Cash-Back Reward Cards Lead to More Debt

A new study by the Federal Reserve Bank of Chicago shows that cash-back reward incentives on credit cards usually cause more spending, more debt, and very little reward.

The study found that a one percent cash-back program on average increased spending by $68 per month, debt by $115 per month, and only yielded a reward of $25. They might save a little bit of money, but on average, they end up with much more debt than reward out of the deal.

Does this mean that cash-back credit cards are bad? No, cash-back rewards shouldn’t solely be blamed for increased spending and debt. The trick is to use the credit card as you normally would, stay within your budget, and not spend more just because you have a rewards program. After all, what is the point of getting cash back if you never even get to see that money?

To learn more about responsible credit card usage, check out http://blog.mycreditspecialist.com, and go to http://www.mycreditspecialist.com for a free credit evaluation.

Medical Bills Top Collection Agencies' Actions

When you or someone you love is going through a medical emergency, your first concern is their well-being and the last thing you are worrying about is paying your bills. According to a study by the Federal Reserve, however, people at their most vulnerable physically are also the most vulnerable financially. Over half of collection actions reported by collection agencies are medical, far and above any other category. (Second place is utilities, coming in at a mere 22.7 percent.)

Last month, the New York Times told the story of Darryle Watson, an automotive service advisor who ran into some problems refinancing his mortgage due to four unpaid medical bills. The bills had been sent to a collection agency, and Darryle and his wife A.J. had no idea that they owed any money. According to the New York Times, their biggest medical bill was less than $400 and the smallest was about $15, and yet these bills would have cost them over $9,000 in closing costs.

The Watsons are hardly unique in their situation. Of all the medical bills sent to collection agencies, 82 percent were $500 or less, and 34 percent were for $100 or less. These are relatively small bills and yet these bills end up costing people points on their credit score and thousands of dollars down the road. What is worse is that many people don’t know about their unpaid bills passed onto these collection agencies until they need credit.

How can you make sure that what happened to Darryle Watson doesn’t happen to you? Keep up with your medical bills and if you know that you won’t be able to make a payment, let them know and try to work out a payment plan. Make sure they don’t sell your bill to a collection agency, and pay them off as quickly as possible. Also, take a look at your credit report on a regular basis or sign up for credit monitoring and repair through My Credit Specialist. Our credit specialists know what to look for, and they can get false or outdated items removed from your credit report, including late medical bills.

To learn more about improving your credit score, go to http://blog.mycreditspecialist.com, and go to http://www.mycreditspecialist.com to sign up for a free credit evaluation.