For many, if not most people, choosing the right credit card when just starting out in adult life is a fairly simple process. It basically boils down to getting whatever card someone is willing to issue. For example, college students are often deluged with card offers from oil companies and department stores. While an easy way to build credit for a possibly more thoughtful approach in the future, such practices on the part of card companies also begin creating consumer debt at an early age. With card companies competing for consumers, it only makes sense that, even at an early stage of establishing credit, one should take one's time in deciding what cards to carry and use.
The most important factor in choosing a credit card is how you plan to use it. Before any other considerations, such as rewards, interest rates, or annual fees, decide what you will be doing with the card and how you plan to pay it. Basically, there are three types of usage to consider before proceeding any further. Figuring out which of these best describes your situation will go a long way in determining what card to get.
First, if you plan on paying off the card balance in full each month, the interest rate is not much of a concern. You should probably look for a card that has no annual fee, as well as a longer grace period in which to pay. Conversely, if you have a tendency to carry a balance from month to month, the interest rate becomes a determining factor. Finally, if you often use a credit card to get cash advances, you need to be aware that many cards charge a higher interest rate on cash advances than on purchases. Therefore, you need to make sure to look for a card that charges the same rate for both.
With all the credit cards on the market today, it is easy to get distracted by all the ancillary features offered. However, before deciding on a credit card based on bells and whistles, decide what kind of card user you are. This will vastly simplify the process at the start and help you focus on choosing extra features of those cards to which you are already best suited.
Tuesday, June 2, 2009
Make Credit Card Balance Transfers Work For You
Credit card balance transfers are simple in premise. You transfer a balance from one credit account to another. However, the benefits, goals, and results of transfers can often be quite different from one product and one opportunity to another.
Credit card balance transfers are routinely offered by card companies as a way to entice new customers away from competitors. Promotions vary, but the most aggressive offers typically include zero per cent APRs on balance transfers, for a specified length of time (the best offers are for 12-15 months). Some cards also combine rewards programs or other perks as part of this initial inducement.
Transfer offers are also used by companies when customers have low balances in their account. Companies throw promotional offers, convenience checks, and the like at customers to get them to transfer balances from other accounts. The idea is to infuse more balance into the customer's account and to get them back into the 'borrow and pay' cycle.
Using credit card balance transfers can certainly be beneficial if consumers use them wisely. Reading the fine print of transfer offers is essential. Some zero per cent offers come with transaction fees for each transfer. Additionally, timeframes vary. Borrowers need to know what happens with the remainder of the transfer balance at the end of the promotional period. For instance, at the end of a six month, zero per cent offer, does the balance return to the normal purchase APR?
Borrowers also need to know in what order credit payments are applied. Many companies slyly apply payments to the lower rate balances first, which leaves higher rate balances sitting on your account to accrue interest. This can actually lead to more interest payments over time than if you had not accepted the balance transfer, if the transfer offer comes from a card with a higher rate than the card the transfer is coming from. Beware of accepting zero per cent offers from cards that have high regular rates and that stipulate that makes apply first to lower rate balances.
Finally, consumers must be aware that while there are some good financial opportunities with balance transfers, transfer of balances do not make them obsolete. Some struggling borrowers simply move money around and take on new credit cards to transfer balances for lower rate promotions. When considering the benefits of credit card balance transfers, the borrower must think both about the short-term gain and the long-term results of a move.
Credit card balance transfers are routinely offered by card companies as a way to entice new customers away from competitors. Promotions vary, but the most aggressive offers typically include zero per cent APRs on balance transfers, for a specified length of time (the best offers are for 12-15 months). Some cards also combine rewards programs or other perks as part of this initial inducement.
Transfer offers are also used by companies when customers have low balances in their account. Companies throw promotional offers, convenience checks, and the like at customers to get them to transfer balances from other accounts. The idea is to infuse more balance into the customer's account and to get them back into the 'borrow and pay' cycle.
Using credit card balance transfers can certainly be beneficial if consumers use them wisely. Reading the fine print of transfer offers is essential. Some zero per cent offers come with transaction fees for each transfer. Additionally, timeframes vary. Borrowers need to know what happens with the remainder of the transfer balance at the end of the promotional period. For instance, at the end of a six month, zero per cent offer, does the balance return to the normal purchase APR?
Borrowers also need to know in what order credit payments are applied. Many companies slyly apply payments to the lower rate balances first, which leaves higher rate balances sitting on your account to accrue interest. This can actually lead to more interest payments over time than if you had not accepted the balance transfer, if the transfer offer comes from a card with a higher rate than the card the transfer is coming from. Beware of accepting zero per cent offers from cards that have high regular rates and that stipulate that makes apply first to lower rate balances.
Finally, consumers must be aware that while there are some good financial opportunities with balance transfers, transfer of balances do not make them obsolete. Some struggling borrowers simply move money around and take on new credit cards to transfer balances for lower rate promotions. When considering the benefits of credit card balance transfers, the borrower must think both about the short-term gain and the long-term results of a move.
Why You Need A Credit Card
The credit card was first invented back in 1920, and since then, it has become an indispensable part of our society. It is nearly impossible to function in our 21st century without owning a credit card.
One of the main reasons for owning a credit card is the simple convenience of it. Rather than constantly having to carry around a significant amount of cash, the credit card allows a person to just carry a little piece of plastic without having to worry at all about cash. A dining experience can be quicker and easier with a credit card. It allows the restaurant to just scan the card, rather than having to get exact change, and makes tipping easier, because patrons can just add to the amount the restaurant charges. It can also simplify things at a gas station. The credit card allows a user to pay for their gas right at the pump, without having to bother with going into the store.
Credit cards are at their most convenient when it comes to travel, however. In fact, credit cards have become a necessity for any traveler. Many airlines no longer allow a person to book a flight without using their credit card. Most nicer hotels also require a person to give their credit card in order to hold a reservation.
Credit cards are also essential on the internet. The internet is quickly becoming the marketplace of the future, and a person needs to have a credit card in order to shop on the internet. Having a credit card allows a person to shop for literally anything he or she desires.
There are, of course, downsides to owning a credit card. One rapidly growing problem is an increase in identity theft. With people constantly giving out their credit card information on the internet, more criminals are finding out that information and using it. Luckily, as criminals steal more credit card numbers, credit card companies are getting better at dealing with identity theft. Most major credit cards are excellent at handling identity theft cases and the majority of the time, having a credit card stolen does not cost the person who had their card stolen.
Owning a credit card also requires a great deal of restraint. While it may seem like free money, it's important to remember that you are expected to pay back what you spend, so it is incredibly important that you spend within your means.
The risks of owning a credit card are far outweighed by the benefits, however. That is why every person must own their own credit card.
One of the main reasons for owning a credit card is the simple convenience of it. Rather than constantly having to carry around a significant amount of cash, the credit card allows a person to just carry a little piece of plastic without having to worry at all about cash. A dining experience can be quicker and easier with a credit card. It allows the restaurant to just scan the card, rather than having to get exact change, and makes tipping easier, because patrons can just add to the amount the restaurant charges. It can also simplify things at a gas station. The credit card allows a user to pay for their gas right at the pump, without having to bother with going into the store.
Credit cards are at their most convenient when it comes to travel, however. In fact, credit cards have become a necessity for any traveler. Many airlines no longer allow a person to book a flight without using their credit card. Most nicer hotels also require a person to give their credit card in order to hold a reservation.
Credit cards are also essential on the internet. The internet is quickly becoming the marketplace of the future, and a person needs to have a credit card in order to shop on the internet. Having a credit card allows a person to shop for literally anything he or she desires.
There are, of course, downsides to owning a credit card. One rapidly growing problem is an increase in identity theft. With people constantly giving out their credit card information on the internet, more criminals are finding out that information and using it. Luckily, as criminals steal more credit card numbers, credit card companies are getting better at dealing with identity theft. Most major credit cards are excellent at handling identity theft cases and the majority of the time, having a credit card stolen does not cost the person who had their card stolen.
Owning a credit card also requires a great deal of restraint. While it may seem like free money, it's important to remember that you are expected to pay back what you spend, so it is incredibly important that you spend within your means.
The risks of owning a credit card are far outweighed by the benefits, however. That is why every person must own their own credit card.
Must Your Poor Credit Score Stop You Getting A Credit Card?
Struggling with bad credit is certainly not a pleasant situation for any person to find themselves in. Obtaining get credit opportunities with bad credit is tougher than it is for those people who have good credit. However, in the competitive credit card environment, more and more excellent credit card offers and deals become accessible for bad credit borrowers on a regular basis.
Many companies offer credit card products specifically tailored to people that have bad or poor credit. These cards are often surprisingly similar in a lot of ways to cards more generally available to excellent and good credit borrowers. Many card companies offer instant online approval processes, 24-hour online account access, and excellent customer service to bad credit card borrowers.
The difference with cards for those with bad credit lies more in certain fees and some of the aspects that impact the creditor risk. The biggest difference with credit cards available to excellent credit and bad credit borrowers is with the interest rates charged. Bad credit borrowers obviously face slightly higher annual percentage rate costs with cards. Again, because of the competitive card industry, bad credit borrowers are still finding access to cards with more reasonable rates than ever.
Another difference with bad credit card offers is related to annual fees. While excellent credit borrowers can regularly find credit cards that offer no annual fee, or waive fees for certain reasons, cards for bad credit borrowers usually have a required annual fee. These fees often range from $50 to $150 depending on the benefits of the card and the car services. The annual fee helps offset some of the increased risk lenders take on by offer credit access to borrowers with a bad credit history. The fee revenue helps spread the risk as well, alleviating the higher percentage of card users that will not meet obligations.
Bad credit consumers need to carefully consider their goals with credit cards, as well as common credit behaviors. Some cards for bad credit borrowers are developed to offer consumers an opportunity to conservatively rebuild their credit rating. Others are intended to give card companies a larger customer base by offering cards to a big group of consumers. Borrowers do need to be cautious as some companies use fine print to hide unfavorable details of card offers that take advantage of desperate borrowers. Borrowers with bad credit should be especially diligent about researching card products.
Many companies offer credit card products specifically tailored to people that have bad or poor credit. These cards are often surprisingly similar in a lot of ways to cards more generally available to excellent and good credit borrowers. Many card companies offer instant online approval processes, 24-hour online account access, and excellent customer service to bad credit card borrowers.
The difference with cards for those with bad credit lies more in certain fees and some of the aspects that impact the creditor risk. The biggest difference with credit cards available to excellent credit and bad credit borrowers is with the interest rates charged. Bad credit borrowers obviously face slightly higher annual percentage rate costs with cards. Again, because of the competitive card industry, bad credit borrowers are still finding access to cards with more reasonable rates than ever.
Another difference with bad credit card offers is related to annual fees. While excellent credit borrowers can regularly find credit cards that offer no annual fee, or waive fees for certain reasons, cards for bad credit borrowers usually have a required annual fee. These fees often range from $50 to $150 depending on the benefits of the card and the car services. The annual fee helps offset some of the increased risk lenders take on by offer credit access to borrowers with a bad credit history. The fee revenue helps spread the risk as well, alleviating the higher percentage of card users that will not meet obligations.
Bad credit consumers need to carefully consider their goals with credit cards, as well as common credit behaviors. Some cards for bad credit borrowers are developed to offer consumers an opportunity to conservatively rebuild their credit rating. Others are intended to give card companies a larger customer base by offering cards to a big group of consumers. Borrowers do need to be cautious as some companies use fine print to hide unfavorable details of card offers that take advantage of desperate borrowers. Borrowers with bad credit should be especially diligent about researching card products.
Turning Lead Into Gold - Getting A Credit Card With Bad Credit
There are plenty of ways to get a credit card, even if you have declared bankruptcy. While your credit score might be low, you can take some simple steps to get a credit card.
First of all, decide what kind of credit card you would like to have. An unsecured card is more difficult to acquire than a secured credit card. Once you have decided what kind of card you are seeking, I would first try to get a second job for a few hours a week to boost your take home pay. Credit card companies want to know your debt to income ratio before they will issue a credit card to you. The higher the take home pay, the more free cash you have, and the less likely you are to default in the eyes of an underwriter.
If you find that your extra take home pay is not enough, then you can open a savings or checking account at a bank. Take as much extra money as you can spare from each paycheck and put it into the account and let it accumulate. Next, ask the bank what the minimum deposit required would be to open a Certificate of Deposit. If it is low enough, say $250 or $500, move your cash from your bank account to the CD.
Next, ask the bank if you can have a loan in the amount of the CD and pledge the CD as collateral for the loan. Your bank won't refuse this; they have the CD if you default. Begin paying on the loan and pay ahead of schedule; pay off the loan early. Now, ask your bank for another loan of $500, but without the CD as collateral.
If they will not grant the loan, you can call a credit card company at this point and ask for an unsecured credit card. If they still won't give you credit, you can take the money out of the bank account and send it to open a secured credit card. Secured credit cards will want to see that you can send some money to open the credit card before they put any of their credit in.
As you make timely payments on the secured credit card, you are issued more and more credit. You can either keep the credit card at this point and gradually up the limit to your liking, or you can call for an unsecured credit card showing that you have made timely payments on your secured credit card.
First of all, decide what kind of credit card you would like to have. An unsecured card is more difficult to acquire than a secured credit card. Once you have decided what kind of card you are seeking, I would first try to get a second job for a few hours a week to boost your take home pay. Credit card companies want to know your debt to income ratio before they will issue a credit card to you. The higher the take home pay, the more free cash you have, and the less likely you are to default in the eyes of an underwriter.
If you find that your extra take home pay is not enough, then you can open a savings or checking account at a bank. Take as much extra money as you can spare from each paycheck and put it into the account and let it accumulate. Next, ask the bank what the minimum deposit required would be to open a Certificate of Deposit. If it is low enough, say $250 or $500, move your cash from your bank account to the CD.
Next, ask the bank if you can have a loan in the amount of the CD and pledge the CD as collateral for the loan. Your bank won't refuse this; they have the CD if you default. Begin paying on the loan and pay ahead of schedule; pay off the loan early. Now, ask your bank for another loan of $500, but without the CD as collateral.
If they will not grant the loan, you can call a credit card company at this point and ask for an unsecured credit card. If they still won't give you credit, you can take the money out of the bank account and send it to open a secured credit card. Secured credit cards will want to see that you can send some money to open the credit card before they put any of their credit in.
As you make timely payments on the secured credit card, you are issued more and more credit. You can either keep the credit card at this point and gradually up the limit to your liking, or you can call for an unsecured credit card showing that you have made timely payments on your secured credit card.
Low Rate For Life Balance Transfer Credit Cards
If you're a responsible cardholder who needs a little help getting back on the right track, a credit card that offers a life-of-balance transfer can not only eliminate excessive interest but also realign your credit score.
Most financial organizations offer credit cards with a low promotional interest rate on balance transfers. But while these special rates usually expire 6 or 12 months after you open the new card, some cards make these special transfer rates permanent. If you qualify for a life-of-balance transfer, take advantage of it!
Life-of-balance transfer interest rates are often lower than normal credit card rates, varying from an amazing 0 percent to 9 or 10 percent, which is still much lower than traditional interest, which can be as high as 30 percent. If you have a balance on another credit card that's gathering 20 percent interest each month, why not move it to a card with half that? The savings will quickly add up. Plus, which a lifetime rate guarantee, you can take your time paying off the transferred balance (though, as always, it's best to pay as much as you can as quickly as you can).
However, be sure you do your homework before you jump in. For example, some cards only guarantee the life-of-balance transfer rate if you also use the card regularly for purchases, say twice or three times a month. This way, the company can offer a great deal but can still squeeze some interest payments out of you, the customer. However, read the fine print - the company may not specify exactly how much those purchases must be; buying two or three packs of gum each month might be enough to ensure you keep your premium transfer rate. But keep in mind, other cards will yank away your low interest rate if you DO make purchases with your card. Be sure you read the fine print!
Also, realize that what you're initially offered might not be what you're ultimately approved for. The envelope you get in the mail may promise a $10,000 transfer limit at 3 percent interest, but if your credit score is low or your history is short, the specifics of your contract will vary. Always call the company and ask them to explain the specifics of the plan.
As mentioned before, make sure you're diligent and consistent with payments. Your special 3 percent rate could be hiked to 30 percent automatically if you miss even one payment.
Most financial organizations offer credit cards with a low promotional interest rate on balance transfers. But while these special rates usually expire 6 or 12 months after you open the new card, some cards make these special transfer rates permanent. If you qualify for a life-of-balance transfer, take advantage of it!
Life-of-balance transfer interest rates are often lower than normal credit card rates, varying from an amazing 0 percent to 9 or 10 percent, which is still much lower than traditional interest, which can be as high as 30 percent. If you have a balance on another credit card that's gathering 20 percent interest each month, why not move it to a card with half that? The savings will quickly add up. Plus, which a lifetime rate guarantee, you can take your time paying off the transferred balance (though, as always, it's best to pay as much as you can as quickly as you can).
However, be sure you do your homework before you jump in. For example, some cards only guarantee the life-of-balance transfer rate if you also use the card regularly for purchases, say twice or three times a month. This way, the company can offer a great deal but can still squeeze some interest payments out of you, the customer. However, read the fine print - the company may not specify exactly how much those purchases must be; buying two or three packs of gum each month might be enough to ensure you keep your premium transfer rate. But keep in mind, other cards will yank away your low interest rate if you DO make purchases with your card. Be sure you read the fine print!
Also, realize that what you're initially offered might not be what you're ultimately approved for. The envelope you get in the mail may promise a $10,000 transfer limit at 3 percent interest, but if your credit score is low or your history is short, the specifics of your contract will vary. Always call the company and ask them to explain the specifics of the plan.
As mentioned before, make sure you're diligent and consistent with payments. Your special 3 percent rate could be hiked to 30 percent automatically if you miss even one payment.
Save Money By Consolidating Your Credit Cards
Many people get into the habit of having several different credit cards with small credit limits, possibly from when they began to establish or re-establish credit. Not only does this cause your payments to be higher, but your interest payments may be as well especially if you have several high interest low credit line credit cards. The inconvenience of transacting business this way makes it more feasible to take those small credit line balances and apply for a card with a higher credit line and lower interest rate. If you have established your credit for at least a year, it shouldn't be difficult to find a credit card with a credit line high enough to allow you to have fewer cards by transferring the balances on the cards you have to another one.
When you consolidate your credit cards, you want to be careful as well so that you don't take something with a higher interest rate in order to have the freedom to make balance transfers at a low rate. For example, you may find a card with no interest on balance transfers for the first six months but which has a higher overall interest rate than any of the cards you consolidate. It's essential to look at all of the angles and choose the one that is the cheapest in all ways. Card issuers use balance transfers to lure customers in to their programs and then raise the interest rates substantially when the introductory period is expired.
Sometimes choosing cards with an introductory rate on balance transfers is not in your best interest. For example, if you are paying on several cards at an average rate of 19.9%, the 3% balance transfer fee that most card issuers charge is minimal if you're accepting a card with a 9.8% interest rate. The key is finding a card with a lower interest rate that is going to be beneficial to you as a card holder. Paying a one-time 3% transfer fee from a card with a 19.9% interest rate to one with a 9.8% interest rate is certainly in your best financial interest.
In order to avoid these situations totally, develop the habit of paying off your credit cards each month and applying for cards that have a lower interest rate initially. Even if you are establishing or re-establishing credit, there are card issuers who offer lower interest rates on small credit lines with regular credit line increases. Look for the offers on those kinds of cards instead of taking high interest ones and looking to consolidate later in order to save money on interest payments and monthly payments.
When you consolidate your credit cards, you want to be careful as well so that you don't take something with a higher interest rate in order to have the freedom to make balance transfers at a low rate. For example, you may find a card with no interest on balance transfers for the first six months but which has a higher overall interest rate than any of the cards you consolidate. It's essential to look at all of the angles and choose the one that is the cheapest in all ways. Card issuers use balance transfers to lure customers in to their programs and then raise the interest rates substantially when the introductory period is expired.
Sometimes choosing cards with an introductory rate on balance transfers is not in your best interest. For example, if you are paying on several cards at an average rate of 19.9%, the 3% balance transfer fee that most card issuers charge is minimal if you're accepting a card with a 9.8% interest rate. The key is finding a card with a lower interest rate that is going to be beneficial to you as a card holder. Paying a one-time 3% transfer fee from a card with a 19.9% interest rate to one with a 9.8% interest rate is certainly in your best financial interest.
In order to avoid these situations totally, develop the habit of paying off your credit cards each month and applying for cards that have a lower interest rate initially. Even if you are establishing or re-establishing credit, there are card issuers who offer lower interest rates on small credit lines with regular credit line increases. Look for the offers on those kinds of cards instead of taking high interest ones and looking to consolidate later in order to save money on interest payments and monthly payments.
Choosing Between Credit Card Rewards Or Low Interest
When you look at the many different credit cards that are available, you will note that in many cases the rewards cards have a higher interest rate and even annual fee than those without rewards. This is not always the case, of course, and in all cases the rate will depend on your credit score.
In addition you may discover that the rewards cards with the lower interest rates are identified as available to those with excellent or good credit. That doesn't mean you won't qualify for a rewards card if your credit score falls into the fair or lower category, but you will have to look harder to find the card that is right for you.
By keeping in mind that many rewards cards carry a higher interest rate and annual fee that cards without rewards, you can make a decision concerning the necessity for a card which pays points for usage. If you are someone who only uses your credit card occasionally, you may find a card with a lower interest rate is more beneficial. On the other hand, if you frequently use your card, the benefits attached to a rewards card may be well-worth the cost of owning it. You want to evaluate your personal situation before you apply for any new credit card so that you know where to direct your search for the perfect credit card.
If you discover your spending needs justify using a rewards card, you want to look at the different offerings. Some issuers limit the number of points you can accumulate in a year and/or have a specific period during which you must spend the points you earn. You want to choose the card that meets your lifestyle so that you can gain the most benefits from your rewards card. That means looking at what the offers are and whether you would be likely to participate in those offers. For example, don't choose a rewards card that offers points for American Airlines if you only travel on Delta.
Even credit card issuers have different rewards cards. Some pay cash bonuses of a certain percentage while others offer points toward purchases at certain retail outlets. Your personal spending habits make some rewards cards more attractive than others - an important reason for evaluating your spending habits before you apply for any credit card. It isn't worthwhile unless you can use it to its full advantage. If you are a small time user, a credit card without rewards points and a lower interest rate is a better choice.
In addition you may discover that the rewards cards with the lower interest rates are identified as available to those with excellent or good credit. That doesn't mean you won't qualify for a rewards card if your credit score falls into the fair or lower category, but you will have to look harder to find the card that is right for you.
By keeping in mind that many rewards cards carry a higher interest rate and annual fee that cards without rewards, you can make a decision concerning the necessity for a card which pays points for usage. If you are someone who only uses your credit card occasionally, you may find a card with a lower interest rate is more beneficial. On the other hand, if you frequently use your card, the benefits attached to a rewards card may be well-worth the cost of owning it. You want to evaluate your personal situation before you apply for any new credit card so that you know where to direct your search for the perfect credit card.
If you discover your spending needs justify using a rewards card, you want to look at the different offerings. Some issuers limit the number of points you can accumulate in a year and/or have a specific period during which you must spend the points you earn. You want to choose the card that meets your lifestyle so that you can gain the most benefits from your rewards card. That means looking at what the offers are and whether you would be likely to participate in those offers. For example, don't choose a rewards card that offers points for American Airlines if you only travel on Delta.
Even credit card issuers have different rewards cards. Some pay cash bonuses of a certain percentage while others offer points toward purchases at certain retail outlets. Your personal spending habits make some rewards cards more attractive than others - an important reason for evaluating your spending habits before you apply for any credit card. It isn't worthwhile unless you can use it to its full advantage. If you are a small time user, a credit card without rewards points and a lower interest rate is a better choice.
What 0% Credit Cards Could Do For You
With the competitive nature of the credit environment, more and more credit card companies offer zero per cent promotional credit cards to entice customers looking for cheap credit. Many companies have extended the length of their introductory 0% offers up to 15 months, in some cases. This allows consumers to enjoy a longer period of inexpensive borrowing with new card plans.
Zero per cent promotion credit card offers vary with their terms. It is important that consumers examine the details and fine print of offers before signing on with a card. Some offers are specifically for balance transfers, meaning the promotional rate applies only to balances transferred from other loan products. Other offers are for new purchases only, and are not applicable to transfers. The most competitive promotional card plans include promotional rates for both balance transfers and new purchases.
Consumers turn to these kinds of cards for a variety of reasons. Consumer borrowing and credit card balance levels continue to rise. Some borrowers look to promotional cards as a way to move balances from more expensive cards in order to reduce finance charges. Debt consolidation experts sometimes refer people to 0% credit cards as a way to consolidate debt from higher rate loans and credit card balances. Others simply enjoy the idea of buying now and paying later and consider that there is no interest charge for a period of time.
There are some limitations to most zero per cent interest promotions from credit card companies. Most cards that promote special rates for up to 12 months, or 15 months, reserve these longer periods of zero per cent rates for excellent borrowers. Borrowers with good or fair credit may still get a promotional rate, but the length of the promotion may be much less. Again, borrows need to be aware of the length of the offer before signing an agreement.
Finally, for zero per cent promotional cards to be effective, users need to understand all aspects of the offer. Some cards maintain the promotional rate on balances acquired during the promotional period. Others apply standard APRs to the remaining balance after the promotion is complete. Many companies also apply payments on balances to lower rates first. Thus, if a debtor has some balance at low rates and some at higher rates, the higher rates would be paid last. Additionally, many cards apply charges to balance transfers made as part of the promotion. Be aware of the full details of the promotion.
Zero per cent promotion credit card offers vary with their terms. It is important that consumers examine the details and fine print of offers before signing on with a card. Some offers are specifically for balance transfers, meaning the promotional rate applies only to balances transferred from other loan products. Other offers are for new purchases only, and are not applicable to transfers. The most competitive promotional card plans include promotional rates for both balance transfers and new purchases.
Consumers turn to these kinds of cards for a variety of reasons. Consumer borrowing and credit card balance levels continue to rise. Some borrowers look to promotional cards as a way to move balances from more expensive cards in order to reduce finance charges. Debt consolidation experts sometimes refer people to 0% credit cards as a way to consolidate debt from higher rate loans and credit card balances. Others simply enjoy the idea of buying now and paying later and consider that there is no interest charge for a period of time.
There are some limitations to most zero per cent interest promotions from credit card companies. Most cards that promote special rates for up to 12 months, or 15 months, reserve these longer periods of zero per cent rates for excellent borrowers. Borrowers with good or fair credit may still get a promotional rate, but the length of the promotion may be much less. Again, borrows need to be aware of the length of the offer before signing an agreement.
Finally, for zero per cent promotional cards to be effective, users need to understand all aspects of the offer. Some cards maintain the promotional rate on balances acquired during the promotional period. Others apply standard APRs to the remaining balance after the promotion is complete. Many companies also apply payments on balances to lower rates first. Thus, if a debtor has some balance at low rates and some at higher rates, the higher rates would be paid last. Additionally, many cards apply charges to balance transfers made as part of the promotion. Be aware of the full details of the promotion.
Getting The Best From Balance Transfers
Credit card balance transfers have fallen from favor somewhat since their heyday a few years ago, after the introduction of the balance transfer fee stopped the practice of shifting debt from card to card without incurring any charges or costs. It is now no longer possible to delay interest payments on credit card debt indefinitely - or at least to do so for free.
In spite of this fact, making use of balance transfer facilities could still be worth your while. The recently introduced fees for transferring debts does increase overall costs but a careful analysis and calculation will still show that in many cases you'll save money by doing so rather than keeping your old credit card loaded with debt. However, it's not the simple matter it once was and so it is important to consider a few points regarding transferring one's balance on credit cards if you're to make a success of the process.
It's now all but impossible to find a credit card without a balance transfer fee, but that doesn't mean there's nothing to separate different cards. The most common fee nowadays is 3% of the transferred balance, but as always it's worth checking if there's a card with a lower fee - ones spotted recently boast a less stinging 2% which could save you a lot on a large transfer.
There's also the question of maximum charges. Some cards limit the total transfer fee you have to pay, usually to around fifty pounds or so, but many cards ave no such upper limit. Depending on the size of your transfer, it may well make more sense to use a card with a high percentage fee but a cap on the total payment size rather than one with a lower rate but no upper limit,
Once you've selected a card with the least onerous balance transfer fee, you need to find one with a decent overall transfer offer. Where once 0% for 6 months was the norm, this is looking pretty unimpressive these days. You should be looking for an introductory interest free period of at least 12 months, with some of the best cards now offering 15 months or even more.
Whichever balance transfer card you choose, it's important to stay focused on why you've taken out that card; the avoidance of interest payments on your debt. Don't be tempted by rewards schemes, cash back, or other incentives to spend using your new card as this will negate the interest-saving benefits. Always keep your balance transfers and purchases separate if you want to get the best out of your cards and to keep the amount you pay for using them to a minimum.
In spite of this fact, making use of balance transfer facilities could still be worth your while. The recently introduced fees for transferring debts does increase overall costs but a careful analysis and calculation will still show that in many cases you'll save money by doing so rather than keeping your old credit card loaded with debt. However, it's not the simple matter it once was and so it is important to consider a few points regarding transferring one's balance on credit cards if you're to make a success of the process.
It's now all but impossible to find a credit card without a balance transfer fee, but that doesn't mean there's nothing to separate different cards. The most common fee nowadays is 3% of the transferred balance, but as always it's worth checking if there's a card with a lower fee - ones spotted recently boast a less stinging 2% which could save you a lot on a large transfer.
There's also the question of maximum charges. Some cards limit the total transfer fee you have to pay, usually to around fifty pounds or so, but many cards ave no such upper limit. Depending on the size of your transfer, it may well make more sense to use a card with a high percentage fee but a cap on the total payment size rather than one with a lower rate but no upper limit,
Once you've selected a card with the least onerous balance transfer fee, you need to find one with a decent overall transfer offer. Where once 0% for 6 months was the norm, this is looking pretty unimpressive these days. You should be looking for an introductory interest free period of at least 12 months, with some of the best cards now offering 15 months or even more.
Whichever balance transfer card you choose, it's important to stay focused on why you've taken out that card; the avoidance of interest payments on your debt. Don't be tempted by rewards schemes, cash back, or other incentives to spend using your new card as this will negate the interest-saving benefits. Always keep your balance transfers and purchases separate if you want to get the best out of your cards and to keep the amount you pay for using them to a minimum.
Your Credit Card Options With A Poor Credit Rating
Having bad credit is never a good situation to face, however, for the one fourth of UK borrowers that face adverse credit, there is hope. Credit markets have become extremely competitive as more and more companies are looking to tap into ever-increasing credit balances being carried by consumers. This competition has helped make credit card application processes more efficient, rates and terms more advantageous, and products for bad credit borrowers more available.
Amazingly, many borrowers with bad credit are actually finding credit card offers within a few percentage points, or less at times, of offers made to borrowers that have excellent credit. As the market for cards tailored for excellent credit borrowers becomes more saturated, card providers have started to turn their attention to the large and growing segment of the population that have experienced some type of adverse credit.
The higher risk posed by bad credit borrowers has limited some lenders from aggressively pursuing this audience in the past. However, market factors have forced them to do so in today's market. Many credit card providers are marketing themselves as a leading provider to borrowers with bad credit.
Bad credit borrower do have to realize there are some protections that companies still regularly use to reduce their risks of offering credit. Most card companies require some type of up front or annual fee for cards used by these borrowers. This is a way to help cover the costs of a higher risk of non-repayment of card debt by spreading the risk out over the bigger group. Some companies also offer smaller credit lines and limit daily spending amounts. However, as with other components of cards for bad credit borrowers, these features have been improved significantly in favor of the borrower.
Finding and obtaining a credit card with bad credit is very simple in the internet-driven economy of today. Bad credit borrowers, like those with excellent credit, can often fill out an application online and receive an instant approval decision. Card processing is also fast. Another advantage of the current credit environment is that an influx of independent loan and card brokers has given card shoppers an easier way to compare cards and offers. Brokers collect the best offers from various companies and present those to consumers after collecting basic information and background details. This has also increased card competition, and simplified finding a good credit card offer for bad credit borrowers.
Amazingly, many borrowers with bad credit are actually finding credit card offers within a few percentage points, or less at times, of offers made to borrowers that have excellent credit. As the market for cards tailored for excellent credit borrowers becomes more saturated, card providers have started to turn their attention to the large and growing segment of the population that have experienced some type of adverse credit.
The higher risk posed by bad credit borrowers has limited some lenders from aggressively pursuing this audience in the past. However, market factors have forced them to do so in today's market. Many credit card providers are marketing themselves as a leading provider to borrowers with bad credit.
Bad credit borrower do have to realize there are some protections that companies still regularly use to reduce their risks of offering credit. Most card companies require some type of up front or annual fee for cards used by these borrowers. This is a way to help cover the costs of a higher risk of non-repayment of card debt by spreading the risk out over the bigger group. Some companies also offer smaller credit lines and limit daily spending amounts. However, as with other components of cards for bad credit borrowers, these features have been improved significantly in favor of the borrower.
Finding and obtaining a credit card with bad credit is very simple in the internet-driven economy of today. Bad credit borrowers, like those with excellent credit, can often fill out an application online and receive an instant approval decision. Card processing is also fast. Another advantage of the current credit environment is that an influx of independent loan and card brokers has given card shoppers an easier way to compare cards and offers. Brokers collect the best offers from various companies and present those to consumers after collecting basic information and background details. This has also increased card competition, and simplified finding a good credit card offer for bad credit borrowers.
Cash Back Credit Cards Reward Regular Spenders
As credit card companies continue to work hard to compete for the borrowed dollars of consumers, reward programs and cash back incentives become increasingly lucrative for consumers. Cash back credit cards and other reward programs are incentives designed to motive credit card users to spend more and spend frequently.
Cash back credit cards vary in terms of the amount of incentives and the set up for the programs. Some cards simply offer a percentage of cash back for each dollar spent. While rewards do vary, most card companies offer cash back rewards in the range of 1-1.5 per cent. Some cards reward every purchase equally, while others reward users with bonus rewards for buying products from network companies. Card companies are partnering with retailers and other businesses and some cards pay rewards up to five per cent or so for in-network card purchases.
Points based cash back programs are also very popular. As opposed to offering a percentage of cash back for purchases, some card companies award points to card users for certain amounts and types of purchases. Users can then exchange points for cash back or other types of rewards.
Credit card companies reward users for various reasons. Sometimes card companies want consumers to spend money to carry higher interest-bearing balances. Others reward consumers more for frequent card uses as a way to increase revenue for transaction fees charged to merchants. Merchants typically pay transaction fees to card companies to process card purchases. Thus, a modest 1.5 per cent cash back payment to a card user is reasonable to the card company who gets significantly more in transaction fees from the merchants.
The biggest decision for consumers considering cash back and rewards programs is what types of benefits and perks are most preferred. Some credit card companies offer cash back only cards that pay the percentage rate in cash back. Others use the point based system but offer a wider selection of reward perks. Many companies rely on their partner relationships to offer higher value non-cash rewards to consumers. Additionally, there are combination rewards programs that allow consumers to choose between cash rewards and other product and service rewards at any point in time.
As with any type of credit card offer, borrowers need to consider their own spending habits, and optimal benefits when reviewing card options. Cash back incentives are most beneficial to users who use cards regularly and in the ways rewarded by the card company.
Cash back credit cards vary in terms of the amount of incentives and the set up for the programs. Some cards simply offer a percentage of cash back for each dollar spent. While rewards do vary, most card companies offer cash back rewards in the range of 1-1.5 per cent. Some cards reward every purchase equally, while others reward users with bonus rewards for buying products from network companies. Card companies are partnering with retailers and other businesses and some cards pay rewards up to five per cent or so for in-network card purchases.
Points based cash back programs are also very popular. As opposed to offering a percentage of cash back for purchases, some card companies award points to card users for certain amounts and types of purchases. Users can then exchange points for cash back or other types of rewards.
Credit card companies reward users for various reasons. Sometimes card companies want consumers to spend money to carry higher interest-bearing balances. Others reward consumers more for frequent card uses as a way to increase revenue for transaction fees charged to merchants. Merchants typically pay transaction fees to card companies to process card purchases. Thus, a modest 1.5 per cent cash back payment to a card user is reasonable to the card company who gets significantly more in transaction fees from the merchants.
The biggest decision for consumers considering cash back and rewards programs is what types of benefits and perks are most preferred. Some credit card companies offer cash back only cards that pay the percentage rate in cash back. Others use the point based system but offer a wider selection of reward perks. Many companies rely on their partner relationships to offer higher value non-cash rewards to consumers. Additionally, there are combination rewards programs that allow consumers to choose between cash rewards and other product and service rewards at any point in time.
As with any type of credit card offer, borrowers need to consider their own spending habits, and optimal benefits when reviewing card options. Cash back incentives are most beneficial to users who use cards regularly and in the ways rewarded by the card company.
Why Rewards Credit Cards Could Work For You
Trying to choose the right credit card can be a tricky thing. Many people don't even realize that they have vast options when it comes to the credit card they choose to use. Most just use whatever their bank or credit union offers. What they don't know is that they could be saving tons of money by choosing to use a rewards credit card. Many different major credit card companies such as Visa, Mastercard, Discover, and American Express all offer some form of rewards credit card. Most of these companies have various forms of rewards credit cards, something to fit the needs of any customer. If you are going to use a credit card for all of your purchases anyways, why not get something back in return?
While living in such a fast paced world, using forms of payment such as cash or checks are not always convenient. It's not always convenient, or safe to carry around a ton of cash whenever you need to make a purchase. Plus there is always the chance that some stores do not accept checks as a form of payment due to the issues that can accompany checks. For these reasons, it has become almost essential to have at least one type of credit card to use for most of your purchases. This is especially true for those who tend to perform the majority of their shopping over the internet, television, or phone. So now that you know that rewards credit cards exist, how do you go about choosing the one that is right for you?
There are a ton of rewards credit cards available to customers who qualify for a credit card. The key is to find the one that will work in your life. You can find cards that offer gas rewards, points rewards, travel rewards, gift card rewards, or cash back rewards. All of these can be great, but if there is one that benefits you more than the others, that is the one you should pick. Many such cards offer a certain percentage for certain types of purchases. Some cards will require the purchases be made in specific categories, while other rewards cards will allow the purchases to be made anywhere. This is one of the reasons that it is important to do the proper research necessary in order to find the rewards credit card that is right for you.
Don't spend your money without gaining anything back in return. Find a rewards credit card that will offer you benefits for spending money on things that you already have to buy such as groceries, clothing, gas, prescriptions, and any other items you pay for monthly. You work hard for your money - why not get a little bit back in the form of points, rebates, gift cards, or cash back when using a rewards credit card?
While living in such a fast paced world, using forms of payment such as cash or checks are not always convenient. It's not always convenient, or safe to carry around a ton of cash whenever you need to make a purchase. Plus there is always the chance that some stores do not accept checks as a form of payment due to the issues that can accompany checks. For these reasons, it has become almost essential to have at least one type of credit card to use for most of your purchases. This is especially true for those who tend to perform the majority of their shopping over the internet, television, or phone. So now that you know that rewards credit cards exist, how do you go about choosing the one that is right for you?
There are a ton of rewards credit cards available to customers who qualify for a credit card. The key is to find the one that will work in your life. You can find cards that offer gas rewards, points rewards, travel rewards, gift card rewards, or cash back rewards. All of these can be great, but if there is one that benefits you more than the others, that is the one you should pick. Many such cards offer a certain percentage for certain types of purchases. Some cards will require the purchases be made in specific categories, while other rewards cards will allow the purchases to be made anywhere. This is one of the reasons that it is important to do the proper research necessary in order to find the rewards credit card that is right for you.
Don't spend your money without gaining anything back in return. Find a rewards credit card that will offer you benefits for spending money on things that you already have to buy such as groceries, clothing, gas, prescriptions, and any other items you pay for monthly. You work hard for your money - why not get a little bit back in the form of points, rebates, gift cards, or cash back when using a rewards credit card?
Getting Free Credit Reports
American consumers are allowed to check their credit annually from the three major credit reporting agencies: Experian, Equifax, and TransUnion. What most people make the mistake of doing is checking all three at once. It is wise to take advantage of this free annual service by spacing out credit checks over the course of the year, as a consumer can keep a closer eye on his or her quarterly credit reporting.
First, be sure to use an authorized credit reporting site. The free annual credit reporting process does not require a consumer to sign up for monthly monitoring, fraud alert protection service, or any other optional services provided by that specified reporting agency. If there are any previous credit reports available, gather them up for review and comparison purposes. It is also necessary to have on hand any banking, past residence, or current credit card information, as sometimes it is needed during for verification purposes during the credit checking process.
Next, choose which agency you wish to start the credit checking process with. If there have been previous credit reports in your name, it would be prudent to select the credit reporting agency that issued the oldest report. This way, all information can be compared to previous information contained in the old credit report for a more-long term comparison. Be sure to keep a log of when you performed the new credit check, with what company you chose, and make sure to highlight any changes or discrepancies from the old credit report on to the new one.
To take full advantage of this process, try to space out the credit checks over an annual basis by performing a credit check every quarter. A good schedule to keep would be to perform checks in March, July and November. By checking your credit report with once agency during these months, a consumer is guaranteed to receive three updates during the year for free.
In addition to performing free credit checks, it is also a good idea to go ahead and spend the small investment (usually less than $10) and check your FICO score. This is especially important for consumers planning to purchase new insurance, real estate, vehicles, or other avenues which require a company to perform a credit check. Having a clear, error-free credit report, along with an excellent FICO score, will greatly improve your chances of appearing to bank and finance companies as someone who is very responsible with their personal credit management.
First, be sure to use an authorized credit reporting site. The free annual credit reporting process does not require a consumer to sign up for monthly monitoring, fraud alert protection service, or any other optional services provided by that specified reporting agency. If there are any previous credit reports available, gather them up for review and comparison purposes. It is also necessary to have on hand any banking, past residence, or current credit card information, as sometimes it is needed during for verification purposes during the credit checking process.
Next, choose which agency you wish to start the credit checking process with. If there have been previous credit reports in your name, it would be prudent to select the credit reporting agency that issued the oldest report. This way, all information can be compared to previous information contained in the old credit report for a more-long term comparison. Be sure to keep a log of when you performed the new credit check, with what company you chose, and make sure to highlight any changes or discrepancies from the old credit report on to the new one.
To take full advantage of this process, try to space out the credit checks over an annual basis by performing a credit check every quarter. A good schedule to keep would be to perform checks in March, July and November. By checking your credit report with once agency during these months, a consumer is guaranteed to receive three updates during the year for free.
In addition to performing free credit checks, it is also a good idea to go ahead and spend the small investment (usually less than $10) and check your FICO score. This is especially important for consumers planning to purchase new insurance, real estate, vehicles, or other avenues which require a company to perform a credit check. Having a clear, error-free credit report, along with an excellent FICO score, will greatly improve your chances of appearing to bank and finance companies as someone who is very responsible with their personal credit management.
Effective Use of Credit Card Balance Transfers
Balance transfers were at one time all the rage, and one of the main criteria people used when deciding on a new credit card. First introduced to the UK by Egg towards the end of 2000, a boom was sparked in credit card applications and a new strategy of serial balance transfers was quickly devised by savvy cardholders who found they could avoid interest on their debts by shifting them from card to card, taking advantage of 0% transfer deals.
This practice was hugely popular for the next five years or so, and was costing the card issuers a small fortune in lost interest charges, and so the balance transfer fee was introduced, whereby a fee of between 2% and 3% of the amount transferred was charged, This fee quickly dampened enthusiasm for balance transfers, effectively ending the loophole that allowed free debts. This doesn't however mean that there's no point these days in making use of transfer facilities, it just means that a little more care needs to be taken if you're going to get the best out of them.
The first thing to check is the size of the balance transfer fee. It's very difficult indeed nowadays to find a 0% card that doesn't feature one, although there are tentative signs that this may be changing. It of course makes sense to get the lowest fee possible, although you also need to check if there's an upper limit to the amount you'll be charged. For larger balances it my make more sense to have a larger percentage fee with a capped upper limit, rather than a lower percentage with no limit. You need to do the maths.
Next, how long will the 0% rate last? Six months used to be the norm, but now twelve months is increasingly common, with some of the best deals extending to fifteen or even eighteen months. The longer the period, the better. Make sure you take note of when your introductory deal will expire, and give yourself plenty of time to arrange a new 0% card in advance so you can transfer the balance again before interest charges kick in.
Now that you've chosen a card and got a great deal, there are a few things to do to make sure you get the best out of it. Firstly, and most importantly, never use your balance transfer card for spending, as the standard rate will likely be uncompetitive so as to finance the costs of the balance transfer. Also, your repayments will go towards clearing your balance transfer first, leaving your expensive purchases debt sitting untouched, happily building up interest. And, each month, you'll be charged interest on the interest too, meaning your debt can grow alarmingly quickly.
Also, try to ensure that you never miss a payment or repay late, as not only will you be charged a penalty fee, you might even find that your balance transfer facility is withdrawn, saddling you with interest payments on the debt instead of your nice 0% deal.
Finally, although it's tempting to use a balance transfer as a sort of 'holiday' from your debts, only making the minimum repayments required, the fact that you're not being charged interest means that any extra repayments you can make are wholly used to reduce your debt, and so a little can go a long way. Try and make use of the opportunity to reduce your debt, even if only by a little, as in the long term debt will always end up costing you - whatever tricks such as balance transfers you can use to postpone that day.
This practice was hugely popular for the next five years or so, and was costing the card issuers a small fortune in lost interest charges, and so the balance transfer fee was introduced, whereby a fee of between 2% and 3% of the amount transferred was charged, This fee quickly dampened enthusiasm for balance transfers, effectively ending the loophole that allowed free debts. This doesn't however mean that there's no point these days in making use of transfer facilities, it just means that a little more care needs to be taken if you're going to get the best out of them.
The first thing to check is the size of the balance transfer fee. It's very difficult indeed nowadays to find a 0% card that doesn't feature one, although there are tentative signs that this may be changing. It of course makes sense to get the lowest fee possible, although you also need to check if there's an upper limit to the amount you'll be charged. For larger balances it my make more sense to have a larger percentage fee with a capped upper limit, rather than a lower percentage with no limit. You need to do the maths.
Next, how long will the 0% rate last? Six months used to be the norm, but now twelve months is increasingly common, with some of the best deals extending to fifteen or even eighteen months. The longer the period, the better. Make sure you take note of when your introductory deal will expire, and give yourself plenty of time to arrange a new 0% card in advance so you can transfer the balance again before interest charges kick in.
Now that you've chosen a card and got a great deal, there are a few things to do to make sure you get the best out of it. Firstly, and most importantly, never use your balance transfer card for spending, as the standard rate will likely be uncompetitive so as to finance the costs of the balance transfer. Also, your repayments will go towards clearing your balance transfer first, leaving your expensive purchases debt sitting untouched, happily building up interest. And, each month, you'll be charged interest on the interest too, meaning your debt can grow alarmingly quickly.
Also, try to ensure that you never miss a payment or repay late, as not only will you be charged a penalty fee, you might even find that your balance transfer facility is withdrawn, saddling you with interest payments on the debt instead of your nice 0% deal.
Finally, although it's tempting to use a balance transfer as a sort of 'holiday' from your debts, only making the minimum repayments required, the fact that you're not being charged interest means that any extra repayments you can make are wholly used to reduce your debt, and so a little can go a long way. Try and make use of the opportunity to reduce your debt, even if only by a little, as in the long term debt will always end up costing you - whatever tricks such as balance transfers you can use to postpone that day.
The Seven Deadly Sins Of Credit Card Use
No matter how convenient credit cards are - and they're almost obligatory for modern life - there's no denying that they can land the unwary card-holder in a whole world of trouble if not used carefully. Here we present the seven deadly sins of credit card use.
Late Payments
The number one rule of using credit cards is to pay your statement on time. Not only do late payments cause damage to your credit rating, they also cost you money - both in the form of the late payment fee, but also in the form of a hike in your interest rate for repeat offenders.
Minimum Payments
Even if you keep to a good repayment schedule and always pay on time, only paying the minimum amount required on your statement is a major mistake that most of us make - not least because we're actively encouraged to do just that by setting up automated payments such as direct debits. The problem is, with minimum payment levels set at only a few percent, nearly all of what you pay is swallowed up in interest charges leaving your debt virtually untouched. Sticking to the minimum amounts will all but ensure that you stay permanently in debt, and will cost you dearly in overall interest charges.
Cash Advances and Withdrawals
Most credit cards now offer the facility to withdraw cash from a huge number of ATMs worldwide. Don't do it, except in a real emergency when you really need cash and have no other way of getting it. Not only will you be charged a fee, the interest rate charged is usually much higher than your normal rate, and because more expensive debt is usually the last to be cleared, you'll be charged this high rate each and every month while you're carrying a balance.
Credit Card Convenience Checks
These are a bad idea as they suffer from the same drawbacks as cash withdrawals - i.e. high interest rates. Even if your card is one of the few still to offer this 'facility', avoid it - there's little benefit in using a check, and plenty of cost!
Spending on Balance Transfer Cards
Balance transfer deals can save you a fortune in interest on your debt if you handle them correctly. The problem is, many people fail to get the full rewards by using the same card for balance transfers and purchases. Because of the way most cards allocate the payments you make, your purchase debt will never be lessened until the balance transfer is fully repaid, and so will attract interest without any of it being repaid. Use separate cards for spending and balance transfers.
Impulse Purchases
One of the major causes of problem credit card debt is the casual use of cards to fund impulse purchases. As you're not actually parting with any cash, using a card doesn't feel as expensive as ordinary purchases, when in fact it's much more expensive! Think carefully before you buy whether or not your purchase will seem as good an idea when your next statement drops on to your doormat.
Paying for Essentials
While using your card as much as possible s a good idea if you're benefiting from a reward or cash back scheme, you should only do this if you pay off your balance in full every month. Using your card to pay for essentials such as food and energy bills, and letting your debt build up unchecked, is a sure sign that you're living beyond your means and need to have a hard look at your budget.
Late Payments
The number one rule of using credit cards is to pay your statement on time. Not only do late payments cause damage to your credit rating, they also cost you money - both in the form of the late payment fee, but also in the form of a hike in your interest rate for repeat offenders.
Minimum Payments
Even if you keep to a good repayment schedule and always pay on time, only paying the minimum amount required on your statement is a major mistake that most of us make - not least because we're actively encouraged to do just that by setting up automated payments such as direct debits. The problem is, with minimum payment levels set at only a few percent, nearly all of what you pay is swallowed up in interest charges leaving your debt virtually untouched. Sticking to the minimum amounts will all but ensure that you stay permanently in debt, and will cost you dearly in overall interest charges.
Cash Advances and Withdrawals
Most credit cards now offer the facility to withdraw cash from a huge number of ATMs worldwide. Don't do it, except in a real emergency when you really need cash and have no other way of getting it. Not only will you be charged a fee, the interest rate charged is usually much higher than your normal rate, and because more expensive debt is usually the last to be cleared, you'll be charged this high rate each and every month while you're carrying a balance.
Credit Card Convenience Checks
These are a bad idea as they suffer from the same drawbacks as cash withdrawals - i.e. high interest rates. Even if your card is one of the few still to offer this 'facility', avoid it - there's little benefit in using a check, and plenty of cost!
Spending on Balance Transfer Cards
Balance transfer deals can save you a fortune in interest on your debt if you handle them correctly. The problem is, many people fail to get the full rewards by using the same card for balance transfers and purchases. Because of the way most cards allocate the payments you make, your purchase debt will never be lessened until the balance transfer is fully repaid, and so will attract interest without any of it being repaid. Use separate cards for spending and balance transfers.
Impulse Purchases
One of the major causes of problem credit card debt is the casual use of cards to fund impulse purchases. As you're not actually parting with any cash, using a card doesn't feel as expensive as ordinary purchases, when in fact it's much more expensive! Think carefully before you buy whether or not your purchase will seem as good an idea when your next statement drops on to your doormat.
Paying for Essentials
While using your card as much as possible s a good idea if you're benefiting from a reward or cash back scheme, you should only do this if you pay off your balance in full every month. Using your card to pay for essentials such as food and energy bills, and letting your debt build up unchecked, is a sure sign that you're living beyond your means and need to have a hard look at your budget.
Why Can't I Get a New Credit Card?
The past decade or two has seen a real boom in credit card use, with competition between issuers leading to ever lower rates of interest, constantly improving features, and a consistent relaxing of acceptance criteria. Such has been the activity in the marketplace that it's become quite normal for people to carry several cards, often building up quite a collection as attractive new offerings tempt them into making yet another application. Card issuers were also desperate for custom, such are the potential profits available to them from every customer, and so having your application approved was usually quite a straightforward matter.
This situation has seemingly come to a screeching halt, with many people finding that it's far more difficult these days to get a new card. Why is this?
The basic answer is that we're facing a global credit crisis, where banks themselves are finding it increasingly difficult to obtain the credit they need in order to finance lending to their customers. The causes of this crisis are complex and beyond the scope of this article, but in essence the years of easy lending have come back to haunt the banks. Lending criteria had become so relaxed that finance was extended to people who would never have been considered previously, because their credit profile made them a risky prospect to lend to. The banks thought that they had covered the risks of lending to these customers via a complex system of financial machinations, and so lent money with what many analysts now say was reckless enthusiasm.
Unfortunately, many of these loans are now being defaulted on, leaving some banks facing huge losses, and the whole system of lending money is freezing up as financiers worry about who owes what and how much will be lost. This is feeding through into consumer lending in the form of higher interest rates and drastically raised acceptance criteria, making it much harder to have your credit card or loan application approved.
This doesn't mean that you really can't get a new card with better features though - you just might need to try a new approach. Firstly, you may well have to lower your sights a little, and apply for one of the second tier cards rather than an all singing and dancing one from the best buy tables. These elite cards are only available to the select few, and many people who were once considered prime customers are now slightly less than prime as lenders adjust their criteria.
Also, it makes sense to give your credit file a spring clean, making sure that it doesn't contain any inaccurate information, and that you don't have any overlooked debts unpaid that you didn't know about. Sorting out any small problems of this nature will improve your chances of being approved.
If you already have a number of cards, try canceling ones that you don't use any more, as having too much credit available to you already will be a hindrance to obtaining further finance. If you still have balances on these cards, then you may consider a debt consolidation loan to be a worthwhile idea, allowing you to get rid of those old expensive card debts and package them up into a cheaper and more organised loan.
There's no telling how long the current financial problems will last, and indeed we don't know if we'll ever see a return to the days of easy credit, but by following the above steps you'll at least maximise your chances of having your application approved, whatever the future might bring.
This situation has seemingly come to a screeching halt, with many people finding that it's far more difficult these days to get a new card. Why is this?
The basic answer is that we're facing a global credit crisis, where banks themselves are finding it increasingly difficult to obtain the credit they need in order to finance lending to their customers. The causes of this crisis are complex and beyond the scope of this article, but in essence the years of easy lending have come back to haunt the banks. Lending criteria had become so relaxed that finance was extended to people who would never have been considered previously, because their credit profile made them a risky prospect to lend to. The banks thought that they had covered the risks of lending to these customers via a complex system of financial machinations, and so lent money with what many analysts now say was reckless enthusiasm.
Unfortunately, many of these loans are now being defaulted on, leaving some banks facing huge losses, and the whole system of lending money is freezing up as financiers worry about who owes what and how much will be lost. This is feeding through into consumer lending in the form of higher interest rates and drastically raised acceptance criteria, making it much harder to have your credit card or loan application approved.
This doesn't mean that you really can't get a new card with better features though - you just might need to try a new approach. Firstly, you may well have to lower your sights a little, and apply for one of the second tier cards rather than an all singing and dancing one from the best buy tables. These elite cards are only available to the select few, and many people who were once considered prime customers are now slightly less than prime as lenders adjust their criteria.
Also, it makes sense to give your credit file a spring clean, making sure that it doesn't contain any inaccurate information, and that you don't have any overlooked debts unpaid that you didn't know about. Sorting out any small problems of this nature will improve your chances of being approved.
If you already have a number of cards, try canceling ones that you don't use any more, as having too much credit available to you already will be a hindrance to obtaining further finance. If you still have balances on these cards, then you may consider a debt consolidation loan to be a worthwhile idea, allowing you to get rid of those old expensive card debts and package them up into a cheaper and more organised loan.
There's no telling how long the current financial problems will last, and indeed we don't know if we'll ever see a return to the days of easy credit, but by following the above steps you'll at least maximise your chances of having your application approved, whatever the future might bring.
Grab a Slice of the Cash Back Action
Cash back credit cards are one of the latest crazes to sweep the personal finance industry. Where once balance transfer offers held sway, with card issuers falling over each other to offer the longest 0% deal in history, it now seems that cash back is king. Banks are increasingly locked in competition to provide the best cash back deal on the market - but what exactly is this feature, and why would you want it?
The basic premise behind cash back cards, as the name suggests, is that you are credited back with a small percentage of everything you spend using the card. This money will accrue on your account, and usually be paid yearly either by personal cheque or by direct refund to your account.
The actual concept of these cards is by no means new, but what's different nowadays is the size of the cash back percentage on offer. In previous offers, a cash back rate of 0.25% was considered generous - after all, it was seen as money for nothing (however misguided that view). Today, that figure looks decidedly miserly.
It's far from uncommon to see cards offering a standard rate of 1% cash back, which for heavy card users can easily add up to a tidy sum over the course of a full year. There is however a new and welcome trend towards offering higher introductory rates which in some cases have hit 5% for the first few months. Think about how great this offer really is - effectively a 5% discount across the board on everything you spend at any store or on any web site, lasting for a period of three months or more. Could you take advantage of this?
What's more, you can really boost your cash back earnings potential if you shift your regular spending such as groceries, fuel, and energy costs onto your card, although you should check if your particular card has any restrictions on what kind of spending qualifies for cash back. In particular, some cards specifically exclude payment of utility bills from their cash back calculations.
So far so good, but surely there's a catch? Of course, as the card issuers aren't going to simply give their money away, are they? They're banking on the fact that most customers will go on a spending spree when they first get their card, racking up a debt which won't be cleared in full and so will begin to attract interest. With interest charged in double figures in most cases, it's easy to see that any cash back earnings will be more than canceled out if you rack up a balance.
The ideal way to take advantage of cash back offers is to use the card only for spending which you can clear in full on your statement date so as to avoid interest being imposed. Ultimately, you should be using your card purely as a payment option rather than as a means of borrowing, and not spending anything you can't afford to repay.
Used sensibly but frequently, cash back cards really can transfer money directly from the banks' accounts to your own, so shouldn't you be grabbing a slice of the action?
The basic premise behind cash back cards, as the name suggests, is that you are credited back with a small percentage of everything you spend using the card. This money will accrue on your account, and usually be paid yearly either by personal cheque or by direct refund to your account.
The actual concept of these cards is by no means new, but what's different nowadays is the size of the cash back percentage on offer. In previous offers, a cash back rate of 0.25% was considered generous - after all, it was seen as money for nothing (however misguided that view). Today, that figure looks decidedly miserly.
It's far from uncommon to see cards offering a standard rate of 1% cash back, which for heavy card users can easily add up to a tidy sum over the course of a full year. There is however a new and welcome trend towards offering higher introductory rates which in some cases have hit 5% for the first few months. Think about how great this offer really is - effectively a 5% discount across the board on everything you spend at any store or on any web site, lasting for a period of three months or more. Could you take advantage of this?
What's more, you can really boost your cash back earnings potential if you shift your regular spending such as groceries, fuel, and energy costs onto your card, although you should check if your particular card has any restrictions on what kind of spending qualifies for cash back. In particular, some cards specifically exclude payment of utility bills from their cash back calculations.
So far so good, but surely there's a catch? Of course, as the card issuers aren't going to simply give their money away, are they? They're banking on the fact that most customers will go on a spending spree when they first get their card, racking up a debt which won't be cleared in full and so will begin to attract interest. With interest charged in double figures in most cases, it's easy to see that any cash back earnings will be more than canceled out if you rack up a balance.
The ideal way to take advantage of cash back offers is to use the card only for spending which you can clear in full on your statement date so as to avoid interest being imposed. Ultimately, you should be using your card purely as a payment option rather than as a means of borrowing, and not spending anything you can't afford to repay.
Used sensibly but frequently, cash back cards really can transfer money directly from the banks' accounts to your own, so shouldn't you be grabbing a slice of the action?
Avoiding the Pitfalls of Everyday Purchasing with Credit Cards
Credit cards go all the way back to the 1920s when gas companies and hotels issued them to pull in customers to their establishments. In the 1950s, Diners Club and American Express began issuing universal cards to select customers. With an American Express card, a card holder could make purchases at any establishment that accepted the card. Bank cards didn't put in an appearance until the 1960s, but at least during the early years banks required a certain level of credit-worthiness before they issued a card to an applicant.
By the 1980s, almost anyone could get a credit card, regardless of their financial status. Still, most consumers used their credit cards to purchase 'big ticket' items: furniture, televisions, vacations - the kind of purchases that people were not likely to make every day. Now, credit cards are used for everything. You can walk into a fast food place, buy a cup of coffee, and with a swipe of your credit card the transaction is completed. It's convenient but it's also risky.
One of the biggest risks is failing to realize how quickly the balance goes up on a card when it is used to handle everyday transactions. Opening a credit card statement and facing the awful truth that the card has been maxed out, is something that most card holders have had to deal with at one time or another. What many card holders do not realize is how quickly the APR (annual percentage rate) on a credit card can jump from a merely outrageous 14.9% to a usurious 28.9% in the blink of any eye. An unsuspecting card holder need only be one day late In making the minimum required payment and that will be enough to trigger a jump in the APR on that card.
Moreover, it doesn't matter if the minimum required payment - or even the full balance payment - was made for the preceding 10 months. Bank card companies take into account only the fact that the most recent payment was late by one day. Even worse, the APR does not go back down when payments are back on track.
At that point, the best bet is to make sure you can pay the entire balance each month, thereby avoiding huge interest charges tacked onto your bill. For the sake of your credit rating, it is also a good idea to try and pay down your balance each month so that you are showing a balance due of less than half your credit limit. When credit report companies look at your card history, that is one of the things they take into account in determining credit rating.
Staying on top of your credit card situation is a key factor in your economic well-being. So be aware of how you use your credit card on a daily basis, what your APR is, what you due date for payments is, and how much of a balance you are carrying on your card at any given time. Paying attention to a few credit card details can save you a world of difficulty and protect your credit rating.
By the 1980s, almost anyone could get a credit card, regardless of their financial status. Still, most consumers used their credit cards to purchase 'big ticket' items: furniture, televisions, vacations - the kind of purchases that people were not likely to make every day. Now, credit cards are used for everything. You can walk into a fast food place, buy a cup of coffee, and with a swipe of your credit card the transaction is completed. It's convenient but it's also risky.
One of the biggest risks is failing to realize how quickly the balance goes up on a card when it is used to handle everyday transactions. Opening a credit card statement and facing the awful truth that the card has been maxed out, is something that most card holders have had to deal with at one time or another. What many card holders do not realize is how quickly the APR (annual percentage rate) on a credit card can jump from a merely outrageous 14.9% to a usurious 28.9% in the blink of any eye. An unsuspecting card holder need only be one day late In making the minimum required payment and that will be enough to trigger a jump in the APR on that card.
Moreover, it doesn't matter if the minimum required payment - or even the full balance payment - was made for the preceding 10 months. Bank card companies take into account only the fact that the most recent payment was late by one day. Even worse, the APR does not go back down when payments are back on track.
At that point, the best bet is to make sure you can pay the entire balance each month, thereby avoiding huge interest charges tacked onto your bill. For the sake of your credit rating, it is also a good idea to try and pay down your balance each month so that you are showing a balance due of less than half your credit limit. When credit report companies look at your card history, that is one of the things they take into account in determining credit rating.
Staying on top of your credit card situation is a key factor in your economic well-being. So be aware of how you use your credit card on a daily basis, what your APR is, what you due date for payments is, and how much of a balance you are carrying on your card at any given time. Paying attention to a few credit card details can save you a world of difficulty and protect your credit rating.
Selecting An Appropriate Credit Card For Your Lifestyle
With so many different types of credit cards available, you can be sure there is something to meet the needs of everyone. It doesn't matter what your credit score may be because there is a credit card that will meet your needs. Whether you want a prepaid, rewards card, no annual fee, low interest rate, or any number of other possibilities, you can be certain there is a card issuer that offers that card. Certainly it will depend upon your credit score, but there is definitely a card for everyone's needs.
Before you apply for any credit card you need to analyze your own personal situation. Some of the things you want to consider include the following:
- Your Credit score
- Your Spending habits
- Amount you spend monthly
- Amount of time you spend traveling
- How much you use your card for business expenses
- How often you pay your card in full each billing cycle
For those who pay their bills in full each month, the higher interest rate that most rewards cards carry is probably of little concern. On the other hand if you frequently carry a balance on your credit card, you may want to forgo the rewards bonus in favor of a credit card with a lower interest rate. That doesn't mean that all rewards cards have higher interest rates, but in most cases if you are earning a bonus or points for using the card, the card issuer has to recover those benefits in some way, which is usually by charging a higher interest rate than they would charge on a card with no rewards points.
Your credit score is going to determine the type of card for which you qualify, so you have to keep that in mind when you begin searching. The higher your credit score, the better the chances are of being approved for a low interest high credit line credit card. In fact, for those with high credit scores, it's easy to find offers for rewards cards that have introductory interest rates that are often as low as zero per cent for up to one year. You may even find an offer with zero per cent interest and no annual fee if you have good credit.
If you are the kind of person that only uses your credit card for emergencies or traveling, you may not have much use for rewards cards. Quite often there is an expiration date for the redemption of the points, so with minimal use your points are likely to expire before you have enough points to spend on anything. In fact, a prepaid card may be the best option for you since there is no interest or annual fee - some cards do, however, charge a fee for activation and reloading. Prepaid cards are also beneficial if you do not wish to reflect debt on your credit report.
Before you apply for any credit card you need to analyze your own personal situation. Some of the things you want to consider include the following:
- Your Credit score
- Your Spending habits
- Amount you spend monthly
- Amount of time you spend traveling
- How much you use your card for business expenses
- How often you pay your card in full each billing cycle
For those who pay their bills in full each month, the higher interest rate that most rewards cards carry is probably of little concern. On the other hand if you frequently carry a balance on your credit card, you may want to forgo the rewards bonus in favor of a credit card with a lower interest rate. That doesn't mean that all rewards cards have higher interest rates, but in most cases if you are earning a bonus or points for using the card, the card issuer has to recover those benefits in some way, which is usually by charging a higher interest rate than they would charge on a card with no rewards points.
Your credit score is going to determine the type of card for which you qualify, so you have to keep that in mind when you begin searching. The higher your credit score, the better the chances are of being approved for a low interest high credit line credit card. In fact, for those with high credit scores, it's easy to find offers for rewards cards that have introductory interest rates that are often as low as zero per cent for up to one year. You may even find an offer with zero per cent interest and no annual fee if you have good credit.
If you are the kind of person that only uses your credit card for emergencies or traveling, you may not have much use for rewards cards. Quite often there is an expiration date for the redemption of the points, so with minimal use your points are likely to expire before you have enough points to spend on anything. In fact, a prepaid card may be the best option for you since there is no interest or annual fee - some cards do, however, charge a fee for activation and reloading. Prepaid cards are also beneficial if you do not wish to reflect debt on your credit report.
The Bare Minimum You Should Expect From A Credit Card
The days when a credit card was just a credit card are long gone. The basic idea of a card, the ability to make purchases now while only actually paying for them at a later date, has been almost submerged under a huge range of extra features and benefits. Balance transfers, cash back, rewards, 0% deals, charitable donations, affinity programs... there's a lot to think about when applying for a new card these days.
However, if you're going to secure yourself a worthwhile deal on your next card, you need to avoid being blinded by all these extras, and to start your decision making process by concentrating on the bare minimum of features that you can expect to get with any card. If a card gets these basics right, only then is it worth looking at any extras it might offer.
The first and most obvious feature to look at is the card's APR or interest rate, and the lower this is the better. A good target to look for is an APR in the low to mid teens range - there's really no excuse for a card to charge 20% or more these days, unless there are adverse credit issues to take into account. It's quite usual for a card which offers extensive benefits to have a slightly higher interest rate, but a great rewards program, for example, shouldn't excuse a rip off APR.
Next, you should make sure your card doesn't have an annual fee which you have to pay whether or not you actually use it. Annual fees used to be very common, but now the only cards which generally feature them are some of the top-end platinum cards which offer VIP benefits to the cardholder, but only at a price.
Another thing to look at is the interest free 'grace period' of the card. If you pay your statement in full and on time every month - that is, you don't carry a debt from one statement to the next - then you should be rewarded by not having to pay interest on your spending during this period. The grace period should be long enough to ensure that by settling your debt you should avoid all interest charges completely, and in practice this means that it should be a minimum of 50 days.
The final thing to take note of is how much fraud and consumer protection your card offers. It is the legal standard that you can't be held liable for any losses caused by fraudulent use of your card account, providing you haven't been negligent in any way, for example by giving your card details out inappropriately. However, some card issuers take this further and offer active fraud prevention measures to help you avoid identity theft and other potential difficulties you could face through card misuse. You should also expect to receive a good level of protection against problems such as non-delivery of online orders or being sold defective goods.
This, then, should be your starting point when comparing credit cards. No matter how attractive some of the more glitzy features might appear, you can bet on it that if these underlying basics aren't up to scratch, then the offer you're being tempted with might well be a better deal for the issuing bank than for the customer.
However, if you're going to secure yourself a worthwhile deal on your next card, you need to avoid being blinded by all these extras, and to start your decision making process by concentrating on the bare minimum of features that you can expect to get with any card. If a card gets these basics right, only then is it worth looking at any extras it might offer.
The first and most obvious feature to look at is the card's APR or interest rate, and the lower this is the better. A good target to look for is an APR in the low to mid teens range - there's really no excuse for a card to charge 20% or more these days, unless there are adverse credit issues to take into account. It's quite usual for a card which offers extensive benefits to have a slightly higher interest rate, but a great rewards program, for example, shouldn't excuse a rip off APR.
Next, you should make sure your card doesn't have an annual fee which you have to pay whether or not you actually use it. Annual fees used to be very common, but now the only cards which generally feature them are some of the top-end platinum cards which offer VIP benefits to the cardholder, but only at a price.
Another thing to look at is the interest free 'grace period' of the card. If you pay your statement in full and on time every month - that is, you don't carry a debt from one statement to the next - then you should be rewarded by not having to pay interest on your spending during this period. The grace period should be long enough to ensure that by settling your debt you should avoid all interest charges completely, and in practice this means that it should be a minimum of 50 days.
The final thing to take note of is how much fraud and consumer protection your card offers. It is the legal standard that you can't be held liable for any losses caused by fraudulent use of your card account, providing you haven't been negligent in any way, for example by giving your card details out inappropriately. However, some card issuers take this further and offer active fraud prevention measures to help you avoid identity theft and other potential difficulties you could face through card misuse. You should also expect to receive a good level of protection against problems such as non-delivery of online orders or being sold defective goods.
This, then, should be your starting point when comparing credit cards. No matter how attractive some of the more glitzy features might appear, you can bet on it that if these underlying basics aren't up to scratch, then the offer you're being tempted with might well be a better deal for the issuing bank than for the customer.
When Payday Loans Outstay Their Welcome
You find yourself broke again. Your bills are piling up. Your rent/mortgage is due in a week. They are going to repossess your car if you don't come up with $300 in just two days. It doesn't matter what it is, we have all been there once, twice, or some even more times then we care to remember. What are you going to do? Then you remember the commercial you saw late last night: a payday advance is the answer, right? Maybe. Pay day advances are only a temporary solution and they come at a very high price.
Each year hundreds or even thousands of people are in a no win situation where they must rob Peter to pay Paul. Their bills are higher then their paychecks, their credit is out of control or nonexistent, and they are desperate. So desperate to hold on to what little they have that they, like sheep in a flock, are lead into a trap by the wolf. The wolf being the payday advance places which are popping up all over the place.
Are they really as bad as a wolf? No, not all the time. A payday advance is exactly that - an advance on your paycheck. You borrow money (a loan) from a lender (the payday advance establishment) and you must pay back said money within a certain time period, plus the interest charged on the money. It all sounds pretty straight forward. The catch in this little transaction is simple this: the interest rate can be extremely high (up to 300% or more), the time period is usually very short ( 5-14 days or less), and lastly you can get drawn into the ongoing loan cycle. Loan cycle? Yes. A cycle with no end.
Let us say that a man named John is behind on his car payment. John figures out his bills. He shops around for the best rates. He determines he can afford the high fees for the loan, and he decides to go get a payday advance. So he gets one for $300 and he writes a check for $375 to the payday advance establishment. Then he pays the car payment with the loan. Now his next check is short $375, but it is ok. He has taken everything into account. However, two days before payday his car dies. He has it towed to the garage and finds out that it is the battery which is faulty, so he buys a new one. But wait - now he is short for his rent. Will one more cash advance send John into a downward spiral? Maybe not, but then again it just might.
So let's be sure about this - payday loans can come to the rescue when money is scarce and there are pressing bills, but it's all to easy to trapped in a cycle of needing to take out a loan every month just to cover the interest paid on the last month's borrowing.
Each year hundreds or even thousands of people are in a no win situation where they must rob Peter to pay Paul. Their bills are higher then their paychecks, their credit is out of control or nonexistent, and they are desperate. So desperate to hold on to what little they have that they, like sheep in a flock, are lead into a trap by the wolf. The wolf being the payday advance places which are popping up all over the place.
Are they really as bad as a wolf? No, not all the time. A payday advance is exactly that - an advance on your paycheck. You borrow money (a loan) from a lender (the payday advance establishment) and you must pay back said money within a certain time period, plus the interest charged on the money. It all sounds pretty straight forward. The catch in this little transaction is simple this: the interest rate can be extremely high (up to 300% or more), the time period is usually very short ( 5-14 days or less), and lastly you can get drawn into the ongoing loan cycle. Loan cycle? Yes. A cycle with no end.
Let us say that a man named John is behind on his car payment. John figures out his bills. He shops around for the best rates. He determines he can afford the high fees for the loan, and he decides to go get a payday advance. So he gets one for $300 and he writes a check for $375 to the payday advance establishment. Then he pays the car payment with the loan. Now his next check is short $375, but it is ok. He has taken everything into account. However, two days before payday his car dies. He has it towed to the garage and finds out that it is the battery which is faulty, so he buys a new one. But wait - now he is short for his rent. Will one more cash advance send John into a downward spiral? Maybe not, but then again it just might.
So let's be sure about this - payday loans can come to the rescue when money is scarce and there are pressing bills, but it's all to easy to trapped in a cycle of needing to take out a loan every month just to cover the interest paid on the last month's borrowing.
When to Take Out a Payday Loan - And When to Avoid One
Payday loans can be a financial lifesaver when you really need one. They can also be something that gets you into a world of trouble due to the amount you owe. It is important to understand when you should take one and when you should pass. That way you can be in control of your financial situation.
If you have something come up that eats into your finances this month, but you will be back on track next month it can be a good solution. That way you aren't stressed out about how to pay for it. Maybe you missed a couple of days of work due to an illness so your paycheck was short. You can work overtime this next pay period though to get it covered.
You may be waiting on money to come in from a source as well. For example you may have just started a new job but have to wait a couple of weeks for a full paycheck. That means you may be struggling to pay to get to and from work during that period of time. Generally as long as you can provide verification of the employment you should be able to get your loan approved.
There are times when a payday loan isn't the right path for you to take. If you find you have more bills to pay each month than money it isn't going to be a solution. You will then suffer the consequences when you have to give up more of your money to cover that loan in the near future.
If you are going to several payday loan locations at the same period of time then you are in deep financial troubles and this isn't going to make it any better. Only borrow money when it is a necessity as well. Don't do so just to go out for the night or to buy something you can live without.
Never take out a payday loan when you know you won't be able to repay it. The consequences will be very severe. That loan for $150 can end up costing you hundreds or thousands more by the time it is done in a court of law or a collection agency. If you find you can't repay it for some reason then you need to immediately contact the lender to work out a plan both of you are happy with.
Understanding when taking out a payday loan may be a good idea and when you should avoid it is important. It will help you get the most out of such funding offers without getting yourself wrapped up in something you can't get out of.
If you have something come up that eats into your finances this month, but you will be back on track next month it can be a good solution. That way you aren't stressed out about how to pay for it. Maybe you missed a couple of days of work due to an illness so your paycheck was short. You can work overtime this next pay period though to get it covered.
You may be waiting on money to come in from a source as well. For example you may have just started a new job but have to wait a couple of weeks for a full paycheck. That means you may be struggling to pay to get to and from work during that period of time. Generally as long as you can provide verification of the employment you should be able to get your loan approved.
There are times when a payday loan isn't the right path for you to take. If you find you have more bills to pay each month than money it isn't going to be a solution. You will then suffer the consequences when you have to give up more of your money to cover that loan in the near future.
If you are going to several payday loan locations at the same period of time then you are in deep financial troubles and this isn't going to make it any better. Only borrow money when it is a necessity as well. Don't do so just to go out for the night or to buy something you can live without.
Never take out a payday loan when you know you won't be able to repay it. The consequences will be very severe. That loan for $150 can end up costing you hundreds or thousands more by the time it is done in a court of law or a collection agency. If you find you can't repay it for some reason then you need to immediately contact the lender to work out a plan both of you are happy with.
Understanding when taking out a payday loan may be a good idea and when you should avoid it is important. It will help you get the most out of such funding offers without getting yourself wrapped up in something you can't get out of.
Relieve Your Credit Card Debt Problems With A Debt Consolidation Loan
Credit card debt is a common problem these days. However, help is at hand with a debt consolidation loan. This can enable you to cut down your credit card repayments, as well as putting all your debts together in one easily managed monthly repayment.
Some of the most expensive debts to have are unsecured credit card debts. They cost you the most in monthly interest charges. The interest charges on many credit cards range from 12.9% to an incredible 41%. That is why it is so important that you do your homework and find yourself the loan which charges the lowest interest rate you can find. Loans that charge lower interest rates allow you save more money.
Organize your Finances
If your credit card balance is rising and you are struggling to make your repayments, think about consolidating. In this way, you can combine all your debts with one creditor so you are just making a single installment on your debt each month. That way you can budget more easily as you know what you need to pay and when.
Reduce your Debt
One complication you may have which adds to your financial problems is several dates in the month when you need to pay out t different creditors. With a consolidation loan, you have more control over when you make the single monthly repayment which will be required.
This means that with this type of loan, you should be able to pay off your balance much more quickly. That will save you money in all the interest you won't be charged! Sometimes, if you're not careful, the interest payable on a loan can almost double what you owe. That makes credit card debt very expensive. But if you consolidate your balances you can save yourself a lot of money. You can be done with high interest payments. Consolidation helps you start on the path to greater control over your finances.
Other options
Debt consolidation is not your only way to get financial freedom. You may also opt for a long-term loan. They usually have lower monthly interest payments. That is a pretty good way to save some money.
You may not be aware that you can also get lower interest rates if you have a secured credit card. That way, if you own property or a car or another valuable possession which can be put up as security against you defaulting on your loan repayments, you can usually find a cheaper loan with lower monthly interest charges. If you haven't got property which you can use as security, then a personal loan may be useful for you.
When you are considering options for your credit, check out the current APR, so you can work out how much you will be paying in interest on your loan. Don't just opt for any old card. Shop around a bit. It's very easy. All the searching can be done online. That is the easiest way to find the best information about credit cards.
Once you have found a credit card that looks interesting, fill in the website form to get a personal online quote. Usually, a representative of the company will then get in touch with you pretty quickly. They can discuss your credit options and how much each will cost you. Then it's simply a matter of choosing the deal which looks best for you.
Some of the most expensive debts to have are unsecured credit card debts. They cost you the most in monthly interest charges. The interest charges on many credit cards range from 12.9% to an incredible 41%. That is why it is so important that you do your homework and find yourself the loan which charges the lowest interest rate you can find. Loans that charge lower interest rates allow you save more money.
Organize your Finances
If your credit card balance is rising and you are struggling to make your repayments, think about consolidating. In this way, you can combine all your debts with one creditor so you are just making a single installment on your debt each month. That way you can budget more easily as you know what you need to pay and when.
Reduce your Debt
One complication you may have which adds to your financial problems is several dates in the month when you need to pay out t different creditors. With a consolidation loan, you have more control over when you make the single monthly repayment which will be required.
This means that with this type of loan, you should be able to pay off your balance much more quickly. That will save you money in all the interest you won't be charged! Sometimes, if you're not careful, the interest payable on a loan can almost double what you owe. That makes credit card debt very expensive. But if you consolidate your balances you can save yourself a lot of money. You can be done with high interest payments. Consolidation helps you start on the path to greater control over your finances.
Other options
Debt consolidation is not your only way to get financial freedom. You may also opt for a long-term loan. They usually have lower monthly interest payments. That is a pretty good way to save some money.
You may not be aware that you can also get lower interest rates if you have a secured credit card. That way, if you own property or a car or another valuable possession which can be put up as security against you defaulting on your loan repayments, you can usually find a cheaper loan with lower monthly interest charges. If you haven't got property which you can use as security, then a personal loan may be useful for you.
When you are considering options for your credit, check out the current APR, so you can work out how much you will be paying in interest on your loan. Don't just opt for any old card. Shop around a bit. It's very easy. All the searching can be done online. That is the easiest way to find the best information about credit cards.
Once you have found a credit card that looks interesting, fill in the website form to get a personal online quote. Usually, a representative of the company will then get in touch with you pretty quickly. They can discuss your credit options and how much each will cost you. Then it's simply a matter of choosing the deal which looks best for you.
Auto Loans, Interest Rates And Your Credit Rating
Just about everyone in America today needs some form of transportation in order to commute to work, home, shopping and even leisure. The average American family normally has two cars since both husband and wife need to drive to the various important locations. The wife normally does a lot of car-pooling, grocery shopping and bill paying. The husband does car pooling, business trips, and takes the family on vacation. When the family grows and teenagers start driving then the family soon finds that the purchase of a third or fourth car is to their advantage. The teenager has many functions to attend plus going to the mall and hanging out with their friends. The vehicle in the American family soon expands from a one-two car family to a four-five car family. The price of a vehicle is never cheap a car cost today what a home cost back in the 60s. The process of getting a loan should not be time consuming. The finance company is the number one resource for obtaining a loan for your vehicle.
The problem of not having good credit does not prevent you from getting a loan for the vehicle of your choice. Many auto dealers advertise that bad credit, no credit no problem we can finance you. There are many safeties put into place that keep the individual from reneging on the loan. The dealer now has the capability to put a device in the vehicle that they can use to track the car and even turn the car off so that it is not moveable. This protects the auto dealer and finance company from loosing vehicles to anyone who has no intention to make payments. The ideal situation for the people who you buy the vehicle from but not for the consumer because if you get laid-off, cut back on payday or some other event prevents you from having enough funds to make a full payment then the car is made immobile. You are not able to use the vehicle for any other purpose. When buying a vehicle watch for all the details in the loan make sure that you have the right to ask for a skip payment whenever necessary. You should be able to ask your finance company for help if you are unemployed so that you can use the vehicle to help seek other employment.
The interest rate should be of great concern to the purchaser of a vehicle because a high rate can cost you triple the amount of the asking price of the vehicle. The ability to refinance your vehicle made possible in order to help you lower the interest rate saving you on cost and lowering your payments. Most finance companies do not have a problem with a refinance or you trading your vehicle in for a newer more up to date model. The finance companies find that if you are the type of creditor who pays his bills on time that you are a good credit risk. A good credit risk means that the finance company is able to make money, which is why they are in business. The longer your finance company is able to maintain a good profit level the more you are able to find financing. Finance companies not only offer loans for vehicles but they offer financing for student loans, mobile homes, RVs and small business loans.
The problem of not having good credit does not prevent you from getting a loan for the vehicle of your choice. Many auto dealers advertise that bad credit, no credit no problem we can finance you. There are many safeties put into place that keep the individual from reneging on the loan. The dealer now has the capability to put a device in the vehicle that they can use to track the car and even turn the car off so that it is not moveable. This protects the auto dealer and finance company from loosing vehicles to anyone who has no intention to make payments. The ideal situation for the people who you buy the vehicle from but not for the consumer because if you get laid-off, cut back on payday or some other event prevents you from having enough funds to make a full payment then the car is made immobile. You are not able to use the vehicle for any other purpose. When buying a vehicle watch for all the details in the loan make sure that you have the right to ask for a skip payment whenever necessary. You should be able to ask your finance company for help if you are unemployed so that you can use the vehicle to help seek other employment.
The interest rate should be of great concern to the purchaser of a vehicle because a high rate can cost you triple the amount of the asking price of the vehicle. The ability to refinance your vehicle made possible in order to help you lower the interest rate saving you on cost and lowering your payments. Most finance companies do not have a problem with a refinance or you trading your vehicle in for a newer more up to date model. The finance companies find that if you are the type of creditor who pays his bills on time that you are a good credit risk. A good credit risk means that the finance company is able to make money, which is why they are in business. The longer your finance company is able to maintain a good profit level the more you are able to find financing. Finance companies not only offer loans for vehicles but they offer financing for student loans, mobile homes, RVs and small business loans.
Are Your Credit Cards Getting too Hot to Handle?
If you're handling credit card debt like a hot potato, chances are, your credit cards are getting too hot to handle. Do you find yourself shifting money from one credit card to another just to make the minimum payments? Are you constantly seeking a limit increase? Maybe it's time to cool those cards off and hold on to some of your cold, hard cash.
It's Easy to Get Burned by Credit Card Debt
It seems so easy at first, doesn't it? You just pull out that little piece of plastic and swipe. Just like that, you're the owner of a sexy new skirt, a new leather wallet or a take-out Chinese feast. It's so satisfying, so appealing . . . until you get the bill.
It's one thing to splurge once in awhile on something you really want or need. It's okay too to use a credit card to track business expenses. But if you find yourself living on credit cards and relying on them to by groceries and pay your electric bill, you're paying way too much for the convenience plastic promises.
Freeze Your Hot Cards and Get Control
Take all of your credit cards now. Put them in a plastic water-proof bag. Freeze them in a block of ice to cool off them - and you.
Make a list of all of your credit cards. Find out exactly how much interest you're paying on each. Tally your monthly minimum payments. Determine exactly how much interest you paid last month compared to principal. Add in late fees and service fees and fees incurred because you put the fork on the wrong side of the plate while setting the table. Could you actually survive without your credit cards?
You Don't Have to Do this Alone
Avoidance is a common practice when it comes to facing financial reality. If it's too hard for you to do it alone, you're among the best of us. Consider debt counseling.
A qualified debt counselor can help you negotiate with creditors to reduce your interest rates and sometimes a settlement for less than you actually owe. Such a counselor will help you create a livable budget and come up with a plan to pay those credit cards off completely in one to three years - depending on how much you owe, of course.
Contact a qualified, reputable debt counselor today and finally relax knowing there really is a light at the end of the tunnel and it's not the warm glow of your future going up in flames.
It's Easy to Get Burned by Credit Card Debt
It seems so easy at first, doesn't it? You just pull out that little piece of plastic and swipe. Just like that, you're the owner of a sexy new skirt, a new leather wallet or a take-out Chinese feast. It's so satisfying, so appealing . . . until you get the bill.
It's one thing to splurge once in awhile on something you really want or need. It's okay too to use a credit card to track business expenses. But if you find yourself living on credit cards and relying on them to by groceries and pay your electric bill, you're paying way too much for the convenience plastic promises.
Freeze Your Hot Cards and Get Control
Take all of your credit cards now. Put them in a plastic water-proof bag. Freeze them in a block of ice to cool off them - and you.
Make a list of all of your credit cards. Find out exactly how much interest you're paying on each. Tally your monthly minimum payments. Determine exactly how much interest you paid last month compared to principal. Add in late fees and service fees and fees incurred because you put the fork on the wrong side of the plate while setting the table. Could you actually survive without your credit cards?
You Don't Have to Do this Alone
Avoidance is a common practice when it comes to facing financial reality. If it's too hard for you to do it alone, you're among the best of us. Consider debt counseling.
A qualified debt counselor can help you negotiate with creditors to reduce your interest rates and sometimes a settlement for less than you actually owe. Such a counselor will help you create a livable budget and come up with a plan to pay those credit cards off completely in one to three years - depending on how much you owe, of course.
Contact a qualified, reputable debt counselor today and finally relax knowing there really is a light at the end of the tunnel and it's not the warm glow of your future going up in flames.
A Little Credit Repair Help Can Go a Long Way
If you've never done it before, you can try to cook up a batch of cookies without a recipe. Sooner or later you'll might get something edible, but the kitchen will be quite a mess.
If you've never done it before, you can try to repair your car's transmission by yourself. Chances are you're not going to drive your car for a while. And the mess in the garage will dwarf whatever mess you made in the kitchen.
And if you've never done it before, you can try to repair your own credit reports. But, using the trial-and-error method of credit repair could make your credit rating much worse, not better. You only have one credit history, and if screw things up while tinkering around, it may be years before you can get the mess cleaned up.
Think how much faster you'd have a batch of great cookies with an expert baker helping you. And how much quicker your car will be back on the road with a master mechanic standing by. It might even be worth spending a dollar or two getting the help.
So why is credit repair so different? While many would have you believe repairing your credit is so simple a caveman could do it, cleaning your credit score can actually have as many complexities as fixing your transmission. There's much more involved than just sending a letter or submitting an online form.
Law firms specializing in credit correction understand the credit repair process, know what to say and how to say it, and have experiencing using the credit repair tactics most people aren't even aware exist. Making a single improper statement can result in your dispute being dismissed which can delay your credit repair efforts by months. Working with a true professional who can lead you through all the tricks and traps might even help shorten the time it takes to get results.
Be wary of the phrase "There's nothing a credit repair firm can do for you that you can't do yourself for free." One thing a reliable, proven law firm can do for you is keep you from making an error that will set back your efforts.
Also, as anyone can tell you, there are good and bad chefs out there. There are good mechanics, and scam artists with wrenches. The credit world is full of vultures, too. But there are also solid, established, consumer-focused law firms whose counsel can be valuable. And they can keep you from making a mess too tough to clean up.
If you've never done it before, you can try to repair your car's transmission by yourself. Chances are you're not going to drive your car for a while. And the mess in the garage will dwarf whatever mess you made in the kitchen.
And if you've never done it before, you can try to repair your own credit reports. But, using the trial-and-error method of credit repair could make your credit rating much worse, not better. You only have one credit history, and if screw things up while tinkering around, it may be years before you can get the mess cleaned up.
Think how much faster you'd have a batch of great cookies with an expert baker helping you. And how much quicker your car will be back on the road with a master mechanic standing by. It might even be worth spending a dollar or two getting the help.
So why is credit repair so different? While many would have you believe repairing your credit is so simple a caveman could do it, cleaning your credit score can actually have as many complexities as fixing your transmission. There's much more involved than just sending a letter or submitting an online form.
Law firms specializing in credit correction understand the credit repair process, know what to say and how to say it, and have experiencing using the credit repair tactics most people aren't even aware exist. Making a single improper statement can result in your dispute being dismissed which can delay your credit repair efforts by months. Working with a true professional who can lead you through all the tricks and traps might even help shorten the time it takes to get results.
Be wary of the phrase "There's nothing a credit repair firm can do for you that you can't do yourself for free." One thing a reliable, proven law firm can do for you is keep you from making an error that will set back your efforts.
Also, as anyone can tell you, there are good and bad chefs out there. There are good mechanics, and scam artists with wrenches. The credit world is full of vultures, too. But there are also solid, established, consumer-focused law firms whose counsel can be valuable. And they can keep you from making a mess too tough to clean up.
Four Laws To Help You Clean Your Credit Rating
Fortunately for you, decades ago Congress recognized that the system of credit reporting needed legislation. The practices of the credit reporting agencies and the agencies using the reports they provided were abhorrent. American consumers were being abused by a system they had no way of influencing and no way of keeping in check.
To combat these abuses, Congress enacted the Fair Credit Reporting Act which with its subsequent revisions has become the cornerstone of your consumer credit rights. It is because of this legislation that you have the right to see what information is recorded on your credit files and to dispute any questionable negative items they contain.
In addition to the FCRA, there are a few other consumer protection acts that give consumers certain rights when you are working with creditors or collections companies who report to the credit bureaus. By making use of their rights under each of these statutes, consumers have been able to successfully fix bad credit.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is what got credit repair started. Because of this act, you have the right to order copies of your credit reports and to dispute inaccurate credit directly with the credit bureaus.
Fair Debt Collection Practices Act
Along with protecting your against abusive behavior from collectors such as calling you at unusual hours, screaming at you, using vulgar language, lying about their identity, or using violence while trying to collect a debt, the Fair Debt Collections Practices Act (FDCPA) gives you powerful debt validation tools that give you the right to challenge any debt.
Fair Credit Billing Act
Similar to how the Fair Debt Collection Practices Act governs collections agencies, the Fair Credit Billing Act gives you the right to dispute questionable negative credit listings directly with your original creditors in order to modify how they are reporting your account to the credit reporting agencies.
Credit Repair Organizations Act
With all the legislation surrounding credit correction, it can be overwhelming for a newcomer working to fix their credit reports. Fortunately, there are licensed credit repair companies who help consumers work towards a fair and accurate credit score. These credit repair organizations are regulated by the Credit Repair Organizations Act which helps prevent consumers from becoming a victim of a credit repair scam.
To combat these abuses, Congress enacted the Fair Credit Reporting Act which with its subsequent revisions has become the cornerstone of your consumer credit rights. It is because of this legislation that you have the right to see what information is recorded on your credit files and to dispute any questionable negative items they contain.
In addition to the FCRA, there are a few other consumer protection acts that give consumers certain rights when you are working with creditors or collections companies who report to the credit bureaus. By making use of their rights under each of these statutes, consumers have been able to successfully fix bad credit.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is what got credit repair started. Because of this act, you have the right to order copies of your credit reports and to dispute inaccurate credit directly with the credit bureaus.
Fair Debt Collection Practices Act
Along with protecting your against abusive behavior from collectors such as calling you at unusual hours, screaming at you, using vulgar language, lying about their identity, or using violence while trying to collect a debt, the Fair Debt Collections Practices Act (FDCPA) gives you powerful debt validation tools that give you the right to challenge any debt.
Fair Credit Billing Act
Similar to how the Fair Debt Collection Practices Act governs collections agencies, the Fair Credit Billing Act gives you the right to dispute questionable negative credit listings directly with your original creditors in order to modify how they are reporting your account to the credit reporting agencies.
Credit Repair Organizations Act
With all the legislation surrounding credit correction, it can be overwhelming for a newcomer working to fix their credit reports. Fortunately, there are licensed credit repair companies who help consumers work towards a fair and accurate credit score. These credit repair organizations are regulated by the Credit Repair Organizations Act which helps prevent consumers from becoming a victim of a credit repair scam.
Is it Time to Fix Your Credit?
As is often times the case, even things as dire as today's credit crunch have a silver lining. And in the case of the credit crunch, the lining is that the cost of big ticket items are falling. Plummeting interest rates with already lower asking prices work together to make now one of the premier times in decades to purchase a home or a new car.
But there is a catch.
Not everybody can take advantage of this opportunity. Credit is harder to come by, hence the term "credit crunch". After years of reckless lending resulting in a record number of defaulted loans and foreclosures, lenders have been forced to be more conservative in their lending practices. Today, they are only able to extend credit to the least risky consumers.
Lenders largely determine credit risk by looking at your credit score. A low credit rating tells them that you cannot be counted on to repay your debts on time and maybe not at all. As a result lenders will deny credit to people they feel are too high of a credit risk, and charge higher interest rates to those who are a moderate risk to make sure they can still turn a profit even if a small percentage of those people default on the loan.
Today, lenders tolerance for credit risk is much lower than in previous years. A credit score in excess of 750 is now required by many lenders to get approved for a loan with the best interest rate and the best terms. Anything lower than that, and you have to pay extra. Too far below that and you run the risk of being denied for credit altogether.
But what happens if your credit score says you are a poor credit risk, even though you really aren't?
Credit reporting errors, flawed scoring models, and irrelevant credit listings combine to give many people credit scores that are not indicative of their true credit worthiness. They are dependable consumers, but their credit scores tell a different story. For people in this situation, fixing their credit score may be the best option for getting the credit rating they deserve.
So if your credit is holding you back, don't just sit idly by and wait for it to get better on its own. You have the right to a fair and accurate credit score and there are steps you can take to legally fix your credit. Take action today and you may even be able to benefit from the credit crisis.
But there is a catch.
Not everybody can take advantage of this opportunity. Credit is harder to come by, hence the term "credit crunch". After years of reckless lending resulting in a record number of defaulted loans and foreclosures, lenders have been forced to be more conservative in their lending practices. Today, they are only able to extend credit to the least risky consumers.
Lenders largely determine credit risk by looking at your credit score. A low credit rating tells them that you cannot be counted on to repay your debts on time and maybe not at all. As a result lenders will deny credit to people they feel are too high of a credit risk, and charge higher interest rates to those who are a moderate risk to make sure they can still turn a profit even if a small percentage of those people default on the loan.
Today, lenders tolerance for credit risk is much lower than in previous years. A credit score in excess of 750 is now required by many lenders to get approved for a loan with the best interest rate and the best terms. Anything lower than that, and you have to pay extra. Too far below that and you run the risk of being denied for credit altogether.
But what happens if your credit score says you are a poor credit risk, even though you really aren't?
Credit reporting errors, flawed scoring models, and irrelevant credit listings combine to give many people credit scores that are not indicative of their true credit worthiness. They are dependable consumers, but their credit scores tell a different story. For people in this situation, fixing their credit score may be the best option for getting the credit rating they deserve.
So if your credit is holding you back, don't just sit idly by and wait for it to get better on its own. You have the right to a fair and accurate credit score and there are steps you can take to legally fix your credit. Take action today and you may even be able to benefit from the credit crisis.
Advice for Finding a Legitimate Credit Repair Company
Choosing a credit repair company is a big decision. Getting stuck with the wrong company could end up costing you hundreds or even thousands of dollars, and if they are unsuccessful in repairing your credit, you have delayed achieving your goal of a good credit score by months or even years. And if that wasn't enough, getting caught up in a fraudulent credit repair service could get you in legal trouble.
So to help you with making a good decision and help keep you safe from getting taken advantage of by a credit repair scam, here is a guide to shopping for a credit correction service. Below are some tips you can use to ensure you end up selecting a trustworthy credit repair company to help you work towards achieving your credit goals.
Know how the credit system works
Before you even begin looking for a credit repair company, you should know the fundamentals of how the credit reporting system works. You wouldn't start shopping for a new car if you didn't know how to drive or how cars operate. So make sure before you begin looking for a credit repair service you have some understanding of how the credit reporting agencies function, how your credit files are created, how they are used, and why it is your responsibility to ensure their accuracy. Also, familiarize yourself with what you can do to repair your credit yourself. You may find that you don't need help from a credit repair expert.
Be familiar with what a credit repair company can and cannot do
Despite what some credit repair clinics would have you believe, there are no secret tricks to repairing your credit . Credit repair companies use the same methods to fix up your credit reports that are available to you as a result of the numerous consumer protection statutes enacted to help protect you from being taken advantage of by creditors and the credit bureaus. The only difference is that an experienced credit repair company already has the knowledge and experience necessary to make use of these credit repair tools. In comparison, it may take you many hours of research and a few months of practice to figure out how to go about effectively cleaning your credit.
Also know that by law, credit repair companies are not permitted to accept payment for services before they have been provided. This was made into law because many fraudulent credit repair companies will charge hundreds of dollars or more immediately and then disappear with your money. Any credit repair company that requires a large upfront payment should be avoided.
Look at the services being provided
A credit repair organization is legally able to provide the same credit repair services you can perform for yourself, but this does not mean that all do. Many credit repair companies only provide credit bureau disputes which are effective for some , but are usually less successful and slower than using credit bureau disputes along with other credit correction tactics.
Look for experience and results
While no credit correction firm is flawless and the success of any effort to fix your credit is reliant on your creditors and the credit reporting agencies, an experienced firm will probably generate faster and more meaningful results than a new company who is still learning the nuances of the system.
Pay attention to the price tag
As with any service, the goal is then to get the best value for your money. To determine this, find out what services you will be getting for your money and make a best estimate of the relative quality of these services. This should help you get a feel for how companies compare to each other. For example, if one service charges $49 per month for credit bureau disputes and has been operating for only a couple of years, you are probably better off using a competing service for $20 more per month that also provides creditor interventions and has been helping consumers for a decade.
Above all, use your common sense
Just as you would at any other time when someone is asking you to part with your hard earned money, when you are looking at a credit correction company, trust your instincts and remember the old adage of anything that sounds too good to be true, probably is.
You should be completely convinced that you are making a goodthe right decision. It is your credit score that is on the line and your money that is being invested. Don't let anyone pressure you into doing anyting that doesn't feel proper.
So to help you with making a good decision and help keep you safe from getting taken advantage of by a credit repair scam, here is a guide to shopping for a credit correction service. Below are some tips you can use to ensure you end up selecting a trustworthy credit repair company to help you work towards achieving your credit goals.
Know how the credit system works
Before you even begin looking for a credit repair company, you should know the fundamentals of how the credit reporting system works. You wouldn't start shopping for a new car if you didn't know how to drive or how cars operate. So make sure before you begin looking for a credit repair service you have some understanding of how the credit reporting agencies function, how your credit files are created, how they are used, and why it is your responsibility to ensure their accuracy. Also, familiarize yourself with what you can do to repair your credit yourself. You may find that you don't need help from a credit repair expert.
Be familiar with what a credit repair company can and cannot do
Despite what some credit repair clinics would have you believe, there are no secret tricks to repairing your credit . Credit repair companies use the same methods to fix up your credit reports that are available to you as a result of the numerous consumer protection statutes enacted to help protect you from being taken advantage of by creditors and the credit bureaus. The only difference is that an experienced credit repair company already has the knowledge and experience necessary to make use of these credit repair tools. In comparison, it may take you many hours of research and a few months of practice to figure out how to go about effectively cleaning your credit.
Also know that by law, credit repair companies are not permitted to accept payment for services before they have been provided. This was made into law because many fraudulent credit repair companies will charge hundreds of dollars or more immediately and then disappear with your money. Any credit repair company that requires a large upfront payment should be avoided.
Look at the services being provided
A credit repair organization is legally able to provide the same credit repair services you can perform for yourself, but this does not mean that all do. Many credit repair companies only provide credit bureau disputes which are effective for some , but are usually less successful and slower than using credit bureau disputes along with other credit correction tactics.
Look for experience and results
While no credit correction firm is flawless and the success of any effort to fix your credit is reliant on your creditors and the credit reporting agencies, an experienced firm will probably generate faster and more meaningful results than a new company who is still learning the nuances of the system.
Pay attention to the price tag
As with any service, the goal is then to get the best value for your money. To determine this, find out what services you will be getting for your money and make a best estimate of the relative quality of these services. This should help you get a feel for how companies compare to each other. For example, if one service charges $49 per month for credit bureau disputes and has been operating for only a couple of years, you are probably better off using a competing service for $20 more per month that also provides creditor interventions and has been helping consumers for a decade.
Above all, use your common sense
Just as you would at any other time when someone is asking you to part with your hard earned money, when you are looking at a credit correction company, trust your instincts and remember the old adage of anything that sounds too good to be true, probably is.
You should be completely convinced that you are making a goodthe right decision. It is your credit score that is on the line and your money that is being invested. Don't let anyone pressure you into doing anyting that doesn't feel proper.
Credit Bureaus: Friend or Foe?
They exert enormous power over your life - and the lives of every other American adult. But what do you really know about the credit reporting agencies? Friend or foe? Fact or fiction?
Survey after survey suggests the typical American knows very little about consumer reporting agencies other than that they essentially control consumer credit profiles - and as a result, their buying power. And that is how these credit reporting agencies want it, argues Dr. Randy Padawer, a clinical psychologist whose research into consumer credit has been featured in Smart Money Magazine and the bestselling FICO 850 seminar for The Motley Fool.
"The three major credit bureaus truly want consumers to believe that they've each been blessed with an officially sanctioned franchise," says Padawer, who has consulted for Lexington Law, a consumer advocacy law firm whose credit repair services help clients dispute errors and other questionable negative information from their credit reports.
The fewer facts you know about the credit reporting agencies, the more difficult it will be to resolve a problem when one shows up on your credit file. And odds are an error will appear. Nearly 80 of credit reports contain errors, and approximately 25 contain errors serious enough to cause significant problems for consumers, according to research by the U.S. PIRG.
Here are some credit bureau fictions and the facts behind each fiction:
Fiction 1: There are only three credit bureaus.
Fact: Many organizations are in the business of collecting, compiling and processing credit information.
Fiction 2: The three major credit bureaus are official government entities.
Fact: "There are no official bureaus," Padawer says. "While most Americans perceive their credit reports to have at least the same legal standing as their driving records, the truth is that the government had no role in establishing the for-profit companies which produce them."
Fiction 3: Equifax, Experian, and TransUnion all record the same credit information.
Fact: Different creditors often report to different reporting agencies. In fact, there is no law that forces them to report to any of the credit bureaus at all. Credit bureaus do not share information either, so if you find an error on your report from all three agencies, fixing it with one of them does not mean the error will automatically come off your other two reports .
Fiction 4: Credit bureaus will act quickly to help me fix an error or remove inaccurate negative listings from my credit file.
Fact: Federal law requires Equifax, Experian, TransUnion, and all consumer reporting agencies to complete an investigation into a consumer complaint within 30 days of when it was first made. The credit bureau may decide to keep the disputed item on the credit report as is, update but not delete the listing, remove the listing, or deem the complaint frivolous. Given that it is easiest to simply deem your complaint as frivolous, many consumers find that their legitimate complaints get dismissed.
Increasingly, frustrated and fed up consumers are turning to professionals like Lexington Law to help them resolve credit report issues. Anyone who has disputed a listing on their credit report knows the process can be long, frusterating and perhaps without results. Involving a credit repair professional can achieve faster, better results.
Survey after survey suggests the typical American knows very little about consumer reporting agencies other than that they essentially control consumer credit profiles - and as a result, their buying power. And that is how these credit reporting agencies want it, argues Dr. Randy Padawer, a clinical psychologist whose research into consumer credit has been featured in Smart Money Magazine and the bestselling FICO 850 seminar for The Motley Fool.
"The three major credit bureaus truly want consumers to believe that they've each been blessed with an officially sanctioned franchise," says Padawer, who has consulted for Lexington Law, a consumer advocacy law firm whose credit repair services help clients dispute errors and other questionable negative information from their credit reports.
The fewer facts you know about the credit reporting agencies, the more difficult it will be to resolve a problem when one shows up on your credit file. And odds are an error will appear. Nearly 80 of credit reports contain errors, and approximately 25 contain errors serious enough to cause significant problems for consumers, according to research by the U.S. PIRG.
Here are some credit bureau fictions and the facts behind each fiction:
Fiction 1: There are only three credit bureaus.
Fact: Many organizations are in the business of collecting, compiling and processing credit information.
Fiction 2: The three major credit bureaus are official government entities.
Fact: "There are no official bureaus," Padawer says. "While most Americans perceive their credit reports to have at least the same legal standing as their driving records, the truth is that the government had no role in establishing the for-profit companies which produce them."
Fiction 3: Equifax, Experian, and TransUnion all record the same credit information.
Fact: Different creditors often report to different reporting agencies. In fact, there is no law that forces them to report to any of the credit bureaus at all. Credit bureaus do not share information either, so if you find an error on your report from all three agencies, fixing it with one of them does not mean the error will automatically come off your other two reports .
Fiction 4: Credit bureaus will act quickly to help me fix an error or remove inaccurate negative listings from my credit file.
Fact: Federal law requires Equifax, Experian, TransUnion, and all consumer reporting agencies to complete an investigation into a consumer complaint within 30 days of when it was first made. The credit bureau may decide to keep the disputed item on the credit report as is, update but not delete the listing, remove the listing, or deem the complaint frivolous. Given that it is easiest to simply deem your complaint as frivolous, many consumers find that their legitimate complaints get dismissed.
Increasingly, frustrated and fed up consumers are turning to professionals like Lexington Law to help them resolve credit report issues. Anyone who has disputed a listing on their credit report knows the process can be long, frusterating and perhaps without results. Involving a credit repair professional can achieve faster, better results.
4 Perks of Maintaining a Good Credit Score
Most people are aware of the obvious reason to have a clean credit report. Lenders heavily weigh your credit rating when considering whether to extend credit and at what rate. The worse your credit rating, the more likely in their eyes you are to default on a loan and the more they will have to charge in interest rates.
Because having negative information on your credit reports is the quickest way to damage your credit score, maintaining a clean credit report or working to clean a damaged report is one of the best things you can do to increase your credit score and become a more qualified candidate for low interest loans.
But that is only one benefit of having a clean credit report. Even if you have no intention of purchasing a new home, buying a car, or refinancing an existing loan, making sure your credit reports are as good as they can be still provides other rewards.
Employers like a Good Credit Score
Credit reports aren't just used for credit anymore. Many employers today will want to take a look at your credit reports as a part of the application process. Before making a commitment on you, employers want to do their homework and for some, that investigation involves seeing how responsible you have been with your finances. Negative information on your credit reports could be a warning sign that you may not be trustworthy.
As a result, having a clean credit report may be another qualification you need to get that new job.
Credit Card Providers Can Keep Tabs On Your Credit Reports
Even if you already have a low interest credit card, you should be careful to maintain a good credit score because that rate isn't always set in stone. Many credit card contracts feature what is known as a "universal default" clause in which credit card providers reserve the ability to jack up your interest rates if you are late on any payments, not just those to the credit card provider.
Come in thirty days late on your car payment and your credit card interest rates could double or triple as a result.
Your Car Insurance Rates Probably Take Your Credit into Account
Most auto insurance providers today will want to see your credit rating before they will be willing to issue you a policy. The rationale is simple. According to statistics, drivers with poor credit scores file more claims that people with a high credit score. As a result, auto insurance providers can elect to deny consumers with low credit score or insist they pay higher premiums.
If you have a good credit score, however, this works I your favor because, as a lower risk client, car insurance companies can get by with charging your lower premiums.
Because having negative information on your credit reports is the quickest way to damage your credit score, maintaining a clean credit report or working to clean a damaged report is one of the best things you can do to increase your credit score and become a more qualified candidate for low interest loans.
But that is only one benefit of having a clean credit report. Even if you have no intention of purchasing a new home, buying a car, or refinancing an existing loan, making sure your credit reports are as good as they can be still provides other rewards.
Employers like a Good Credit Score
Credit reports aren't just used for credit anymore. Many employers today will want to take a look at your credit reports as a part of the application process. Before making a commitment on you, employers want to do their homework and for some, that investigation involves seeing how responsible you have been with your finances. Negative information on your credit reports could be a warning sign that you may not be trustworthy.
As a result, having a clean credit report may be another qualification you need to get that new job.
Credit Card Providers Can Keep Tabs On Your Credit Reports
Even if you already have a low interest credit card, you should be careful to maintain a good credit score because that rate isn't always set in stone. Many credit card contracts feature what is known as a "universal default" clause in which credit card providers reserve the ability to jack up your interest rates if you are late on any payments, not just those to the credit card provider.
Come in thirty days late on your car payment and your credit card interest rates could double or triple as a result.
Your Car Insurance Rates Probably Take Your Credit into Account
Most auto insurance providers today will want to see your credit rating before they will be willing to issue you a policy. The rationale is simple. According to statistics, drivers with poor credit scores file more claims that people with a high credit score. As a result, auto insurance providers can elect to deny consumers with low credit score or insist they pay higher premiums.
If you have a good credit score, however, this works I your favor because, as a lower risk client, car insurance companies can get by with charging your lower premiums.
Repairing Your Own Credit: Is it Worth it?
As anyone who has researched credit repair has heard, you have the right to repair your own credit. In fact, Dr. Randy Padawer, who co-wrote the best selling "FICO(R) 850" seminar for The Motley Fool and "Credit Revolution: Path of the Smart Consumer", became a credit expert by becoming an uber-do-it-yourselfer when it comes to credit repair.
You have probably also read that you can dispute the inaccurate negative items in your credit reports for free. Equifax, Experian, and TransUnion even provide a form on their respective websites to make this process easy for you.
Something that you likely will not hear as often is that credit repair is rarely as simple as it initially seems. On its surface, repairing your own credit seems to be an easy process. You get a copy of your credit reports, find each of the inaccurate credit listings, dispute them with the credit bureaus, and wait for the bureaus to perform their investigations. Of course, if it really were that easy, there would be no need for any of the dozens of reputable credit repair companies.
As you continue researching the process of self credit repair, you will start to understand the difficulties of working to repair your credit score. You will find that it is not uncommon for the credit bureaus to reject your disputes or to verify a negative item that is actually inaccurate. You will find that repairing your credit reports may involve also working with your creditors and if they are unresponsive to your needs, invoking your rights under the FCBA to force them to update or remove inaccurate listings. If you have inaccurate collections accounts listed on your credit reports, you may find that you also need to work with the reporting collections agencies in a similar fashion by taking advantage of your rights under the FDCPA.
Add to this that when dealing with each of these entities, you will find there are set protocols that if not observed could hurt your credit repair efforts. Even more, there are some pitfalls you will need to be aware of and avoid to make sure your credit rating does not get worse as a result of your credit repair efforts.
The benefits of correcting your credit reports can be huge but the process is not always easy and not without risk. If things go poorly, working to repair your own credit could hurt your credit score and even result in you being sued. For this reason, anyone looking to repair their own credit should adequately research the process before they begin.
As mentioned above, Dr. Padawer became a credit expert by educating himself about how people can repair their own credit. For most people, however, becoming a credit expert is not the goal. The goal is to correct the errors in their credit reports and this is why credit repair firms exist.
In 2004, Lexington Law, the trusted leaders in credit repair, conducted a study of over 2,000 of our clients. A finding from this study showed that almost 40 of those surveyed had attempted to repair their own credit before enlisting the help of the firm. Even through credit repair is something you can do for yourself "at little or no cost" according to the FTC, these people found it was easier to pay for Lexington Law's credit repair services than to keep working on repairing their own credit.
You have probably also read that you can dispute the inaccurate negative items in your credit reports for free. Equifax, Experian, and TransUnion even provide a form on their respective websites to make this process easy for you.
Something that you likely will not hear as often is that credit repair is rarely as simple as it initially seems. On its surface, repairing your own credit seems to be an easy process. You get a copy of your credit reports, find each of the inaccurate credit listings, dispute them with the credit bureaus, and wait for the bureaus to perform their investigations. Of course, if it really were that easy, there would be no need for any of the dozens of reputable credit repair companies.
As you continue researching the process of self credit repair, you will start to understand the difficulties of working to repair your credit score. You will find that it is not uncommon for the credit bureaus to reject your disputes or to verify a negative item that is actually inaccurate. You will find that repairing your credit reports may involve also working with your creditors and if they are unresponsive to your needs, invoking your rights under the FCBA to force them to update or remove inaccurate listings. If you have inaccurate collections accounts listed on your credit reports, you may find that you also need to work with the reporting collections agencies in a similar fashion by taking advantage of your rights under the FDCPA.
Add to this that when dealing with each of these entities, you will find there are set protocols that if not observed could hurt your credit repair efforts. Even more, there are some pitfalls you will need to be aware of and avoid to make sure your credit rating does not get worse as a result of your credit repair efforts.
The benefits of correcting your credit reports can be huge but the process is not always easy and not without risk. If things go poorly, working to repair your own credit could hurt your credit score and even result in you being sued. For this reason, anyone looking to repair their own credit should adequately research the process before they begin.
As mentioned above, Dr. Padawer became a credit expert by educating himself about how people can repair their own credit. For most people, however, becoming a credit expert is not the goal. The goal is to correct the errors in their credit reports and this is why credit repair firms exist.
In 2004, Lexington Law, the trusted leaders in credit repair, conducted a study of over 2,000 of our clients. A finding from this study showed that almost 40 of those surveyed had attempted to repair their own credit before enlisting the help of the firm. Even through credit repair is something you can do for yourself "at little or no cost" according to the FTC, these people found it was easier to pay for Lexington Law's credit repair services than to keep working on repairing their own credit.
Today is the Perfect Day to Fix Bad Credit
There is a reason why it seems like everyone is talking about credit repair these days and why so many Americans are turning to credit repair organizations for help with increasing their credit scores. For decades, your credit rating has been a critical component of your ability to get approved for credit. The difference is that recently, lenders are offering some of the best deals in a very long time, but you need to have a higher credit rating than ever if you even want to be considered.
The credit crunch has caused interest rates and prices to dive. Combine that with the thousands of dollars new home buyers can get from the government and it becomes obvious that if you have a good job and a steady income, now is a great time to make a major purchase. The only problem is that unlike previous years where lenders seemed to be pulling out all the stops in order to lend to people regardless of their credit scores, now lenders are being far more cautious. Some people are finding that a 700 plus score is necessary to even get approved for a loan. A 750 plus FICO score is required to get the best interest rates.
So what does it mean if your credit score is below average? Basically, if your credit score is below 650, your chances of making the most of the credit crunch are not too good. Banks are no longer willing to give to people they feel are a high credit risk and that is exactly what a bad credit score means to them.
A low credit score tells lenders that you are not credit worthy. But in many people's cases, their credit scores are lower than they should be. If you know you are worthy of credit, but can't get approved because of your credit rating, then your credit score is incorrect and needs to be fixed. Credit repair is how people are able to increase their credit scores when they are lower than they should be. Using credit repair, people have been able to permanently delete millions of items from their credit reports that should not be there for one reason or another.
You can clean your credit reports on your own, but it is rarely an easy chore. For this reason, thousands are turning to credit repair law firms for help with fixing their credit. For a fee, legitimate credit repair organizations take the hassle out of credit repair while providing results that can be quite literally life changing.
The credit crunch has caused interest rates and prices to dive. Combine that with the thousands of dollars new home buyers can get from the government and it becomes obvious that if you have a good job and a steady income, now is a great time to make a major purchase. The only problem is that unlike previous years where lenders seemed to be pulling out all the stops in order to lend to people regardless of their credit scores, now lenders are being far more cautious. Some people are finding that a 700 plus score is necessary to even get approved for a loan. A 750 plus FICO score is required to get the best interest rates.
So what does it mean if your credit score is below average? Basically, if your credit score is below 650, your chances of making the most of the credit crunch are not too good. Banks are no longer willing to give to people they feel are a high credit risk and that is exactly what a bad credit score means to them.
A low credit score tells lenders that you are not credit worthy. But in many people's cases, their credit scores are lower than they should be. If you know you are worthy of credit, but can't get approved because of your credit rating, then your credit score is incorrect and needs to be fixed. Credit repair is how people are able to increase their credit scores when they are lower than they should be. Using credit repair, people have been able to permanently delete millions of items from their credit reports that should not be there for one reason or another.
You can clean your credit reports on your own, but it is rarely an easy chore. For this reason, thousands are turning to credit repair law firms for help with fixing their credit. For a fee, legitimate credit repair organizations take the hassle out of credit repair while providing results that can be quite literally life changing.
Now Is the Perfect Time to Repair Credit
There is a reason why so many people are talking about fixing credit now days and why so many people are signing up with credit repair services for help with raising their credit scores. For many years, your credit reports have been a critical part of your ability to get approved for credit. The difference is that today, lenders are offering their best deals in years, but you have to have a higher credit score than ever if you even want to be considered.
The credit crisis has caused prices and interest rates to dive. Combine that with the thousands of dollars new home buyers can get from the government and it becomes obvious that if you have steady income, now is an ideal time to make a major purchase. The only problem is that unlike previous years where lenders seemed to be bending over backwards to lend to people regardless of their credit, now lenders are being far more cautious. Some people are finding that a 700 plus credit score is necessary to even get approved for a loan. A 750 plus score is required to get the best interest rates and terms.
So what does this mean if your FICO score is lower than average? Basically, if your credit score is in the low 600's or below, your chances of benefiting from the credit crisis are slim. Banks aren't going to lend money to people they feel are a high credit risk and that is exactly what your low credit score means to them.
A low credit score tells lenders that you are not worthy of credit. But in many people's cases, their credit scores should not be as low as they are. If you know you are a low credit risk, but still can't get a loan because of your credit rating, then your credit score is wrong and needs to be fixed. Credit repair is how people are able to raise their credit scores when they are worse than they should be. Using credit repair, people have been able to permanently delete millions of accounts from their credit files that should not be listed for one reason or another.
You can repair your credit score on your own, but it is rarely a simple chore. For this reason, thousands have turned to credit repair companies for help with fixing up their credit. For a fee, legitimate credit repair companies take the difficulty out of credit repair while providing results that can be quite literally life changing.
The credit crisis has caused prices and interest rates to dive. Combine that with the thousands of dollars new home buyers can get from the government and it becomes obvious that if you have steady income, now is an ideal time to make a major purchase. The only problem is that unlike previous years where lenders seemed to be bending over backwards to lend to people regardless of their credit, now lenders are being far more cautious. Some people are finding that a 700 plus credit score is necessary to even get approved for a loan. A 750 plus score is required to get the best interest rates and terms.
So what does this mean if your FICO score is lower than average? Basically, if your credit score is in the low 600's or below, your chances of benefiting from the credit crisis are slim. Banks aren't going to lend money to people they feel are a high credit risk and that is exactly what your low credit score means to them.
A low credit score tells lenders that you are not worthy of credit. But in many people's cases, their credit scores should not be as low as they are. If you know you are a low credit risk, but still can't get a loan because of your credit rating, then your credit score is wrong and needs to be fixed. Credit repair is how people are able to raise their credit scores when they are worse than they should be. Using credit repair, people have been able to permanently delete millions of accounts from their credit files that should not be listed for one reason or another.
You can repair your credit score on your own, but it is rarely a simple chore. For this reason, thousands have turned to credit repair companies for help with fixing up their credit. For a fee, legitimate credit repair companies take the difficulty out of credit repair while providing results that can be quite literally life changing.
Single Mother on a Budget?
A budget is a systematic plan for the expenditure of a usually fixed resource, such as money or time, during a given period. As a single mother, you might groan at the thought of putting together a household budget. Kelly Kennedy has a few helpful tips.
By Kelly Kennedy
* Budgeting Tips *
A budget is a systematic plan for the expenditure of a usually fixed resource, such as money or time, during a given period. As a single mother, you might groan at the thought of putting together a household budget with all your expenses, but it's easy to do and will also help you become very financially organized.
Shaping up your finances is particularly important if you are experiencing a life altering experience such as a marriage, divorce, new baby, or any other event that changes your finances dramatically. Whatever the state of your financial life, developing a sensible household budget will allow you to be in charge of your money.
* How to Create a Simple Budget *
Your Cash Flow
The core of budgeting is for you, as a single mother, to see your monthly spending needs and habits. The purpose of a household budget allows you to track your personal cash flow. Your personal cash flow is how much money comes in and how much goes out.
Adding up your monthly income is easy, but totaling up all your expenses takes a little more effort.
First, collect all your bills, your credit card statements, your checkbook register, and receipts for your groceries, gas, or anything else you buy with cash.
If you haven't been keeping good records, you may have to get a receipt of every dollar you spend for a month before you put together an accurate budget. Track your expenses by making entries in a notebook or learn how to it in Microsoft Excel. You can also use a money management program such as Quicken or Microsoft Money. They are really worth the investment, because they make the budgeting process easy and the software can often be found discounted at computer retailers or bookstores.
Now, divide your spending into fixed costs and variable costs. Your fixed costs will include such things as mortgage payments, rent, or loan payments. Your variable costs will include such things as clothing, food and entertainment.
* How to Stick to a Budget *
Once you are managing your spending, you can easily decide which costs as a single mother you can cut and which you cannot. In most cases, as soon as you see how much you are spending on your morning latte and breakfast items, you will be motivated to cut back. Stay motivated by setting goals.
Here are a few budgeting tips to get you started:
* Budgeting isn't difficult, but getting started does take motivation. Promise yourself a reward for your efforts.
* Gather three months of bills or, if possible, all of the past year's bills, and add up how much you spent every month. Divide them into categories such as housing, entertainment, and food.
* Take a good look at what you can spare. Entertainment expenses are easy to cut, but utility bills are not. Keep a daily journal of what you spend each day. This may sound obsessive, but it can be helpful. Once you know where your money goes, you can spot your unnecessary costs. It is really not that hard to give up lattes or bring your lunch from home.
* Pay bills as soon as they come in. Avoid destroying your budget with late fees.
* Decide what you can cut, and then cut it out. Track what you are saving, and you will be pleased with the results.
By Kelly Kennedy
* Budgeting Tips *
A budget is a systematic plan for the expenditure of a usually fixed resource, such as money or time, during a given period. As a single mother, you might groan at the thought of putting together a household budget with all your expenses, but it's easy to do and will also help you become very financially organized.
Shaping up your finances is particularly important if you are experiencing a life altering experience such as a marriage, divorce, new baby, or any other event that changes your finances dramatically. Whatever the state of your financial life, developing a sensible household budget will allow you to be in charge of your money.
* How to Create a Simple Budget *
Your Cash Flow
The core of budgeting is for you, as a single mother, to see your monthly spending needs and habits. The purpose of a household budget allows you to track your personal cash flow. Your personal cash flow is how much money comes in and how much goes out.
Adding up your monthly income is easy, but totaling up all your expenses takes a little more effort.
First, collect all your bills, your credit card statements, your checkbook register, and receipts for your groceries, gas, or anything else you buy with cash.
If you haven't been keeping good records, you may have to get a receipt of every dollar you spend for a month before you put together an accurate budget. Track your expenses by making entries in a notebook or learn how to it in Microsoft Excel. You can also use a money management program such as Quicken or Microsoft Money. They are really worth the investment, because they make the budgeting process easy and the software can often be found discounted at computer retailers or bookstores.
Now, divide your spending into fixed costs and variable costs. Your fixed costs will include such things as mortgage payments, rent, or loan payments. Your variable costs will include such things as clothing, food and entertainment.
* How to Stick to a Budget *
Once you are managing your spending, you can easily decide which costs as a single mother you can cut and which you cannot. In most cases, as soon as you see how much you are spending on your morning latte and breakfast items, you will be motivated to cut back. Stay motivated by setting goals.
Here are a few budgeting tips to get you started:
* Budgeting isn't difficult, but getting started does take motivation. Promise yourself a reward for your efforts.
* Gather three months of bills or, if possible, all of the past year's bills, and add up how much you spent every month. Divide them into categories such as housing, entertainment, and food.
* Take a good look at what you can spare. Entertainment expenses are easy to cut, but utility bills are not. Keep a daily journal of what you spend each day. This may sound obsessive, but it can be helpful. Once you know where your money goes, you can spot your unnecessary costs. It is really not that hard to give up lattes or bring your lunch from home.
* Pay bills as soon as they come in. Avoid destroying your budget with late fees.
* Decide what you can cut, and then cut it out. Track what you are saving, and you will be pleased with the results.