While this is good news, it can also be interpreted in a different manner. Last year, the Institute recorded the highest number of personal bankruptcy filings since 2005. Bankruptcies are usually the last way out as the consequences of a bankruptcy on your credit report can have resonating effects for up to ten years.

Bankruptcy is an option for consumers who have no other option, and are afraid of losing their personal property, such as homes, cars, large appliances, etc. Also, once one files for Chapter 7 bankruptcy, they are not allowed to apply again for another eight years. So the recent decrease in personal bankruptcy is not only indicative of struggling consumers. In the past eight years, 10 million consumers have filed for personal bankruptcy. So that means 10 million people are unable to file for bankruptcy at this period in time.

According to the National Bankruptcy Research Center, one out of 50 people in the United States have filed for either Chapter 7 or Chapter 13 bankruptcy in their lifetime. This becomes an important issue when consumers apply for credit cards. Consumers that recently file for bankruptcy can find it increasingly difficult to find a good credit card that suits their needs. Banks and credit card issuers generally clump consumers who recently filed bankruptcy along with consumer who have bad or no credit. This means that there are a select amount of credit cards, mortgage loans and auto loans available for you. These loans will more than likely be offered at a higher interest rate or with an annual fee.

Even if the data shows that bankruptcy is decreasing, it’s still clear that consumers are filing for bankruptcy at high rates. This is due to our current economic state, and while signs may point to progress, we still haven’t reached the light at the end of the tunnel. But some good news comes in the form of the strengthening of the creditor/debtor relationship. Now, it seems that creditors are more understanding of consumers’ financial situations and are more likely to set up payment plans that accommodate the consumer.

In fact, it is commonplace now to see consumers of all income brackets on set monthly credit card payment plans and lower interest rates that they negotiated.  Also because of the increase of homes going into foreclosure for delinquent payments has surged over the past decade, it could be anywhere from 18 to 24 months before the banks actually remove you from your home. This extra time could be enough time for the consumer to pay off any excess debt and to save themselves from being kicked out of their homes. The banks have become desperate as well, they are now more inclined to take any form of payment, before sending you to the debt collector.

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act passed and made it harder for consumers looking to file Chapter 7 bankruptcy. The Act also made it harder for consumers who filed to see the full list of their released debts. Previously, bankruptcy meant exemption from all debts, but the Act changed that. Now, consumers may be forced to pay back some of their other debts. This is a notable change for the face of bankruptcy, which used to be the end-all, be-all solution for a cash and credit strapped consumer.

Quick, without looking at your statement:  How much available credit is left on your credit card account?  Perhaps you know an exact figure, maybe you have a rough idea, but I’d be willing to bet that most consumers certainly wouldn’t feel comfortable using a credit card to make purchases not knowing just how much they have to spend.  For this very reason, you may want to steer clear of No Preset Spending Limit (NPSL) credit cards and charge cards.

While people often forget about the “P” in the above acronym and think that NPSL credit cards do not have monthly spending limits, they are unfortunately mistaken.  There is no such thing as an unlimited credit card.  There is, however, something unusual about NPSL cards.  Unlike most credit cards—which from Day 1 have well-communicated credit limits—NPSL cards have limits that are determined on a monthly basis, depending on things like the general state of the economy as well as the cardholder’s credit score and spending/payment habits.  Not only that, but these monthly limits aren’t even communicated to either the cardholder or the three major credit bureaus.

What’s the rationale?

Why would a credit card company intentionally keep a customer’s limit secret, you might ask?  Well, it’s quite simple actually:  to add to the illusion that NPSL cards are indeed limitless.  This semi-well-kept secret has played a big part in making American Express charge cards as well as Visa Signature and World MasterCard credit cards some of the most popular products for people with excellent credit.

What’s the downside?

People using NPSL cards should have two primary concerns:  having purchases get unexpectedly declined at the point of sale and credit score damage.  When you don’t know your credit card’s limit or you aren’t even aware that it has a limit to begin with, you’re bound to run into usage problems.  This could certainly prove problematic if, for example, you head to Best Buy with the kids to buy a new TV and your excitement is brought to a screeching halt when the transaction is declined at the checkout counter.

What’s more, it would be pretty tough to keep your credit utilization (the ratio of your spending to your available credit) low, which is where creditors want it, if you don’t know exactly how much credit you have to your name.  Credit scoring agencies have the same problem, as issuers often provide them with misleading information about their NPSL cards, making it difficult to calculate accurate credit scores.

You see, credit utilization—which is calculated for each credit card you have as well as for all of your cards combined—is a key component of the “Amounts Owed” section of one’s FICO score, the most commonly used credit score in the U.S.  And rather than simply reporting the actual credit limits they give their NPSL customers, some card issuers relay proxy limits, while others either provide a customer’s high account balance over a certain period of time or don’t even report credit limits at all.  Given this habitual dissemination of inaccurate information and the fact that each issuer does not rely on a single method of NPSL card reporting, it’s often next to impossible to predict how a given NPSL card will impact your credit standing.

What now?

In case you were wondering, NPSL cards don’t have much of an upside.  As we’ve learned, these cards aren’t unlimited, and while the lack of a set limit may lead to optimism that you could be afforded additional spending power “next week,” that’s certainly outweighed by the uncertainty, inability to spend confidently, and potential for credit score damage that are also byproducts of NPSL card use.  It’s therefore probably in your best interest to steer clear of these cards for the time being.  There are plenty of credit cards for people with excellent credit that provide equal or better rewards or whatever perk you’re interested, so why settle on a card that will only maximize your headaches?

Once you are out of your situation it is wise to begin rebuilding your credit, but what is the best credit card to get if you have bad credit? Where do you start? and How do you apply for a credit card with bad credit?

Applying for a credit card when you have poor credit is actually no different than if you have great credit. Your options will be far less and fees may be higher, but the process itself is the same.

Is there a ‘best card’ to get for this situation? There are a lot of credit cards out there for people in this predicament. Especially as of late because the number of people that are applying for “Bad Credit Credit Cards’ has increased. Therefor there may not be one best card, but you do have options.

Many cards that are offered for poor credit individuals are secure credit cards (read here about the difference between secure and unsecured credit cards.) If you have been unsuccessful in applying for a traditional credit card a secure credit card may be right for you. More often than not you can get approved. Some secure credit card offers do not even require a credit pull.

So the next question is “Where to get a credit card with bad credit?”

Here are a couple of bad credit credit card offers you can start with.

The Orchard Bank card is the best place to start. This is a card with low fees created for individuals with poor credit. If you cannot get approved there see the Horizon Gold Card below.

The Horizon option is expensive, but offers no credit check and guaranteed to report to the major credit bureaus.

As Bank of America spokeswoman Anne Pace stated to Bloomberg News, “the economics of offering a debit card have changed with recent regulations, and we’ve decided to introduce a monthly fee for customers who use their debit cards for purchases.”

This announcement has caused much outrage among consumers and politicians alike, especially in light of the fact the Bank of America received a federal bailout to the tune of $45 billion, as reported by foxnews.com.

The “recent regulations” referenced by Pace are the “swipe” fee caps that went into place on October 1, restricting the amount banks can charge merchants per debit card transaction.

“It seems that old habits die hard for Bank of America. After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers,” said Senator Dick Durbin, D-Ill, in a statement, according to foxnews.com. Durbin, after whom the “recent regulations” are named (i.e. the Durbin Amendment), also stated “It’s overt, unfair and I hope their customers have the final say,” in regards to BOA’s new fee.

Bank of America is not the only bank levying new fees upon customers in an attempt to recoup revenue losses as a result of the Durbin Amendment.

The Huffington Post revealed that Wells Fargo, who has been field testing a monthly debit card fee in select places throughout the country over the past several weeks, has decided to burden their customers who use a debit card for purchases with a similar fee, $3 a month starting this fall. Chase, who also field tested monthly debit card fees, decided against implementing one for the time being. Smaller lending institutions like SunTrust and Regions Financial have both chosen to impose debit card usage fees upon their customers. People using their debit cards at the ATM will not be charged the monthly fee, it is only enacted when their debit card is used to make a purchase.

Amidst all of these changes, now is an opportune time for fee-conscious consumers to apply for a credit card to use for purchases in lieu of a debit card. If used responsibly and the balance is paid off in full at the end of each billing cycle, a credit card won’t incur a monthly usage fee.

Citibank, who announced that they will not be charging their customers a monthly fee for making debit card purchases, is instead restructuring their fee structures for checking accounts along with raising minimum balance requirements.

The average 30 year rate is 3.94% with .8% in fees and points.

This rate sets a new record low for interest rates. The first week of October in 2010 the average 30 year rate was 4.27%.

What does this mean for borrowers?

Now is an excellent time to be able to purchase a house, or if you have equity to refinance. There are reports that some borrowers are still on the fence, wondering if rates are going to bottom out anymore.

Last year there were the same concerns. A common question we got was, “Are Mortgage Rates Going to Go Up in 2011?”

At the end of 2010 mortgage rates started to rise. It looked like rates in 2011 would go up and stay up. In February rates hit 5%, but sense then have again declined to the current record low.

Investors are still extremely cautions, the economy remains in shambles, there is a threat of a second recession, unemployment is still very high, the housing market has not turned around. All of these factors are contributing to the low interest rates.

Are the low rates going to stick around?

Yes and no. In there short term there is no economic forecast that would suggest rates will increase “over night”. Once mortgage rates increase for good it will most likely be a slow process following the recovery of our economy and the housing market.

Should I buy or refinance?

Yes. Record low housing prices and record low rates is a recipe for a great home with a low payment. Even if house prices stay low for a few more years it is still an incredible opportunity to purchase a home. In fact never in the last 50 plus years have Americans had the opportunity to get locked into such an incredibly low 30 year interest rate.

If you have been through bankruptcy because of job loss, medical bills or some other reason try to not let it get you down too much.  It is a difficult time, but there is a light at the end of the tunnel.  You can not only rebuild your finances, but you can flourish.

[See below for cards you may qualify for after your bk.]

Can I get a credit card after bankruptcy?

The short answer is yes.

The long answer is this.  Lenders and banks are always very hesitant to lend to a consumer with a bankruptcy on their record.  That consumer is considered high risk, and instead of taking that risk many companies will simply deny you.

You may ask “Then how do I get a credit card after bankruptcy?” or “What card can I get?”

There are credit cards that are made specifically for high risk situations.

Most credit cards are what is called unsecured debt. This means there is no collateral backing up the debt you acquire.  Even if you do not have $10,000 in the bank you can still rack up $10,000 of debt.  This is a typical credit card, right?

A secure credit card on the other hand does have collateral backing it up.  For example, if you deposited $300 the lender would give you a credit card with a $300 dollar limit on it.  You could use the card like any other credit card and when you close the card the deposit is used to pay off the remaining balance.  The remaining deposit money is returned to you.

A secure credit card dramatically reduces the risk to the lender and the best option after a BK is often a secure credit.

If you can qualify for an unsecure credit card, that is great as well.  The best CC to rebuild credit after a bankruptcy is whatever card you can get that reports to the bureaus.  Remember to keep these tips in mind though.

Things to keep in mind when applying for credit cards after bankruptcy

The majority of secure credit cards have fees associated with them.  Expect to pay some sort of fee to use a secure credit card.

Using a well-known financial institution is recommended.  There are a lot of people out there trying to take advantage of folks after bankruptcies.  They are easy targets because their options are limited.  Using a well-known financial institution will help you not get ripped off.  Remember the easiest card to get is not always the best.

Be sure the lender issuing you the card will report your activity to the credit bureaus.  Some companies do not report secure credit card information.  If they do not report your activity the card means nothing.

How long after my bankruptcy until I can get a Credit Card?

Many times you can get a card right after.  It is going to depend on what type of card you apply for and if the lender approves you.

Applying for a credit card after bankruptcy is easy.  Here is a great option you may qualify for.

Best Credit Card to Apply for After Bankruptcy

The technological platform that would result of such a unification between scanner and card could then be combined with a global-standard standard EMV (Europay, MasterCard and VISA) application that would allow for the highest-ever security on credit and debit ATM cards.

According to the information provided in a press release on Marketwatch, the EMV Co. website published that at the end of last year, there were well over 1.24 billion chip-based payment cards in circulation around the globe that were EMV compliant.

Additionally, the close of 2010 saw more than 15.4 million EMV terminals available for SmartCard-carrying consumers to use in stores worldwide.

A SmartCard has the same shape a feel of a standard credit card, and can be designated by a chip that in mounted on its surface. This chip contains the card’s information and can be scanned by a reader that is EMV compliant.

This, along with a PIN number that is typed in by the cardholder, enables the card to be used for a purchase. Such cards are often referred to throughout the banking industry as “chip and PIN” credit or bank cards.

The technological developments made by Smart Metric will finally do away with the “PIN” number portion of SmartCard transactions which is, in fact, the least secure aspect of EMV cards. The “PIN” component of card transactions will be replaced with the Biometrics finger scan, which is much more secure.

After long being a European standard, EMV cards are now being implemented in the United States. Already available to those Americans going abroad for business, “chip and PIN” cards should soon be attainable by leisure travelers as well so they can carry a card out of the country that will be seamlessly compatible at all European points-of-sale.

The “traditional” American credit card with the magnetic swipe strip on the back occasionally does not work in other countries, especially at self-service kiosks that can be found at many bus and train stations.

The “Banking Industry Fingerprint Activated Card technology” is scheduled to launch in the first quarter of 2012, after Smart Metric finishes constructing a facility in Latin America intended for the mass production manufacturing of these new cards.

Credit card debt is a problem that has gotten out of hand in America.  Millions of people are faced with the issue of how to pay off credit cards.  The good news is that paying off credit cards is not rocket science.  There are simple things you can do to learn how to get out of credit debt.

Remember the Goal

When trying to pay off credit card bills the goal is not always speed.  Paying off credit cards fast is enticing, but for most of you it probably took a lot of time to get into debt.  We will discuss how to pay off credit cards quickly, but I want to let you know that is not the goal.  The goal is paying off credit cards, whether that takes two weeks or two years, let your mindset not be speed, but credit card debt elimination.

Credit Card Debt Problems

First we are going to look at some problems people face with debt.  The most common problem with high credit card debt is over spending.  Someone racks up high amounts of unpaid credit card bills and owes far more than they feel they can pay.  Often time’s excessive debt leads to the second problem which is not being able to make the monthly payments.  This leads to your credit score being negatively affected and can then lead to credit card debt collection.

Many times the start of the issue is in college when students use their student credit cards to rack up debt, rather than paying with cash or paying off their monthly bill.  People are still paying for a taco they bought 15 years ago.  They never learned how to manage their financial situation and the snowball effect takes hold.  Before long the debt load seems too much to handle and drastic measures need to be taken.

Credit Card Debt Solutions

There is no ‘best way to pay off credit cards’.  Everyone has a different situation which means there are different solutions for getting rid of your debt.   Here are some solutions to consider.

Start from the Bottom

If you make the minimum payments on your credit cards you may never erase your credit card debt.  The start from the bottom method starts with the card with the lowest balance.  Start applying extra principle payments until it is paid off.  Now take the minimum payment from that card, plus the extra principle you were paying and apply all that extra money to the next smallest card.  Repeat the process once the second card is paid off.  Now you can add that minimum payment to what you were already paying.  Each time you reach a credit card payoff you have more money to apply to the next card and you spend nothing more each month.  This method has helped thousands of people pay down their debt. The major key to this method is the credit card user must stop overspending and stop using their credit cards.

Start from the top

This strategy follows the same concept as the start from the bottom method, but instead of focusing on the low balance cards first you focus on the cards with the highest interest rates.  If you lower your credit card debt starting with the highest interest you will save more money in interest payments sooner.  Once you pay off the highest interest card, move onto the next card using the payment from the first card you paid off as extra principle.

Credit Card Debt Reduction

Both of these strategies will help you pay down your balances with the least amount of extra money spent each month.  They may take some time, but the more time you put into these methods the faster they will start snowballing and soon you will reduce your credit card debt to zero.

Credit Card Debt Consolidation

A debt consolidation program is a process in which you use one card or loan to pay off the rest of your cards.  You will take all the credit cards you have and consolidate them into one.  If you have high interest on your debt, then a consolidation to a lower interest rate could save you money.

If you decide to consolidate your credit card debt there are a few things you should be wary of.  If you continue your bad credit card habits a consolidation will only make things worse.  The best practice is to never use the credit cards you paid off again.  It is also wise to reapply any money you save monthly back into the principle of the new consolidated debt in order to pay it off sooner.

You can do free debt consolidation on your own, or if you feel you need assistants there are consolidation services you can use.

0% Interest Balance Transfers

If your credit score is not trashed, then you might qualify for a 0% balance transfer from one of your credit card companies.  Usually these balance offers last between 6 months to 21 months and can save you hundreds, if not thousands of dollars in interest alone.  This is a better way of consolidating your own debt without using a debt consolidation company and will also save you money on their fees.  The card company you go with will most likely charge you a minimum of 3% of the total balance transferred.

For instance, if you wanted to consolidate $20,000 in debt from 3 credit cards into 1, you would write each credit card company a check for the full amount owed. These checks are usually sent with the credit card offer or you can also send payments over the Internet.  Once the payment is received and the debt transferred to your new 0% interest credit card, you will be charged the 3% fee. This fee would equal $600, on $20,000 of debt, but the interest you will save over 21 months can be thousands of dollars.

Your plan for the next 21 months (or however long your 0% interest transfer last), is to pay off as much of your debt as possible. Since all of your payments are going straight to the principle amount, it might be enticing to keep using your other credit cards.  This is where many people fail and only dig themselves deeper into debt.  If you are serious about paying off your debts, then you need to get rid of the rest of your cards.

Negotiating Credit Card Debt 

What if you are in a situation that you are unable to even make your minimum payments?  There are still solutions for you.  One solution is to negotiate your credit card debt to see your balances reduced.  Negotiations are done through a debt settlement company. Negotiating your debt should never be your first option.  Here is a good list to see if this process is right for you.

• Are you unable to make your payments for at least 3 months?
• Did you lose your job and have little to no income?
• Have you had a medical emergency?
• Are your creditors threatening you with a lawsuit?
• Is a collection agency harassing you?
• Will paying off debt slowly or consolidation not work for you?
• Are you ready to file bankruptcy?

Before a settlement company will start the credit card negotiations they will determine if you need help paying off your credit cards.  You can set up a counseling session with them, and many companies offer this session for free in hopes you will choose them for their services.

Here are a few steps of the debt reduction/settlement process you can expect.

1. Prepare a budget with the credit card help company.
2. Determine the length of the program.  Usually debt settlements can last 2-4 years in order to accumulate savings for debt payoff.
3. Stop making payments and start saving money. A trust/bank account will be set up and the money used to pay the creditors will be saved for the debt payoff at the end.
4. Now the settlement company will handle all calls and contact by the creditor or collections agency.
5. Finally, with your approval, a settlement will be made and the debt paid off.

Credit card debt settlements will negatively affect your credit because of missing the monthly payments.  Also the amount of debt you do not pay off will be considered taxable income by the government.  (Example: If you owed $10,000 and settled on $5,000, the difference of $5,000 will be taxed.)

Closing

Remember the main goal is getting out of debt.  The second goal should be staying out of debt.  Building new habits with credit cards is vital.  Each of these situations could escalate your credit card problem if you do not change the way you use credit cards.  Get out the scissors and good luck.

However, the latest Credit Power Index data reveals a reverse in the trend. Meaning when the index goes up, it means that the interest consumers are paying on loans is significantly higher than the interest rate they are receiving on deposits.

“The national Credit Power Index may have hit bottom last month,” says the general manager of RateWatch, Rachelle Zorn. Her statement suggests that an end to the great consumer environment at banks may be close at hand.

However, the notion of what makes a “great environment” is entirely relative, as interest rates on savings products such as CD’s have been dismal for quite some time.

The current sorry interest situation can be blamed upon the government. “The low Fed funds rate is the real driver here,” says Maria Cappellano, a portfolio manager at investment management firm Eaton Vance who focuses on short term instruments, according to Main Street.

“It’s really an anchor for short-term CDs and deposits.”

Despite the fact that any return investor can expect to receive upon such CD’s and deposits are drowning, many Americans are choosing to take the safer route of wealth preservation over the riskier and much more precarious path of growth investing. What this means is that much of people’s money will continue to be shuttled into these rather unappealing but secure instruments.

“Do I want to have my money in prime money market funds with exposure to the European debt crisis? Or should I put my money in an FDIC-insured CD at the local bank?” Cappellano proposes that investors are asking themselves, as per Main Street’s reporting. “The mindset of consumers is that they’re looking for this cash to be safe, and they’re mostly concerned with capital preservation than an income base.”

The only bright side is for people looking to borrow money because, should they qualify, they could get a great rate on a loan at the moment.

Despite the grim return money put into savings accounts and Certificates of Deposit these days, it is important that consumers don’t abandon setting some money aside in order to establish an emergency fund.

How does this affect savers?

Anyone not buying a house, car or taking out long-term loans will be affected negatively by the current moves of the Fed. As long as banks and other financial institutions can get money at near 0% interest, they have no need to get it from investors. When the Fed increases rates, the cost to banks for borrowing money increases, this will in turn give the banks an incentive to pay its customers more to borrow their money.

Whenever you place your money into a bank account, savings account or certificate of deposit, the bank uses that money to lend to its customers of credit cards, mortgages, car loans and any other type of loans. In turn the bank charges an interest rate for these loans and pays its customers its borrowing money from a part of that percentage. This is how the banking system makes its money. When rates are down, the banks have no reason to pay a higher rate to investors. Therefore, as long as interest rates are at or near 0%, investors will lose, while those buying long-term loans will win by the decreased cost of borrowing money.

Will interest rates increase in 2011?

The U.S economy is projected to grow at an annual rate of 2%, not even keeping up with the rate of inflation. The current inflation rate for 2011 is 3.8% (US Inflation). When the Fed announced that it would keep interest rates near zero percent for ‘an extended period’, they said so because there was little prospect that the economy would recover within the next two years. This means that interest rates would stay low for this period of time, giving borrowers more time to make purchases or to borrow money at record low rates.

One of the dangerous causes of low interest rates is inflation. If inflation increases, interest rates would need to be increased to control the increase of inflation. The only hope for savers to see an increase on their savings accounts or CD rates in the near future would be to see an increase in inflation. Then it becomes a game of when, or if the Fed will renege on their original statement that interest rates would stay low until at least mid-2013. If the interest rate the Fed sets is not increased until 2013, then I do not see CD rates or Savings rates increasing until 2013 also.

Where are the best interest rates for savers?

If you are looking for the best interest rates on CDs or savings accounts, then stay away from major banks. Check your local credit union, as these financial institutions tend to have the best CD rates anyone can find. Melrose Credit Union is a great example of a Credit Union offering some of the highest rates on their certificate of deposits. Melrose is also a credit union open to anyone, while most credit unions are only open to specific groups of people.