credit card debt

How Do I Go about Credit Card Debit Management?

August 16, 2013 by penn

It is important to take control of your debt, do not let debt control you. Credit card debt management is just one aspect of debt that you will need to address, it is the most difficult to reduce and control.

There are many different kinds of debt but they are all part of the same overall package, debt. Debt is classed as money that you owe to other businesses to pay for services or purchases, these include:

Credit cards
Mortgages
Car loans
Personal loans
Store cards

No matter the kind of debt that you have it will be reflected in your credit report. It is possible to manage credit responsibly and it can have a positive effect on your credit report if used correctly.

Credit Card Debt Management

Knowing what is on your own credit report is vital. So,

Understand and know what good credit look like.
Don’t be afraid of your own credit report.
Plan to improve your credit report.

It is important to realize that a report will change during a month and it can go up as well as done, this is normal. If you are late with a payment or miss a scheduled bill then this will have a negative effect on your credit report. You are aiming to attain the score around the 740 mark. If you want to purchase any items on credit then it is a good idea to check your credit report a month or soon before to make sure that the report is correct and is looking healthy, if there are any errors on your credit report these will need correcting before you apply. The better the score on your credit report the less that you will pay in interest rates and this will be better for you in the long term.

Control

If you take control of your credit card debt management then you will be in a better financial position. It is important to pay your bills on time each month because late payment fees will lower the credit rating scores. Many companies will allow the set-up of text alerts to remind you when the bill is due to be paid.

Paying Down Debt

It is important to think about paying down debt, this is where you are reducing the amount of debt that you owe each month. If you are unable to pay the full amount off a credit card and are only paying the minimum amount then you will find that this will take a long time to pay off especially if you are still using the credit card.

Plan to pay more of the balance each month and this will then reduce the time that you are paying for a credit card. You will be paying a lot of interest each month, the more you pay the quicker that the debt will be cleared.

Good Credit

The idea of having good credit is important for any future prospects of loans or credit applications. It is possible to have a good credit rating. It is important to look at your credit report and to plan how you can improve on what you already have in place. A great credit report will be around the 740 score but with most Americans sitting around the 620 mark there is scope for improvement. This will come from paying bills on time, paying of the debt in full will also boost your score.

There are many ways in which you can improve the credit score; you will need to find the ones that you are able to do. Using the system and finding the right tools for the job will mean that you will be in a better position financially.

It will also mean that when you apply for services and products the company will look at your report and if it is healthy you will get a better interest rate than someone with a poor credit rating. The lower the interest rate the lower the total cost of the loan will be. The higher the interest rate is the more money that you will be paying out over the loan period in interest payments.

It is important to have control and have a credit card debt management in place. This will allow you to see where you have debt and what you have spent the debt on to work out the possible solution to your situation. Debt itself isn’t a bad commodity, it is when the debt takes over and a person loses control of the situation. This then can have negative effects on the future and any prospect of getting credit when you need it for new purchases, not matter the reason, bad credit will affect the interest rates and the possibility of securing the loan in the first place.

Don’t Ignore Credit Card Debt And Just Consolidate

June 18, 2013 by penn

Ignoring your credit card debt is probably the worst that you can do. If you really want to remove your debt problems so you can live in peace, pretending it does not exist should not be one of your options.

There are so many things that will be affected when you refuse to acknowledge your card debt. First of all, the interest and late payment penalties will continue to pile up and grow your debt amount. If you started with $5,000, it can grow to $10,000 if you refuse to pay any amount towards it. Even if you stop using it, as long as it has a balance, the card debt will continue to grow.

Your card debt also ruins an important part in your life: your credit score. If you had plans of setting up your own business or buying a house, your credit card debt will keep you from reaching these goals. Your credit score reflects your attitude when it comes to your finances. Even your employment opportunities, rental option, business partnerships and loan interest rates will be compromised with a bad credit score.

Fortunately for you, there is a way to solve your credit card debt and that is to consolidate it. You have two options: pay down the debt through debt consolidation or reduce the amount through debt settlement.

Debt consolidation help restructure your debt payments so the balance is stretched over a much longer term. The goal here is to lower your monthly contributions without being penalized for it. Take note that you will still end up paying for everything that you owe so you have to make sure that your income can support it. There is a possibility of getting a lower interest rate with the new payment plan that debt consolidation will set up for you. That will decrease the monthly payments even further but do not bet all your savings on it.

If you need further reduction, you may be better off with debt settlement. This option involves negotiating with your creditors and convincing them that you are in a financial crisis. Explain to them how this crisis rendered you unable to keep up with your payments. It can be an illness or a recent job loss. Give them the details and let them know that you still take full responsibility for the debt. It’s just that recent events made it impossible for you to meet the minimum requirements of your debt. You will then offer to pay pennies for every dollar. If you and the creditor agree on a settlement price (e.g. .50 for every dollar), you only pay that percentage and have the rest forgiven.

While the latter option may seem like the better choice, know that your credit score will suffer because you will have to default on your payments. That is one of the ways to convince your creditors that you are in a crisis.

Choose between the two based on your financial capabilities. You can always grow your income so you can afford the first option. Just remember that your debts are your doing and thus you are responsible for completing its payments. Don’t ignore the problem that you created because this is one of those that will not go away on its own.

Will Living Without Your Cards Keep Debt At Bay?

June 14, 2013 by penn

Consumerism is driving economies all around. It has a lot of benefits for a lot of industries but for the buying public, it holds a lot of challenges.

The primary tool driving a consumer-centric economy is purchasing capacity. If you do not have the means to purchase a specific item, then you cannot get it. But this practice has been shattered to pieces with the advent of credit cards. This purchasing tool is so rampant that individuals sometimes have more than one in their possession.

As the name suggests, this plastic card allows you to purchase items on credit. Even if you do not have the actual money on hand, it lures you to buy the item anyway because you can pay it off at a given time in the future. This way of thinking has crippled a lot of families by putting them in credit card debt and left in regret as to why they kept purchasing all the items in the past.

Getting rid of your cards is a good start in trying to keep debt away. If you have more than one card, pay all of them off, call the bank to cut the credit and literally cut the card in half. Keep one card in your possession just for emergency. It will also be your tool in getting your credit score up as long as you can pay it off after every purchase.

Starting to live without your cards will take some getting used to if you have been dependent on them for the longest time. The next thing you need to do is sit down and look at your expenses every month. With this list, match it with your monthly income. Your income must always be bigger or at least equal to your expenses. If it is the other way around, you will have to find a way to either increase your income or reduce your monthly payables.

Once you are all set on this step, next is to adopt a cash basis policy. It means that you use only the cash on hand in managing expenses. This is where maintaining a budget comes in handy. With your list of expenses and income, you will know how much amount should go to where every single time.

One idea to keep tabs in this is to categorize your expenses and by using an envelope. Mark envelops based on the category. With your expense list, identify each of them and put them in a category. Every time you get your income, whether from a job or business, make sure that you put in the envelope what you have budgeted as payment for each item. It also applies to your weekly allowance if you keep one. It lets you know how much you can spend and limits it at that amount.

Another idea is using a debit card. Yes, it is similar in look and feel and even the way you use it to purchase items with a credit card with one major difference – it runs on a debit system. You can only use it if you put money in it. Think of it as a state of the art piggy bank. You can only consume as much as you have put in, nothing more.

Of course, all these will be pointless if you do not adapt a change in attitude. You can cut all the credit cards you want but if you keep the same buying mentality of getting what you cannot afford, you will still feel the disadvantages of having a big debt.

Spending Mentalities That Will Keep You In Debt

May 8, 2013 by penn

Most of the time, we are in debt because of our own doing. We make decisions about when and where we will spend our money without really considering the costs that it will have on our future. What we should realize is that it all boils down to a change in perspective and some serious self control. There are spending mentalities that you should be aware of because these may be the ones that are keeping you in debt.

If you really want to stay out of debt, you need to train your mind to stop thinking certain thoughts. For instance, we tend to justify some of our wants as needs just so we can spend on them. Do not do this. If you have the money to buy it in cash – go ahead and do so. But remember, the cash that you will spend on wants should always be what’s left after your priority expenses like you basic necessities and your debt payments. If you cannot afford to buy it in cash – then you know that you should not buy it under no circumstance.

Another spending mentality that we have is using shopping as our means to get over a stressful situation. Making financial decisions when you are emotionally unstable is not a great idea. Retail therapy does not really do anything except to put you in debt. When you are stressed, sad, angry or even happy – don’t go to the mall to use shopping as an outlet for extreme feelings – even when it is something positive. It will lead to unnecessary debt accumulation.

You should also be cautious of the term, “I will only do it once.” If you start thinking that way, you will never hear the end of it. You will always find a way to use that line and justify that it is right. If at the back of your mind is a nagging feeling that something should not be bought, then most likely, it should stay on the shelf.

All of these spending mentalities lead you towards debt that can oftentimes spiral out of control. If you happen to be in a credit situation that you find hard to get out of, you should start looking for a debt relief option that will help you out of your predicament.

When it comes to debt, especially credit card debt, debt consolidation is one of the best options that will effectively get you out of debt. It is one of the solutions that will keep you from ruining your credit score in the process. This method takes your current balance and distributes it over a longer payment period. This will result in a lower monthly requirement. Not only that, it also combines your debt so that you only have to monitor a single payment. With your focus on debt payments lessened, you get to concentrate on growing your income so you have more money to work with. It will make your life less restricting despite all your debt payments.

What To Do With Your Maxed Out Cards

April 11, 2013 by penn

A maxed out credit card simply means that you have been making very bad spending choices. There are only a few options for you when you reach this point.

One of them is ignoring your cards. That is a flat out bad idea. This is the worst thing that you can do because not paying anything for a couple of months can increase your debt balance significantly.

The other option, and obviously the better one, is to pay off your credit card debt.

First things first, you need to stop using your cards. If you maxed it out, you will not be able to use it anyway. But in case you have other cards that are not yet maxed out, then you need to stop using them as well. It will help you solve your debt problems if you stop adding to it. That will allow you to expedite getting a debt free life.

It helps to actually remove the physical cards. Keep them in a place where it will be very difficult for you to access them. Some people refuse to close the account for credit score purposes. If this is what you want, then make sure you come up with a great place to hide it. You can keep only one card in case of emergencies but even that should not be kept at home. Do not bring it with you as you go out performing your errands to avoid using them unnecessarily.

Once you have your cards out of the way, you can start thinking about how you will pay off what you owe. There are debt relief options like debt consolidation that can do wonders for your credit card problems.

There are two ways for you to consolidate your debts. One of them is getting a loan that will help pay off your loan. This is called debt consolidation loans. If you had been taking care of your credit score, you can get a low interest rate. That will be a better alternative for the high interest on your maxed out cards. These loans are usually stretched over 3-5 years so your total card debt will be paid over that time. That can effectively make your monthly contributions smaller.

The other option is getting help through debt management. This involves going to a third party company for help. They will assign a credit counselor who will help you come up with a payment plan called the DMP or debt management plan. This plan will contain a new payment term that spreads out your debt over a longer period – much like in debt consolidation loans. The difference is it will be subject for your creditor’s approval. But once the credit card companies agree, you will send a single payment to your counselor who will distribute payments on your behalf.

Probably the best thing about debt management is learning how to make smarter financial choices. The best companies offering this service usually have financial education and training programs that will help their clients stay out of debt. Credit card debt is the easiest pitfall to get into so you need to learn the right habits that you will implement even after you have reached a debt free status in life.

Options To Pay Credit Card Debts With High Interest Rates

April 5, 2013 by penn

What makes credit card debt so difficult to get out of is the high interest that you have to pay off on top of the principal amount that you really owe. If this is what you are worried about, there is a way for you to eliminate or lower this rate so you can put more contributions into your debt amount.

The worst you can do with credit card debt is to stick to the minimum payments. It will take you ages to completely finish off your debts. What you need to do is to enrol in a debt relief program that will allow you to make bigger payments on your debt balance and at the same time, lower your interest rate.

Your best option to achieve the above mentioned goals is debt consolidation. The great thing about this solution is the fact that it will have the least effect on your credit score.

There is more than one way to eliminate the high interest on your credit card balance. Debt consolidation loans, specifically, have various options available. If you have a valuable asset like a home or something similar, you can put it up as collateral so you qualify for a secured loan. You will be given a low interest rate on your loan because of the low risk factor that your collateral can bring. In case you default on your payments, the lender can get it to substitute as payment for the debt. You can take the approved loan and use it to pay off your high interest debts. Of course, you are endangering your home in this scenario. But if you have a steady income and you are sure that you can meet payments, then go ahead with this option.

Debt management can also be an option but the lowering of the interest rate is not always guaranteed. But you can still try to talk to a debt counselor to know your chances to get approval for your request.

Another way to pay credit card debts with very high interest is through balance transfer. For a certain fee, you can transfer the balance of your other cards into a low or zero interest card. The low interest is usually just applicable for a certain period so you need to know the schedule so you can take advantage of it. Make sure you are able to pay off a significant percentage of your debt during this promotional period.

Of course, you can also lower the interest rate of your debt by simply asking for it. They usually have a program in place for people who are financially hard up but would still like to pay off what they owe. If you can prove that you are in a financial crisis, they may agree to lower your interest as long as you keep up with the payment term that you have agreed to follow.

The thing about these methods is they will get you out of debt but staying out of it is an entirely different matter. You need to practice the right financial management skills, smart spending habits and save up for a reserve fund. This is the only way you can eliminate the need to get yourself in debt. If something happens that leads to your income falling short of your expenses, you have the funds to support the deficit.

Remember that if you find yourself buried in high interest credit card debt, there is a problem with the way you manage your finances. Address that concern so that you do not only get out of debt, you will learn how to stay out of it.