Cancel a card, hurt your credit score

Everyone knows that your credit score is important to your financial life, affecting the rates you get for mortgages, credit cards and insurance. Improving your score may save you thousands of dollars in interest. So would it help your score if you got rid of a credit card?

"Pay your bills on time and keep your credit expenditures under control, and you won't have to worry about your credit rating," says Craig Watts, spokesman for Fair Isaac Corp., which calculates the FICO score for consumers. "If you're having trouble doing that, sometimes canceling a credit card in an effort to get your credit behavior under control is more important than your credit score."

That's the short answer. But since virtually everything that makes up your credit score depends on something else -- depends on your credit mix, the number of cards you carry, the length of your credit history, your rate of credit utilization and myriad other things -- there is a longer answer.

In most cases, canceling a credit card won't help your credit score. In fact, it may actually hurt your score. You see, your credit score depends on how you shake out in five different credit-scoring categories, each weighted differently when calculating that score.

According to Evan Hendricks, author of the book "Credit Scores and Credit Reports," canceling a credit card potentially can hurt you in at least two of the five categories -- and maybe even a third.

Credit-utilization ratio is key
First, canceling a card could upset your credit-utilization ratio, the second most heavily weighted category in Fair Isaac's credit scoring algorithms. For example, assume you have three cards with total available credit of $20,000. Assume further that your outstanding balances total no more than $6,000 of that available credit at any one time. Since creditors like to see a credit-utilization ratio of 30 percent to 35 percent or less, you're in good shape. Now, assume that you cancel a card with a zero balance and a $10,000 credit limit. Suddenly, your utilization ratio jumps to 60 percent, and your credit score drops.

As counterintuitive as that seems, that could happen. Impersonal credit-scoring systems aren't concerned so much with how much available credit you have but with how you manage that credit. And in the credit-scoring world, a 30 percent utilization rate is much better than a 60 percent one. "That's what scoring models want to see, a good utilization rate," Hendricks says.

Furthermore, he says, canceling that card could result in a double whammy to your credit score, "because each card is scored individually, and then all your cards are scored together. (If) you've just canceled the card with a zero balance, (you've) lost a great individual score." Regardless, if you still want to cancel a card, he says, "make sure to pay down your other balances to keep that rate in line."

Older credit is better
If you do cancel a card, you can compound your error even further by canceling the card that you've had the longest period of time and on which you've been making regular payments. By canceling an old card, the length of your credit history on open accounts will grow shorter. Both the FICO score and the VantageScore credit-scoring formulas take into account the credit histories of even closed accounts in assessing how long you've been managing credit. However, according to Watts, "that history will finally disappear from the formula when a credit bureau of its own accord removes old credit account information from your credit file."
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Barrett Burns, CEO and president of VantageScore Solutions (the company formed by the credit bureaus Equifax, Experian and TransUnion), agrees, but cautions that the scoring algorithm "is weighted such that if you maintain that older account, you're better off because it goes to a pattern of payment history." Nevertheless, he says, if it's an older account that you don't use, and you're paying fees on it, "you're probably better off closing it out for privacy rather than credit score reasons."

There's at least one more nuance to consider, Hendricks explains. If you're intent on canceling a card, cancel a younger card or cancel one on which the credit card issuer doesn't report the credit card limit. "Some credit card companies don't report your credit limit," he says. "You can find out which ones by getting a copy of your credit report."

Number of cards matters
Your credit report may also alert you to another reason to cancel a credit card: You can have too many credit cards. Though there is no magic number -- again, because each person's credit situation is so different -- your credit report does give so-called reason codes for your credit score.

There are more than 40 reason codes -- reasons to grant or deny credit -- and up to four are given with your credit report to show what factors affected your score. The most common reason codes, according to Equifax, are as follows.

One of the reason codes (reason No. 4) tells you if having too many cards has hurt your score. Common sense should tell you that the older you are and the better you manage your credit, the more cards you can have in your wallet before you reach the magic number that triggers the reason code (though you may be surprised to learn that 10 or more cards is not too high in some cases). "In any event, if you're in that rare category and have plenty of credit and low balances on the other cards, canceling a card may help you," Hendricks says.

Though canceling a card probably will not increase your credit score, holding on to one has a number of advantages. For one, Fair Isaac and VantageScore look for a healthy credit mix, a mix that might include a mortgage loan, a car loan, maybe a store card or two, three or four MasterCard or Visa cards and a home equity line of credit, or HELOC, for example.

HELOC effect
Of course, it's not simply a matter of having diverse sources of credit. They also want to see responsible credit usage on your part, including credit card balances in the healthy 30-percent-to-35-percent range. "That's a sign of an active and responsible credit person," Burns says. "On the other hand, if somebody consolidates their credit cards or revolving credit down to just a handful of credit sources and has high utilization rate, that will be detrimental to their score."

And this is where credit-score math gets fuzzy. Many consumers have consolidated outstanding credit card balances into a HELOC, both for the lower rate and because they thought doing so might help their credit scores. (For what it's worth, Fair Isaac's Watts wonders whether mortgage brokers, in an effort to generate more loans, first pitched the myth that canceling a credit card would help your score.) Once again, the answer is "it depends."

"Home equity lines of credit are really interesting creatures when it comes to credit scores," Watts says.

What's interesting is that it may make sense to consolidate credit card balances into a HELOC because Fair Isaac may treat the new HELOC as an installment loan rather than a revolving loan. However, Watts points out, that with Fair Isaac that only happens if the HELOC is a large line of credit. Small HELOCs are regarded as revolving lines of credit, much like your credit cards. Thus, as with credit cards, it might help your credit score in some cases to close out a HELOC.

"But in all cases, paying down a real estate-based loan like a mortgage or a HELOC is going to help your score," says Watts.

And that seems to be the key to the kingdom when it comes to credit cards and credit scores: Don't cancel your cards. Pay them off. And after you've done that, don't send them back. Cut them up.

Do that, and you have a zero balance enhancing your credit utilization rate. Do that, and you maintain your credit history on open accounts. Do that, and your credit mix looks good. Do that, and you still have the available credit on the card you cut up. All you have to do is ask for a new card when you need it.

Nevertheless, if you have a compulsion to cancel credit cards, do it the right way. First, cancel your department store cards; then cancel the newest MasterCard or Visa with the lowest credit limit, making sure to close the card from the company that doesn't report credit limits.

"And make sure to keep your credit-utilization ratio in line as you cancel, paying down balances on your other cards, if necessary, to keep it in line," says Hendricks. Score one for the consumer.

Which card is right for you?

Zero-or-low interest rate
Best for: Anyone willing and able to pay down existing credit card debt relatively quickly.

Pros: Most cards offer the bargain rate on balance transfers from other cards. The lower rate can save you a bundle on your current interest costs.

Cons: The low rate usually lasts for only six to nine months, then reverts to something higher, usually around 14 percent to 16 percent. One late payment and the card will revert to the higher rate immediately. If you transfer a large balance but don't pay it off during the favorable rate period, you may end up with a higher rate than you had to begin with.

Best for: People who make the majority of their purchases on a credit card and pay off the balance each month.

Pros: Cards offer cash back, airline miles or points toward purchasing select merchandise based on the amount you spend. Some rewards cards, for instance, currently offer as much as 5 percent cash back on select purchases with no annual fee.

Cons: Some cards have high interest rates and annual fees that cancel out the reward benefits. Other have complicated and unfavorable redemption policies. Always read the offer carefully.

Best for: Someone with has gotten into trouble with credit cards in the past.

Pros: Most secured cards report to the three credit bureaus, so using one responsibly can be a way to establish or repair your credit rating.

Cons: The secured part means you put down a deposit, usually between $200 and $250, with your application. Many secured cards have high interest rates and annual fees. Read the fine print very carefully.

Best for: College students who can handle money responsibly.

Pros: Students can qualify for theses cards without an established credit rating. Many offer extra benefits such as cash back or bookstore discounts.

Cons: Some companies charge higher interest rates for students. It's easy for students who are inexperienced with handling credit cards and finances in general to rack up unmanageable debts quickly.

3 steps to boost your credit score

If your credit score is below 660, take these three steps now.

1. Pay every bill on time.
A late payment will instantly drag down your score. A few months history of timely payments, however, can help boost it.

2. Pay down the cards that are maxed out first.
You'll get points deducted from your score any time you charge more than 50 percent of the limit on any kind of credit card.

3. Do not cancel any credit cards.
Counterintuitive, yes. But not when you consider that one-third of your score is based on how much of the credit available to you you're actually using. Cutting up credit cards will automatically decrease the amount of credit you have available. Better to stick the cards in a drawer until your score is back on track.

Take charge of your cards

The average American carries about $5,000 in credit card debt. Does that sound familiar?
With a typical interest rate of 16 percent, it would take 12 years to pay that off, assuming the cardholder makes only the minimum payment and doesn't charge any new purchases. Worse, that person would pay an extra $2,500 in interest payments for a total bill of $7,500.

Think of what you could do with that much money. A fabulous vacation perhaps? A used car for your son in college? If you socked it away in your retirement account, you'd have an extra $24,000 in 20 years. That's a lot of greens fees.

Simply put, that money that could go toward so many bigger and better things. "You wouldn't set fire to a stack of $100 bills would you?" asks personal finance expert Jane Bryant Quinn. "Paying interest on your credit cards isn't much different."

That credit monkey on your back can affect every aspect of your financial picture from how much money you have in your wallet to whether you get the next job you apply for. That's why taking control of your credit cards -- and keeping debt at bay -- is the No. 1 ingredient for financial success. "Taming credit card debt is the first thing I do with all my clients," says Bill Driscoll, a financial planner in Boston who specializes in debt management. "Virtually everyone can learn to use credit cards better."

With the strategies outlined in the "Take Action" section of this site, you can take control starting today, no matter how deeply in debt you may be. And even if you're the type to pay off your balance every month you'll learn to make your good credit standing work even harder for you.

To make any headway, however, you've got to first understand why using credit cards wisely is so important.

Gift card trading: The secondary market

For your wedding, you got four Wal-Mart gift cards and one for Barnes & Noble, but you'd like to get one big present at Pottery Barn. There are a number of Web sites that can help you turn your unwanted gift cards into gifts you want -- or cash.

"Money is money. If you have three $5 cards, you can trade them for $15," says Bob Butler, president and CEO of, a 3-year-old site where people can buy, sell or trade gift cards.

The gift card market is estimated to be $60 billion, and experts say 10 percent to 15 percent of gift cards go unused. "A $25 gift card is worth $25," says Butler. "People don't think about it as money. People will have $200 in gift cards lying around. You can sell your card for cash or trade, and most people trade."

The largest market of gift cards for auction is at eBay, of course. There are so many cards available on eBay that they separate them into various categories; even by retailers. Some are also listed under the "gift certificate" heading.

Buying gift cards on a Web site can bring potential savings. It can also give you access to a store or restaurant that might not be in your area, but is in the neighborhood of someone to whom you're giving a gift. Listed recently on eBay were: a $395 Coach store gift card with a $335 bid ($2 shipping), a $466 Pottery Barn/Williams-Sonoma gift card with a $355 bid (shipping fee not specified), a $150 card for the Palace of Auburn Hills, where the Detroit Pistons play, with a $51 bid ($1 shipping) and a $400 Nike gift card with a $280 bid (free shipping).

Other Web sites -- including, and -- are devoted exclusively to buying, selling or trading gift cards. has an extensive inventory of cards of all kinds. "We average 5,000 cards a month," says Butler.

If you want to trade a card, you create a "wish list" of cards you will accept. For example, a recent trader had a $162.56 Tiffany & Co. gift card and would accept a card for retailers such as Armani Exchange, Trader Joe's and Costco.

"Most people combine various gift cards to get one they want," says Butler. "Say, they'll have three Target cards and a Borders and a Starbucks, totaling $150. They can trade them on our site for one $150 card at Lowe's or someplace." has free registration, and it charges the auction seller 3.95 percent of the auction's closing price, plus a 50-cent closing fee. Auction buyers pay no fee. For trades, both parties involved pay 3.95 percent of the value of the card, plus a 50-cent closing fee. If the value of one customer's gift card is not equal to the value of the card he or she wants to trade for, he or she can offer the other party cash for the balance. Those negotiations are between the two parties. PayPal is accepted.

How to settle with a debt collector

That bill has been sitting at the bottom of your paperwork pile for a while. Despite your best effort, ignoring it hasn't made it disappear.

Now you've acquired somebody who wants to be your new best friend -- a debt collector.

You can't wait any longer to face it. In fact, many credit experts say too often consumers dodge the opportunity to resolve their money issues with the debt collector.

"If you know you lost your job and you don't have the money to pay your creditors, don't be reactive, be proactive," says Robin Holland, spokeswoman for Equifax, a credit reporting agency.

Many people don't know what to do when it comes to working out a deal with a debt collector. The following questions could help:

True or false:
An account sent to collection still can be deleted from your credit report.
That's true. A deletion is possible, but that doesn't mean all creditors will agree to it, cautions consumer credit attorney Edward Jamison of the Jamison Law Group P.C. in Los Angeles, which specializes in helping consumers get their credit ratings restored.

Even if the collection agency agrees to a deletion, it's only of limited value.

Maxine Sweet, spokeswoman for Experian, explains that if the deletion letter came from the collection agency, only the collection account would be removed. The original credit or account from the creditor would remain on the report.

"The original creditor can verify to us that the original debt was an error and should not have gone to collection and instruct us to remove both the original account and the collection account," Sweet says.

Jamison explains the creditor deletion gets rid of the account completely. This, in turn, "helps the credit score because it is like it never happened, where a paid collection means you were not creditworthy in the past."

He advises that if the consumer is able to get a deletion, have the letter faxed stating the terms. For instance, it could say: "I, ABC Collection, agree to delete John Doe's collection account with the account number 1854642 in return for John Doe paying X dollars." Make sure it's signed by someone at the company.

The consumer can't demand a deletion without reason, warns Pamela Baird, a collection attorney for Lacy Katzen LLP in Rochester, N.Y.

"If it's disputed and they investigate it and they find the debt has been reported in error or inaccurately, they delete it," she says. "They are telling the credit reporting agency they want that trade line taken off the consumer's credit report."

Craig Watts, public affairs manager at Fair Isaac Corp., says some creditors don't often provide deletions because it can be deceptive.

"One of the main reasons lenders do business with credit bureaus is because lenders want a better view of the risk involved in extending credit to any individual," he says. "Deleting a collection account from a person's history is not in the best interest of the lender because such information is important to a fair assessment of the person's credit risk."

True or false:
Paid-in-full collections are better than settled.
Depends on who you ask. If it's not possible to get the account removed from the report, Jamison suggests settling. He says this can prevent the resale of your debt, prevent a lawsuit and alleviate damage to your credit report and credit score.
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Collection agencies will act as middlemen during the deal, says Jill Jensen, director of Omnium Worldwide Inc., a collection agency. She says Omnium's clients, which include banks, credit card companies and phone companies, will define the parameters for settling.

"The client will have payment criteria, for instance, on when the account can be paid, what kind of terms can be offered and in what situations the agency can offer the settlement," she says.

For example, she says, a client may tell the debt collector, "The options we have are payment in full or no more than three payments spread over 90 days."

Jensen says the client will expect Omnium to gather enough information about the consumer to decide how much to deviate from the preferred payment in full.

"If the customers' financial situation is such that other terms might be appropriate, we would act as the conduit to the client and seek permission to set payment terms or settlement outside of that area."

If you choose to settle, do so for as little as possible, Jamison cautions.

"It's better to save 50 cents on the dollar and lose a couple points off your credit score by having a settlement as opposed to 'paid-in-full,' because the collection and the charge-off notation is what's hurting the account," he says.

Watts explains, "As far as the FICO credit risk score goes, the paid-in-full status is going to have little, if any, affect on the person's score."

True or false:
You can be sued after the statute of limitations period ends.
True, technically, says Baird, but only if you reaffirm the debt.

Generally, the statute of limitations is the amount of time the debt collector can take legal action. This action can include a lawsuit or having your wages garnished. The time period is set by individual states.

American Collectors Association International, or ACA, a trade association of third-party debt collection businesses, says the statute of limitations is longest for documents that have been notarized by a notary public, while it is shortest for actions on open or revolving accounts such as credit card debts.

The countdown begins on an accounts' last activity, according to ACA. It can restart with a partial payment or a written promise to repay, which reaffirms the debt, depending on the state law.

It's suspended if a consumer leaves the state or is sent to prison. However, the statute doesn't prohibit the collector from going after the debt, it merely prevents the collector from taking any legal action, such as filing a lawsuit or garnishing wages.

Jamison says any time the statute of limitations has expired, you probably don't want to settle.

If you choose to settle beyond the statute of limitations, Jamison says the company is more likely to agree to delete the account with payment because the company knows it can't sue.

Jensen says Omnium doesn't sue most of the debtors it deals with.

"The legal process takes time. Most of the accounts we get, we don't have the period of time to sue," she says. "We do occasionally file suit when somebody has the ability to pay, but refuses to pay."
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She says the agency can determine the person's ability to pay by seeing if he or she is employed. Or, the agency may review the person's financial situation by looking at the person's credit report.

Jamison offers this reminder: Don't verbally agree with the collector on the phone or send in a payment even for a dollar, because the statute of limitations will start all over again.

True or false:
Credit card charge-offs can't be deleted from your credit report.
False. It's possible, but that doesn't mean it will happen.

Jamison says it's unlikely to be deleted if you are dealing with a big bank, which probably won't give you a deletion letter.

"Reason being, the companies are too big and they have too much red tape that you have to circumvent to be able to get somebody that can make a judgment call to give you a deletion with payment."

Baird disagrees. "If the creditor has a reason to delete a reported debt, then they are going to delete," she says. "Saying that creditors are not deleting because it is not efficient is not accurate."

True or false:
If you have a debt in collections over $2,000, you won't be sued.
False. Jamison warns that when collections get over $2,000, the collection agency is more likely to sue before the statute of limitation expires because there's more money at stake.

Baird agrees.

"Most creditors look at the dollar amount to determine whether they will sue," she says. "They look at whether the person is working or not, whether they own a home or not, the cost of commencing a lawsuit and state-specific avenues for collection-related lawsuits and collection."

Jamison hypothetically uses the $2,000 amount because the extra money needed to pay the debt in full may not benefit the consumer as much in return.

"If the person can afford to, I suggest paying in full in return for a deletion for accounts that are $5,000," he says.

If the account is for a credit card, Jamison says the settlement will depend on how much the person intends on using the card in the future. If the consumer uses it a lot, he advises the consumer to be willing to pay a higher amount to delete. That's if the deletion can be negotiated.

When it comes to collections less than $2,000, Jamison suggests that getting a deletion is better than getting a deal. Calling the collection agency to settle for 50 cents on the dollar won't work, he says, because the agency won't agree to a deletion with payment. Instead, he advises paying the full balance in return for a deletion letter, especially if the consumer is concerned about his or her credit report and credit score.

Baird warns that if you do pay in full for an account that may have been charged-off, the creditor is under no obligation to delete the account. However, the creditor must report that it is "paid in full."

Educating teens about credit

We're living on a plastic planet, where even vending machines, parking meters and Starbucks branches are now accepting credit and debit cards for everyday transactions. Small wonder that high schoolers -- who were expected to spend $195 billion in 2006, according to a study by the Harrison Group -- hanker for their own charge cards.

"Getting a credit card is a rite of passage," says Todd Mark, director of consumer relations for Consumer Credit Counseling Service of Greater Atlanta.

In fact, a 2005 study by the Jump$tart Coalition for Financial Literacy reveals that 31.8 percent of high school seniors use a credit card. About half of these students have a card in their own names and the rest use cards issued in a parent's name. And of course, college freshmen get bombarded with credit card come-ons as soon as they set foot on campus.

Facing this prospect, plenty of debt-dubious parents wonder how best to introduce kids to the temptations of swipe-and-sign. As with most child-rearing decisions, the best course of action depends on the individual child. But thanks to an ever-increasing number of credit and debit options, savvy grown-ups can choose the card best suited to a teen's temperament, financial sophistication and maturity level.

Starting out
Youngsters who already have a checking or savings account -- and that should be the first step in a kid's financial education -- are ready for a standard debit card because they're accustomed to keeping track of transactions, according to Marc Minker, a CPA and personal financial specialist at the New York City consulting firm Mahoney Cohen & Co.

Parents can rest fairly easy in this situation, since even the most acquisitive teen will find it self-limiting: Once the account balance drops to zero, theoretically, he or she has to stop spending.

And conveniently, many employers will deposit wages directly into a teen's account.

However, since a debit card is taking money from a checking or savings account, overdrafts and the resulting fees can happen. What's more, if Junior's money gets debited via fraud or error, or if there is a problem with a merchant, recouping the already-gone cash can be difficult.

The Fair Credit Billing Act has different rules for liability with debit card fraud or theft. If you report the card missing before the thief makes any transactions, the issuer can't hold you liable for any charges. If you report the loss within two business days, you will be responsible only for $50 of charges. If you don't report the loss within 60 days, you can be liable for $500 of transactions. These rules make it important to check the account regularly to be sure there are no problems. However, debit cards from a major card issuer such as Visa or MasterCard carry the same fraud protections as credit cards, with zero liability.

Single Parent

Advice on Single Parent Family Finances Including Education, Disability and Retirement
Article Courtesy of Prudential Financial

Managing your family’s affairs on your own can be challenging every day—so you may have postponed planning for the future. Yet, you have others who rely on you. You can take simple steps to ensure their financial future—as well as your own.

Since you're a single parent, it may be even more important that you take action soon. Think about how you'd afford your own care if you should suffer a disability. Have you started saving for college education?

If you'd like to buy a home, start a business, or take care of an aging relative, you can start taking steps now to ensure your finances can fulfill your goals.

Start planning your financial future today:

Getting Started
Since it can be difficult to balance all of your possible financial needs and goals at the same time, try focusing on your priorities:

1. First, define and prioritize what is important to you by using our Goals Worksheet.
2. Then, you can see where your money is going and calculate how much of your income you can put aside to reach those goals. Use our Financial Analyzer.
3. To learn more about reaching your financial goals, read the sections below.
4. To get more information and to implement solutions, talk to a financial professional in your area.

Managing Your Money
Whether your concern is day-to-day money management or achieving a specific goal, we can help you reach financial well-being:

* To estimate your net worth and understand your cash flow, use our Financial Analyzer.
* To start on the path to being a savvy investor, learn investment basics.

Saving for a Major Purchase
Although it may seem impossible to save for a major purchase while you're focusing on other financial goals, it can be done. The key is to break it into more manageable steps:

1. Determine which goals you want to fund by using our Goals Worksheet.
2. Review your resources. Get started with our Major Purchase Worksheet.
3. Periodically review your situation to see if you are still on track.
4. To discuss appropriate courses of action and review alternative solutions, talk to a financial professional in your area.

Education Funding
With the rising cost of tuition, funding an education can be a challenge. That's why it is vital to understand your options and develop a practical strategy. According to the Consumer Price Index, education costs rose 5.1% in 2000 and 6.9% in 2004—which is even higher than the rate of inflation (according to the Bureau of Labor Statistics Data, U.S. Department of Labor).

Protecting the Ones You Love
The right type of life insurance and the right amount of coverage can help ensure that your loved ones will always be able to fulfill their dreams and goals. Find out more about life insurance or get a quote to estimate how much it might cost.

Disability Income Protection
How would you pay your monthly bills if you were seriously injured or ill for months or even longer? If you're like most people, you don't anticipate a circumstance that would prevent you from maintaining your current lifestyle. But, the reality is that a 35-year-old has a 41% chance of suffering at least one 90-day disability before the age of 65 (Society of Actuaries, 1995). Learn more.

Retirement Planning
How long do you think your retirement will last? Most women still working today can look forward to a period of 15, 20, or even more years of retirement or semi-retirement. Will your current plans help you realize your retirement dreams later in life? Get help with your retirement planning.

6 steps to credit card serenity

We think nothing of pulling out our credit card for these and hundreds of other transactions every year. That's not necessarily a bad thing. Credit cards can be a convenient and safe alternative to cash. But too often, before you know it, credit card purchases spiral out of control (to the tune of more than $8 trillion a year) with a simple swipe of the card.

Then, with high rates, fees, penalties, continued spending and the other pitfalls that can happen with credit cards, debt accumulates much faster than your ability to pay it down.

But that all too common and sad scenario doesn't have to happen to you. Whether you're carrying a balance of a couple hundred dollars or several thousand, take the following steps to get out of debt -- fast.

1. Know where you stand
When you're feeling overwhelmed by debt it's easy to let the bills pile up, unopened like so much junk mail. But, you can't control your credit cards if you don't have a handle on how much you owe, says Bill Driscoll, a financial planner in Plymouth, Mass. Sit down at the computer screen (or with pencil and paper) and make a list of exactly how much you owe and what rate of interest you're paying on each card. Then list your cards in order of highest rate to lowest.

Use this work sheet for organizing your cards, rates and balances.

2. Pay your highest rate cards first
These cards are the ones that are costing you the most over the long run so you need to make every effort to pay more than the minimum payment each month on these bills first. Find out the fastest and cheapest strategy to use to pay down your card balances. Our calculator will automatically set up a plan of action for you to follow.

3. Get a better deal
Call the toll-free number for your highest rate cards and ask the customer service representative if she can give you a better deal. Let her know that you've been getting offers in the mail for much lower rates and you've been tempted. At most credit card companies, reps are authorized to lower your rate rather than lose you as a customer, says Robert Manning, director of the Center for Consumer Financial Services at Rochester Institute of Technology. You'll be surprised how easily this works.

If you succeed, you'll soon notice your minimum payment is lower. Don't breathe easy yet, says Jean Chatzky, author of "Pay It Down, From Debt to Wealth on $10 a Day." Instead, continue paying the old amount and you'll see your balance shrink faster without any additional squeeze on your budget.

Use this work sheet to keep track of your interest rate requests.

4. Consider using a different card
Hang on to all those zero percent and other low-interest credit card offers you've been getting in the mail. Done well, transferring your high interest balance to one of these cards can save you an enormous amount in interest and put you on a solid track to paying down debt. But these cards are filled with caveats that can end up costing you more in interest than you expected and sometimes more than if you had stayed put. Check the time limit for the low rate; where the low rate applies (balance or new purchases?) and the fee for transferring balances.

Check out these five balance transfer trip-ups.

5. Beef up your credit score
If you're having trouble getting a no- or low-interest card, it's mostly likely because your credit score is too low. This number represents how responsible you are when it comes to handling debt. So if you have a history of late payments or are already maxed out on several cards, your credit score will suffer. To find out what your score is, use this FICO calculator to get a rough idea. It's free. Or, you can purchase your credit score from any of the credit reporting agencies or FICO. If it's below 660, you'll need to spend the next six months or so trying to improve that so you can qualify for a cheaper card. If you make all your payments on time over the next six months and aggressively pay down your biggest balances first, you could improve your score as much as 50 points, says Chatzky.

6. Avoid penalties and fees.
Interest rate hikes and hefty monthly fees can ruin even the best-laid pay-back plans.
• Late payment penalties. It's not unusual for your interest rate to jump to 25 percent or even 30 percent if you make a late payment. If you have trouble keeping track of your due dates, consider setting up an automatic payment from your checking account each month.
• Penalties for late payments on any card. Even if you pay on time, some credit card companies will hike your rate if they see you've made a late payment on another card. This practice, called universal default, is waning somewhat, thanks to pressure from consumer advocates, but it can still happen.
• Credit limit fees. If you go over your credit limit it's not unusual to get hit with a $40 fee. Do it a few months in a row, add the interest payment and you're talking real money.

Good Debt vs. Bad Debt

The following article is courtesy of

Here's how to tell the difference -- and trust us, it makes all the difference.
Debt is a concept as intricately intertwined with America these days as baseball, Mom and apple pie.

The amount of personal debt in this country is ever-increasing and a large part of the reason is that credit has never been easier to get.

But debt is a complex concept. Not all of it is good -- a fact a surprising number of Americans fail to realize until they're in the hole -- and yet not all of it is bad. When used intelligently, debt can be of tremendous assistance in building wealth.

One of the secrets, therefore, to being smart with your money is to differentiate between good debt and bad debt. While the differences often seem logical, it is a logic that is apparently missed by many Americans.

"When you buy something that goes down in value immediately, that's bad debt," says David Bach, CEO of Finish Rich Inc. and author of "The Finish Rich Workbook.”

"If it has no potential to increase in value, that's bad debt."

Good debt
"Good debt is investment debt that creates value; for example, student loans, real-estate loans, home mortgages and business loans," says Eric Gelb, CEO of Gateway Financial Advisors and author of "Getting Started in Asset Allocation.” Robert D. Manning, a professor of finance at the Rochester Institute of Technology, also recommends taking on debts that are tax-deductible and debts that produce more wealth in the long run.

"If you are talking about reducing current debt, that's where it starts to get nuanced," says Manning. "If you take a home-equity loan because you have a 17% credit card, and you go with a 6% loan that's tax-deductible, that's good debt."

These general rules of thumb set some clear delineations -- buying a home or refinancing to get rid of excessively high rates is usually good debt, as is generating debt to buy high-return stocks, bonds and other investments.

Bad debt
The concept of bad debt comes in when discussing the purchase of disposable items or durable goods using high-interest credit cards and not paying the balance in full.

"The trouble is most people are not organized enough to retire the entire balance before the due date," says Gelb.

Every month that you make a partial payment on your credit account, you are charged interest. The disposable or durable item you purchased continues to lose value, and the amount you paid for it continues to increase.

"When you buy clothes, they're probably worth less than 50% what you pay for them when you walk out the door," says Bach. "So if you borrowed to pay for them, that's bad debt."

Not to mention what that debt could potentially do to your credit rating.

"Total personal debt should not exceed 36% of your total income," says Gelb.

Keeping the debt-to-income ratio in mind, it's also important not to miss payments.

"Missed payments are trouble," he says. "A representative of Citibank said if you don't pay within 30 days, they report that to the credit bureaus."

When it comes to buying durable goods that won't contribute to wealth generation, Bach offers a basic rule of thumb.

"My grandma used to say that if you're going to buy something that doesn't go up in value, and you can't afford to pay cash, then you can't afford it."

Exacerbating the bad-debt factor is that people will apply for store credit for the savings offers that say if you open a credit card account today, you can take 10% to 20% off the cost of your purchase. What people often don't realize is how much of that savings will be destroyed by the high interest rate on the card if they fail to pay for the items immediately.

"You can open a store credit card account," says Bach, "and what they're not telling you is that after the first few months, the rate jumps to 20% or greater."

Driving into debt
Another bad-debt area is auto debt. While most people need an automobile, and the ultimate cost of an auto is higher than many people can pay in one lump sum, the way people go about it -- namely, purchasing more car than they need -- turns it into bad debt. When is it worth it?

"What we would normally consider bad debt can turn into good debt in certain circumstances," says Catie Fitzgerald, a personal-finance coach and registered investment adviser in Henderson, Nev. "If you use debt to buy a car that gets better gas mileage than your old vehicle, you could end up better off financially."

Bach considers auto debt a Catch-22.

"People borrow to buy cars before homes," says Bach, "and that's unfortunate. For most people, their first major loan is a car loan. That's guaranteed to go down in value. So you really want to borrow less. For example, instead of rushing out to borrow to buy a $50,000 BMW, you'd be better off buying a $25,000 car."

The best type of debt is debt that builds wealth over the long run, and the No. 1 example of that is mortgage debt.

"Home values have increased an average of 6.5%, per year over the past 30 years," says Bach. "So when you borrow to buy a home, chances are that's good debt. You'll build value."

Bach heavily promotes the idea of homeownership, saying that everyone needs to own where they live.

"About 40% of Americans are renters," says Bach, "and the fastest way to wealth in America is buying where you live."

Bach cites some shocking numbers to back this up.

"The average renter has a median net worth of $4,000, and the average homeowner has a median net worth of about $150,000."

Manning also emphasizes what a good time this is to build wealth through debt.

"This is the most advantageous time ever to be in debt," says Manning, "in terms of opportunities to get low-income loans or to renegotiate or refinance."

Duh, debt?
One of the reasons so many Americans seem mired in bad debt (Bach reports that the average American carries approximately $8,400 in credit card debt) is that financial education is virtually nonexistent.

"This type of common-sense stuff isn't taught in school," says Bach, "and most Americans don't realize how badly high-rate credit cards are hurting them."

Fitzgerald advises teaching your children the difference between good debt (debt that's used to buy assets that grow in value over time) and bad debt (debt that's used to buy things that will lose value) early on.

Gelb opts for a more hands-on approach. "Give your children an allowance (without strings) beginning when they're in kindergarten and offer them the opportunity to perform extra jobs around the house for money. Stop buying them everything and teach them how to make choices with their own money-buying decisions." The mistakes they make will help them learn and grow.

"People are getting in debt before they have a job," says Manning. "Education is important. We used to encourage kids to save, and that has been missed. Students now refer to their credit cards as yuppie food stamps. They see cards as entitlement and see they will be in debt all their lives."

Fitzgerald recommends teaching by example. Treat credit cards like emergency safety nets and your children will likely learn some money-management skills. "If you have to use your credit card, immediately revise your budget, paring back on nonessential spending. Allocate the saved dollars to a payoff plan to bring your debt balance down to zero as soon as possible," she says.

FAQ (Junkies TV)

1) Do I get thrown into jail for watching movies in here?

Yes, you will!! Gotcha Ya! ha ha ha just kidding. Honestly, you got nothing to worry about because this site is legal. We don’t host movies; they are only links from public sources (hosting sites). If the Chairman of YouTube (Google) gets thrown into jail, then this site will have to be closed. Big boys know how to play the game and so do we. Got to be a shark to swim with sharks.

2) This site is CRAP!! I can’t ever get to play a dam @#$%$ movie?

Cool down, take a chill pill. Most movies in here are DIVX. You need to install (into your own PC) the DIVX WEB PLAYER plug-in to play and watch movies. Get it here. Without this player your PC is CRAP! and you won’t be able to watch any @#$%$ DIVX movies. You also need to install AC3 SOUND CODEC because most DIVX movies use the AC3 sound codec. After installing these codecs, you need to restart your browser for the codecs to start working. Make sure you've installed the latest version.

We also have some movies under FLASH (FLV). You also need to install ADOBE FLASH PLAYER to watch movies and make sure you don’t have anything blocking Go check your firewall. Please get the latest version.

Divx web player is known to use CPU usage.
- You should not have multiple browser/applications running while viewing a movie, may crash your browser.
- For general viewing problems you should clear your cache and try again.
- For more web player options right click on the video screen.

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Everyone likes to be kissed differently. We only welcome deep kissing not the regularly bullshit ones. If you're not into that, please look for the “Thank you” signs (usually located at the bottom of the movie screen) click it and visit our “recommendations sites”. Make sure you spend sometime browsing around. You only have to do this request once a day if you enjoy our services. If you dislike our services, please feel free to kick our ass so that we can improve, but don’t become an asshole by complaining like a granny and spamming our site.

4) Shit the movie can’t play….what’s going on?

There are many reasons why the movie can’t play. Let me list some down for you….

You're internet connection is CRAP, go kick the ass out of your internet provider. They might be restricting your bandwidth download speed, if you are using broadband. If you are browsing the net with "dial-up", you can just forget about watching movies in here because it will take you like 24 hours to load a movie. You also need bloody 70kB/sec consistent download speed to watch the a movie continuously without buffering. Anything below that, go take a clock and start timing the upload and wait until buffering percentage reaches an acceptable limit to star watching the movie.

Some idiot reported the movie as copyright material and the hosting site deleted and removed the links. If you come across these idiots, point them to me and I will shoot them down. All our bandwidth, time and effort goes down the drain because of these fools!

The movie is hot and too many people are watching at the same time which congests the servers.

When the movies keeps on connecting but doesn't automatically play or even play after clicking the play button, thats a great possibility the link have been deleted. Please inform us.

Restart you computer and clear your cache files. All those files stored in your cache take up space, so from time to time, you may want to clear out the files stored in your cache to free up some space.

5) What in hell name is “Buffering” and “Connecting”?

Go read it here.

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Sure you can, but please try to limit your request because we are currently short of work force and time. If you've send us a request, please give us about 24 hours to get it for you. After 24 hours and your request aren’t posted, please remind us because we might overlooked it, but usually we will inform you or post the movie within 24 hours.

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WE GOT THE MATERIALS BUT WE NEED THE TOOLS, too sad, we don’t have the juice right now.

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Go ask around or ask Micky or download this guidelines file from here.

8) It says my DIVX download folder is full what do I do?

It means you don’t have enough space on your computer so delete some stuff and free some space. If you don’t know how to do this, do a search under Google on “how to clean up my hard disk”

7) Which is the best browser to watch movies?

For us IE7 browser sucks, because there are too many unnecessary security features which prevent DIVX player to behave like normal. This is all the big boys’ doing, go ask Microsoft and Google. Since DIVX is supported by Google, Get Firefox browser because the movie will load faster and without any major issues.

8) Why my browsers keep on crashing?

You should not have multiple browser/applications running while viewing a movie; it may crash your browser. In plain English, don't watch more than 2 movies at the same time.

9) Can I download the movies?

Sure you can. Whenever you see the DOWNLOAD sign at the bottom of the movie screen, right click, and save link as. You can also watch the movie while it downloads but make sure you have a strong download speed.

10) The screen is too small, and it’s killing my eyes.

If you wish to enlarge or change the movie screen size, right click the screen and choose either "Windows Mode" or "Full Screen Mode". You need to have Divx Web Player installed to activate this function. Too bad, you have to bear with the actual size for Flash movies.

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Please send all your emails and personal messages to Micky at

If you need more answers to questions which are not posted above, please send an email to Micky. Cheers!

Tips On How To Apply For Personal Loans

Your First Step

Look for programs that can help you to rebuild your credit. There are a number of small banks that will offer you a secured major credit card that would require you to deposit about $200.00 into there bank.

Secured Credit Cards

Use there card, pay on-time and after 6 month they will return your security deposit and offer you a unsecured credit card with a credit line of up to $2,000. They will also report your on-time payments to the credit reporting agencies. This will go a long way in rebuilding your credit history. Never pay an application fee to join a credit card program. If you are dealing directly with a bank, there is never a fee to apply.

Other Ways To Build Credit

Auto Loans

If you have a job, you can always get approved for an auto loan.
This is not one of the best ways to build your credit but it’s a start. In order for this option to work, you must always send in your auto payment in before the due date.

Retail Store Credit Cards

Retail store credit cards are a lot easier to get approved for than a major credit card. Most retail store cards will only allow you to use the card in their store. This card will help to rebuild your credit as long as you pay your payments on-time.

How To Get Personal Loans

Everybody wants a personal loan. If you do not have an A1 credit rating, do not waste your time applying for a personal loan with a major bank.
They only offer personal loans to individuals that have an A1 credit rating.

Here Are A Few Options If You Have Less Than Good Credit

Join a credit union

You have a much better chance of getting approved for loans or credit cards as a credit union member.
Get a co-signer that has an A1 credit rating.
More people would be willing to be your co-signer if you start out with a small loan amount.

Small Financial Lenders

Find a list of lenders that offer high risk personal loans. There interest rates will be higher than a bank, but this will help to improve your credit rating.

Finance A Computer System

There are a number of companies online that will allow you to purchase a new computer with no credit checks. You are guaranteed to get approved as long as you have a checking account. You would be required to pay a down payment and monthly payments. They will ship your computer out to you once they have received your down payment. You would be set up for monthly payments, that could be reported to the credit reporting agencies.

Short Term Loans

If you are employed and have a checking account, you can go online to get a payday loan of up to $2,000 with no credit check.

This loan option will not help to rebuild your credit. It is just a short term solution to pay a payment that can not wait, like monthly rent or an auto payment.