credit card question?

CubsGirl05 · July 2009

What is the difference between "settling" a credit card debt and "paying in full"? Will one hurt a credit rating more than another?

mandysmear · July 2009

no idea. i just use em and pay em off.

Mrs.B6302007 · July 2009

IDKsettling maybe has something to do with transferring balance or consolidating but not really paying off?

FutureMrsDudley55 · July 2009

I've never had a credit card so I have no clue. But what I do know is that FI just paid off his credit card debt and was offered a big discount for paying in full. So he went that route and as far as I know, it improved his credit rating.

lpstl · July 2009

Settling means you are paying less than what is owed. A lot of companies will allow you to do this if you've fallen behind or gone into collections, but they usually require that you pay in full. I don't believe it hurts your credit anymore than it was already hurt by falling behind.

CubsGirl05 · July 2009

Well, I got a letter from on of my cc companies saying I can either pay off my card in full, for x amount, which is $100 less than the balance, or I can settle the account (which would also show as paid off, but it doesn't say "paid in full" it says "settled debt") for like $300 off of the balance. hmm...

lpstl · July 2009

Are you behind on the card? That's odd that they would randomly send you a letter like that.

CubsGirl05 · July 2009

Well, I'm not late or anything, I just called them a week ago asking what the total pay off amount was, and if they would close my card if I paid in full. So, if it doesn't hurt my credit rating, I guess I should do the 300 off..

shanwalk2 · July 2009

I know I'd much prefer to have "paid in full" rather than "settled debt" when people look up my credit. There has to be a reason that it's 200 less... it will probably affect you later. I'd just pay it off and be done with it if I were you.

lpstl · July 2009

I'm not 100% sure about that, so don't go on my opinion. I think E is around, she might be able to tell you the rules.

mrsAE · July 2009

Are you sure the letter came from your cc? There is a lot of fraud and you should call to verify this. If you don't have a high balance to limit, you should just pay the card off and keep it open. If you had late payments and have been charged late fees, close it because it already has damaged your credit. Closing a credit card that you have had for a while, and that is in good standing will hurt your credit, not by lowering your score but because you are removing old credit history. It will still appear on your credit but will not count toward history for new credit, like if you want to apply for a new card or if you are looking for a loan.

CubsGirl05 · July 2009

Yeah, I asked them to send me a letter when I called just so I had a record that paying it off would either keep it open or if they would close it, etc. Thanks everyone!

FutureMrs.McC · July 2009

It will negatively effect your credit to settle because it's basically saying that you paid less than you owed. Also, the credit card company can use the $300 discount as a tax write off and you would be liable to cover the taxes to the IRS.

mrsAE · July 2009

It will negatively effect your credit to settle because it's basically saying that you paid less than you owed. Also, the credit card company can use the $300 discount as a tax write off and you would be liable to cover the taxes to the IRS. That is one of the most asinine things I have ever heard. If the credit card company discounts the interest owed, no 1099 is generated and there isn't a tax liability. Rebated and interest discounts, including promotions and points rewards are considered a discounted price and do not have a tax liability either.

FutureMrs.McC · July 2009

Google is a beautiful thing

. A little info: "When you settle a debt or if a creditor forgives a debt by writing it off, the amount that was forgiven needs to be reported when you file your taxes". "The amount is considered income since it was originally loaned to you but now you do not have to pay it back." After settling a debt your creditor should send you and the Internal Revenue Service a Form 1099-C or 1099-A at the end of the year. Both forms are for the reporting of miscellaneous income. When you file your taxes you'll need to record the amount on those forms along with your income for the rest of the year. "Even if your lender didn't send you the proper form, you don't want to gamble that they didn't send it to the IRS," Kidwell said. "If you don't report that income and the IRS was notified of it, you might be sent a tax bill or even worse an audit notice."

mrsAE · July 2009

A 1099-C is only for debt forgiveness of $600 or more, usually this is generated when someone's arm is readjusted and interest is prorated back. Your italics comment is not from the IRS site and next time you want to use something as an argument, site the source.

FutureMrsNewmire · July 2009

you are SLIGHTLY correct.. and THIS IS FROM THE IRS WEBSITE....Form 1099-C. If an applicable financial entity cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. The amount of the canceled debt is shown in box 2. Unless you meet one of the exceptions or exclusions discussed later, the canceled debt shown on Form 1099-C, box 2, is ordinary income from the cancellation of debt and must be reported on the appropriate form shown above. An applicable financial entity includes: A federal government agency, A financial institution, A credit union, or Any organization in which a significant part of its trade or business involves the lending of money http://www.irs.gov/publications/p4681/ch01.html

FutureMrs.McC · July 2009

I apologize for not naming the source. I cut the info down and wasn't thinking. Also, I was not trying to start an argument. I was simply stating what my FI had happen to him. However, his was for more than $600 which makes perfect sense since you don't have to claim income under that amount. I guess the point I was trying to make to OP, is not worth the $300 savings in my opinion.

mrsAE · July 2009

I am not slightly correct, I am completely correct. We are here discussing Cubs issue, not the issue in general. My advice is for Cubs and you are both clearly misinforming her, except for the IRS C&P.

FutureMrsNewmire · July 2009

Listen.. I really dont need your attitude Mrs whoever you are.... I did POST from the IRS and I fully admit that I was not aware of the $600 or more rule for it.... I stand corrected.... but the rest of the things I have posted are MOST certainly correct about her debit/credit ratio and it COULD impact her credit report if she pays less then the total balance she owes on the credit card INCLUDING the finance charges. If she rec'd a letter from the credit card company stating "if you pay xxxx amount then we will credit back to you the xxx remaining amount of interest as a courtesy" then i would PERSONALLY suggest paying the full amount. NOTHING MORE to say but I would really appreciate you losing the snotty attitude.... the "snarky brides" part of the board is in another section.....Sorry... rant over

FutureMrsNewmire · July 2009

Please refrain from replying to ANYTHING I post... i've been nice enough to report your post... =)I never said what you stated was "wrong" I simply stated you were implying it only happened on mortgages or ARMS... which is NOT correct.. and funny you never "sourced" any of YOUR posts....

mrsAE · July 2009

I can reply where ever I want, get used to me. I didn't say only arms, I said usually. I said she needed to source her direct quote, a direct quote is different than just responding to a post. I stated knowledge I have about consumer credit based on being credit trained for underwriting and financing, and my experience as a Wealth Management Advisor.

mrsAE · July 2009

Suze Orman is not a financial expert. She had a back office management position at Merrill, then another firm in a lateral move, and only owned, never managed clients at her firm. She also has not made a stock purchase in over seven years, how qualified is someone who has the most vanilla porfolio ever able to advise anyone else? She is a buffoon and a laughing stock in the financial industry.

whitsy · July 2009

Haha futuremrs! Do you realize that a) mrsE could care less about your report and b) it doesn't matter? For a report to even get noticed it has to happen by several different posters. Maybe it made you feel better though?

agk0125 · July 2009

Someone mentioned that this could possibly be a scam. Even though it doesn't seem like it is, you should know that if you're on the phone with your "CC company" and they ask for the card's security code (the three digits on the back) that mean it is definitely a scam. The person you are on the phone with already has your card number and address and this code is the last thing they need to steal it. A real CC company will already know that information.Slightly unrelated to your post, but since you said you talked to them on the phone you might want to know this.

mrsAE · July 2009

I would rather just omit you from the post. Mentioning and referencing Suze Orman has shot your credibility.

FutureMrsNewmire · July 2009

Agk actually sorry to correctbut you are some what wrong. The credit card company will ask for the cvv/cvc code on the back in mainly one occasion and that when activating the card OR when processing a balance transfer. We actually do not keep access to that number most institutions have a system setup where you input the # amd comes back correct or incorrect. That # is only located on the card and someone who has compromised the card & exp date wouldn't have access to that only someone in posession pf the card. Its only used in certain situations but it most definately not fraud if your cc company asks you to verify it. Sorry to chime in again

FutureMrsNewmire · July 2009

Further *disclaimer* before mrs know it all "wealth mgt" bites my head off..... If someone is calling you and offering lower apr or asking for ur cvv/cvc code then don't ever do that. Those scams are everywhere but if you have dialed the # on the back of ur cc or off your statement my prev post would apply.

NuggetBrain · July 2009

Wait, you reported someone because they disagreed with what you said? Really? Are you going to take your ball now and go home too? Jesus. Whiny little brat.

wadingmoose · July 2009

Way to go FutureMrs. You truly are a moron. Someone here actually gave incredibly sound security advice and you said they were wrong and went ahead and told readers to go ahead and give the security code for their card over the phone. *Golf clap*I'm not sure about other people, but I'm more than aware that if I call the number on the back of the card, the people I'm calling are, in fact, the credit card company. And I can give them that number.PS. I would actually give them my credit card number so they know what account I'm talking about, but I wouldn't give my credit card number to someone calling me. I'm smart like that.

FutureMrsNewmire · July 2009

If u read the post that I was replying to she stated ur cc company would never ask for your code on the back and THAT is what I was correcting... Because in fact in the TWO transactions I mentioned they will ask for it .

credit card question?

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