News : Cheap Credit Cards

Date : June 22, 2008

Question : Please tell me something about companies that take your credit-card account or any uninsured debt and negotiate with the card company and give a lower payment? I've had them call me and it sounds great, as I have gotten myself into big trouble.

One company is willing to negotiate about $24,000 with three cards to about $8,000 plus attorney fees. If the card company won't agree, will I still have the attorney fees to pay? It seems like paying $375 a month for 40 months is a good thing. Another one is for more than $25,000 at $310 for 60 months plus a $350 starting fee.

I know it all sounds too good to be true, but I don't want to get stuck with more fees to pay than I'm paying on the credit cards now.

L.H., Sanford

Answer : Any company that contacts you with this type of service will most often charge a fee. There are a number of them out there so you need to do your homework. I would prefer you contact the nonprofit Consumer Credit Counseling Service. They help with negotiations of balances owed and the payment you would make. Many people have used them but, again, make sure you contact the nonprofit group.

Nancy Hecht

Question : Regarding the 2008 tax rate schedule, I was surprised to see the jump from $65,100 to $131,450 was a 10 percent increase. Is that correct? You could make $65,000 and be taxed married filing jointly 15 percent, but go over $100 more and it goes to 25 percent?

Is this schedule before itemized or standard deductions?

Let's say I make $65,000 in 2008 and there isn't a ladder of tax rate increase, such as 16 percent. If there isn't, that means someone making $65,000 pays the same tax rate of 25 percent as someone making $130,000?

H.D., Orlando

Answer : First let me say I am impressed that you are already planning ahead.

There are six tax brackets: 10, 15, 25, 28, 33 and 35 percent. These are based on your taxable income after you have deducted either your standard or itemized deductions. These tax brackets are the taxpayers' marginal tax brackets. This means that the next dollar in income will be taxed at that bracket, because they are tiered.

For instance, when a couple files jointly, the first $16,050 in taxable income is taxed at 10 percent; the portion between $16,051 and $65,100 is taxed at 15 percent, and the amount between $65,101 and $131,450 is taxed at 25 percent; and so on up to the 35 percent bracket. Your marginal tax bracket may change with increased taxable income, but it does not affect the lower rate of taxation of the income below the new threshold.