ABC Good Money Credit Card Tips, Investment Tips Mail Bag

Now we're going to put his expertise to the test by answering some of our viewer questions sent in by you, the viewers. All right, Ramit, are you ready? The first one comes from Tina of Philadelphia, Pennsylvania. She writes in saying, I have a credit card that I had for about nine years and the credit limit was only fifteen hundred dollars. The account has been closed for a long time, but I'm still paying off the credit card. The current balance is 700. I've been paying more than the minimum payment, and my interest rate is 20.99%. Do you think if I contact them, I'll be able to get my rate down since credit card for so long and the credit limit was only fifteen hundred dollars. That's a high rate.

That's a high rate. Yeah, absolutely. Since the average is 14%.

Right.

Good news is that it's possible, I think it's unlikely that they'll lower the rate since you've closed the account, but you might as well call. There's no harm. What are they going to do? Close the account again? But beyond that, what I hear from that question is the balance is $700. That's a fairly modest amount. So if I were Tina, I would just focus on paying as much of that down as possible and start saving money in other areas of life so that I can just get this off my back.

Well, what's the best way? We don't know Tina's personal situation. We don't know if she has a job, so maybe it's tough for her right now. What's the best way to go about doing that?

You know what you want to do is one of the things I talk about is a CEO strategy, cut costs, which we're familiar with. But if you have a goal, a $700 goal, then it becomes a lot easier to do e earn more. I like using Craigslist and seeing what people are looking for. Is it a dog walker? Is it a tutor for fourth grade math? What is it? Or, oh, optimize your spending. And that's what she's talking about by calling up and negotiating the APR or calling up your gym or any of these places where you have subscriptions that can actually lower your payments quite a bit.

All right, next question comes from Ted of New Bedford, Massachusetts. And he writes in saying, I have one credit card that went over the limit, approximately $15. I was charged the over the limit fee of $39. The company said it was the monthly membership fee that put me over. It keeps happening every month. The company will not Compro. I'm not charging anything on the account and have destroyed the card. What do you recommend to resolve the situation? Does it sound like he's using a debit card? My monthly payment is already over $100 per month. Does that sound like a debit card?

I'm very puzzled by this question, but I will tell you that if indeed it is a credit card, okay, then this is reprehensible. This is something that happens. You get stuck in this vicious loop and there's no way to get out. And it's some of the worst things that can happen. But there is a way to do it. Send a letter, not an email. Send a letter to the executive customer service group at the credit card company. Explain the situation, just the facts, and CC it. Send in a separate email to my friends over@tipsconsumerist.com these guys investigate exactly this kind of stuff, and they're great. This is what you want to do. Because if you're stuck in a loop.

That'S a great idea.

It's ridiculous that you would have to keep paying fees even if you're not charging anything else. It makes me so angry when this happens. But let's hope it's just a mistake and not systemic by the company.

Ted, I hope you're watching because that's. That's really great advice. Now, you know, there are a lot of changes that credit card companies are undergoing right now. I myself got an email from one of my credit cards saying if you want to opt out of these changes, you can, but do so now. You'll close your account, etc. Etc. What do you recommend people right now? Do they really need to read the fine. Fine print?

Yeah, absolutely. And you know what? Honestly, it's even hard for me to read the fine print sometimes. I just call them and say, explain this to me in plain English. And they say, blah, blah, blah, And I say, I don't understand. Can you explain it again? I will tell you that I was working with a friend the other day to help him pay off his debt, and the minimum on his card was something like $220 a month, which is. Okay, that's fine. They jacked it up to $550 in anticipation of this legislation coming through. So it's really important to pay attention to the mail that you're getting these days.

Yeah, Right now you've got to read the mail from your credit card companies. It's important right now. All right, so here's one from Gammy of New York, New York, our neck of the woods, she or he writes in saying, I received a let credit card company stating they've noticed that I have only used a limited amount of my credit line. They adjusted my credit line from 7750 to 3900. Can they do this without my consent? Will this affect my credit score? How can I appeal to have my credit line reinstated?

That's a good question. Yeah, and there's good news and bad news. The bad news is that yes, they can do that and yes, it will affect your credit negatively. But I get the sense from this question that she has a pretty good credit score just because she's paying attention to it and she's being proactive. So what I would suggest is, first of all, don't worry too much about it. Second, if you really are a credit card geek and you want to optimize it as far as you can go, you can call up the credit card company and ask them to give you a higher credit limit that will improve your debt to credit ratio. And if they don't do it, you can go to your other credit card companies and ask them to up your credit limit there. But as financial challenges go, this is really not something to worry about too much.

Does this happen a lot? That's the first time I've heard of a credit card company lowering someone's credit because they're not using their car.

Yeah, it happens a lot. It's. And that's somewhat of an excuse. They're lowering systematically people's credit across the country. In fact, some of my readers call up to negotiate as I advise them. And then the credit card companies say, well, we're looking at your numbers and we're going to lower your credit. That's because they're trying to fix their problems on the books right now.

Right. So it's all because of the economic downturn. It's not a reflection of the individual consumer.

Oh, listen, if I were a credit card company, I'd like to give you $50,000 of credit credit limit because I know you're irresponsible or somewhat responsible, etc.

And it sounds like she is pretty responsible.

So that sounds great.

She was upset about it. All right, so here's the last question from Bernadette of Kennelsworth, New Jersey. Where is the best place to invest money in these times? I have money in a Vanguard money market which doesn't pay that well. Are savings bonds a good choice or a cd? That's a good question. A lot of people want to know.

I wish I knew how old Bernadette is. But I'm just going to assume, based on Bernadette's name, that because I don't have a lot of friends that are named Bernadette, okay? So I'm just gonna assume since she's investing in bonds and CDs, maybe she's a little older.

It's coming back. It's retro. The name is that.

Yes, that's right. What I would suggest is that one of the best investments for people is something called a Target Date Fund. And all this means is you don't have to sit around and pick stocks, bonds and all this stuff. You simply go into your investment account and say, this is how old I am. And they will pick a fund for you that's appropriate for they, the investment company. So whether it's Vanguard, TIAA, CREF, etc. And they'll pick a fund for you that automatically changes over time to be more conservative. So if you're, say, 27, you're going to be pretty aggressive in your investments. If you're, say, 77, you're going to be quite different. That takes the guesswork out of it because you can just pick a fund and all you have to do is one thing, funnel as much money as possible into it.

All right, Ramit Sethi, thank you so much. Great investment, Great advice on how to help us invest.

ABC News now. Good to know.