Money Blue Book

I’m what you would call a credit card arbitrager. What that means is that one of my hobbies and passions is to seek out ways to maximize my money, particularly in the area of credit card reward programs. It’s not just credit card sign up bonuses and cashback rewards that I aim to maximize either – it’s also such credit card perks as balance transfer offers. 0% balance transfer credit cards are used by many, including myself for a variety of financial planning purposes. While some anti-credit card personal finance commentators frequently rally against the use of credit cards altogether, blaming them for the out of control credit card debt problem we have in this country, I personally cite the lack of proper financial education and abandonment of personal responsibility and accountability for the majority of credit card debt related troubles on the part of consumers.

Credit Cards Offer Valuable Benefits For Arbitrage Chasers, But They Should Be Used Wisely and Selectively

While not perfectly analogous, one can compare the benefits and utility of credit cards to that of an automobile. Both are powerful tools that can help people enhance their lives and get them to their target destination, whether real life or financial. However, both, if utilized improperly or irresponsibly, can potentially cause serious damage to oneself and to others. If you drive your vehicle while inebriated or intoxicated, or if you disregard the legal speed limit and swerve around the highways recklessly, you are bound to not only harm others, but injure yourself as well. However, if you stay within the legal boundaries, follow the directives of law enforcement officers, and learn to operate the vehicle safely by the book, having a vehicle can be an invaluable tool.

Likewise, credit cards, if utilized recklessly without careful regard for credit limits, monthly payment obligations, and knowledge about how to stay within the boundaries of one’s own financial means, such usage can certainly result in financial disaster. However, if used properly and responsibly, credit cards can provide valuable financial benefits like free credit card bonuses and discount rebates for everyday purchases. Most credit cards also provide some type of extra consumer protection benefit for items purchased, such as extended credit card warranties for qualified goods like expensive laptops, and travel reward upgrades.

Some credit cards even provide balance transfer offers that can help consumers weather difficult personal financial storms and serve as temporary financial safety nets of sorts. I’ve personally utilized balance transfer credit cards during times when I was cash strapped and in desperate need of a temporary infusion of money to pay off unexpectedly large bills (the key word here is “temporary”). Like all initially good things in life, everything can ultimately be twisted and abused (even seemingly innocuous things like food, video games, and the Internet), so it’s our own responsibility as adults not to misappropriate the useful tools we’ve been given, and to be extra selective when it comes to determining what is a good offer and what is a deal that’s overly fraught with dangers. While there’s usually a catch to every seemingly good credit card offer, there are often strategic ways to greatly minimize potential problems. It’s usually just a matter of getting in the habit of reading the fine print and knowing what to look for.

Case In Point – Discover More’s Promotional Offer For 0.99% APR On Balance Transfers For Life

I’m sure many of us periodically receive credit card junk mail. Oftentimes these pre-approval mailers are sent to us by credit card issuers like Citibank, Chase, American Express, and Discover Card whether we want them or not. While there are ways to affirmatively opt out of all future solicitations, it always seems like the opt outs expire at some point at which time the credit card junk mail letters continue to flow back into our mailboxes. Most of the time the pre-approved credit card offers I receive are useless, but once in a while I stumble across very attractive mail offers. While the majority of people usually throw the paper pre-approvals away on principle without even giving them a quick peek, savvy credit card arbitragers will usually give the offers a good, hard once-over before chucking them into the trash.

A few days ago I received a very enticing junk mailer from Discover Card (I call it junk because that’s what it initially looked like). While the vast majority of such offers through the mail tend to be trash, this one in particular caught my eye. It was a Discover More credit card promotion for a 6 month 0% APR balance transfer period with a 0.99% APR offer on balance transfers for life thereafter. That’s right, after the end of the initial 0% APR period, you get to enjoy a less than 1% annual percentage rate on balance transfers indefinitely.

Obviously there’s a catch – there’s always a catch. The caveat is that to maintain a permanent 0.99% APR on lifetime balance transfers after the end of the initial 0% balance transfer period, you’ll need to make at least two purchases or cash transactions each month continuously for the life of the balance. You won’t have to worry about your rate going higher while you pay your balance transfer minimums each month, but you’ll need to make at least two purchases with the card to keep the promotion active. The obvious tightrope is one that novices and beginners to balance transfer arbitrage may not be familiar with. A close inspection of the fine print found in the credit card terms and conditions page reveals that Discover Card applies payments to balances with low introductory special APR’s (such as special balance transfer and purchase APR’s) prior to balances with standard APR’s. It’s disconcerting because standard purchase balances almost always have much higher interest rates – anywhere from 8% to 20% APR depending on the cardholder’s individual credit score history. It’s one of the many hidden dangers of balance transfers – the accidental addition of even small purchase balances at higher interest rates that can never be paid off until the existing, frequently much larger balance transfer amount at the lower promotional rate is completely paid off first. But then again, this is nothing new in the world of balance transfers as all balance transfer cards apply bill payments towards 0% balances before applying them to any existing high interest purchase balances. It may seem counter-intuitive, but that’s how credit card companies make money – with these technical rule traps.

How To Maximize The Lifetime Balance Transfer Offer From Discover Card

Of course, in regards to the Discover Card lifetime balance transfer offer at 0.99%, the clever credit card arbitrage gamer can attempt to get around the mandatory 2 purchases per month at higher interest rates by making sure he or she spends those purchases on 2 incredibly low priced items. Ideally you’ll want to swipe your card for 2 separate gumball or candy purchases of less than 25 cents each, or less if possible. That way, even with the addition of purchase balances at higher interest rates to your account, the interest payments for the transferred balance remain relatively insignificant, allowing you to carry the 0.99% balance for as long as possible. The money obtained from the lifetime balance transfer can be used by balance transfer arbitragers to make money from interest earned as a high interest savings account deposit, or it can be used to help pay down high interest credit card debt. Of course, at some point in the future, even small incremental purchases per month do slowly add up and the entire balance must ultimately be paid off. But if you are able to keep the 2 mandatory monthly purchases low, you may be able to drag out the 0.99% balance transfer for several years and still be in the money. Presumably by then, you’ll have earned plenty of interest income to make the credit card arbitrage effort worthwhile.

Keep in mind, this particular balance transfer for life offer is one of those special rare credit card offers not available to the general public or through online links. You won’t find them in any search engine as a custom invitation code is required to partake. Each custom invitation code sent to recipients is unique and must be used to access the special online application page to take advantage of the offer. Unfortunately, I only have one invitation code for the lifetime balance transfer offer and won’t be able to list it here.

Some may recognize this particular Discover Card offer. It used to be a 0% balance transfer for life, but the credit crunch crisis seems to have forced Discover Card to downsize the offer by imposing a slight interest rate. While a 0% lifetime balance transfer deal would be ideal, 0.99% for life is still pretty good.

My Advice and Guide To The Risks Of Using Pay Day Cash Advance Loans

When it comes to the subject of money and finance, certain things seem to inherently come with bad raps, and it’s not always deservedly so. As someone with a legal background, I feel that I’ve been naturally trained and conditioned to reflexively see both angles of a debate. Generally, I can take either opposing positions of a controversial issue. For example, when it comes to credit cards, I can see both the negatives and the positives. Some see credit cards as the scourge of consumer debt, and the ultimate symbols of excessive consumerism and financial servitude, responsible for trapping generations of consumers into irresistible cycles of minimum payments and high interest credit card debt. But at the same time, I can also see the rewarding aspects of credit card usage – the ability to use a powerful and versatile financial tool to not only build much needed credit history, but to make money and earn cash back rewards through responsible use and management.

However, even with a self proclaimed balanced view towards the use of semi-controversial financial tools for arbitrage profit and monetary gain, there are some practices out there I am reluctant to defend. Currently, I’m loathe to take a positive stance when it comes to the area of payroll advance loans and high interest short term cash advances. While I begrudgingly admit that payroll cash advances do serve a certain purpose and that there is an unmet need in the marketplace for their existence, I still see them as the pinnacle manifestations and ultimate symbols of financial distress, familial desperation, and loan sharking. Allow me to share some of my research and thoughts on the matter.

What Are Payroll Advance Loans and Where Are They Obtained?

Payday advance loans are a type of very high interest, short term cash loans used by lower to middle income people with jobs, usually during times of great financial turmoil and desperation. Payday loans have many names either formally or colloquially, including – cash advance, quick cash, post dated check loans, payroll advance loans, deferred deposit lending, and even loan shark advances. Pay day loans are almost always taken on by people who are experiencing some type of financial emergency and temporary cash shortfall that necessitates the use of risky short term loans to meet that monetary need. Oftentimes, consumers who find themselves pressed into seeking out payday cash advance loans do so because of their lack of preparedness to handle large bills arising from things like sudden medical expenses, unexpected car repairs, large electricity bills, and overextended rental payments.

Payday cash advance services can be found in most cities, at least in states that haven’t outlawed or made the practice illegal. While previously limited to stores found in low income neighborhood slums next to liquor stores, bail bonds, and gun depots with barred up windows, many are now poking their collective heads into well trafficked downtown area malls and mainstream commercial centers. Currently, payday loans can be obtained at many Western Union cash checking type stores, at standalone payday lending storefronts, and even in many pawn shops. As select states have gradually begun to legislate against the practice of payday lending, many cash advance stores are now bypassing individual states and heading online to do business. A great number of new payday loaners can now be found through search engines and pay per click online ads – the new frontier for customers and businesses.

Who Uses Payday Loans and Why Would Anyone Resort To Using Them?

So what type of person represents the typical payday loan user? The answer might surprise you. No, it’s not the drug addict, dead beat dad, or even the homeless guy who roams the streets, despite commonly held stereotypes to the contrary. The typical payday loan user according to some news research reports, and U.S. census bureau data from 2000 – is a lower middle class individual with a steady job, with average annual household income of around $40,000 who has bills to pay but has exhausted most financial alternatives. Thus it seems evident that payday loan consumers are generally not financial indigents or those who are unemployed. They almost always work a steady wage paying job, but struggle mightily with paycheck to paycheck living and their inability to pay down debt and deal with recurring daily expenses. However, the idea still persists in the public’s mind that payday lending stores prey upon the downtrodden through the use of predatory lending practices. In one of its many attempts to dispel the notion that the payday lending industry preys upon less educated, low income families, military personnel, and even immigrants, the nation’s largest payday lender, Advance America (link) (absolutely NOT an endorsement) points out that 90% of payday loan users have at least high school degrees with almost half of all loan applicants owning their own homes. While these statistics help to temper my perception somewhat, they don’t really change the negative opinion I hold about these risky, high interest financial traps.

In almost all cases, the eligibility requirements to receive a payday loan are all too easy to meet – you merely have to be at least 18 years old, have a steady job with reliable wages, have a funded bank checking account, and you must have appropriate financial documentation like pay stubs to prove your income status. While some lenders demand that cash advance borrowers possess a phone, have residency status, or have at least $1,000 or so of monthly income, in most cases, not much personal or financial information is needed other than documentation of income. Not even a credit check is required. By definition, consumers of high interest pay day loans are usually cash-only spenders with shoddy or ruined credit at best. Otherwise, they probably would have gone with credit cards or utilized more mainstream ways to acquire loans exhibiting more favorable terms.

How Do Payday Loans Work and Why Are These High Interest Cash Advance Loans So Fraught With Hidden Dangers?

Payday loans are usually obtained by the financially distressed via the many paycheck anticipation loan storefronts that dot the landscape and via the many payday loan websites that can be easily accessed online. While “more reputable” and socially accepted lending institutions like banks and credit unions usually require borrowers to undergo necessary hoops and hurdles to qualify for loans, payday lenders are notoriously well known for their service with a smile and the relative ease in the way they rapidly approve consumers for these risky high interest loans. The convenience of instant approval is why they are so attractive to the financially desperate. Customers are usually only required to provide the most basic of personal information pertaining to themselves, although sometimes they are required to provide some names and phone numbers of family and friends for reference purposes (presumably to track you down in case you don’t pay back your loan). The application and approval process frequently only takes minutes from inquiry to cash in hand. This rapid approval process is also how most payday lenders seem to justify their outrageously high transaction fee charges. Their explanation is that the high cost of quick approvals, assumption of higher default risk, and distribution of extremely short term loans demand much higher premiums on customers and require higher rates of return on loans offered for themselves.

Payday advance loans are offered by lenders for very short periods of time – usually anywhere from 2 weeks to 1 month at the very most (with the option to renew). Once approved, the applicant is required to write a check to the payday lender for the amount of the loan (usually anywhere from $100 to $500) plus an extra payday loan fee that the lender will ultimately keep. This is the where the devastating payday loan trap springs into action and why their use is so despised by many – the interest and payday loan fee that lenders charge is absolutely outrageous and insanely high.

Let’s say you want to borrow $500 for 2 short weeks to pay off your rent or some type of utility bill that is overdue. You have an employment payroll check coming in at that time that will allow you to pay the loan back plus fee. Most payday lenders will charge you a whopping $100 or more fee to lend you that amount. If you want to borrow $500, you will need to write the lender a post dated check for $600 ($500 plus the $100 fee), posted to be cashed in 2 weeks. The check is held by the lender to ensure you will ultimately pay. In the process, this creates an incredibly high potential annual percentage rate (APR) of (brace yourself) – 521% interest. No, that is not a typo – it really is that high. When the payday advance loan comes due in 2 weeks, the entire $600 is owed in full. However, pay day lenders frequently offer the option to roll over, or renew the loan. Instead of cashing the $600 when the short term cash advance comes due, payday lenders often encourage borrowers to pay another $100 fee to extend, or flip the loan for another two weeks. Oftentimes, cash strapped borrowers are unable to pay the hefty full $600 and are forced to pay the new fee instead. In the process, the borrower is not getting more money, but is merely floating and rolling over the same loan money he received in the beginning. If not paid in full as soon as possible, what started out as a small loan can quickly balloon into a monstrous debt.

The greatest payday loan danger occurs when consumers fall into this destructive pattern of chronic payday loan borrowing. The cycle of financial devastation can be potentially crushing. Just think – let’s say you took on that original $500 payday loan for 2 weeks and at the end of the 2 week period you were unable to pay off that loan plus the fee so you kept rolling the debt for 6 more cycles (2 weeks each) for a total of 12 weeks, or about 3 months give or take. By floating the cash advance loan 6 times, you’ll have paid out $600 worth of payday loan fees. At the end of the period, you’ll have to pay out an astounding $1,200 out of pocket cost to cover what was once a manageable $600 loan. If not paid off quickly, payday loans have the potential to make credit card debt seem like a minor nuisance in comparison.

The Growing Governmental Regulation and Legal Opposition To PayDay Advance Lending

It’s difficult for me to say anything positive or in defense of the payday loan industry despite my general willingness to let free market play itself out. After all, on some level it’s hard to deny that there is a thriving market for these types of short term, instant cash loans to pay down short term debt and bills. Instead of blaming payday loan companies, maybe we should be blaming the mainstream banks and credit card companies for not doing a better job of providing more accessible outlets for this type of consumer need. But regardless of the niche that they fulfill, in the interest of protecting the public from such imbalanced financial transactions and to shield people from such potentially predatory risks, many states are starting to crack down. Currently, some state legislatures have already made payday loans illegal and outlawed the practice. Many states are even in the process of enacting usury laws that impose caps and limits on the amount of interest that short term payday lenders can charge, effectively putting them out of business in those states. Currently, payday loans are illegal in the states of Arkansas, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia (but this roster may change as prohibitive laws are challenged by lobbyists for the industry). While not illegal in Washington D.C., caps on payday loan interest of 24% APR (essentially a mere 92 cents on a $100 loan) has effectively driven out all lenders in the district. Other states have imposed mandatory longer lending terms to give consumers more of a fighting chance.

The dangers of payday loans and their perceived blight on society is also why the federal government has stepped in as well, into an area that has been primarily regulated by state governments. The United States enacted a law that became effective in 2007, capping short term cash advance loan interest rate to 36% APR for all military personnel, citing the terrible financial distractions and conflicts of security interest that they cause. While this rate cap may still seem pretty high, the rate restriction limit is mere pennies compared to the nearly 500% APR or more that payday lenders used to charge civilians, and military service men and women. However, as a result, payday stores simply stopped lending to military personnel altogether, forcing needy servicemen and women to look elsewhere, a rather disconcerting thought.

Of course, with the increasing regulatory efforts, many payday lenders have migrated onto the Internet, a rather disturbing trend, but perhaps a sobering reminder that their presence in some shape or another fulfills a need in society whether we like it or not. They may not be available now in all states, but financially desperate borrowers still seem to seek them out.

For those of you who insist on seeking out payday loans, I highly advise you to reconsider. There are options and alternatives out there my friend. While payday advances may seem attractive and easy to obtain, it’s a financial debt/death trap in waiting. Unless you are absolutely certain you have the means to pay off the short term loan in one loan cycle, don’t even think about it. Why not consider other more reasonable alternatives to payday loans?

Much Better Financial Alternatives To Getting A Pay Day Cash Advance:

• Ask your existing creditor, lender, landlord, or bill collector for additional time to pay your bill in full. This is the quickest and most recommended way to get yourself out of an immediate cash shortfall. Unfortunately, this option is not always dependable as not all of your existing creditors will be agreeable to this type of generosity.
• Borrow from your friends or family instead if you can. Put the short term loan in writing and back up your good word with future action.
• Perhaps you can request a one time or temporary pay advance from your employer. While it may not look good in the eyes of your employer to ask for a pay advance, desperate times do require more desperate measures.
• Get a short term loan from your bank or credit union, or apply for a 0% balance transfer credit card offer. If your credit score is still salvageable, the 0% balance transfer option is the recommended way to go. I’ve personally used 0% APR balance transfer cards to get myself through difficult financial jams before. Read this guide to 0% balance transfers if you don’t know what they are. Transferring existing high interest debt to 0% APR credit cards works.
• Try visiting a pawn shop instead. While pawn shops and pawn brokers still charge rather hefty interest and fees for loaning you money in exchange for collateral as security, their rates tend to be on par with that imposed by credit cards. If you must choose, I suggest going with a pawn shop instead of a payday storefront branch. It’s a bit more paperwork to come up with the right collateral, but the terms are better.

Where To Find The Best Payday Loan Lenders Online (If You Insist On This Course Of Action)

While payday loans do serve a need, always seek out better options first! I will admit I’m no expert when it comes to finding the best payday loan lenders. While I occasionally recommend sites in the form of affiliate recommendations, I’m extremely leery of inserting payday loan affiliate links here. Instead. you can find payday lenders through Google searches, online banners, website ads, and through the Community Financial Service Association (CFSA)’s list of CFSA member payday loan companies. Despite the organization’s name, the CFSA represents the payday advance industry’s interests completely and does not have your best interest as a consumer in mind. The list of approved payday loan companies is provided only as a useful resource and not as a recommendation of any of the companies listed.  While it’s a financially morbid choice I would prefer not to make, I’d rather you get financially ripped off by a “reputable”, industry-certified lender because you affirmatively decided you must get a payday loan, than get yourself ripped off and have your identity stolen via some unscrupulous and unknown payday loan scammer’s website.

According to the Fair Credit Reporting Act (FCRA), a consumer reporting company is officially permitted to list accurate negative information on a consumer’s credit report history for seven years (7) and bankruptcy information for ten (10) years.

Information regarding a lawsuit or judgment against you can be reported for seven years or until the statute of limitation expires, which ­ever is longer. There is no time limit on reporting information about crimi­nal convictions, information that is reported in regards to a job application for a salary of more than $75,000 a year, nor is there a time limit on information reported because of an application for $150,000 worth of credit or life insurance. Thus, unless the reported information is otherwise determined and proven to be inaccurate, incorrect or downright fraudulent, negative information on your credit report can only be removed or marginalized through the passage of time.

It’s the job and duty of the credit reporting agencies to store and maintain accurate information about consumers by collecting data from credit granters and public records, including bankruptcies, judgments, and liens. Potentially negative information or remarks, such as missed payments and most public recordations, generally remain on a personal credit report for 7 years, with the exception of Chapters 7, 11 and 12 bankruptcy filings, which remain for 10 years. Unpaid tax liens remain for 15 years while paid tax liens remain for 7 years. Positive information may remain on a report indefinitely, and paid-for closed accounts generally display for 10 years. Requests for your credit history remain on your personal credit report for 2 years.

While the Fair Credit Reporting Act places limits on the time period that negative information such as a bankruptcy filing notation may remain on one’s credit report, the actual time period it will remain will vary depending on the type of bankruptcy filing and whether the bankruptcy procedure was properly discharged, halted, or dismissed. The length of time that a bankruptcy filing stays on the credit record will depend on which one of the two common consumer bankruptcy proceedings was filed – Chapter 7 or Chapter 13:

• Chapter 7 Bankruptcy - Chapter 7 is a type of straight bankruptcy procedure also known as a liquidation proceeding. This type of last resort bankruptcy filing is for those who have little assets or income, and have incurred so much debt that only a complete sell off will properly heal their financial position. Under Chapter 7, the debtor turns over all non exempt property to the bankruptcy trustee who then converts it to cash funds for distribution to the various creditors. The debtor then receives a discharge of all dischargeable debts, usually within four months. In the great majority of Chapter 7 bankruptcy cases, since the debtor had no significant assets to hold onto, the Chapter 7 filing will give that person, who was previously encumbered by crushing debt, a new opportunity at a fresh start. Most major unsecured creditors such as credit card companies hate this form of bankruptcy filing since they stand to lose the majority value of their unsecured debt claim again the debtor upon completion and discharge.

• Chapter 13 Bankruptcy - Chapter 13 is also known as a reorganization bankruptcy and differs from Chapter 7 in that instead of forcing the debtor to sell off nearly all of his or her possessions, it affords the filer the opportunity to keep most them and enter into a court mandated payment plan. From the start of filing, the Chapter 13 bankruptcy debt restructuring process takes over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep and is the preferred choice for people who are struggling with the burden of debt but still have the income or assets to cover some payment obligations. For individuals who maintain a predictable income stream and whose income is sufficient to pay reasonable expenses with some amount left over to pay off their debts, this is their only bankruptcy option.

Notwithstanding the FCRA, The Big Credit Reporting Agencies Have Customary Policies Of Reporting Chapter 7 Filings For Ten (10) Years and Chapter 13 Filings For Seven (7) Years

Although the federal Fair Credit Reporting Act does provide that bankruptcy notations can remain on your credit report for 10 years, most creditors will only leave a chapter 13 bankruptcy on your record for 7 years from the time of filing, instead of the 10 year maximum. They do this primarily to encourage people to pay part of their debts rather than discharge everything under a Chapter 7 bankruptcy filing. Since a Chapter 13 debt repayment process typically takes 3 to 5 years to complete, the bankruptcy notation on your credit report likely won’t be removed until 2 to 4 years after the debt repayment procedure has been fulfilled and properly discharged to the bankruptcy court’s satisfaction.

Despite some reported online information to the contrary, the reports that Chapter 13 reorganization bankruptcy appears on one’s credit report history for a period of 7 years from the date the case is completed and discharged, and that there may be a cloud of bankruptcy for 12 years from filing, such indications are categorically false. The 7 year reporting period is from the date of Chapter 13 filing, not from the date the several year Chapter 13 process is completed. The bankruptcy discharge date has no bearing or effect on when the bankruptcy filing information expires and is expunged from the credit report.

This cloud of Chapter 13 bankruptcy debate is obviously less applicable to Chapter 7 filings due to the comparatively quicker speed and pace at which Chapter 7 liquidation proceedings are usually completed.

There Is Less Reporting Consistency When Bankruptcy Filings Are Dismissed By The Court Or Filer, Without A Proper Discharge

Not all Chapter 7 or Chapter 13 bankruptcy filings successfully run their course and get discharged by the bankruptcy court. Sometimes, the court can dismiss a bankruptcy case, the trustee can request dismissal, or the debtor can file a voluntary dismissal for various reasons. Regardless of stoppage method, a bankruptcy dismissal derails the bankruptcy petition and procedure, and eliminates the automatic stay provision of bankruptcy where creditors are forced aside while the bankruptcy court assumes control. Without the automatic stay protection, creditors are able to once again resume collection activities against the debtor.

But despite the dismissal itself which is required to be recorded on all credit reports, the original bankruptcy filing will continue to remain on the filer’s credit history for a certain period of time. One thing to note is that creditors and credit bureaus report bankruptcy dismissals differently – the time period can be anywhere from seven to ten years. That said, most other negative data and remarks on your credit report do drop off after seven years from when it was placed on the report. Here is how the big three credit reporting agencies treat subsequently dismissed bankruptcy filings:

• Experian - The Experian credit reporting agency doesn’t list bankruptcy dismissals as a separate reporting item. On its frequently asked questions page, Experian indicates that: “Missed payments and most public record items remain on the credit report for seven years, with the exception of Chapter 7, 11 and 12 bankruptcies, which remain for 10 years, and unpaid tax liens, which remain for 15 years.” Thus the indication is that Experian reports all Chapter 7 filings, whether properly completed and discharged, or whether abruptly dismissed, for a period of 10 years. All Chapter 13 filings, whether discharged or dismissed appear to be reported for seven years (7) from the date of filing.

• TransUnion – Trans Union material on its website indicates that the typical retention period for Chapter 13 bankruptcies that have been either dismissed or discharged remain on file for seven (7) years.

• Equifax – On its website, Equifax states that it keeps in its credit reports all dismissed Chapter 13 filings for ten (10) years from the date filed. Discharged Chapter 13 filings on the other hand are only reported for seven (7) years from the date filed.

Of the big three credit reporting bureaus of Experian, TransUnion, and Equifax, it appears that only Equifax reports dismissed Chapter 13 filings for ten years. The other two report dismissed Chapter 13 filings for only seven years. Because the credit reporting agencies receive and report their data independently of each other, there’s always bound to be some differences in their information retention and reporting policies. Be sure to check your free credit report and free FICO credit score on a regular basis – preferably at least once or twice a year. You want to catch accidental errors, mistakes, or even fraudulent transactions before they ever get out of hand.

While Bankruptcy Filings Represent A Detrimental Mark On Your Long Term Credit Reporting History, It’s Not The End Of The World, And The Negative Effects Do Fade With The Passage Of Time

These days, just because someone has to file for bankruptcy protection doesn’t necessarily mean the person is broke. Bankruptcy can occur for many reasons, and it’s certainly not always the fault of the person who borrowed money in the first place. There are a variety of unforeseen situations and life emergencies that may cause one to file for bankruptcy including persistent unemployment, sudden illness or injury in the family, or simply the inexperienced use of certain financial instruments like credit cards. The reality that consumers must recognize is that bankruptcy is not the cure all for financial distress or ailments, but should be regarded as a small part of an overall strategy to financial and fiscal stability. Bankruptcy will help you keep the creditors off your back and get you on your own financial feet again, but it’s important to acknowledge that there are long term repercussions to such a filing. But at the same time, it’s also important to know that your business and consumer life won’t just end with a one time filing for bankruptcy help.

With the passage of time, the negative reputation that follows filers of bankruptcy fades, weakens, and becomes less pronounced. Your credit rating will unlikely remain low for the entire time that the bankruptcy information remains on your credit report, and will more likely than not gradually rise over time. Credit scoring takes into account the age of the derogatory stain, and gradually discounts the value of that information the older it is. Therefore, the more time that passes the less effect the bankruptcy mark will have on your credit score. Thus after bankruptcy discharge, a two year old bankruptcy will likely mean more to potential future creditors than a five year old bankruptcy because creditors are primarily interested in present financial circumstances. If one’s debt to income ratio is much improved from past years, the negative effect of a prior bankruptcy is likely going to be minimized. So keep in mind that negative history on your credit report is just that – history. It’s just something credit lenders will take into consideration when they evaluate your overall credit worthiness in the future. It does not doom you to perpetual credit rejection or credit purgatory, but it will challenge and should embolden you to strengthen your financial future by saving and using credit more carefully.

The truth and oddity of it all is that the bankruptcy debtor will probably be a much better credit risk and more credit worthy after bankruptcy than before the filing. Some have suggested that the effect of bankruptcy on one’s ability to obtain future credit is vastly overstated and on some level I have to agree. While your past credit reporting history has a significant effect on how potential creditors perceive you as a possible credit risk after bankruptcy discharge, the key to getting credit also has to do with your present income situation as well. If you have a decent job with good present income, creditors will likely be willing to look past your credit report to the contents of your wallet if possible. Even with a bankruptcy on one’s record, it may still be very possible to get loans for new cars and new credit cards, or even a mortgage for a new house. Creditors may not offer you the best rate, but if you have good present income, even a person with an active bankruptcy filing mark on their credit report can still get the credit they want in many cases. Of course this will depend on the condition of the overall credit market. In super tight credit markets, lenders may be less inclined to assume any type of financial risk that may remotely be construed as questionable.

Another reason why former bankruptcy filers strangely become more attractive to certain creditors after emerging from bankruptcy protection is that creditors know that the former debtor is precluded from filing again for many years.

A Chapter 13 bankruptcy can only be filed again if:

• The debtor received a bankruptcy discharge under Chapter 7 more than four years ago, or
• The debtor received a bankruptcy discharge under Chapter 13 more than two years ago.

A Chapter 7 bankruptcy can only be filed again if:

• It has been more than eight years since the debtor filed the previous Chapter 7 bankruptcy.

Because creditors are keenly aware of the bankruptcy filing limitations after discharge, it helps to explain why former and recent bankruptcy filers often see new credit card applications arrive at their doorsteps very soon after bankruptcy emergence. My advice is to avoid all new credit card and loan applications altogether until you can get back on proper financial footing and develop a more mature perspective on managing credit and debt obligations.

Updated List Of the Top Recommended Instant Approval Credit Card Offers Below

These days, with the emphasis towards quicker and more convenient methods of transacting business (contact-less radio frequency credit card scanners, for example), credit card companies are constantly researching ways to improve the speed of credit transactions and the expediency at which they acquire new customers. Currently, most standard online and paper credit card applications take upwards of 2 weeks to a month or longer to get reviewed and approved. For the vast majority of people, this is no big deal since most people are usually not in any particular hurry to get a new credit card. Most people apply for credit cards because they want the long term purchase convenience that they offer, or they want the ability to save money on ordinary purchases by earning credit card rewards and rebate discounts. But there are consumers who simply don’t like to wait weeks to find out whether their credit applications were approved or denied. For those who intend to use their new revolving credit account to pay down debt as soon as possible or make an emergency balance transfer, having to wait up to 4 weeks or longer is often a pretty significant inconvenience. For those types of people, choosing to go with an instant approval credit card offer may be the way to go.

Generally, instant approval credit cards benefit those with exceptional credit scores and credit histories the most. For credit cards that offer or advertise the instant approval option, once the online card application is submitted with all requested information provided, the completed form gets sent on an expedited review track for baseline evaluation and instant processing. The application information is usually immediately transmitted to credit reporting agencies for identity verification and credit score screening. The expedited process may require a few minutes to a few hours depending on the automation speed and the complexity of your financial history, but it’s usually substantially faster than the normal card approval process. Those with excellent to perfect credit scores with no extraneous or questionable personal or business information requiring further follow up may get instantly approved in a matter of a few minutes. The notification may happen online as a instant pop up congratulatory message or it may occur as an approval email that is sent to you a few hours after your application submission. With the same expediency, most instant approval credit cards can provide instant denial as well to save you time. By not having to wait around indefinitely for a decision, your time is freed to immediately pursue another more viable credit card alternate should your first card option be declined, at your own discretion of course.

However, one thing to keep in mind in all of this is that all credit card application inquiries are considered hard credit checks that result in short term negative hits against your credit score. Even if your instant approval credit card application is run through the card issuer’s computer algorithm and promptly denied, the inquiry itself will still leave a residual FICO credit score ding.

Ways To Speed Up The Instant Approval and Credit Card Application Process

It should be pointed out that instant approval does not always necessarily mean instant credit for everyone. Instant approval credit card offers are usually meant for those with excellent credit. Those with bad credit are unlikely to be approved under the expedited review process of instant approval cards. Individuals with poor or damaged credit seeking instant credit approval will likely have to resort to secured credit card offers where cash collateral deposits must be made prior to the extension of revolving credit lines. Those with average credit will likely be qualified for unsecured card offers but probably not get cleared for instant approval, as the credit application will likely be flagged for further manual review.

Those who wish to substantially increase their chances and speed up the credit card approval process should note that credit card issuers tend to have approval preference for individuals from certain financially favorable demographics and backgrounds. Obviously your credit score is the most pertinent and visible evidence of your credit worthiness. However, in my research, I’ve noticed that instant approval credit card issuers tend to offer high preference for those applicants who are married, own their homes, and carry mortgages – over single, unmarried individual applicants who rent their homes. I suspect instant approval credit card issuers use these demographic indicators to make rapid assumptions about the credit worthiness and possible risk factor of potential card applicants.

Keep In Mind That Instant Approval Does Not Necessarily Mean Instant Receipt Of Your New Credit Card

Before instant approval credit card seekers get their premature hopes up, there are certain things to keep in mind. First of all, even for those with perfect credit whereby your credit card application gets instantly approved, you won’t likely receive your actual credit card for another 3-7 days. That’s usually the time needed to set up your credit card account and mail your plastic card out to you. So if you are hoping for the company to provide you a temporary credit card number that you can use immediately, that’s a very unlikely scenario. In the past, many card issuers offered instant account approval along with instant access to your new 16 digit credit card number and expiration date. This greatly sped the approval and card receipt process, but due to the growing prevalence of identity theft cases, the practice has been curtailed. So, don’t expect to be able to print out your credit card number online after your instant or subsequent email approval. Most credit card issuers have halted the practice of issuing temporary usable numbers due to the prevalence of fraud and the need for subsequent verification.

Even though instant doesn’t mean immediate anymore, the realistic benefit of instant approval cards is that you don’t have to wait around in vain to see if you were approved. For example, a few years ago, I attempted to take advantage of 0% balance transfer credit cards and get involved in making money with balance transfer arbitrage. I applied for several 0% credit card offers (none offered instant approval). Only after waiting around for 3-4 weeks did I finally receive notification that I was only approved for some of them. Instant approval card offers help to get around this by greatly speeding up the account approval process. Of course there is still the few days needed for the postal service to actually get the card out to you – that can’t be avoided.

Retail Store Credit Cards Are The Only Truly Guaranteed, Instant Approval Credit Card Offers Available, But They Should Be Avoided At All Cost

While I’m a reward credit card supporter, I don’t recommend that consumers ever apply for one of those instant approval department or retail store credit cards. Department store instant approval credit cards tend to offer the worst interest rates and card payment terms possible. Usually the retail cards will entice consumers with a one time savings discount of 10-20% off their first time purchase but after that, they usually don’t offer any further purchase rewards. Most of these retail cards are also very restrictive in where they can be used and are usually only good for one particular store line. Department stores utilize the marketing power of impulse buying to get consumers to opt for these instant approval retail credit cards that allow consumers to walk into a Best Buy or Circuit City with no money or credit card in their pocket and still walk out with an expensive plasma TV. These retail cards may sound tempting, but they should be avoided. If you want to get your revolving credit line quickly, you are better off evaluating and reviewing instant approval credit card offers online instead.

List Of The Best Instant Approval Credit Cards (For Both Consumers and Businesses):

1. Blue From American Express – 0% APR on purchases for 6 months. Card holders also earn 1 reward point for every dollar charged, redeemable for entertainment, retail, and travel rewards.
2. Blue Cash® From American Express – 0% introductory APR for 6 months on all purchases.  Also earn up to 5% rebate on select purchases and up to 1.5% back for everything else with the Blue Cash card.
3. Blue Sky Card From American Express® – 0% intro APR for 6 months on all purchases. Cardholders also get to earn 1 reward point for every dollar spent with redemption good towards airline travel, hotel stays, and car rentals, with no travel restrictions.
4. American Express® Gold Card – This card is currently offering 10,000 Membership Rewards(R) bonus points when you spend $500 in 3 months – redeemable for a $100 gift card. Earn 1 membership reward point for every dollar you spend, redeemable for travel, shopping, and entertainment rewards. With this offer, the first year’s annual fee is waived.
5. Hilton HHonors® Card Platinum From Amex – Earn up to 50,000 Hilton reward points when you receive the Hilton rewards card. With this card offer, you can also earn 5 reward points for purchases at Hilton locations and at supermarkets, gas stations, and drug stores. You can also earn 3 points for purchases made anywhere else.