Just ask yourself: is the credit card working for you or are you working for your credit card? Most people’s response to this question will depend on how they treat their “plastic friend” as credit cards are sometimes known. As many people with burned fingers will tell you, they didn’t realize that things had become so bad until too late, because most credit card companies try so hard to make themselves sound like a charity. Well, take it from me, they aren’t.
And this is not a hate campaign against credit cards. They have their benefits – in the USA if you want to rent a car, you have got to have a (major) credit card. But, consider this scenario:
You get an offer in the mail that sounds good, perhaps it’s a new television or refrigerator. But it costs $2,000. You have a credit card with a $5,000 limit, so you go out and buy the product right away. Often, this is how your repayment schedule will work out. Most credit cards charge a minimum percentage of the remaining balance (usually 2 percent) per month. Assuming the interest rate is 18 percent and you choose to repay the minimum amount of $40, $30 of that will go towards interest and only $10 will come off the $2,000 you borrowed!
Sounds scary? It doesn’t have to be. The moral of the illustration is to use the credit card very, very carefully.
Credit Cards Dos and Don’ts
There is a great deal of truth in the advice that credit cards are not a substitute for not having money. Every time you use a credit card this should be the theme song playing in your head. Furthermore, you would do good to remember the following too:
Dos.
1] Always plan for the purchases that you have to have and those that you just want. You need the essentials, and you want everything else. The ability to make a distinction might help you plan wisely.
2] If caught up in financial difficulties, it’s always good to talk to the credit card issuer who might re-schedule your payments. If you just default, that only helps to build up a bad credit history and you might find yourself being denied credit next time.
3] Unless it is an emergency, staying within your credit limits will help you a lot. If you must spend over the limit, ensure you are within manageable levels, say within 30 percent.
4] If your letterbox is chock-full of information on credit cards with more favourable deals than you are currently enjoying, you can always approach your issuer for a better deal. They want to retain you as a customer, so they will listen.
Don’ts
1] Do not use your credit card to purchase household goods. It is too expensive in the long term.
2] Do not only pay the minimum amount necessary. You will end up paying exorbitant amounts of interest. The quicker you can clear the debt the better.
3] Do not use the credit card to buy things you can’t afford.
If you are thinking onswapping or applying for a Credit Card, have a look at the free advice on our web site on using Credit Cards wisely. This article, Credit Cards Dos And Don’ts is released under a creative commons attribution licence.
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You must differentiate between the various types of financial problems. For instance, a financial emergency is when you experience a situation that can render you penniless, homeless or without any important property. You should separate these types of emergency from a threatening phone call or a letter from a debt collector.
When experiencing a crisis such as these, it is crucial to act at once. You have to begin by contacting the creditor. Doing so enables you to work out a temporary solution, which can help you to keep your property. However, it does not always work and if it doesn’t, getting in touch with your solicitor to negotiate with the creditor is necessary.
Face up to your Problem: A common maxim in debt problems is that “the less you know, the less it hurts”. However, you need to learn how to face your debt problems. You must be able to do this because rebuilding your credit will not happen, unless you know exactly where your money is going or where it has to go instead.
Although it is not harmful to overestimate the amount of your debt, it is always beneficial to know how much money you really owe. You can do this by looking at the bills you have had. If you have thrown out your bills without even opening them, you can still call the company and ask about them or request duplicates.
Some creditors even use an automated telephone system, which can give the balance you owe and information regarding missed or future payments automatically, which means you do not even have to talk to anyone. Furthermore, information about your account might also be available on your creditors’ web sites. After acquiring the necessary details, add them all up, especially those overdue instalment bills.
Options Available for Your Debts: There are several choices available when dealing with debts. One is to do nothing. This option is probably the most popular approach used by those who are deeply in debt. Most often, these people have a very small income and maybe no property and do not usually expect any change in their lifestyle. If you do not expect any significant income any time soon, you can consider this option.
However, doing nothing does not really help, so perhaps you can find some money to pay your debts. You could do this by, first, selling a major asset, like a car or a house. This can be a good idea if you can no longer afford your car or house payments. Instead of waiting for a repossession or foreclosure to happen, selling the property is always a better solution.
The proceeds you make from the sales should be put towards lessening your debt. Moreover, you should remember to pay off the liens placed by the creditors and use anything that is left to pay (something) off your other debts. However, before taking this step, make sure that you have already worked out an alternative for your housing or transportation needs.
A further way to help you pay off your debts, is to reduce your expenses. This will help you not only in the repayment of your debts but also when negotiating with your creditors. Try to shrink the cost of your food by cutting out coupons, purchasing generic brands, buying where there is a sale on or shopping at discount outlets.
However, if you cannot cut your expenses enough, you can always borrow money from a tax-deferred account. Tax-deferred retirement accounts, like IRA or 401(k), can be used to help pay off debts by withdrawing money from them before retirement. However, since you may need to pay a penalty or taxes, this should only serve as your last resort.
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Having accepted credit, you are using someone else’s money as payment for your purchases. In addition, it also indicates that you promise to repay the money to the agency or person that loaned you the money.
If you are applying for a loan, credit card or mortgage, it is usual for the agency or bank to check up on your credit worthiness. This is based mostly on an assessment of your credit history, thereby helping them assess the possible risks of the transaction and decide the terms of the loan. A positive assessment means that you have a good financial history, which increases your chance of being granted credit.
Credit Repair: The process, by which people with a poor credit history try to re-establish their credit worthiness is called credit repair. It involves procuring a copy of your credit report from the reporting agencies and carefully taking any steps necessary to address any problems, including omissions, mis-reporting, mis-interpretation or any other inaccuracies.
If there are any discrepancies found in the credit report, the consumer is entitled to dispute the errors that have unjustly harmed their financial health. There are several laws and regulations that are designed to guarantee the just and legal reporting of someone’s credit worthiness. You can make use of these laws to legally commence the process of repairing your credit.
Every consumer may ask for one copy of his/her credit report each year from each credit reporting agency. You will have to investigate the real reason for the inaccuracies and errors for successful credit repair.
Your credit rating affects your purchasing ability and eligibility for acquiring credit lines in the future. You should bear in mind that a good credit rating can help in several spheres like as: mortgaging a home, buying a car or even applying for a job. On the other hand, a bad credit score can make you vulnerable to exorbitant interest rates and unnecessary loan terms from the loan companies. These two facts are important to help you understand why upholding a good credit score is really quite vital.
How to Repair Your Credit: The process of credit repair can be achieved through conscientious work and discipline. Some firms will offer you easy methods to help you repair poor credit history and they can be quite tempting. However, these easy ways-out can also create more difficulties in the future, especially if they are illegal.
If your poor credit history was caused by circumstances beyond your control, you can request an upgrade to your credit rating from your creditor. However, this can only be done if you were able to make amends to your credit records afterwards.
Creditors do not usually trust people who have defaulted on their payments. This can pose difficulties for you obtaining any credit. However, once you are able to show a stable income and patterns of prompt repayments, the situation can improve in two to three years. This way, even if there was a bankruptcy involved, you are likely to be considered eligible for credit cards within two years, if a steady income is maintained.
Bear in mind that there are no quick fixes when repairing your credit. However, by contacting the credit bureaus, correcting any errors, budgeting and consolidating your debts, you can improve your own credit rating very quickly.
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There are a huge number of credit cards available and one of the most misunderstood is the business credit card. Many people choose not to apply for a business credit card because aside from having a certain target market – business owners or business executives – it appears to be complicated to use. Although a business credit card has more stipulations, it has a lower interest rate compared with other kinds of credit cards and, contrary to popular misconception, it can be very useful if used properly.
What is a business credit card? Basically, a business credit card is for business people’s use. Compared to a regular credit card, a business credit card has a high credit limit and low interest rates. Depending on the business credit card you apply for, a business credit card may also bring a lot of benefits.
Because it is targeted at businessmen or those people who are building a business, a business credit card is meant to benefit these small businesses. A business credit card helps the budding business by allowing the owner to finance bills or payroll, which improves cash flow. Apart from presenting the image of a reliable credit card company, business credit cards supply detailed statements of expenditure and give quality customer service as its two major benefits.
Apart from enjoying higher spending limits and lower interest rates, a business credit card provides many credit alternatives for small businesses. A business credit card also caters to big corporations as well as those people who are starting their own business because it closely tracks the base rate of credit.
Simplifying business credit cards. It really is better to go to the bank when one requests for a credit card to get answers to all the immediate questions you may have. But since a business credit card is for business people who are always on the move, many business credit card issuers offer online applications for business credit cards. So, when one applies for a business credit card, there is no necessity for you to visit the bank any more, which means that there is also no need to wait in the queue just to talk to a bank manager.
When you apply for a business credit card online, all you have to do is to select the business credit card that suits your small business or corporate credit requirements right from the comfort of your home or office. Aside from offering safe, secure, and simple processes that are designed to assist you to take care of your start-up business, most online business credit cards offer access features for the convenience of the business credit card holder like online bill payment and reporting.
Customized company logos and access to instant cash are further advantages offered on line. Yet other online business credit cards offer even more detailed reporting features for easy monitoring of multiple accounts.
Most business credit cards do not charge fees for the first year and have no pre-set spending limit or finance charges. Other business credit cards offer reward programs that enable the member to earn points for travel, merchandise and other types of advantages.
Many business credit cards offer small businesses a credit line of up to $100,000 at a competitive APR as low as base + 1.99% for both cash and cheque purchases. Furthermore, 100% of the credit line is available as cash and usually no collateral is required.
The business credit card customer might be offered free checks as well as a card to access their account. There may even be: common savings or exclusive savings on purchases, express approval on extra loans, no annual fee, up to 5 percent discounts on qualifying purchases, and 0% introductory APR annual percentage rate on purchases for the first six months of card membership are some of the fantastic plus points of business credit card ownership.
The majority of the business credit card issuers offer great deals, but it is still important to research what your business requirements are first. No matter whether you require your business credit card for buying inventory or only for payroll, it is important to get a business credit card that can cope with anything you need.
So, whether you choose to go direct to the bank or apply for a business credit card online, there are a number of business credit card suppliers who can assist you to find the credit card that is right for your business.
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Filed under Uncategorized by on Jun 16th, 2010. Comment.