Posts Tagged ‘Get out of debt’

Tips To Avoid Credit Card Traps

May 26th, 2009 by Adam | No Comments | Filed in Credit Score, Credit Score Advice, Credit Score Tips

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If you’re like most Americans, offers for credit cards arrive in your mail on a daily basis. Why are credit card companies so eager for your business? Many intentions are behind it. Credit cards, for one thing, are not free cash. Funny enough, many customers think of them this way, and that—aha!- is how credit card companies build up money.

You’ll notice when you read through the fine print about credit cards that there are varying APRs, or annual percentage rates. It refers to the interest rate you have to pay on your credit card charges if you did not pay your full monthly balance. When did you went shopping last time. Before buying anything make sure you can pay for those things from your monthly salary? Credit card companies bank on customers who are not attentive towards their shopping. Credit card companies work on the chance that users will purchase more than they can actually afford using their credt card. When the bill comes and it can’t be paid in full, the customer pays interest on this borrowed amount, and that interest accrues daily. This money goes right into the credit card company’s bank account. With thousands of customers falling into this predicament on a monthly basis, you can see where the companies get rich quick.

How to avoid falling into the credit card trap? A little forethought and budget planning can help you prevent paying interest and still allow you to benefit from credit card perks.

Take mileage credit cards, for example. Many airlines offer credit cards that earn you frequent flier miles based on the amount of dollars you spend. Alluring, right? Sure.

Just be careful to know how much you are able to spend in a month, and don’t let yourself go over the top. It’s easy to check your credit card balance online or by telephone. Always do shopping within your monthly limit and know when the closing date is for your monthly statement. That way you can take advantage of the bonus without digging yourself into a rut.

Speaking of the credit card rut, let’s go back to that interest thing. Is you did not pay your interest fully in a month it will also accumulate interest? Take a look at this example. You have racked up $10 in interest on your credit cards in one month, based on a balance of $100. (This assumes a 10% monthly interest rate.) The next month’s interest accrues on the new balance of 110$ since you leave it unpaid. That means the next month you owe an additional $11! You have to pay a fees of 21$ on your 100$ purchasing. Did you really find a bargain when you bought that jacket at 20% off? Probably not.

If you buy responsibly and keep track of your purchases, you can avoid credit card traps. Be a smart consumer, and credit cards can work in your favor.

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How To Avoid the Credit Card Debt Trap?

May 20th, 2009 by Adam | No Comments | Filed in Credit Score, Credit Score Advice, Credit Score Tips, Personal Finance

Credit Cards has become the necessity of life, it is being used widely for shopping. Credit cards can be used to do shopping, dining or whatever you want to buy.

Credit cards has become status symbol nowadays so everyone wants to use it. These cards are easy in use they are very slim and can be used to buy anything regardless of the money one is having in his wallet.

Shortage of money and hungry too? No grocery supplies? Want to buy that dress which you have been dreaming of? Do not get upset With your credit card you can buy it. Don’t worry.

Credit Cards: Not Free Money

But wait. A credit card spree may be fun, but that doesn’t free you from responsibilities in paying the expenses you incurred from using your credit card.Credit cards, after all, are interest loans in disguise. Credit cards comes along with number of various charges linked with them, including:

“A finance charge, which is an interest charge for the unpaid portion of your monthly bill;
“An annual membership fee;
” Or you can be charged higher interest rate on the late payment fee.

In fact, many credit-card holders face credit-related problems. Unperfect buying decisions, lack of knowledge on credit card fees, and disregard for upcoming credit payments are among the reasons why many credit-card users are often hard-pressed in paying their debts. Some are not even able to pay for the actual purchases they made, just barely managing to pay credit card company charges.

Before you get totally indulged into your debts, here are some ways to manage your credit related expenses:

“Be credit concious. Along with the credit card comes the responsibility of paying your credit which you should be aware of. You and only you - not your parents, spouse, or whoever - is responsible for that.” Use your credit cards wisely and sparingly. Remember: Paying through credit card cost you more than cash or checks. Credit payments include interest and other fees. Use credit cards as sparingly as possible.

If you really need to use credit cards, carry only the cards that you will actually use. “You should cross your credit limits only when you can pay it. Paying your debt on a credit card using another does not count.
” Avoid impulse shopping on your credit card.
“Keep credit card for money emergencies only .” Seek credit counseling as soon you see financial problems on the horizon.

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The Proper Use of Credit Cards

May 17th, 2009 by Adam | No Comments | Filed in Credit Score, Credit Score Advice, Credit Score Tips, Personal Finance

At one time or another most all of us apply for and get more credit cards than we need. We feel like we have to be able to purchase almost any type of item at anytime, whether we can really afford it or not. Having numerous credit cards allows you to do shopping at your own will. Is it correct or not?

There are many companies offering credit cards and loans online, but all may not fit everyone’s needs. A credit card is a significant financial tool that needs to be used wisely and carefully. Do not cross your credit cards limits so much that you can only afford to pay the minimum payment amount or small amounts each month towards the reduction of your debt. That is the interest rate trap. Once you are trapped on paying minimum amounts, you will most likely be stuck there for years if not for a lifetime.

However, having credit cards can be a positive, productive personal finance tool and does not have to be a negative to your credit status or your lifestyle. Some important key points:

• It can be taken anywhere very conveniently
• Offers important protections for consumers
• Use it with sound judgement and alertness
• Pay off your monthly bill in full each month, which eliminates interest charges

Having credit cards is a priviledge and huge personal responsibility. You must utilize and manage your credit rating wisely and carefully at all times. The saying that if you can not afford to pay cash, then you can’t afford credit card is quite true and we should take care of this warning. Using credit cards in responsible manner makes them your friend and not your foe. Having credit cards in your name is not bad just take care not to go into debt for more than can repay. Crossing your credit limits will only damage your credit rating and it will create larger credit problems for yourself into the future that may be difficult to handle.

When shopping for a new credit card, comparison shopping is important, because it can save you money. Make sure you have considered all the expenses and conditions of the credit card offer. These can make a real difference in how much in fees and interest charges you will possibly be paying each month. Be sure to compare these costs with any of your existing financial instruments, cards, loans, mortgages, etc. You may be able to replace some of your current debt with less expensive options. Some of the expenses and terms to consider are the annual percentage rate (APR) for products and services as well as for any cash advances you may request, the annual fee, and the grace period.
Don’t forget to compare your other fees, late-payment charges, and over-the-limit spending fees.

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Crash Course In Credit Scores

May 13th, 2009 by Adam | No Comments | Filed in Credit Score, Credit Score Advice, Credit Score Tips

It is really amazing that someone’s life can be drastically affected by three numbers. Here’s a small crash course on what they are and what results they can bring.

You sit down to look at your credit report for the first time. Congratulations, if your scores are above 720! You have excellent credit; stop worrying about it. If you’re scores are not above 700, no problem—let’s get to work. Take solace in the fact that the national average score is around 676 according to the Gallup Organization. There’s surely a chance for improvement and only one way to go—up, if you’re scores are below 400, 500, or 600!

If the numbers I’ve mentioned don’t make any sense to you or you have no idea what they mean, don’t fret—I’ll explain. Credit scores range from 350 to 850. All three of the credit bureaus—Transunion, Experian, and Equifax—offer  FICO credit scores using a complex mathematical formula developed by Fair, Isaac and Company, but they each give the scores a different name: At TransUnion, the FICO is known as the Empirica; at Equifax,it is called the Beacon credit score; and at Experian, it is called the Experian/Fair, Isaac Risk Model.

If you have excellent credit means if your credit scores are above 720 you will be able to get the best interest rates available. As your credit scores fall down, the interest rate you’ll receive for a home loan will rise: this is known as tiered pricing. The more of a risk the lender takes on you, the higher your interest rate will be. In addition, all lenders have their own break points between tiers. What this means is that one lender may raise the interest rate if a score drops below 700, while another lender won’t give a higher rate until the score drops below 690.

In summing up, you should do everything in your power to maintain good credit scores, and be sure to shop around and do your homework when looking for a home loan because all investors are not created equal. I think you’ve already gleaned the moral of the article but just in case you haven’t, here it is: Good credit scores save lots and lots of money, and be sure to choose a lender wisely to get the best rate for your scores.

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