Friday, October 25, 2013

What You Need To Know About Credit Card Interest Rates

Being responsible with your money does not really require that you get rid of your credit cards. If you think about it, the purchasing tool is not really the issue here. The problem lies in how you choose to use it. There are people who own credit cards but never had any problems with debt. How did they manage that when you can’t even keep up with your minimum payments? Here you are, looking for the best debt relief company to help with your credit problems while others are calmly charging purchases without worrying about their finances going under.

The answer is simple. They know everything about credit cards and they understand how to use it. You need to simply educate yourself about these cards to keep yourself from abusing its use and thus end up in debt.

One of the most important factors of a credit card is the interest rate. You have to understand this if you want to avoid having it on your balance. The high interest of a card account is one of the reasons why this balance can grow immediately. So if you can get rid of it, you should be alright. So how do you do that?

When you use your credit card to make a purchase, that does not automatically accrue interest. You still have the grace period to keep that from happening. The grace period is the time between the date of purchase and the due date of the billing statement where that transaction is included. If you pay within this time, you only pay for what you purchased. You are not wasting your money on interest rates. If you do this for every purchase, you don’t have to worry about the high interest on your card.

The thing about these rates is that your creditor has the right to raise it even when you displayed a good payment behavior. So despite looking for a low interest credit card, that can change and go higher over time.

While the creditor has this right, you also have to know that you have the right to refuse when the creditor implements this change. The law mandates that they send you a notice before implementing the change. You can call them to say that you do not want to accept this interest rate revision. One of two things can happen.

The first is the creditor will accept your request and retain your old interest rate. You have to get a written confirmation that this is what they will do. Follow up until they send you the document.

The other scenario is you will close your credit card account. This is the least likely scenario because the creditor would want to keep you as a client. But in case it does happen, you have to be prepared to pay the balance of your debt. You do not have to worry because the creditor has to accept a payment plan that you can afford.

Just keep these interest rate facts in mind, make better spending choices and stick to your budget - that should keep you from incurring too much credit card debt.

Friday, October 18, 2013

Does It Make Sense To Use Credit Cards During Emergencies?

It seems like a good idea to get rid of all your credit cards save for one. The purpose of this one credit card that will be left behind is to help you maintain a good credit score and help tide you over an emergency situation.

But then again, is it really a good idea to use your credit card in times of emergency? If you had just gone through the tedious debt consolidation or the risky debt reduction, you are sure to be committed to staying away from debt. Don’t you think that an emergency credit card can push you over another debt pit? There are instances wherein this seems like a good idea but do you really want to rely on it when the unexpected happens?  

The thing about the unexpected is you do not know when or what will happen. There is no doubt that your emergency credit card can handle the amount no matter how expensive it is. However, there are a couple of important facts that you may want to consider.

First of all, you just solved the unexpected situation with another problem. Remember that you just used a credit card to pay for that situation. Although the crisis is past, you have to face yet another problem - paying off the debt on your card. Remember that any purchase that you will make must be paid back to the creditor. If you spent it on an expensive purchase, you will be carrying it over to the next billing cycle. That will incur finance charges and grow your debts. The interest in itself is a waste of your money.

Another problem that you may not realize at first is you will no longer be forced to look for better options. Using credit cards are much more hassle free and convenient. Why go through all the trouble of looking for financial assistance from government agencies when you can easily swipe your card to pay off something? You will be losing the benefits that you could have qualified for.

Lastly, and as mentioned previously, using credit cards to tide you over an emergency situation will endanger you to fall into another debt pit. You do not know how much it will really cost you. One emergency can drag you back into debt. You have to go through the debt relief process all over again.

It is alright to keep your card but it has to be for the purpose of keeping your credit score high. That way, the expenses you make on your credit account will be something that you planned and budgeted for. You can pay it off immediately and that will really keep your credit score up.

But what about emergencies? Simple. You have to save up some cash for it. A cash reserve fund will serve you better than a credit card. When you use it to pay off your emergency situation, you can forget about it immediately. You don’t have to worry about the payments that you have to make after. Your credit card can still be used but only when your cash fund is already depleted.

Friday, October 11, 2013

How Earning More Will Get You Out Of Debt

Your debt means you are spending more than what you are earning. This is a problem that you have to solve if you really want to get out of debt.

There are two ways that you can do this. One is to cut back on your expenses. When you do this, you will eliminate the unnecessary spending that is getting you to spend more than you should. However, if the reason for your increased spending is your debt payment, you actually have no choice but to earn more money.

Some financial experts prefer that debt ridden consumers focus on increasing their income because that is being more proactive. It sets up the consumer to a bigger income that will be more beneficial when they get out of debt.

There are many options for you to increase your cash inflow without burning yourself out. We suggest that you go for work at home options so any extended work hours will keep you close to your family.

Thanks to the Internet, you can build up an online career or business. Online careers include web development, web design, writing, accounting/bookkeeping jobs, programming, graphic design, etc. There are also careers related to social media marketing, search engine optimization, link building and Internet marketing that you can look into. You simply have to look for a client that will hire you for your services.

You can also set up an online business - the most famous is an online store. You can sell products online and generate income from it. Some people partner with suppliers who will do everything for them - keep the inventory, package the product and ship it to the customer. All you have to do is to set up the online shop, make sure you get a lot of orders and organize it so when it gets to the supplier, the orders will be delivered as requested. If you set up your store to be automatic, it will earn you money even as you sleep.

Another option to earn more is through your hobby. If you can cook or bake, why not use that and cook/bake for others? Now that the holidays is upon us, bake cookies and sell it as gift items. If you love to garden, offer to take care of the garden of your neighbors. Even those who love to shop and have a good taste can hire themselves out as a personal shopper. If you love pets, offer to walk the pets of your neighbors.

You can also set up a passive income business. If you are not using your garage, why not convert it to a studio apartment that you can rent out? Or if you have an extra room, rent it out to earn more money.

There are many ways to increase your income you just have to be creative and resourceful about it. Try to choose something that will not tire you out or keep you too long from your family.

Friday, October 4, 2013

Consumer Habits That Make Debt Freedom Hard

A lot of people will probably disagree but debt is not the main culprit for all of our problems. If you think about it carefully, it is our own personal habits and perceptions that should be blamed for our debt situation. Although the temptation is there, our self control, knowledge of personal finance and developed financial management skills should have been enough to override it.

Fact is, it is difficult to not be in debt in this consumerist society that we live in. If you want to reduce your debts, you have to get the connection between consumerism and debt. It will help you understand the effects on your habits and the way you spend your money. This is how you really get down to the root of the debt crisis in your life.

Here are a couple of habits that consumerism taught us that you probably should avoid.

  • Justifying wants for needs. You have to be strict when it comes to defining what is a want and what is a need. If you have limited finances, you really have no choice about it. You should only buy your needs. This means letting go of branded products and just going for store labels. It also means buying second hand if it will save you a lot of money.
  • Buying things because we can afford them. Smart spending is not just saying no to purchases that you cannot afford. That is actually the easy part. The hard part is saying no even when you can afford it. Putting aside that money to grow your savings could be more beneficial than making that purchase transaction.
  • Practicing retail therapy. It is never a good idea to shop while you are on an emotional high. Regardless if it is positive or negative, it can override rational thinking when you are deciding to make a purchase or not.
  • Get it now pay it later. Credit cards are actually teaching us to be impatient. You are given the ability to purchase something that you want right now even if you cannot afford it. You rely on a future income that in truth, may or may not come. We brush off the money we will waste on the interest rate just so we can enjoy something now. That is not really the best habit to develop. Most of the time, what we purchase are “stuff” that we really do not need. They usually depreciate in value even before we have finished paying them off.

Buying things is not bad because there are things that we really need to consume. But you have to separate the essentials from the not - especially when you know your budget cannot afford it. Also, debt should not be a complete taboo in your life. There are debts that has all the potential to do you good. Just think of it this way, if the debt will help put money in your pocket, then that is a good debt. If it will only take money from your pocket, then don’t get it. If you really need that purchase, just save up for it and buy in it cash.