Thursday, September 26, 2013

3 Options To Deal With High Interest Credit Cards

Credit cards are notorious because of their high interest rates. Sometimes, people who are burdened with credit card debt do not need to go for debt reduction. They do not have to compromise their credit scores because they can afford to pay off their contributions. They just need to do something about the high interest on their credit cards to make better progress at paying it down.

Lucky for you, there are three options to help you deal with your high interest credit cards.

1. Request for a lower interest rate. Some people do not know this but you can actually call your creditor to request for a lower interest rate. Sometimes, telling them that another company offered you a new low interest rate credit card can be a great strategy. Even if it is true or not, that really happens. Credit card companies use it as a way to get cardholders to switch to their company. Tell your current card company that you are seriously thinking about taking up on the offer unless they can make you a good offer too. If you had been good with your payments, the chances of them lowering your interest will be high. Of course, you just have to be ready to close the account in case they refuse to agree to your request.

2. Stop accumulating debts. Here’s the thing. Your interest rate can only affect you if you have an outstanding balance on your card. That means, removing this balance will automatically keep you from suffering the effects of high interest rates. One of the ways to do that is to stop using your cards. Just pay for things in cash. Learn how to wait if you cannot afford to buy something.

3. Use debt relief. Since lowering your balance seem to be the key in dealing with the high interest rate on your card, using a debt relief program can also help. If you want to keep your credit score from suffering, we highly suggest that you go for debt consolidation. You have two options in making sure that you end up with a low interest when you combine your credit card debts.

  • Debt consolidation loan is when you get a master loan that will be used to pay off your existing high interest credit balance. The average debt consolidation loan rates are relatively smaller compared to credit cards so this will help address the interest problem.
  • Balance transfer. This is when you transfer your high interest credit balances to a new card that offers a zero percent interest for a specific period. This promo period usually runs between 6 to 18 months. The idea is to make bigger payments during this period so that you can seriously pay down the principal debt that you owe. Just be careful because you could be back to the high interest rate once the promo period is over.

These three options can help you with the high interest of your cards but make sure that you be smarter about how you will use it. That way, you can avoid the usual financial crisis that credit card debt can bring.

Thursday, September 19, 2013

How To Keep Your Credit Score High And Not Be In A Debt Pit

Although staying out of debt is a great advice, it does raise a couple of issues. The most prominent of them is the need to keep our credit score high. There are many uses for a good credit score and it goes beyond getting a good interest rate on a loan.

A person with a good credit report is someone who is perceived to be a responsible credit holder and a great manager of money. It means you know how to pay on time, you understand your financial capabilities and you make smart decisions when it comes to your credit. It can paint you in a good light with potential employers or business partners. It can help you secure a good home in an affluent neighborhood.

But here’s the thing, in order for you to have this good credit score, you need to have credit. And that does not only mean once. You have to do it a couple of times to maintain a good score. So how can you keep your credit score high and still stay away from a debt pit?

There is a way to accomplish this and it may surprise you to know that credit cards is your best shot at this. Although we understand how difficult it is to get out of credit card debt, if you follow the rules, you will understand how you can make this work.

First rule is to input your credit card spending in your budget. This will help you limit your spending and will keep you from going over your budget. You need to plan how and where you will use your card.

Second rule is to pay the full balance within the grace period. This is the time between the purchase date and when that transaction is due on the billing statement. If you pay it in full within this time frame, you do not have to worry about any finance charges being added to it.

The third rule involves purchases that you cannot afford to pay in full within the grace period. In case it is a big expense, make sure you have a payment plan before you proceed with the transaction. And refrain from using the card until after that debt is fully paid.

The fourth rule is to limit the use of your card. Even if you place it on your budget, try to limit it all the same as you may get used to relying on it again. Most credit cards needs to be used once every 6 months to keep it active. You can decide to use it every other month or even once a month - just make sure to pay it back immediately.

The fifth rule is not to rely on it during emergencies. It is not really a good idea to do so and you are better off with a cash emergency fund. Now if that cash fund is depleted, then that is probably when you should use your credit card.

These rules should help satisfy the requirements that will give you a good credit score. At the same time, it will help keep the credit under manageable proportions so you stay away from a debt pit.

Thursday, September 12, 2013

How To Work On Your Debt And Credit Score At The Same Time

People in debt have more than just their credit to worry about. In fact, it is never a good idea to just focus on paying off your debts. While it may be your primary concern, you must not lose sight of other things like saving and improving your credit score.

Do not think that everything ends when you get out of debt. That is just the end of one chapter and the beginning of another. What will you do when you achieve debt freedom? How can you pull yourself up?
Your credit score will help you achieve certain financial goals. For instance, you can get a good deal on your mortgage when you decide to buy your own home. It can even help you get better chances at securing a good paying job - in case you want to shift employers. Make sure that you do not lose sight of the life that you live right after debt.
Given that, it is probably a good idea to choose a debt relief program that will get you out of debt and at the same time, take care of your credit score. When that is your concern, there is probably nothing better than debt counseling.

Also known as credit counseling, this debt solution involves a debt professional known as a credit counselor. The credit counselor will help you analyze your debt situation and current financial standing. You will talk about how you can pay off your dues and they will educate you on the proper financial habits that could have prevented the debt situation.

If they see that you are qualified, they will offer to take a more active role in paying your debts through debt management. The service includes creating a debt management plan that stretches your debts over a long payment period so you can make lower monthly contributions. When this is presented to the creditor and they agree to it, you will make a single monthly payment towards the counselor who will distribute it to your different accounts.

So how does all of this help your credit score?

  • Credit counseling is not reflected in  your credit report. That means you will not feel its effect on your credit score.
  • The credit counselor will make sure you will make timely payments. This will keep you from late payment fees and a damaged payment history.
  • The creditor will freeze your credit card accounts and this will keep you from adding more into your debt.
The last two will actually help you improve your score as you follow your debt management plan.

All three will help consumers develop better personal financial habits when they go through credit counseling. Part of the session is to provide you with personal finance education and other training materials that will help you stay debt free. These also contribute to help you display better credit behavior.

At the end of the day, debt counseling will give you a well rounded experience that will not only help you pay off your debt, it will also teach you how to stay out of it. The fact that it can improve your credit score along the way is the icing on the cake.

Thursday, September 5, 2013

Debt And Marriage How To Make It Work

When you get married, you share almost everything about yourself to your spouse. The good, the bad and even the idiotic mistakes that we make. The same is true in vise versa. If you want to make your marriage last, you have to learn how to live with every little quirk and problem that your spouse will bring into the relationship.

Sadly though, a lot of people file for divorce because they cannot agree on a lot of things. It can be because of the in laws, children and even the business. Infidelity is also a reason for couples to separate. But among all of these, one issue seems to rise above everyone: finances.

Money is a very important yet controversial issue in a couple’s life. Believe it or not, a lot of couples fail in marriage and their finances because they refuse to talk about it. They do not make plans together or only one manages the money. When they end up in debt, it causes discord between them. They start to blame each other and instead of finding a way to pay off the debt, they end up letting the marriage fall apart.

That debt situation can either make or break your marriage. Of course, we all want to make things work and to help you with that, here are some tips that we have for you.
  • Make a budget together. If one or both of your dislike this tedious plan, there is nothing that you can do about it. If anything, it will help you organize your future and give you an idea about the current status of your debt and finances.
  • Stick to the budget plan. Once you have created your budget, you both have to make a commitment to stick to it. You want to make sure that you will not put your finances in further jeopardy.
  • Discuss the debt solution that you will use. You need to decide on the best debt solution that you can both use to help you get out of debt. That way, both of you will be aware of the sacrifices that you have to make and the consequences that the debt relief program will bring to your future.
  • Keep the communication open. The most important thing that you can do is to always talk about money matters in your household. Be very open about your finances. If one holds the budget, they need to be honest as to whether that budget works or not. It all boils down to how well you can understand each other’s spending behaviors - something that communication can help you accomplish.

Debt is not the end of everything. Do not think that you need to give up on your marriage if one of you makes a mistake that leads in debt. If you do it correctly, this can even help make your relationship a lot stronger than before.