, has added benefits designed to protect consumers.

In this bill college students in particular have been singled out for special treatment.  Below are a few of the changes on the horizon which are scheduled to take hold in February 2010.

• Prohibits extensions of credit to consumers under age 18, unless they are emancipated under state law, or the consumer’s parent or legal guardian is designated as the primary account holder. Minors are allowed to have a credit card in their name on a parent or legal guardian’s account.

For full-time or part-time students attending an institution of higher education who are between 18 and 21 years of age, the legislation reads:

• Limits the credit line from any one credit card to the greater of 20 percent of annual income or $500, unless there is a co-signer.

• Limits the total credit line from all credit card sources to 30 percent of annual income, unless there is a co-signer.

• If there is a co-signer, requires written co-signer approval before granting any increase in credit line.

• Prohibits creditors from granting more than one credit card account to college students who have no verifiable annual gross income and already have a credit card account with that creditor, or any of its affiliates.

With all these changes in the pipeline it may be prudent to apply for a student credit card sooner rather than later.