Millions of consumers will pay billions this year in fees that are not listed on their credit card statements, bank statements or any other financial record. From rate spikes to endless fees, it seems that credit card companies are finding more and more reasons to take your money. The most costly of these hidden fees or charges may be referred to by many different names such as “interchange fees,” discount fees”, “checkout fees”, “currency exchange fees”, or “convenience fees”.

Most consumers are ignorant to the fact that they are paying interchange fees, which are hidden in the price of virtually everything we buy and are estimated at $27 billion annually in the United States. Consumers are unaware of these hidden fees because the credit card companies don’t want you to know. Even though consumers are unaware of the fact that credit card companies and banks charge a fee on every single transaction this doesn’t keep it from happening. Retailers pay your bank and credit card companies every time you make a purchase with plastic. However, as more and more consumers start to use plastic for their purchases, the cost that the retailer is paying to your bank or credit card company goes up. The retailers then have to build this expense into the cost of their product, which is then passed along to consumers in the form of higher prices for all products. More importantly this is being passed along to almost every consumer not just the ones using plastic. However, there are certain places that charge a different price if you use cash rather than credit. For example a service station called ARCO charges a $.40 fee for debit or credit, but there is no additional fee for paying with cash. So keep this in mind, the next time you purchase a ½ tank of gas (almost 8 gallons) you will be paying an extra $.05 per gallon. Since today’s gas prices are so outrageous who would want to pay more. My advice is to be aware and if you can afford it use cash on as many purchases as possible. Reports show that the average household paid more than $230.00 in hidden fees last year. Imagine what that extra money could have done for you!

Credit card companies are also trying new ways to squeeze money out of you. They have ever changing grace periods (the time between making the purchase and your credit card company charging you interest). It used to be if you made a payment before the grace period you would not have to pay interest on that purchase. Say you start your month with a zero balance and charge an amount that you don't pay off in full at the end of the month. If your card uses the average daily balance method to calculate interest, you are charged nothing for the month you made the purchase, and interest only for subsequent months in which payment is outstanding. Unfortunately, this former interest method has gone to the wayside and two-cycle billing is taking over. With two-cycle billing, interest charges begin with the day you make the purchase and gives no consideration to when you pay off the purchase.

And if that wasn’t bad enough paying your bill by a certain date will not even guarantee you don’t get charged a fee. Card statements are very clear about what day your payment is due, but are not so up front about what time on that date your payment has to be in. Some banks have set a 9 a.m. deadline on the posted payment date which is normally before the mail even arrives. You are expected to pay by a certain time in the day. If your payment is not recorded before this time elapses you may be stuck with a late fee.

Another tricky maneuver that credit card companies like to pull is checking up on your credit report to see if you have defaulted on any other credit cards, personal and auto loans, utility bills or your mortgage. This is referred to as a “universal default.” You can make all your credit card payments religiously for a long time, but fall behind on your electric bill and, suddenly, you're a high risk borrower and you will be charged accordingly. If you have missed a payment on any of these installment contracts you can probably assume that your interest rate will sky rocket to at least 25%. For those of us who received a great introductory rate, this could be devastating.

The easiest way to avoid any type of hidden fees or costs is to pay your bill on time - as soon as you receive your bill. Another helpful hint is to pay more than your minimum so you can pay your bill off faster and ensure that you pay the bill and not just the interest. Hidden fees and costs are out there, it is your responsibility to be aware and avoid them. Credit card companies and banks won’t tell you what the hidden fees are, unless you ask them. You should never be afraid to question them or put them in a position where they have to explain their actions. To protect yourself and your credit it is important that you should always be aware of the costs and how you can prevent them from being charged to your account.

If you are already in a situation where you are beginning to default on any of your payments or are having trouble paying your bills on time, it may be time to seek outside help. You can contact a reputable debt settlement agency and see how they might be able to help reduce your debt. Most reputable firms will offer a free consultation.

When I first moved out on my own I had no idea what a budget was or what I was supposed to do with one. I had never worried about paying my bills on time because I had so few. When I was in college I was able to make ends meet and still have enough money to enjoy my weekends. However, when I moved into my first apartment this all changed. Suddenly there were bills I’d never had before and after a few months I found my savings depleted, and collectors calling to harass me for payments. I had no idea how it happened. I had a job and it seemed like I was making enough to get by before. Fortunately, I was able to call my family for help. However it was to my dismay that they were not willing to give a monetary donation. They decided to show me a simple way to set up a no-hassle budget allowing me to keep track of my money.

The first step was to determine exactly how much I had coming in each month and what my occupancy/transportation expenses were. Occupancy/transportation expenses should include items such as: rent, car payment, electricity, gas, water, car insurance, health insurance, bus fare, etc. Below is an example:

-Rent $900
-Car $260
-Electricity $98
-Water $70
-Car Insurance $45

TOTAL $1373

After we totaled my occupancy/transportation expenses we had to estimate my other living expenses. For example:

-Food $140
-Gas $130
-Credit Cards $70
-Clothing $75
-Entertainment $120
-Savings $100

TOTAL $635

Finally, we added the two amounts together to get the total amount of out going funds.

$1373 + $635 = $2008

If I was making $2300 a month I would have had an extra $292 left over for emergencies or something fun. What I typically tried to do with any extra that I had was to either put it in a savings account or start an investment account. However, it is also a good idea to keep it accessible in case of an emergency.

So how did I make it work? As soon as I got my paycheck I would pay my occupancy/transportation expenses. These expenses should always be paid no matter what and they should always be paid before anything else. Once I had written the check for those bills I would move on to my other expenses. Now with the other expenses it is important to note that you should pay cash whenever possible. If you set out an envelope for every single expense and then put the appropriate amount of cash in it, you can then put the cash for all of the bills paid by check right into your checking account the day before or after you mail out the bill. This way for all the bills that need to be paid in cash the money stayed in the envelope until needed. For example if I knew that I needed a tank of gas I would grab the envelope with the gas money in it, and then put the receipt in side the envelope when finished. This way at the end of the month you will have a record of all the check and cash transactions you have made.

By using this system it meant that I could not spend more than I had, keeping me from going over budget. I realize that even though this sounds perfect it may not always work and I found myself pulling from one envelope to cover the expenses in another or to buy something extra. However, when the cash was gone it was gone until the next month. When I started leaving my credit cards at home, I realized I was really able to start saving money.

This system is a very simple way that can be adapted to fit your needs, bills and/or budget growth. This can also be an easy way to start teaching teenagers and college students the importance of fiscal responsibility. Always remember don’t spend more than you have and you will be able to make this simple system work for you!

If you are one of the many Americans who are contemplating divorce, let me ask you two questions: How will you and your former spouse split your debts? What will you do if your ex is unable to pay his or her share of the divided debt?

It is important to understand that you and your soon to be ex are both responsible for any debts you have signed together like joint credit cards, mortgages, tax returns, or loans. You should also be aware that each state has a different way of handling debt in a divorce. In order to determine who is responsible for repayment, certain states will look at when the debt was incurred, who acquired the debt and the purpose of the debt. However, some states take all the property that has been acquired during the course of the marriage, add it up, and allow a judge to decide how the marital debt will be split. However, if you are in a state that considers only property acquired jointly, the judge will generally consider who incurred the debt and who is in the best position to be able to repay the debt. Still other states assume that debts incurred before the divorce are marital debts. If you reside in a community property state, any debt you or your spouse incurred during the marriage, regardless of who actually signed for the debt, is a marital debt for which the creditor can hold you both liable. No matter what the laws in your state are, you may be affected by the separation of debt in areas such as spousal support, child support, and division of property.

It is very important to note that even though some divorce lawyers will tell you that your creditors will honor a divorce decree that states you are no longer responsible for debts assigned to your ex; it may not always be true. Some creditors may honor the divorce decree but most, if the debt remains unpaid or goes into default, will pursue any means necessary to establish a payment. This means that they may pursue you for a debt that has been assigned to your spouse in the divorce. They may also begin to report the negative marks on your credit report, or decide that they would like to file suit against you on the outstanding debt.

I want you to understand why this is allowed to happen. The bottom line is: a creditor views debt acquired by both spouses during marriage or debts incurred on a joint credit card or line of credit during a separation (and very rarely debts acquired after the divorce) as the responsibility of both parties. Creditors do not care how the divorce court assigns the debts; they just want to be paid.

Here is some necessary information that everyone should know before filing for divorce:

- If you do share joint credit cards you should cancel them as soon as you know you would like to end the marriage. This will help ensure the balance does not increase. The best way to get an idea of exactly what you will be dealing with is to request a joint credit report from all three of the major credit reporting agencies. After you have cancelled the joint cards you should open a new credit card in only your name so that you can begin to build your individual credit score. Just a reminder – don’t forget joint items such as department store charge cards and/or service station cards. It should also be noted that a creditor cannot close a joint account just because of a change in marital status, but can close a joint account by the request of either spouse. You should also be aware that the creditor does not have to change joint accounts to individual accounts.

- If you have a joint mortgage or home equity loan or line of credit, the lender may require you to refinance in order to remove your ex’s name from the title or deed.

- If you are required to pay a portion or all of the debt incurred during marriage, you may want to think about contacting the lenders on these accounts to see if you can negotiate a lower interest rate. A lot of companies will offer you a lower interest rate if they think there is a possibility they could lose your business completely.

- If you do have joint debts you may want to think about borrowing money in your own name to help pay it off. When you do this you take a joint debt and turn it into an individual debt that only you are responsible for.

- You should be aware that your credit card, bank, or mortgage companies are not bound by your divorce decree. Whoever has signed for the debts (usually both of you) is responsible for re-payment no matter who filed for divorce.

- If you and your spouse have filed a joint tax return that you are unsure is correct, you will want to talk to your divorce attorney about adding a clause to the divorce decree that states whoever is responsible for the errors should be responsible for paying the taxes due or the penalties.

- If you are stuck with debt you cannot afford you have options. A viable debt settlement company could help you reduce the debt owed by 40-60% and have you out of your marital debt in 12-36 months.

Take Advantage of Your Tax Refund – Get Out of Debt More Quickly

This year, more than three out of four individual taxpayers will receive a tax refund. For these consumers the average refund will be approximately $2,400.00. If you are one of the many to receive a refund you have probably been thinking about what you should do with the money. I know many of you already have the money spent - even before you get it. However, instead of spending your tax refund on some new CDs, a laptop, a vacation, or a big screen television, you should use this money to get ahead financially. If you evaluate your financial situation you may find better uses for the money than spending it on material items. One wise option is to use it to pay down your credit card debt more quickly. At the conclusion of this article, I’ll also address how you can use alter your current taxes to help you immediately – instead of waiting until next year’s refund.

Although, most of you have the best intentions about using your refund, the reality is most consumers will spend a large chunk of their refund on luxury items before even considering their outstanding debts. This is incredibly hard to understand since so many have already fallen behind on monthly bills and other debt. Credit card interest rates are higher than ever so it costs consumers more and more to carry a balance.

Here are some simple tips for putting your tax refund to work for you.

#1. First and foremost you will want to reduce high-interest debt first. Pay down credit cards with the higher interest rates, first. If you hold a balance of $9,000.00 (the average amount of credit card debt carried by a person in America) at an interest rate of 18% and you are making the minimum payment of 4% (most creditors are now charging 4-5% for your minimum payment.) per month, it will take you about 175 months to pay off the debt. You will pay roughly $5,315.67 in interest. When added to your principal of $9,000, your total cost is about $14,315.67. However if you were to take $2,000 of your tax refund and paid it toward your debt now, you will be able to pay the debt off nearly 1 year sooner AND you will save approximately $1,200 for a total cost of about $13,100.

#2. Paying down your mortgage is another great way to utilize your tax refund. If you reduce your mortgage balance it could mean substantial long-term savings. Any extra mortgage payment you are allowed to make goes directly toward your principal allowing you to pay off your mortgage faster. This will also save you on interest costs. However, for some, accelerating mortgage payments isn't always the wisest decision. It depends on your current mortgage and rate as well as other investment possibilities. I would suggest consulting a financial advisor before making any extra payments.

#3. Another way to use your tax refund to help you get ahead is by putting it into a retirement plan. You could increase your contribution to your 401(k). If your employer matches 50 cents to each dollar you contribute up to a specified percentage of your paycheck you could really see the benefits. If you do not currently have a 401(k) or other retirement options offered by your employer, you could always start an individual retirement account (IRA). If you are self employed, talk to your financial advisor about contributing to a SEP. If you have maxed out your contributions on any of these accounts for the year, you could look into tax-efficient mutual funds or possibly an annuity.

#4. Begin to establish an emergency savings fund. Almost 60% of American households, with children under 18, live paycheck to paycheck. It could possibly save you from having to put an emergency car repair or doctor bill on your credit card, or having to rob from Peter to pay Paul. Having an emergency fund could prove to be a valuable asset. Put the money into a money market account or high yield savings account. You’ll earn 4-6% on your money. If you ever have an emergency, instead of having to charge your credit card and incurring more interest charges, you’ll have the cash available.

#5. If you have children, another way to plan for the future is to start a college fund. By investing in a college account for your children you will give them an advantage, and help take the stress off of the thought of planning for their future. Use your tax refund to start the fund. The younger your children are when you start the fund the more it will be able to grow. There are many options for college saving such as a Coverdell education savings account, which is a trust or custodial account set up solely for the purpose of paying qualified education expenses for the designated beneficiary of the account. You could also consider investing in the tax-free growth of a 529-college savings plan. This plan is an education savings plan that is run by a state or educational institution and is designed to help families save funds for future college costs. As long as the 529-plan satisfies the basic requirements, the federal tax law provides special tax benefits to you, the plan participant. Any of these options can help provide for the education of your children.

If you find that you are still falling behind, you may want to look into changing the amount of deductions from your paycheck. Allow yourself more money throughout the month rather than using the IRS as a no interest savings account. Many consumers think that getting a refund is a positive. In some cases it is. But in other cases, it just means that you paid too much to the Government in taxes throughout the year and are getting it back in the form of a refund…months later. But the Government does not pay you interest on your money while it holds it. Rather than using the IRS as a no interest savings account you should consider adjusting your W-4 so that you are able to get the maximum amount due to you every month. Then you will have more money each month to pay down your debts. Do not use these extra funds to purchase unnecessary items. Take advantage of the increased cash flow to get out of debt more quickly. You will, however, want to seek the advice of a tax professional before making this decision. If not enough money is being withheld, you could find yourself owing money to the IRS at the end of the year.

Many Americans are feeling the pinch of the recent increase in the required minimum payment for credit cards. The change went into effect late 2005/early 2006 and as many of you have now received updated statements, I am sure you are seeing the effects.

The goal was to help people pay off debts faster and reduce the interest owed. However, by doubling the amount due each month, many of you have found yourselves in default and you may be starting to see late fees and penalties beginning to mount. If you were a consumer already indebted and struggling to make the 2% minimum payment, you may now find yourself at a financial breaking point. To give you an example, if you were holding $20,000.00 in credit card debt before the minimum increase you would have been paying about $400 a month or $4,800 a year (if you were able to avoid penalties). Now, with the increase in the minimum, if you carry $20,000.00 in credit card debt you will fork out at least $800 a month for a total of $9,600 a year. That additional $400 is the equivalent of making an extra car payment each month. For a struggling family, this is a very tight noose.

As we are all faced with the harsh reality of higher energy prices, rising interest rates, gas prices over $3.00 a gallon, and record levels of overall household debt, it is no wonder many of us are falling further and further behind. Many of you may have fallen victim to illness or unemployment and use these cards for medical bills and everyday expenses. However, the payment must be made, so where will that $400 come from? You need to evaluate some areas in your spending where you could find that $400. Here are some very simple solutions that may help you find the extra $400 in your budget.

1. Cut down on going to Starbucks or purchasing $4.00 designer cups of coffee. Try a local 7/11 where you will only pay $1.20 or make the coffee at home. This gives you the opportunity to save anywhere from $2.80 – $3.50 a day. Over the course of a month that could be a savings of up to $105.00.

2. Instead of going to see a movie every weekend and spending up to $10.00 a ticket, just go once a month. This could be a simple savings of $30.00 a month.

3.Bring your lunch to work. In general, you probably spend $12-$15 on lunch if you are eating out each day. You could easily save about $300.00 a month by brown bagging it.

4. If you have a maid or maid service, which generally costs $50 a month, you can save that money by setting aside time for chores. Cleaning burns calories too, so it can serve two purposes.

5. If you are a smoker – think about quitting. If you are smoking a pack a day you are shelling out about $5 a pack. By merely reducing the amount of cigarettes you smoke to 2-3 packs a week, you can save up to $70 to $90 a month.

6. Purchase lower octane gasoline. Unless you drive a high performance vehicle there is no reason to pay the extra $.10 to $.20 per gallon to fill up with higher-octane fuel. This will save you about $3.00 per fill up if you fill up six times per month that would be a savings of $18.

These very simple tips amount to a savings of almost $600 a month. It is also very important that you have a personal budget, money you use for personal spending. The budget should be reasonable; $50-$75 per week is attainable. If in any week you do not spend your budget the extra money should be put toward paying off your credit cards. Another great tool to help save money is to clip coupons. Many grocers offer double coupons; this is a great way to save at the register. You can even get many items for free this way by being aware when your couponed items are also on sale. Just make sure that you are only clipping coupons for things you need so you do not increase your spending.

If you ever find yourself in a situation where you are falling behind on your monthly payments, consider filing bankruptcy, or even stop paying your bills, seek help.

Damsel of Debt Reduction