Credit Card Quick

Should you Use your Home’s Equity to Pay off your Credit Cards?

Credit Card Debt

If you find yourself knee-deep in credit card debt and you have an adequate amount of equity in your home, you may have considered using that equity to pay down your debt and assume a lower interest rate with a longer repayment period.

Because so many Americans have assumed too much debt over the years, many of them are anxious to erase the debt. Because of this, many people have turned to the equity in their homes as a way to satisfy their credit card debt, consolidate their bills and assume a lower, monthly payment.

Some homeowners have taken out home equity loans to pay off their debts, while others have chosen cash-out refinancing. Whatever you choose, however, is all the same when it comes to using your home’s equity to pay off debt.

Consider your Options

For some homeowners, this may be a smart, financial move. For others, however, this is not the case. Some financial advisors warn consumers about using the equity in their homes to pay off credit card debt, as this changes the debt from unsecured to secured. In other words, because credit card debt is an unsecured debt, creditors cannot take your home or any other assets away from you if you fail to pay. However, if you transfer your credit card debt into a home equity loan and you fail to pay on that loan, the bank can repossess your home to satisfy the debt.

So the question is: should you risk losing your home to pay off your credit card bills?

Consider your Financial Situation

If you have ever found yourself in a situation where you have been unable to pay your bills, then taking out additional debt in the form of a home equity loan probably isn’t in your best interest. Instead, if you are struggling to pay bills, you should probably seek the help of a nonprofit debt settlement company instead of taking out another loan.

In the end, if you are considering taking out a home equity loan, keep in mind that your personal financial situation may be far different from your neighbor’s financial situation. Therefore, always weigh both the positive and negative aspects of any large financial transaction, especially when it concerns your home.

Your Guide to a Healthy Relationship with your Credit Cards

Introduction

You can have a healthy relationship with credit cards! You can use them to your advantage without becoming embroiled in credit card debt! All it takes is a bit of forethought and a firm understanding of the pitfalls of credit card debt.

• Begin by understanding the current credits you have and if they are still working for you – The best first thing you can do is to take an inventory of your current credit cards to make sure that they still have what you want and need. Take a look at the interest rate on your credit cards, as well as any other thing you may need to use the credit card for, including balance transfer offers, credit card insurance and protection and rewards features.
• Consider your needs and choose a credit card based on them – In order to guarantee that you have found a credit card that’s right for you, you must first consider your credit card wants and needs. For most individuals, a good credit card with a low, fixed interest rate will be suffice, while some individuals may find value in rewards and cash-back credit cards. Of course, the credit card you choose will be a personal decision, so take your time to explore your options when it comes to credit cards.
• Make it a point to thoroughly understanding the rates, terms and conditions of your credit card – Before you accept a credit card offer, take the time to read and understand every aspect of the credit card; otherwise you could be setting yourself up for disaster. If you are accepting a card with a 0% introductory interest rate, for example, make sure you understand the terms of the promotional rate and the rate you will be charged once the promotional rate has ended. If you accept a rewards credit card or a cash-back credit card, read the fine print so you can be sure you understand the best ways to earn points and redeem them. Although the CARD Act has made credit card companies become more forthright when it comes to their terms and conditions, it should never replace your responsibility of understanding the card and its terms and conditions.

You’ve Consolidated your Credit Card Balances: Now What?

Credit Repair

If you have great credit, but too much credit card debt, you may have already considered consolidating your credit card debt. Consolidating your credit card onto a loan or credit card with a competitive interest rate may be a good idea, provided you don’t find yourself in the same position in a few more years.

Many individuals choose to consolidate their credit card debt in an effort to lower their interest payments and to ease the burden of paying multiple bills each month. For those reasons, it is often quite advantageous for individuals to use the services of credit card consolidation.

However, unless consumers make a game plan once their consolidation takes place, they may be doing little more than freeing up their credit cards to begin spending once again.

One of the main problems with credit card consolidation and balance transfer loans is that, once consumers pay off their debt, they begin, once again, spending on the credit cards that they recently paid off.

With that said, it is usually a good idea to have a game plan in place so that you can better deal with your credit card consolidation in a responsible fashion:

• If you know that you will likely begin spending on those credit cards once the consolidation has taken place, cancel the cards. Some credit card analysts tell individuals to not cancel any accounts because it will affect their credit score, but the truth is that a small hit on one’s credit score is better than mounting credit card debt. In other words, canceling cards is always the lesser of two evils if you have trouble controlling your spending.
• Set up a repayment plan and stick to it. You can begin making a considerable dent in your consolidation loan or balance transfer if you calculate how much you can afford to pay each month and then stick to your plan. There is no better satisfaction than watching your credit card balance dwindle, month after month.
• Set up a reasonable household budget and take the time to find out why you overspent on your credit cards so you begin to see where your money is going every month and how you can avoid going back to that situation.

Seniors and Credit Card Debt

Credit Card Debt

Credit card debt doesn’t just affect younger consumers. In fact, recent statistics show that consumers over the age of 65 are spending more on credit cards than ever before. Unfortunately, seniors are also apt to be living on fixed incomes.

Because of this, it is important to consider credit card debt and seniors. If you have older loves ones in your life, it may be a good idea to ask them about their credit card debt, as it can become a huge issue for individuals living on fixed incomes.

Approaching your Aging Loved One

Although it may be difficult to approach your aging loved one about credit card debt, as this could signal to them a loss of independence or privacy, ensure them that you have only their best interest at heart. If you notice that the senior in your life is purchasing things you may not think he or she can afford, or if you are aware of mounting medical bills (a signal that he or she may be forced to rely on credit cards because of high medical bills), it may be time to talk.

Another problem with seniors and credit card debt is that they may be unaware of the interest rate on their credit card, thereby creating problems in terms of paying off their debt.

Although it may not seem like such a big deal if your aging loved one is incurring a great deal of credit card debt, the truth is that this debt may be causing them a great deal of emotional stress and anxiety, especially if they are being hounded by creditors.

Providing your Aging Loved One with Financial Assistance

If you are able to do so, help your aging loved one pay off some of all of their credit card debt. You may also want to take the time to help them work out a budget or, if your loved one feels uncomfortable talking to you about finances, encourage them to talk to a financial counselor or non-profit consumer credit agency.

Remember that credit card debt can affect nearly anyone at any time in their lives, including seniors, so it pays to keep the lines of communication open with your aging loved ones so they don’t have to deal with the stress and anxiety of credit card debt.

Your Guide to Formulating your Credit Card Plan

Credit Card Debt

Do you have a credit card plan in place? If not, or if you’re not even sure what a credit card plan is, consider that formulating a game plan for your credit cards and your overall financial goals is one of the easiest ways to reign in your spending and keep your budget where it belongs – in the black.

How can you formulate a credit card plan? The easiest way is to determine your overall financial goals – both in the short term and in the long term. How do you want to manage your money? How much money can you comfortably afford to spend on credit cards each month? Will you always commit to paying off your credit card in full each month or have you developed a game plan for paying off existing credit card debt?

In other words, everyone’s credit card plan will look slightly different, but all will have the same goal: to use credit responsibly and to keep our credit card debt to a minimum.

Here are some factors you may want to consider when formulating your credit card plan:

• Pay as you spend – A great way to keep your head above water when it comes to finances is to commit to paying off your credit card bill, in full, each month as to not accumulate any debt. You may also commit to not spending on your credit card until the bill has been paid in full.
• Never exceed the 30 percent mark – The magic number, it seems, for credit reporting agencies when determining your credit score, is 30 percent. In particular, credit reporting agencies want to see your overall debt account for less than 30 percent of your income; and that includes your credit card debt. Take the time to review your debt picture and determine whether you have exceeded that 30 percent mark, and then make a commitment to either lowering your debt or keeping your debt under this magic number.
• Develop a payoff goal – and stick to it – Many consumers’ credit card plan is undoubtedly paying off their existing credit card debt. Although how you will pay your debt off will vary, the overall goal should be the same. Therefore, once you have determined the time frame during which you want to pay off your debt, and the payment that you can afford each month, stick to it. In other words, make a commitment to follow through with your payoff goals.

A No-Nonsense Guide to Credit Card Debt Elimination

Credit Card Debt

It may seem like a daunting task to finally begin making a dent in your credit card balances, but it can be done – and without a lot of nonsense and frustration.

You have likely heard of plans to reduce and eliminate your credit card debt, and many of these words of advice are quite useful. However, sometimes it may make the process of reducing your debt a bit easier if you break it down into a basic plan of action.

If you want to reduce – and ultimately eliminate – your credit card debt, here’s how to get started:

• Stop using your credit card – You may think that small purchases are relatively harmless, but it reality these small purchases often add up big when it comes to your credit card balance. Therefore, the best rule of thumb is simply to go cold turkey and stop using credit as a form of payment.  The act of eliminating credit card spending will require a new way of thinking, but if you are serious about reducing your credit card debt, then it is one to which you must be committed. In other words, if you want to take a trip, but you don’t have the cash, you simply don’t take the trip.
• Pay it down – Once you have taken the time to really change your spending habits you can start to focus on the debt. If you are only making the minimum payments on your cards, you are getting nowhere fast.  Make a commitment to pay at least twice the minimum payment each month. Although this may mean making additional sacrifices regarding your spending, you will soon be rewarded with your diminishing credit card balances. If you are having difficulty paying double the amount on all of your credit cards, concentrate first on those cards with the highest interest rate and pay the minimum payment on your other credit cards in the meantime.
• Make it easy – Paying more than the minimum payment on your credit card may be a hard thing to do; that is, if you have a choice. If you set up an automatic payment plan for your credit card payment each month (either through your bank or your credit card company), you will keep your payment commitment and likely not miss the extra money.

American Credit Card Debt Decreases

News

According to Synovate, credit card spending is up again throughout the United States.

In fact, the latest data shows that credit card consumers spent an average of $1,559 in 2010; that’s an increase of 6 percent over 2009. These numbers are indicative of those in 2008 – the last time consumers spent before the recession took hold. In 2008, credit card consumers spent an average of $1,701 on their credit cards.

Credit Card Debt Falling to Lowest Level in Eight Years

A related study by TransUnion also has good news to report: credit card debt has fallen to its lowest level in eight years. The average consumer credit card debt has averaged $4,951 over the last three months, which is a decrease of nearly 13 percent from 2009’s average of $5,719. The last three months, in fact, were the first time the average consumer credit card debt dipped below $5,000 since the first quarter of 2002.

Many economists are quick to point out, however, that the decrease in credit card debt has little to do with consumers having more money; instead, it is likely that consumers are making much more of an effort to get out of the debt they are in because of high interest rates.

Rising Credit Card Interest Rates

According to Synovate, the average interest rate on a credit is now 14.7 percent, compared with 13.1 percent this time last year. The spike in interest rates is likely a result of the CARD Act that was recently enacted.

In short, it seems that credit card companies are getting their money one way or another. If they are limited or prevented from charging certain fees, they will certainly find a new way to bring in the all-might dollar; and that just may be in the form of higher interest rates.

In addition, many banks and credit card companies scrambled to raise interest rates before the CARD Act went into effect, given the strict regulations the government put on companies regarding notice of interest rates increases.

Another reason the data is coming back showing a decrease in credit card debt is also likely because of the many bankruptcies and other debt write-offs that have taken place over the last year. This type of debt reduction or elimination is not included in these studies.

How Best to Approach your Partner about your Household’s Credit Card Debt

Credit Card Debt

You may have a good idea about how to budget your income and pay off your credit card bills; but your spouse or partner may not be on board.

In order to make the most out of your income and live without mountains of credit card debt, it only makes sense that both partners must find a compromise between what is spent and what is paid each month.

If you have a spouse or partner who is unwilling to go the distance to get your credit card debt in check, then it may be time to be a bit more creative when it comes to negotiations.

1. Don’t approach the conversation in attack mode. If your partner feels that he/she is being attacked or accused of accumulating the bulk of the credit card debt, he/she will certainly react by becoming defensive. Instead, approach the conversation using “we.” For example, “We should come up with a game plan for reducing our credit card debt so we can begin saving for a home.”
2. Include your partner in on the discussion. Instead of approaching your partner with all the answers, encourage him or her to become actively involved with finding a solution. You can certainly come with a list of ideas or suggestions; just avoid being the one with all the answers.
3. Sweeten the pot with a little incentive. You may try something like: “we could begin to put money aside for that Caribbean cruise if we just pay off this credit card debt first.” Having something to look forward is often a good incentive for paying off credit card debt.
4. Put it in writing so there are no misunderstandings or miscommunication. Detail clearly what is expected of each of you so that there won’t be any problems down the road. If you are both income earners, detail what portion of each paycheck should go to paying off the debt. You may also want to discuss the ways in which you can begin cutting back on your spending. But, once again, make sure you approach this conservation in a calm, non-confrontational manner so that you can better accomplish your overall goal of living debt-free.

The Top Five Tips for Managing your Credit Cards

Introduction

Credit cards are the ultimate convenience for many individuals. However, they have also proven to be quite a nightmare for millions of other consumers.

There are a number of ways to meet your financial obligations and still manage your credit cards successfully; you must, however, be committed to a number of obligations if you expect to enjoy the many benefits of credit cards.

1. Always make a point to establish an emergency savings fund so that you won’t have to rely on credit cards if an unexpected expense creeps up. Putting a large purchase on your credit card may make it incredibly difficult to pay off, thereby setting you up for long-term debt.
2. Always take a moment to question your purchase so that you can decide if you are living within your means. A spur-of-the-moment trip to the beach many sound like fun, especially if you have a large credit limit, but you must think hard about whether this type of credit card purchase can be realistically paid off in a reasonable amount of time. The problem with credit cards is often that individuals get the false sense of having money because they have their credit cards in their back pocket.
3. If you are unable to pay off your credit card balance, in full, make a commitment to stop spending until the balance is paid off.  Making this small commitment to yourself will likely mean the difference between living within your means and living with credit card debt.
4. If you are saddled with too much credit card debt, take the time to set up a realistic repayment schedule and stick to it. Instead of simply paying the minimum payment, treat your credit card bill like any other bill and stick to the monthly payment you set up. You may even want to set up an automatic bill payment so that you won’t be tempted to pay less each month. You can often find calculators online that will provide you with a monthly payment amount that will allow you to reach your credit card payoff goals.

What you don’t know about Credit Card Debt Settlement Services can Hurt you

Credit Card Debt

Have you ever been tempted to take advantage of those commercials or ads that promise to eliminate or greatly reduce your debt? Because of the sour economy and the credit problems so many individuals are facing, these types of companies are popping up at astounding rates. Some of the companies are quite helpful; others are merely looking to make money off your unfortunate situation – and leave you in worse condition when they are done with you than when you started.

So, the question is: can you settle your credit card debt for less than you owe? Can you settle with your credit card company for a fraction of your balance and make more realistic payments?

Here’s what you need to know when considering a credit card debt settlement company:

• Not everyone can negotiate a lower payoff amount for their debt. In other words, your overspending may not qualify you for debt settlement. Instead, reputable debt settlement agencies work specifically with people who are in hardship situations, like a loss of a job, divorce or medical situations. In other words, if you are still making money the credit card company will expect you to pay back your debt – so don’t expect a “get out of jail free” card if you simply overspent beyond your means.
• You may be better off trying to negotiate a deal with your credit card company. Because so many people are turning to debt settlement companies many credit card companies simply won’t deal with them. Simply, if you are experiencing financial hardships and are having a difficult time paying your credit card debt, the best course of action may be to simply contact the credit card company yourself and forgo the debt settlement company.
• Don’t approach the debt settlement business the same way. Simply put, not all debt settlement companies are the same. There are unscrupulous, even dangerous, companies that are out to take your money and there are non-profit organizations that may prove to be quite helpful. In other words, do your homework before choosing a debt settlement agency.
• Understand that using a debt settlement company will adversely affect your credit score. There is no way to avoid this, as any time a credit card company is willing to settle for less than you owe them your credit score will take a hard hit.