One of our readers sent us this question:

Hi, just came across this site, am from the UK and its really informative, unfortunately alot of the laws you state are, obviously, only applicable to the USA - therefore, do you have any letters or know of UK laws that state the same thing - about refusing to have any communication with credit card issuers? Your help would be great - thanks swinny

Thanks for your question Swinny. I’ve done some digging for you, and here’s what I uncovered:

The Administration of Justice Act 1970 gives you the following rights:

• Creditors cannot alarm, distress or humiliate you or your family members.
• They cannot falsely represent themselves or the debt you owe.

Additionally, the Office of Fair Trading enforces several guidelines that collection officers must follow:

• They cannot contact you too frequently, or at unreasonable times.
• They cannot ignore a dispute about whether or not you owe the money.
• They cannot pretend to be a legal or government body.
• They cannot discuss your debt with anyone but you unless you authorize them to.

I’m going to give you a quick series of links that will give you all the information you need to know about how protect yourself from harassing creditors in the UK:

The National Debtline Creditor Harassment Fact Sheet for England and Wales - This site outlines many of your rights where collections agencies are concerned. It even tells you which agencies to complain to when you are being harassed by creditors.

The Office of Fair Trading Debt Collection Guidelines - This is a PDF that clearly states what collections officers are not allowed to do.

An excellent (but long) You Tube audio on how to handle collection agencies in the UK.

And finally, go back to the National Debtline for a full list of sample letters to send to your creditors. This includes everything from asking them to write off your debt to asking them to freeze the interest rate on your account.

Unfortunately, I was not able to find any information that supported a “cease and desist” practice (stop all communication) like we have here in the US. However, the links above should give you the power you need to deal with debt collectors and make the harassing behavior stop according to your rights under UK law.

Have a question for us? Leave a comment below!

Collection calls can be some of the most distressing, evil things on the planet. The only thing worse than having a creditor hound you repeatedly is having them contact your friends, family, and employer on your behalf.

If you are receiving collection calls at home or at work and want them to stop, then there are two things you can do.

1) Make a payment arrangement and stick to it. If your account goes past 30 days overdue, then it will be assigned to the collections department, and they will begin to call you. The best way to handle things is to set up a concrete repayment plan and stick to it. Try to avoid losing your temper. The people on the other end of the phone have likely been yelled at several times already that day - before they ever even called you.

The good news is, they have a lot of power to help you if you will let them. Instead of avoiding the calls, ask the collection representative what they can do for you. Collection officers are usually authorized to:

If you have no money and can’t make a payment for a month, tell them that. Ask them what kind of repayment plan they can put you on. Being proactive when the collection calls happen will actually keep them from calling you back. Avoiding the calls will only cause them to be more resourceful. Instead of simply calling your house or cell phone, they will begin to track you down at work, and any other number they can get their hands on.

Whatever you do, stick to any agreement you make with them. If you default on a second repayment plan, you are going to be right back where you started.

But what if you are already waaaay past that point? If you are in serious financial trouble and you have creditors calling everyone you know (and believe me it happens to people more often than you might think) then you need to know your rights.

2) Avoiding your creditors is never going to be a sound financial decision. However if that is the path you need to take then be aware of your laws within section 805 of the Fair Debt Collection Practices Act (FDCPA):

Unless you consent or a court order allows it, debt collectors may not call to collect a debt from you:

• At any time or place which is unusual or inconvenient to you.
• If they know you are represented by a lawyer.
• At work if your employer does not allow it.

Collection officers are also not allowed to call your friends and family if they already know your location. That is why it is so vital that you pick up the phone and talk to them, even if you can’t pay them anything. It will prevent all the other legal forms of harassment

So, to make it short and sweet, if you want them to stop calling you at work, tell them your boss does not allow it. If you want them to stop calling your family and friends, talk to them and confirm the number where they can reach you.

If things get really ugly, there is one more thing you can do. You can send a registered letter that refuses to pay the debt and instructs them to cease all communication with you. By law, once they receive that letter they must stop attempting to contact you, and that will keep them from harassing you at work, or calling your friends and family. Be aware though, that this is a refusal to pay the debt, and that is likely just a one way ticket to a court date or a wage garnishment.

For a sample cease and desist letter click here.

How do I opt out of pre-screened credit card offers?

If you are tired of receiving unsolicited credit card offers in your mail box each week, there is a way to prevent it from happening.

Why you get unsolicited offers of credit in the mail:

The three credit bureaus (TransUnion, Equifax and Experian) regularly sell lists of consumer’s names to the major credit card companies. The credit card companies then send out offers of credit based on the range your credit score fell into at the time the list was made.

If you are tired of these offers there is a simple way to make them stop. However, before you decide whether opting out of credit card mailers is right for you, you may want to consider some of the pros and cons:

Pros:

• Opting out could reduce the possibility of identity theft. You will not have to worry about someone else getting their hands on your credit card offers and ruining your credit.
• The majority of credit card companies who buy your information also find a way to re-sell it. Opting out of the initial list could impact the total level of junk mail you receive. Your name would no longer be sold over and over again to different companies throughout the United States.
• It is getting easier and easier to compare credit offers online. When you decide it is time to apply you can simply search for a card that meets your needs. You can even read reviews and direct card- to- card comparisons without ever leaving your chair, much less opening junk mail.

Cons:

• Occasionally credit card companies will use direct mail to send you an offer that they do not make publicly available - especially if you have either excellent credit or horrible credit. (There are companies that target both markets).

  The interest rates you are offered by mail could be better than the offers that show up online, or the offer may have had other rewards attached. This is not common practice, but it does happen.

Tip:
The best way to combat that little voice in the back of your head that says, “I wonder if I could have gotten a better deal?” is to do a little research online. Credit card companies do not typically make unique, one time only, or only-for-you offers. (Although they want you to think they do!)

Chances are, if you would have been “pre-selected” for an offer, then other people were too - and you can usually find unbiased opinions of those offers in forums like this one. If you hear of a better than advertised deal, call the credit card company and see if you can get approved for it.

How to stop getting unsolicited offers of credit:

Under the Fair Credit Reporting Act (FCRA) you have the right to “Opt-Out” of pre-approved or pre-selected credit card offers. You can choose to remove your name from the marketing list for 5 years, or to opt-out permanently and never receive offers again. You can also opt back in if you change your mind later.

To begin opting-out of credit card offers by mail, or to find out more about what opting out will mean to you, click here.

How do I get a free copy of my credit report from all three credit bureaus?

If you are going to apply for a credit card or a loan soon, then it is wise to check your credit reports before you apply. Even if you are not planning to apply for a credit card, it is good practice to check your credit report at least once a year to look for problems or false information.

There are three major credit bureaus: TransUnion, Equifax and Experian. Each bureau keeps it’s own records about your credit history. The information on your Transunion report could be very different from the information on your Experian report, so you need to check your full credit reports at each bureau if you want to see your whole credit history.

You are entitled to one free copy of your credit report each year. All three credit bureaus allow you to download and view your credit reports online. However, if you choose to do that you may be “encouraged” to sign up for a variety of credit monitoring services, which are not free.

You can start the process of viewing your credit reports by clicking on the links to each credit bureau below:

• TransUnion - View your credit report at TransUnion.
• Equafax - View your credit report at Equifax.
• Experian - View your credit report at Experian.

If you can afford to wait a week or two to see your credit reports, then you can print out this form. This is an official request form to get your credit reports from all three credit bureaus. One free form, all three credit reports - it doesn’t get any easier than that. Once you have filled out the form, it should be sent to this address:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, Georgia 30348-5281

Here are some posts that caught my eye recently.

Flexo noiced payment method discriminations at gas stations rearing it’s ugly head again. You should definitely check this out.

I chucked when Clever Dude noticed that Someone’s submitting his posts to carnivals!. I guess there could be worse things happening!

Moolanomy wondered if his parnets should buy long term card. The answer is obviously YES - unless he or she does not mind footing the nursing home care bill!

Please also check out the following carnivals which my post appeared in.

Carnival of Personal Finance #152

Carnival of Personal Finance #151

I got the following question from a reader :

What is the difference between the Amex Blue and the Blue Sky? I am thinking of getting a card to use for airline rewards. My understanding is that the Blue card has membership rewards and that it is a great program. I also know that you can use points for other things other than travel rewards for the Blue. Which is the better card for me if I want to use it for travel rewards?

Answer : There is a major difference between the two cards. So let’s take a look at both of them.

Firstly, the Amex Blue card is actually not geared towards travel rewards. The traditional Amex charge cards (like the Green, Gold and Platinum Cards) is linked to the Membership Rewards program, which has 20 airline partners at present. For these cards, you earn one point for every dollar you spend on the card. You can transfer one point into one airmile for most airline partners. The amex charge cards all have an annual fee.

The Blue Card is based on a scaled down version of the Membership Rewards program, which is the Membership Rewards Express Program. This program is exactly identical to the Membership Rewards program except the airline rewards program. You cannot transfer points to airline partners. But instead, you can use points to buy airline tickets and you can pay an airline ticket with part points and the rest with your card if you do not have enough points. In a way, this functions more like a regular credit card reward program.

The Blue Sky is specially targeted at people who just want to use points for airline travel. You simply have to book your travel expenses on the card and if it qualifies, then you will rebates from those expenditure. These rebates will then appear in your next statement as a credit. The advantages of the Blue Sky is that it is really hassle free - no blackout dates or any of the other restrictions that are common in other programs.

So my advice to this question is if you want to use the card solely for travel, the Blue Sky is probably the better card. If you intend to use reward points for other rewards, the the Blue Card will probably be the better bet.

I had a sneaky feeling this would happen sooner or later. Months ago, Citibank started to

1. remove caps on balance transfer fees on some of their credit cards.

2. Raise the maximum balance transfer on some cards to as high as $250.

However, there was still one card where they offered a 0% APR teaser for 12 months on balance transfers and new card holders did not have to pay any balance transfer fee. That card was the Citi Professional Cash Card

Well, that card no longer offers any 0% deals for balance transfer. They switched it to 0% for purchases for 12 months.

Hence, right now, all of Citibanks’ consumer cards that offer up to 0% balance transfer deals have no caps on their balance transfer fees. Furthermore, their minimum balance transfer fee is only $5.00. So if you are looking to do a balance transfer, do not apply for any of Citi’s consumer cards.

Having said that, they have left their student credit cards unscathed! I supposed students do not have the dough to pay the balance transfer fees! So you could still apply for a Citi student credit card and get a balance transfer deal. But it is only for 6 months and not the usual 12 months.

With this new development, it looks like I have to update my balance transfer credit card list. But the great choices for balance transfer deals among consumers are dwindling. Perhaps another sign of the credit crunch.

The Fed has drawn up a set of rules to police behavior by credit card issuers. On the surface, it all looks good. However, there may be some unintended consequences. Here are the proposed rules and my thoughts on the matter.

1. Placing unfair time constraints on payments - While consumers may cheer this, I honestly think this is the most ridiculous thing I’ve come across. In the corporate world, if a company misses a coupon payment on the bond, the bond trustee would immediately act on behalf of the bondholders. Lawsuits will be filed, and the company has to negotiate with creditors if they want to avoid filing chapter 11. If payment was missed due to extraordinary circumstances, the borrower may have to pay a fee to the creditors. Why should consumers be given leeway. The Feds are proposing that payments are not considered late unless we have been given 21 days to make a payment. My experiences so far is that credit card companies will not report late payments to the credit bureaus unless you have been late by 60 days. Well, I guess consumers will benefit as we may not be charged any interest unless we are late by 21 days. I’m really not too sure if that is a good idea.

Unfairly allocating payments among balances with different interest rates. - Presently, when you have transferred a balance on a 0% APR deal and you carry more balance on top of that, the payments that you make above the minimum amount will be used to reduce your balance that is charged the 0% rate. That is how issuers make their money on 0% deals. If you charge more expenses to the card, they will earn that higher interest and you cannot pay it off. Well, under the new Fed proposals, this practice will come to an end. An extra payments above the minimum payment will be used to pay the higher interest balance.

Sounds good? But credit card issuers will suffer. One unintended consequence may be that banks stop offering good 0% APR deals.

Unfairly raising annual percentage rates on outstanding balances. - Under the first proposal, issuers cannot raise your interest rates unless you are late by more than 20 days. This proposal will prohibit issuers from raising your rates just because you miss your mortgage payments. This effectively bans the practice of universal default clause.

On surface this sounds great. However, credit card issuers do have a valid point in that you are a more risky borrower if you miss a payment on another debt obligation. In the corporate world, if a corporation miss one couple on one bond, technically, the company has defaulted - not just on their bond, but on every creditor.

I think another unintended consequence is that credit card issuers will have higher issuing standards and APR will be higher than what it would be without this.

Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account, usually by rental car companies or hotels. - This is long overdue and a wise proposal.

Unfairly computing balances with methods such as “two-cycle billing - I definitely second this proposal. Most people do not understand APR or how to compute their monthly balance. Having 2-cycle methods only add to the confusion.

Unfairly adding security deposits and fees for issuing credit or making credit available - The rules would ban fees that consumed a majority of a new card’s credit limit. Sounds familiar. Yes, sub prime cards! Subprime cards normally charge a one-time application or processing fee, a monthly maintenance fee and high APR. Most will only given you a credit limit of $300. By the time the fees are taken out, a new cardholder only has an initial limit of $100!

One is tempted to think that it is great for sub prime borrowers because all sub prime credit cards charge these ridiculously fees. But having said that the reason they do that is because regular issuers will not even issue cards to sub prime candidates.

Question is what happens if they are forced not to charge these fees. Will these subprime issuers feel that they are compensated for lending to less than desirable candidates? I don’t know the answer to that but time will tell. Another unintended consequences.

Making deceptive offers of credit - Issuers have to state clear what you need achieve the APR or teaser deal that was advertised. This is a great thing because if prevents impulse purchases. If only they would enforce that with cell phone companies or cable companies (with all their pay so little for 6 months but do not tell you what happens after the teaser deal is gone!).

I would certainly like to hear your thoughts on these changes.

We get lots of advice on how to avoid identity theft :

1. Do not carry your social security in your wallet.

2. Shred all your bank statements or bills if you decide to junk them.

3. Have strong passwords

4. Know what are phishing emails and do not reply or divulge any information over the email.

But, today while I was at the driving center renewing my driving license, the person over the counter told me that he just attended a course about identity theft. And he said that one of the easiest ways to get your identity stolen was through the hotel room swipe cards that the hotels give you.

It turns out that many hotels store information such as your name and even your credit card numbers. It makes it very easy for even an amateur to get someone’s credit card number! So I did some googling and true enough, there have been lots of articles written about this as early as three years back. Here are interesting posts :

Swipe here to steal ID at computer world

Hotel Key Cards : Identity Theft Risk or Not

Hotel/Motel Key Cards embedded with personal information.

Guess the lesson is to make sure you actually shred those cards after you have checked out.

This is the time that I’m supposed to rounding up what has been going on around the blog world. But I am now watching a CNN program : Special Investigation Unit, and I’m intrigued. There is a round table on the mortgage sub prime crisis and the mess we are in right now. The show essentially explains the events that led to the present situation. As I am watching this, a few things spring to mind.

1. Unintended Consequences - One of the things about this show that really intrigued me was this phrase called “reverse red lining” - which is a term used to describe mortgage lending to people like minorities and people with low credit. In 2002, President Bush announced his intention to help more than five million minorities to own their homes.

Great intention, but unfortunately, this ended up with disastrous consequences as we are witnessing right now. But this has led me to challenge every good intention that the three political candidates are proposing now. For example, is “universal health care” really great? Great intentions certainly. But just like the mortgage situation, is “universal health care” really desirable? I don’t know, but I’m looking to see the press ask tough questions about how the democrat ideas will be funded? Are there any “unintended consequences” we are not considering?

Beware of common assumptions - One of the common assumption on why we got into this whole mess is because of this common assumption - that housing prices will always go up. Well, unfortunately, because most people rely on leverage to buy a house, it does not take a large decline before everyone gets into trouble.

Another assumption common in the financial world - invest for the long run, stocks always go up. This may be true, but many people do not have the long run. For example, a 55 year old who is planning to retire in 8 years does not have time on his side. He or she needs a certain degree of protection against portfolio volatility.

Most people will never be financially savvy - CNN interviewed a lady who had her home foreclosed. Inevitably, the reporter asked if she knew that she was taking out an adjustable rate mortgage. Her answer was obviously NO! I’m pretty sure most people who took out interest only or adjustable mortgages will not know what they have gotten into. I can only shudder to think the majority of individual investors don’t know what to do and get scammed.

Alright, back to some tributes here. I participated some carnivals which you should check out :

Carnival of Personal Finance 150th Edition at Lazy Man and Money

Carnival of Personal Finance 149th Edition at The Happy Rock

carnival of Everything Finance #17

carnival of money stories

Carnival of Debt Management #49

Alright - good night and have a great week ahead.