Credit Card Quick

Financial Vulnerability: Bankruptcy Pitfalls to Avoid

Bankruptcy

When your financial crisis has come to a head and your only option is bankruptcy, you’re at a pretty vulnerable point. There will be alluring ideas waiting on you, as well as some less than respectable people waiting to take advantage of the state you are in. This does not mean you should steer clear of filing bankruptcy if it is going to make your life a lot better, nor does it mean you should avoid businesses and services who are there to help you. You simply need to be aware and be on the lookout for things that could lead to further financial trouble and to avoid things that could easily lead to your being taken advantage of.

Credit Counselors

Credit counseling is a wise idea if you find yourself in a bad way financially. For those who are filing bankruptcy, it is often a requirement of the court that you go through a credit counseling program and receive your certification. Credit counseling can teach you how to budget, how to manage your bills and finances, they can negotiate some of your bills for smaller settlements and can give you a lot of tools for a healthy financial future. Even people who are not in financial trouble could benefit from such services. Unfortunately, not all of these services are reputable, having less than your best interest in mind. If you need to go through one of these programs, ask if your state or county offers a free program. If not, ask for a recommendation from the court or someone who knows all about it. Do not trust advertising and be one the lookout for those who want a bunch of money up front. Some of the most unscrupulous companies will gladly take your money while failing to deliver what they have promised.

Watch out for credit repair offers as well. Accurate information can not be removed, even if it is negative. If something is old and needs updated, or is inaccurate, you can call the credit bureaus yourself to see that this is taken care of.

Risky Financing

Once a bankruptcy is discharged, you might think that offers for financing and refinancing would be slow or non-existent. The truth is, a lot of these offers will start coming out of the woodwork once your bankruptcy is behind you, even if it is still on your credit report. Why? because the lenders making the offer operate on the assumption, whether true or false, that because you filed for bankruptcy, you are less likely to get into financial trouble again. It is not real smart on their part, as some people do file for bankruptcy numerous times. Some are irresponsible and others, well, life happens.

Some of the offers you might see are refinancing options for mortgages, loans and even credit card offers. It is not a bad idea to take a lender up on an offer. Sometimes, it can help to rebuild your credit. However, you will want to pay close attention to the terms and conditions, as well as the rates you will be expected to pay. You will want to weigh this against your financial ability and will want to ensure that you are responsible with paying the bill each and every time it is due.

Once you have filed bankruptcy and had a favorable decision, you just want to be careful. Work to get your financial health back on track and be wary of things that could lead you right back into bankruptcy court.

How to Prepare for Difficult Financial Times

Introduction

Given the state of the economy, it certainly comes as no surprise that many of us have been affected by the recession and the credit crisis in more than one way. And, unfortunately, most of our finances have taken a hit over the last year or so.

With that said, it is important that everyone prepares for difficult financial times so that we can best handle a financial crisis if it comes our way.

1. Start an emergency fund – There is absolutely no better way to make your way through a financial crisis than to fall back on an emergency fund. Most experts recommend aiming to save at least 3 to 6 months worth of living expenses, but every little bit helps. An easy way to start an emergency savings fund is to have a set dollar amount transferred from your paycheck or checking account into an interest-bearing savings or money market account.
2. Keep a good credit card or two and keep the balances low – Now is a good time to find a great credit card or two with competitive terms and conditions and get rid of the rest. It is also a good time to put yourself on a spending budget and to also make it a point to pay the balance in full every month. Getting into the habit of paying off your credit card every month will certainly enable you to manage your budget and your finances better.
3. Reconsider carrying retail credit cards – Retail credit cards are often a mess waiting to happen. They are easy to apply for, easy to receive, and often too tempting to avoid using in excess. If you find yourself charging more than you normally would just because you have a retail credit card then it may be time to say good-bye to your retail credit cards and simply stick with one or two, major credit cards.
4. Keep a home equity line of credit open – Homeowners with significant equity in their homes may be able to secure a home equity line of credit. Many financial experts recommend securing a line of credit in case of a financial emergency. The line of credit is open and ready to use whenever necessary, but you pay no interest or charges if your balance is zero.

How to Stay on Top of Rising Interest Rates

Credit Card Debt

The financial crisis of the last couple of years has left many banks and creditors scrambling to recoup their losses. The overall losses are astronomical, and millions of customers are simply without the means to repay their credit card debt.

Unfortunately, whether we like it or not, the losses felt by many credit card companies and banks are simply passed onto customers in good standing. Although this certainly isn’t something that is said outright, many of us have likely experienced interest rate hikes and additional fees on our favorite credit cards over the last couple of years.

As a customer in good standing, you do have rights regarding interest rake hikes and other fees. In other words, don’t feel like you have no other option than to accept higher interest rate charges on your credit card if you have always paid your bill and kept your credit in good standing.

1.       Keep your credit card account in good standing – no matter what! You have little room for negotiation if you fail to pay your bill on time.

2.       If your credit card company sends you notice of a rate increase, immediately call the company to negotiate. Once again, if you have maintained an excellent credit history you will hold the cards regarding your interest rate. Ask the credit card company to maintain your current interest rate. If you have no luck, ask to speak to a supervisor and plead your case with him or her.

3.       If your current credit card company does not budge regarding your current interest rate, simply look elsewhere. If you have maintained an excellent credit rating, switching credit cards should not be a problem. Although obtaining credit may be harder than it was a year or two ago, individuals with good credit are still being sought out by creditors.

4.       Look for a credit card with a low, fixed interest rate or one that has a low, introductory offer. Also, look for a credit card that includes a low rate on balance transfers and or a low fee on balance transfers, as these costs can be significant, regardless of whether you have secured a low interest rate.

Facts about Secured Credit Cards

Credit Card Types

Credit cards are a convenience that many Americans have come to appreciate. However, given the financial crisis and the looming recession, many once credit-worthy Americans are now struggling to re-build their credit after difficult financial times sidelined their credit score and their ability to obtain credit.

For those of us who are struggling with our credit worthiness, secured credit cards may be the answer. It is important, however, to educate ourselves on both the advantages and disadvantages of secured credit cards before applying for one.

How Secured Credit Cards Work

A secured credit card is essentially a credit card with a security deposit. The credit card works in a similar manner to a traditional credit card; however, the credit card holder must first deposit money into a special account that is equal to 50 to 150 percent of the card’s credit limit.

The credit card holder then uses the credit card as he or she would any standard credit card, and pays the bill in a similar fashion. The only difference is that the creditor has a cash reserve to pay the credit card should the cardholder default.

As the cardholder continues to pay the card every month and make responsible purchases, the creditor may raise his or her credit limit. For cardholders seeking a higher credit limit, the creditor simply requests a larger security deposit.

Establish and Spruce up your Credit Rating

For those consumers with little or no credit, or for those with a poor credit history, a secured credit card may be the ideal solution for rebuilding credit. A secured credit card provides consumers with the opportunity to show creditors that they are working towards a more financially sound future.

A secured credit card enables anyone of legal age to establish a credit history; therefore, they are ideal for young adults who have no credit history. Others who may find secured credit cards to be useful are those in bankruptcy or those who have had their bankruptcy recently discharged.

Establishing a credit history with a secured credit card may very well be a responsible step towards a better financial position.

Disadvantages to Secured Credit Cards

While there are few disadvantages, it is important to remember that secured credit cards typically carry a high interest rate, although for many consumers with poor or no credit, this is often an accepted trade-off.