What would you do for a whopping $1.00 of new credit from your credit card issuer? Hmmmmm…let me see—nothing?

You certainly wouldn’t agree to move old charged-off debt to a new credit card just so you could start making payments and paying interest again, right? That would be absurd! That is, unless you were tricked into doing so.

Well, Capital One has allegedly found a way to dupe some unaware consumers into entering such a debt repayment plan by sending them solicitations disguised as offers for new credit cards. West Virginia Attorney General, Darrell McGraw, stated in a press release on January 22nd that “Consumers who had charged-off accounts with Capital One or other creditors were sent the offer, which required the consumers to agree to transfer the entire account balance of a charged-off account to a new credit card account to receive $1 of new credit from Capital One.”

I haven’t seen a copy of what this alleged offer looks like, but it’s got to be rather deceiving to convince any rational consumer to do such a silly thing. I can only imagine how masterfully hidden among many pages of fine print is the fact that you will actually only receive $1.00 of additional credit when you agree to the terms of the offer.

In addition, those who accepted were required to immediately begin making payments on the old charged-off debt before they could receive further increases in their credit limits. According to McGraw, “Capital One’s practice of offering nominal extension of credit, if and only if, the consumer agreed to pay off a debt too old to be sued on is tantamount to loan sharking.” At the same time, acceptance of the terms allowed Capital One to re-age the debts, thus restarting the clock on the statue of limitations while also charging interest and fees on debts that otherwise would have been untouchable.

Rest assured credit issuers will be dishing out their fair share of above-the-waist blows in 2010 as they seek to recuperate lost revenue due to CARD Act of 2009. And taking actions such as raising interest rates or cutting credit limits on customers who are late on payments are fair, above-the-waist blows in my book.

However, this alleged behavior by Capital One is essentially like dishing out a clean shot to the proverbial consumer groin—definitely a low blow! If you receive any correspondence offering what appears to be terms for new credit cards, be sure to read the fine print carefully and understand exactly what it is you’re agreeing to before making any quick decisions. And always keep in mind that if it appears too good to be true, it probably is. Credit card companies are “for-profit” businesses and are certainly not in the business of giving away free money.

Dear Creditnet: I received a credit card offer in the mail from the university I attended for graduate school. It’s a MasterCard issued by a major bank with no annual fee, and it also boasts no currency conversion fees for international transactions.

Is this a perk that’s common through other no annual fee credit cards as well? I travel overseas often, so this could really come in handy on future trips.

Answer: No, it’s actually quite uncommon for credit cards to not charge currency conversion fees. In fact, Capital One is the only major credit issuer left that still doesn’t charge additional fees for international purchases on any of its credit cards.

It’s frankly always amazed me that Capital One doesn’t advertise this as a major advantage over competitors’ cards, but perhaps that’s because it may be going away soon?  With the CARD act set to take effect next month, I’m sure they’re looking for any possible way to increase fee revenue in 2010.

Other popular cards, such as Citibank credit cards or Chase credit cards, currently charge a 2 percent fee in addition to the 1 percent processing fee levied by Visa/Mastercard for converting your foreign-currency purchase into US dollars.  If you use your credit card a lot when traveling overseas, then you know just how fast the additional 3 percent can add up. Looking over your billing statement after returning home from a trip can be quite a shocker!

Try comparing other terms of the credit card offer you received, such as the APR and rewards program, with cards offered through Capital One before making a final decision about which one to take on your next trip. In addition to not charging any foreign transaction fees, Capital One offers some great credit cards that give up to 2 percent cash back on purchases and have no limit on the cash you can earn—not a bad deal during times when cash is tight for many of us.

It’s always annoyed me that we can’t pay our taxes with a credit card for free.

I mean, come on—it’s 2010, and I still have to cut a check or set up a direct debit to the IRS each year. It just seems so old fashioned.

I would much rather use my credit card to pay online, rack up rewards points, and enjoy having an extra 30 days or so before coughing up the cash to pay my balance in full. Wouldn’t you?

But alas, I’m too cheap to fork out the 2.35% convenience fee that sites like OfficialPayments.com or Pay1040.com charge for paying your taxes with plastic. And the government is clearly too cheap to absorb the merchant card expenses like most retailers do.

The good news is 2010 will provide a new option for paying your taxes online. For the first time ever, American Express recently announced that cardholders will now be able to redeem membership rewards points when paying their taxes through the two sites mentioned above. When I heard this last week, I thought it sounded like a great move on the AmEx’s part. It seemed logical that there may be a lot of cash-strapped Americans these days who could really benefit from this sort of tax option during rough economic times.

The bad news is it clearly won’t make sense for the vast majority of cardholders. Here’s why.

For example, how many points do you think it would it take to pay a $2,000 tax bill? Are you ready for this? A mere 400,000 points! And since most AmEx credit cards reward cardholders with one point per dollar spent, you can easily do the math. I doubt there are many cardholders with a tax bill of $2,000 who have spent at least $400K on their American Express credit cards.

While I think this is a great concept and could certainly be a last resort for some big-time spenders with beaucoup points who have no option but to pay their tax bill with credit cards, I can’t imagine it becoming a popular use of points among the majority of American express cardholders. There are certainly more efficient ways of redeeming membership rewards points.

As for my AmEx points, I’ll take cash please.

In response to the CARD Act, credit card companies are desperately seeking to boost profits by resurrecting old fees and creating new ones.

The long-lost inactivity fee is one that’s been receiving a lot of attention in the media lately.  Use your card too much, and you end up in debt.  Use your card too little, and your credit issuer will slap you with a nasty inactivity fee for basically not being profitable enough.

Mark Fiore, political cartoonist/illustrator, obviously finds the whole situation pretty ridiculous.  He pokes fun at credit card reform and the industry’s response in this video by dubbing the credit card companies’ efforts to adapt as the “Safe Credit Revision Everyone Wins Undertaking”, or S.C.R.E.W.U.

And just in case credit issuers have run out of ideas for new fees, which I’m sure they haven’t, Fiore even provides some excellent suggestions.  Among my personal favorites—the “legibility processing fee for left-handers”, which will also apply to right-handers, and the “thought processing fee” for simply thinking about the word credit.

Enjoy…this is brilliant.

2010 already looks like it’s shaping up to be the year of ever-expanding fees for credit cardholders.

While legislators are still celebrating and patting themselves on the back for passing the CARD Act of 2009, consumers, on the other hand, haven’t experienced much to be happy about at all. Credit limits continue to get slashed, interest rates are on rise, and credit issuers are resurrecting old fees or adding new ones in an effort to recapture lost profits.

The inactivity fee is just one of the newly resurrected charges that appears to be gaining more and more traction among credit issuers. Fail to use your card often enough this year, and you may find yourself getting whacked with a monthly fee for lack of use. And to make things worse, the fee could even be triggered after you’ve opted out of a change in terms and are essentially forced into inactivity. Of course, nothing in the CARD Act exclusively prohibits these actions.

According to a recent report released by the Center for Responsible Lending, consumers could pay as much as $36 in yearly inactivity fees. However, I’ve heard reports of banks testing much higher rates on certain percentages of their client base. Fortunately, I haven’t seen one added to any of my credit card accounts yet.

How about you? If you’ve been charged an inactivity fee or have seen one added to your credit card’s terms, let us know how much and from what credit issuer in the comments sections below.

The return of inactivity fees is just another reason why it’s a smart idea to use each of your credit cards at least once a month to pay a recurring bill or simply make a small purchase. You’ll not only avoid having to deal with complete account closures, but you’ll also avoid getting surprised by one of these nasty inactivity fees.

Remember partying like it was 1999?

Yeah, that was ten years ago. Since then you may have been able to hide your collection of Limp Bizkit CDs, stop wearing jean shorts and change your “Rachel” hairstyle (frosted tips for guys), but unfortunately you can’t remove that barbed wire tattoo from around your bicep.

Show of hands —who else thought this decade would be dominated by Sisqo and his Thong Song (parts 1-5)? Ok, maybe I’m the only one.

Times flies. In some ways Y2K, boy bands, Bill Clinton and the tech bubble seem so far away. I now nostalgically look back at the stuff we “worried” about at the beginning of this decade and they seem rather insignificant.

We lived in the glory of a pre-9/11, pre-housing bubble/burst, pre-Afghanistan, pre-Iraq, pre-$140 oil, pre-financial crisis, pre-reality TV world. We were so much better off.

Or were we?

In looking back at this decade I can’t help but wonder what future generations will think of the pages we have added to the book of human history during the course of these ten years. Will my grandkids learn about the 2000s as the decade of terrorism and sub-prime loans or will they see it as the dawn of the internet age, the proliferation of accessible and cheap technology, instant global communication and emerging environmental awareness?

Although many technological advances such as the internet, email, digital cameras and cell phones were not invented in this decade, they became commonplace. If you’ve ever had a day at the office when the Internet was down or if you’ve ever left home without your cell phone, you’ve become acutely aware of how dependent we have become on these things.

These technologies have made it possible for our businesses to operate more efficiently, while simultaneously making us as individuals busier, but sometimes less efficient. If you’ve Facebooked, Twittered, watched YouTube or g-chatted with friends at work, then you know what I mean.

I think the thing that stands out most about this past decade is that our world has grown exponentially smaller. Not to get all Thomas Friedman on you, but more than ever our economies, communities, cultures and decisions are intertwined. Increasingly we are bound together by our technology and we have access to unlimited information, for better or worse.

Keep this in mind the next time you watch a video of Filipino inmates dancing to Thriller on YouTube.

The team at Creditnet.com would like to wish each of you a joyous holiday season and a prosperous, debt-free New Year!

Oh, and whatever you do this year to celebrate, just don’t eat too much of the icing that comes with those pre-made gingerbread houses. That stuff is lethal.

It’s been ten months since I first wrote about Experian ending it’s partnership with Fair Isaac. Since then, consumers have been unable to purchase their FICO scores based on Experian’s data, while lenders’ access to the scores has remain unchanged.

The fact that individuals can only purchase two of their FICO credit scores while lenders can still access all three has not only outraged consumers across the country, but also many consumer advocacy groups and representatives in Congress. If any credit bureau wants to sell their credit scores to lenders, consumers should have the ability to purchase those same scores too. It’s only fair, right?  There needs to be a level playing field between consumers and creditors.

In response to Experian’s actions and a lot of consumer complaints, Congresswoman Niki Tsongas of Massachusetts penned an amendment to the Wall Street Reform and Consumer Protection Act that would require all credit bureaus, including Experian, to provide consumers with their FICO credit scores for a fee.  That’s “fee”, not “free”.

Tsongas’ amendment was passed on December 11th as the major financial reform package made it’s way through the House and forged ahead to the Senate.  If signed into law, those of you experiencing Experian-FICO score withdraw, will be able to pay up again to sneak a peak at how potential lenders’ might asses your credit risk.

This holiday season, Citibank is offering new student cardholders of its Citi Forward(SM) Card for College Students and Citi® mtvU™ Platinum Select® Visa® Card for College Students enough bonus points to redeem $25 in gift cards and more. While credit is being portrayed poorly in the media right now, it’s refreshing to see some credit issuers like Citibank actually step up and offer incentives to customers for responsible use of credit.

With this limited time offer (ends Jan. 15, 2010), Citibank is helping students establish good credit habits by offering even more bonus points to credit-savvy cardholders. For each of the first three billing periods the account is open, 1200 bonus points will be earned if the cardholder pays on time and stays within the given credit limit—equaling a total of 3,600 bonus points! As the cardholder continues these responsible practices, additional points will accumulate, up to 100 points per billing cycle.

Bonus points aside, the Citi Forward(SM) Card for College Students and Citi® mtvU™ Platinum Select® Visa® Card for College Students are great for young adults who are serious about building a good credit history. Students will pay no annual fee and are consistently rewarded for good credit behavior. Rewards for paying bills on time and staying within credit limits include redeemable reward points and even an interest rate deduction in the case of the Citi Forward(SM) Card for College Students. Some applicants may even qualify for a 0% interest introductory period of 6 months on purchases!

Most important for consumers new to credit is for them to understand how to use credit responsibly and then to actually do it! Kudos to Citibank for offering this incentive to help teach students to play “nice” with their personal credit.

Dear Creditnet: I haven’t used my credit card in a long time, and I think they may have closed it on me. The expiration date on my card passed a few months ago, and they didn’t send me a new one. It had a pretty large credit line. Was my credit score dinged?

Answer: You never received a replacement credit card in the mail, but that doesn’t necessarily mean your account was closed. The bank may have made an error and failed to send a new card, or perhaps the card was lost in the mail? You need to do some legwork first to determine the true status of your account.

If you have an online account established, logon right away to check your status and the transaction history to make sure there haven’t been any unauthorized charges. If you don’t have online access, call your credit issuer directly to verify if the account has been closed or if a replacement card was ever sent to your current address. In addition, you should pull a free credit report from annualcreditreport.com to see how the account is reported on your credit file.

If you determine the account is closed, it’s likely your FICO score has taken a bit of a hit. Exactly how much depends on several variables that are part of your individual credit profile.

For example, your credit utilization ratio (the amount of credit you use relative your total available credit) has probably worsened unless you obtained a new credit card to replace the available credit you lost when the account was closed. In addition, if this card happened to be the first credit card you ever had, the length of your credit history may have been significantly reduced. And lastly, your credit mix, which accounts for about 10 percent of your FICO score, may have been adversely affected as well.

These three factors account for about 55 percent of your credit score, so you can see why a closed credit card isn’t something to take lightly.