Credit Card Debt Management

If you have an hour to kill, watch the video below, “The Secret History of the Credit Card.” The New York Times and PBS’ Frontline teamed up in November 2004 to create this fascinating look at how the credit card industry got to the point it’s at today, which is fairly unregulated.

It’s amazing to hear at the beginning of the video that interest rates used to be legally mandated. There would be certain interest rates for financing used cars and a different rate for financing new cars, etc. Times have certainly changed, especially when it comes to credit cards. The video has an accompanying web site loaded with educational information and related reports from The New York Times. Some of the web site’s information is outdated, but there are updates throughout, specifically regarding the revision of bankruptcy laws a few years ago.

CreditCards.com has amassed a staggering collection of recent credit card statistics that shed light on just how prevalent plastic is in our see-and-spend society. About 14 percent of Americans use at least 50 percent of their available credit and carry at least six credit cards. That group, however, has a credit score that is 30 points lower, on average, than the group of consumers using less than 50 percent of available credit. While more than half of all people are using less than 30 percent of their credit limit, one in seven are utilizing more than 80 percent.

Fortunately, there are some statistics that make it seem as though the credit card industry doesn’t quite have a death grip on American society. For instance, CreditCards.com cites the Federal Reserve in saying that most U.S. households have no credit card debt, about one-fourth have no credit cards and about 30 percent pay off their balance each month. Whether you fall into the category of risky or responsible credit card management, this video is sure to be enlightening. Programs like Frontline aren’t exactly enjoyed by mainstream American society, but maybe if documentaries like this were more popular, far fewer Americans would drown themselves in debt and then bury their heads in the sand.

Credit monitoring services are currently viewed as the best way to prevent identity theft from touching your life. The standard features include credit account and credit report monitoring for any sudden changes, as well as insurance to help you “get your life back” and cover any fees related to identity theft recovery following an incident. The service is provided by all three major credit bureaus, Equifax, TransUnion and Experian. There are also a host of independent companies that offer a smorgasbord of identity theft protection plans.

However, there are mixed opinions on credit monitoring services. Are they really worth the monthly fee (typically around $10), or are they overrated? While many customers can acknowledge that they are paying for convenience and that’s OK, many others are frustrated that the services provided by credit monitoring companies could be handled by themselves, or by their grandma or their 3-year-old, for that matter. For instance, in his By the Bayou blog, John vents his frustrations with Equifax’s credit monitoring service (or perhaps the lack thereof):

“Basically, they alert you when your account balances change. So, for example, when my Amex has a balance of $150 and then I spent $100 on something, I get an email warning me that the balance went up more than 30%! Or if I buy something expensive with my MasterCard, they tell me about it. Oh, and you get the warning a week after the purchase, so if somebody was using your card information, they would have been using it for the last week.”

If you do decide to use an independent identity theft prevention, protection and recovery program, check to see if they monitor your credit reports from all three bureaus, or if they check only one. Consumer Reports suggests that an up-and-coming service, ID fraud prevention and detection, may provide a more comprehensive picture. This service monitors other avenues (besides credit card information) that thieves might use to compromise your identity — think social security numbers, driver’s license numbers, etc. ID fraud prevention and detection is expected to surpass credit monitoring services in terms of consumer popularity by the end of 2009, according to Consumer Reports.

This newer type of service works by “trawling Internet chat rooms and directories and by sifting through online public records for signs of Social Security number fraud, stolen credit-card account trafficking, and other types of ID theft,” states Consumer Reports, adding that some of the services do offer limited monitoring of credit reports.

On a slightly different note, the Washington, D.C.-based iSekurity is offering a new service that is garnering much attention. Though not geared so much toward identity theft prevention or even recovery, necessarily, iSekurity’s main goal, it seems, is to track down the thieves and hold them accountable for their crime. As an organization staffed by former federal agents, iSekurity has the skills and know-how to get the job done, as well as the awareness that this is one of the most overlooked areas of federal law enforcement. The time and resources simply aren’t there for identity theft crimes to be investigated and prosecuted fully by government agencies, so criminals are generally able to run rampant. So be smart when deciding how to protect yourself!

1. Research the many different ways identity thieves can get to you (mail, Internet, credit cards, etc.)

2. Look into the most common problems faced by identity thieves (inadequate help in reestablishing good credit and good name, frustration at lack of investigative effort).

3. Then make sure you purchase a plan that covers all the bases.

4. Don’t become complacent in your sense of security. Still be proactive in protecting yourself by guarding your cards, putting a stop to credit card mailings, get your bank statements by e-mail, have your mail directed to a post office box and shred important documents. These are just a few of the steps that, when combined with a professional service, can help you avoid becoming a victim of the fastest growing crime in American society today.

Investigators from the New York Police Department and other agencies struck a major blow against identity theft recently by exposing a massive credit card fraud ring. It seems the ring was manufacturing credit cards and driver’s licenses using information obtained from retail stores’ customer databases. Shopping teams would fly throughout the U.S. and use the forged cards and licenses to purchase expensive purses and electronics like flat-screen TVs and iPods. The merchandise would be shipped back to headquarters in Queens, NY and sold at a discounted price over the Internet.

The forged licenses were good enough to pass airport security, which many are pointing to as a homeland security risk. At least $1 million worth of merchandise was purchased using fake Visa, American Express, MasterCard and Discover cards, according to BusinessWeek. Altogether 39 people were charged federally with various charges, including identity theft. The ring’s boss, Kwok Chow, was Chinese, and had teams of workers assigned to web site maintenance, shopping, and producing the highly authentic fake cards.

This not only tells you to be careful what you buy on the Internet, but also to protect your identity. It can be nearly impossible to protect against episodes like this, but a credit monitoring service can help you at least become immediately aware of when your identity has been compromised.