Credit Guide Live

Be warned, Does the credit card work for you or do you work for your credit card?

Most people’s answer to that question will depend on how they treat their “old plastic” as credit cards are known.

For many with burned fingers will tell you they didn’t realize that things had gotten so bad until very late, because most credit card offers try much to sound like they are actually running a charity. Well, they aren’t.

And this is not a hate campaign against credit cards. Surely they have their benefits - in America if you want to rent a car, you got to have a (major) credit card.

But, consider this scenario: You receive an offer in your mail that sounds good, maybe it’s a new generation TV or a fridge. But it costs $2000. Oh, but you have a credit card with a $5000 limit, and you immediately purchase your merchandise.

Typically, here is how your repayment schedule will play out. Most credit cards charge a minimum of total balance (usually 2 percent) of the total 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 percent towards the principle.

As a result, you will take 30 years to repay and end up paying over $5000 interest.

Sounds scary? It doesn’t have to be. The moral of the illustration is: Use the credit card the same way porcupines make love; very, very carefully.

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Credit cards give you the opportunity to acquire the material things that you did not think possible for you to have. These cards offer payment schemes that can be too tempting to resist. Imagine having your favorite gadget to be paid in installment plans. But the damage on this scenario starts when you buy things simultaneously without having solid ideas on how you will be able to pay up for such. This is where credit card management can help you straighten out the mess that you have gotten entangled with.

Use Credit Cards Wisely
Credit cards can indeed make life easier but only if you will be a responsible owner and use it only in emergency situations. It is okay to indulge on your guilty pleasures every once in a while. But you have to check if you are still spending according to what you earn. This way, you will not be surprised one day to find yourself in a big mess concerning your debts.

The more credit cards you have, the more tempting it will be to spend on things even if you don’t really need them. So think really hard before you acquire a new card. The more debts you have, the harder it will be for you to pay up. This holds true despite the various payment schemes that are made available by the credit card companies.

Here are some thoughts that you can ponder about to be able to achieve success in managing your credit card debts.

1. If you find yourself in debt with more than one credit card company, analyze the situation before it is too late. Look at what you are faced with and think of ways to alleviate yourself from the situation. First, look at the debt that is gaining higher amount of interest. You need to allot more money for its monthly payment. This way, you will be able to stop the amount from ballooning until you can no longer control it.

But that doesn’t mean that you will look beyond the other debts from the other cards. You must pay at least the minimum amount due monthly. You can allot more once you have finished paying the card that has the highest amount of debt.

2. If you can afford to pay off your cards on a weekly basis, the better. This way, you will not be pressured come the cards’ due dates. Without the said pressure, you will be able to focus more on how you will be able to pay up for your remaining debts.

3. Live within your means. If only people will religiously follow this adage, life will be easier to lead. If you will only learn to value your money and budget it wisely, you will no longer have to resort to credit cards for your immediate needs. Bring cash with you wherever you go. This way, you will be able to control your spending. Being too much dependent on credit cards will not do anything good. So you have to break away before it is already too late.

You must learn the ropes through credit card management before it is already too late. You must control your debts. It must not be the other way around. You can still use your credit cards every once in a while. But make sure that you don’t let your debts become uncontrollable. Spend your money wisely and learn to control yourself from giving into temptations.

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Bankruptcy is a procedure that is designed to relieve debt to consumers who have fallen on hard financial times and cannot afford to pay their existing debts.

While there are many types of bankruptcy out there, the most commonplace are chapter 7 bankruptcies and chapter 13 bankruptcies of the bankruptcy code.

Chapter 7 is the most common for the individual. It is the complete erasing of qualifying debt. The debtor is then released from all repayment obligations. But chapter 7 bankruptcies are not to be taken lightly.

While giving you an immediate fresh start in repairing your finances, it remains on your credit report for 10 years. You will be looked at as a high credit risk and financially irresponsible.

Chapter 13 is less harmful to your credit. Though there are still marks against you, since you will be working to repay your debts on a payment plan, you do not look like you are financially irresponsible, though you are still considered a slight credit risk. Also, your qualifying assets will not be sold with the chapter 13 bankruptcy like they would in the chapter 7.

In 2005 an act passed legislation that now makes it more difficult for individuals to receive a chapter 7 bankruptcies. There are now terms to be followed such as pre-filing credit counseling and post-filing financial education.

So when considering your file for bankruptcy, it is important to weigh the sides between chapter 7 and chapter 13. Which one will do you more harm than good when it comes to solving your financial problems?

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There is another level to what should be the purely financial problem of how to handle your credit card debt.  That side has to do with the human toll that carrying that debt from month to month and year to year can have on a person and on a family.  A family’s finances are at the core of what make the family work.  The old joke goes “Money can’t buy happiness but it can rent it.”  And while that’s cute, money and debt can make the difference between a family that is able to live peacefully within its means and one that is on the verge of disaster.

So when you sit down and decide that its time you took seriously the challenge of conquering your credit card debt, you have some battles to fight that are not just about interest rates and minimum payments.  The truth is that none of us can face down something as overwhelming as a massive credit card debt if we just don’t think we can do it.

A person’s self confidence is rooted in the idea that he or she can and has had success at facing a challenge before.  So we can take on a new challenge because you did it before and you can do it again.  But when it comes to facing tens of thousands of dollars of credit card debt, it’s possible you have never faced such an elusive enemy.  It is an enemy that seems to want to swallow you up.  And that can cause despair and make you just want to throw up your hands and give up.

So the question comes, when is the best time to panic?  Well, you know the answer to that question is – NEVER!  This is not just pie in the sky optimism talking here.  There are some very pragmatic reasons that you should stubbornly refuse to panic no matter how bad the credit card debt threatens to get.

For one thing, if you are the responsible adult in the house whose job it is to handle the finances of the family, those people you love depend on you to guide your family out of messes.  This is the job of a head of household so the last thing they want to see is for you to come unglued because of a few bills.  So for the sake of the people you love, keep your head and keep looking for options and answers.

The other reason to not panic is that there is always something you can do.  You can get another job or find another income source to keep paying those debts down.  And as long as you can make the payments on any given month, there is hope the next month you will start to pull ahead.  As long as you have your health and there are jobs to be had, you can work and get out of this mess.  It might take some hard work but you can do it.

But even if you cannot work and the bills keep getting higher and higher, that is not a good reason to panic.  You can renegotiate with lenders to get some control over the debt.  You can use a credit consolation service to get your payments down and get on a schedule to pay them off over time.  And at the very end of the spectrum of what you can do, there is bankruptcy.  And as bad as that word sounds, bankruptcy is not the end of your world.  Lots of people use it and come out the other side of it fine and ready to take on the world again.

So take some heart in the fact that you really are not doomed and there is always a way out of the mess you are in.  It might take some looking, some creative thinking and some leadership to get there.  But you can only find those resources inside yourself if you stubbornly refuse to panic.

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Students in high school that are looking to start building their credit early can get high school student credit cards.  These credits cards can help teach high school students responsibility, and how to manage their credit at an early age.  These types of credit cards are issued to high school students, with a parent or guardian co-signing with the student.  Students who have these credit cards also have a sense of responsibility as well.

Before applying for a high school student credit card, both students and co-signers should always look at their available options.  There are a lot of banks and credit card companies to choose from, which makes it in your best interest to look around.  Some cards will come with high APR and a high annual fee, while some are more reasonable.  With high school students not having any credit, some banks and companies will try to charge unreasonable rates - which is reason enough to do your research and know the best deal.

Co-signers can normally help students to make the best decision.  The co-signer will be going on the application with the student, and will be the individual that the bank or company will come to when the student is unable to pay the bill.  Parents and co-signers will know the best deals for credit cards, which is students should always ask them for help when picking out the ideal credit card.

For some students, prepaid credit cards can be an ideal investment.  These cards hold absolutely no risk for students, while they help to teach financial management as well.  With these high school student credit cards, the prepaid amount you have put on the card is your spending limit.  To ensure that the application for is filled out correctly, students should always have a parent or guardian assist them with filling the information out.

When a student gets their credit card, they should be instructed on how to properly use the credit card.  Although some students will be tempted to run up their high school student credit card, they should save it for emergency situations.  At the end of the month, they should try to pay their whole bill, to avoid getting into debt.  If a student can pay the bill - it will also help boost their credit.

If you are interested in a high school student credit card, you can always apply for one online.  The applications are processed in a timely manner, normally giving you a response in a matter of minutes.  Although credit cards are great to have, prepaid credit cards are sometimes the way to go with students.  If you are unsure - make sure you look into all options available to you and compare what you find out.

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If a caveman came back and made his way to a store offering Point of Sale (PoS) payment mode, he would be baffled by the ease at which Homo sapiens do their own version of hunting. In truth, the simple act of swapping a small card into a terminal to effect a transaction would bewilder the uninitiated, and not necessary the early man.

What happens? How the payment is finally processed?

These are just some of the questions that even some card holders don’t bother to ask, either to themselves or anyone (it is a possibility that some store workers don’t fully understand it as well), so you are not alone.

Here are some quick hints.

Every time one uses a credit card to purchase something, several industry players offering different services then come forward to complete the transaction.

Once the card is swiped across a PoS terminal, the terminal electronically reads the cards holder information and then through a phone line, it asks for an authorization to complete the transaction from the processing network which is responsible for translating the information given at the PoS sale point.

The data is then sent to the issuing bank to check whether the account is valid and that the transaction is within the allowed credit limits.

The network is then triggered to send an approval code to the PoS terminal. The details are then saved at the PoS which are then sent to the processing bank at the end of the day which then pays funds into the merchant’s account.

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Nowadays a country’s financial growth depends on how much its citizens invest and its annual expenditure and profit.

Giving credit has always been in fashion, for it brings in good money to the potential lenders.

In the same way it allows consumers to have means to participate largely into the country’s financial benefits in this enormous money play discipline in of utmost importance.

Credit bureaus maintain credit records and likewise Credit rating agencies determine the appropriate rates according to which consumers and lenders work out their dealings.

Credit rates provided by credit rating agencies function as guidelines in such cases. The issuers are companies, cities, non-profit organizations, or national governments issuing debt-like securities that can be traded on a secondary market.

It is obvious that credit rates are never the same for everyone. They are set on the basis of risk-based pricing. Risk-based pricing is a way of price differentiation based on the different expected costs of different borrowers, as set out in their credit rating.

There are more than hundred credit rating agencies around the world. The top listed credit rating agencies that assign credit ratings for corporations include the following:

* A. M. Best (U.S.)

* Baycorp Advantage (Australia)

* Dominion Bond Rating Service (Canada)

* Fitch Ratings (U.S.)

* Moody’s (U.S.)

* Standard & Poor’s (U.S.)

* Pacific Credit Rating (Peru)

* Egan-Jones Ratings Company (U.S.)

Credit rating agencies are not spared from criticism, for their inability to downgrade countries readily enough and also supprting unscrupulous company management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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A lot of people these days have bloated credit card debts. According to studies, about 1 in 20 American household has about $8000 in credit card debt. Credit card debt management is something that everybody needs to know, whether you are in debt or not.

The first step to effective management and reduction of your credit card debt is to know exactly how much money you owe. Many people carry more than one credit card with them all the time, and not everyone know exactly how much money he or she owes the credit card company.

Track how much money you spend. You’ll be surprised at how much money goes into the little things that you buy everyday. Try writing down the items that you buy as soon as the money leaves your pocket. Seeing everything in writing will help you plan your budget better.

Decrease your consumption. Do you take a cab everyday to work? Try riding a bus for a change. It’ll save you a lot of money at the end of the month, not to mention that it’s also environment-friendly. Stop buying expensive lattes and settle with plain coffee. Take the time to bring your lunch to work instead of eating out everyday. All these little things siphon money out of your pocket without you noticing it. Once you track your spending and identify things that you can do without, you effectively decrease your consumption.

Increase your productivity. A more realistic approach to dealing with debts is to increase your income while you decrease your spending. How many times have you tried to sit down and calculate how much you really need to save every month to pay off your debts in x numbers of years? It wouldn’t be a surprise if you find out that you’ll end up needing more money than you make monthly to cover your expenses plus debt payments. Find a freelance job that you can do from home or in your spare time. If possible, you may also want to consider adding overtime hours at work.

Make a monthly spending plan. In order to free up as much money as possible to put into your debts payment, create a spending plan where you estimate how much money you will need to spend every month, and how much money you probably will be able to save if you follow the plan. Take note of special events (like holidays and birthdays) where you will probably need to spend more money than usual and factor this into your monthly spending plan.

Prioritize your spending. Put your necessities first, taxes second, and other debts third. Define clearly the things that you consider to be necessities in life. Things like mortgage or rent, transportation expenses, child support (if applicable), food, and some money kept in a safe place for bills in an emergency situation, such as hospital bills.

Identify and understand your spending issues. Most problematic debt situations build up because spending issues are not identified or addressed. Do you spend to make yourself feel better about something? Take the time to sit down and really think this over.

Get rid of the clutter around the house and make the money work for you. If you have accumulated a lot of things that you do not use anymore, consider starting a garage sale and put the proceeds towards debt payment.

Taking steps towards credit card debt management is not something that you can perfect overnight. It takes a lot of dedication and the proper attitude to make it work. It’s difficult, but it’s far from being impossible.

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Several financial planners would agree that one of the foremost and important steps that you should take to protect your financial stability is to set aside funds as emergency reserve. The concept that you have the fund for emergency and unexpected events is enough to help you stay away from using your credit card and drown yourself in debt.

How to Get Started

Everyone must stash a little extra cash in case of emergencies. However, how much money should you keep? Although the topic of exactly how much money is needed for your emergency fund is open to debate, the minimum amount should be enough to cover your expenses for daily living for at least three months. It is also wiser to save for six months though most financial planners agree on a full year worth of cash.

Your personal circumstances and what it takes to provide you with a peace of mind are the elements to help you determine just how cautious you want to be. If for instance, you have well-off parents who have always been supportive and willing to help you in a financial crisis, an emergency fund for three months will be sufficient. On the other hand, if you had reach for you credit card for help and end up paying 15% in interest on the debt, you would be better off saving enough money for your expenses that would last for at least six months.

If by any chance you are thinking about where to place your money, emergency fund, paying off the credit card debt or funding your 401(k), you can always start with your credit card debt. Next, you can contribute to your 401(k). This step is especially useful since you can later borrow money from your 401(k). However, as soon as all those are finished, return to your project of setting up your emergency fund.

If you do not feel like you are required to make your entire funds this week, you can start like everyone else. Begin by setting aside a monthly amount, like for instance, 5% of your paycheck or other amount that allows you to build one month’s worth of living expenses over the course of a full year. It is also advisable and helpful to make this automatic. You can do this by asking your bank to do an automatic program for deduction from your checking account to your savings account.

Additionally, monitor you spending habit each month and always search for areas that you can develop. If by any chance you receive a promotion, bonuses, or other unexpected windfalls, always think about including them to your emergency fund.

Where to Keep the Cash

Keep your emergency fund somewhere that is both easily accessible and safe because you might be required to get the cash in a hurry during emergencies. Remember not to put your cash in the freezer but do not tie them up together in stocks whose worth may have declined by the time you need them.

The best option you have is to open a savings account or money market account. However, always examine their offer with regards to the minimum balance, interest rate and other terms.

By time you think you have saved enough, learn how to stop. You can now sleep easier and try to start placing your additional saving into higher-interest and usually less accessible investments or accounts.

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There are many problems about the credit dealings because sometimes during the dealings the creditors have to face unforeseen complications.

As it has become a part of our life we sometimes ignore the problems we face through it. Though they also offer you extra protection, when things go wrong you may have spent more money than what you figured on and the protection may not help.

But if you have been in financial trouble at some stage, which most people have sometime and have arrears, a county court judgment or bankruptcy, the creditors may find it very difficult to issue you a credit card.

It has been seen that this adverse credit history hampers the person’s life in later periods, as they have a poor financial record in the past they could not avail credit card facilities though they have sorted out their finances.

There are many factors which could create adverse credit history and could lead you into trouble, which are as follows.

If you have not paid arrears on your mortgage or other loans, if the payments are not made on time and are over 30 days late on your mortgage or other loans, county debt is going against you, if your claiming address is false and you are not available at the voters list on that address then also it is counted as your negative point.

If you are a multiple applicant for different credit cards then it acts as a negative score to your credit history. One of the main things is Recent Bankruptcy (undercharged bankrupts will always act as negative points to refused credit).

And last but not the least is Repossession, it is also a bad thing to have on your credit record.

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