Credit Guide Live

There is something strange about what happens to all of us psychologically when we see our credit card debt just keep climbing and climbing with no end in sight.  For some reason, our emotional reaction is often one of ambivalence or even acceptance as though having a mountain of debt to credit card companies is a part of life and no big deal.

But it is a big deal.  When a huge portion of your monthly budget goes to servicing debt, it’s a big deal because that money could be going toward a better house, a new car or even just for something fun for you or your family.  Whatever it might buy is a lot better than it just being thrown away as interest on a ridiculously high credit mountain.

So as much as we all do strive for peace and keeping a positive attitude about life, in order to get some motivation to get out there and defeat this monster we call credit card debt, it might be time to get good and angry about the way credit cards handle our accounts and find the guts to finally find a way to just up and fire them.

In the retail world, it is a crime to use false advertising or pull off hat is called “bait and switch”.  Bait and switch is a tactic where they advertise a price for a retail item and then when you get to the store, the price is wrong on the shelf or for some other reason (like, we ran out of the ones at the sale price), they bilk you into paying the non-sale price.  That’s cheating and it’s wrong.

Credit card companies are the international grand champions of bait and switch.  When they send you those glossy, well worded invitations to low interest, “no cost” credit cards, they have no intention of honoring that offer.  Oh sure, they might set up the accounts that way.  But if you read the fine print of what you are signing when you apply for the credit card, they retain the right to change the rules of how your credit bill is handled without notice and without restrictions.  That means that even if they said there will be no annual fee, they can impose one and there isn’t a darn thing you can do about it.

Even more outrageous is the fact that credit card companies can and often do raise the cost of what you are paying for the goods or services you bought using your credit card, again without any notice at all.  So if you bought a refrigerator on your credit card which at the time was charging 8% interest, the credit card company can up and raise your interest level to 20% overnight, with no reason for doing so and with no notice to you.  So what just happened is they jacked up the price of the refrigerator you bought and you have to pay it.  If that doesn’t get you good and mad, well, it should.

If you watch how the credit card companies handle your accounts, you can tell they are looking for any excuse to raise your rates.  If your payment comes in an hour late, they can double your rates.  And guess what?  They are the ones who determine if your payment came in late.  So if you mail it a week and a half a head of time, they can still claim it as late and jack up your interest rate and impose a huge penalty for late payment.

It’s just amazing and completely outrageous that credit card companies are able to change the rules of how you do business with them with no respect for you as a customer and with no intervention by any federal agency.  In fact, the concept that the federal government is in the pockets of the credit card companies is reinforced over and over again.

Getting good and mad about credit card debt can mobilize you to do some things that are long overdue.  It might be overdue for you to contact your congressman and start putting them on notice that we aren’t going to take this anymore.  But it is definitely overdue for you to see the credit card companies for what they are and fire them by getting rid of that credit card debt once and for all.

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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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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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Sometimes we don’t take the time to get a real world understanding of not only what credit card debt is but how we got into this mess and what its going to take to get out of it.  The first steps of solving the problem are the most important because by identifying what the problem is, you also identify what it isn’t.  So if we can think logically about the problem of being buried in credit card debt, the path to digging out will become more clear.

It doesn’t take a committee to figure out the heart of how all this debt got started because it boils down to a very basic statement of economic fact.  And that is that you got in debt because you spent more than you made.  In other words, you are living at a standard of living higher than your income can support.  And the overflow goes to debt.

It is pretty brutal when it gets to that level of honesty but when you look at it that way, then the solution begins to become clear to you.  Now it’s important when doing this kind of analysis that no guilt is allowed.  There are a lot of perfectly acceptable reasons you may have fallen into the debt.  It’s not like you are necessarily running around spending lavishly on expensive cars and trips overseas.

Lots of things happen to a family budget that you have no control over and using your credit to handle it is the responsible thing to do.  You may have lost your job or source of income.  There may have been a family medical crisis that you just had to handle with credit funding.  There are home repair emergencies, weather emergencies or trips you have to take to keep everything together.   So for whatever reason as that credit hill turns into a credit mountain, then it becomes the family emergency to tackle.

The solution is evident from our diagnosis.  It quite simply is not only to get to where you live within your means but to generate sufficient income to start paying that credit card debt mountain down the same way you drove it up, a little at a time.  There are a lot of very adult things you can do and should do to make this dream a reality.  You have to stop the debt from going up so to cancel as many credit cards as possible reduces the chance they will continue to accumulate charges.

Getting control over spending is going to take some family discipline.  But if the whole family knows it’s also a family quest to get this debt off your backs, everybody can pitch in.  You can eat at home and never out. You can scale back extras like cable TV or entertainment buying.  You can let the holidays be about love and not gifts for a few years.

This also might be the time to think about adding some additional income to the family budget to get that overflow that you can use to attack the credit mountain more aggressively.  One adult might take a second job and everyone agrees that every cent of that job will go against that debt.  Keep good records and when the family sees that the debt is coming down, celebrate, albeit do so cheaply.

This is a hard step especially for the parent who has to work two jobs or if you have to send mom back to work for a little while to get this situation under control.  Sometimes it can be made less harsh if the second job is something the adult going out likes to do like work a book store or a garden center which may be a hobby.  Or if the job is on the internet, that parent could work in the comfort of home and make that extra money.

But as the size of that debt starts to go down and month after month it gets smaller and smaller and the interest payments get smaller and some of the credit cards get paid off and all of a sudden there is more money in the family budget, that extra hard work and careful cost cutting will have all paid off and everyone will breath a sigh of relief because you took the credit card down the same way you ran it up, one month at a time.

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Credit card debt is really a menace and a lot of people are facing it around the globe. Credit card debt consolidation and bank loans are well known as ways of reducing and eliminating credit card debt. In all this confusion, credit card debt negotiation almost gets forgotten.

Well, credit card debt negotiation starts right from your credit accounts where you have the most hard-hitting credit card debt. This means credit card debt negotiation has to be taken up with your current credit providers. Before you misinterpret it, let me clarify that we are not talking about chucking off a portion of your debt through credit card debt negotiation. We are talking primarily about using credit card debt negotiations for getting the APR on your current credit cards reduced to some lower figure.

So, credit card debt negotiation is about talking to your current credit card suppliers for informing them about your intention to clear off your credit card debt and using your skills (credit card debt negotiation skills) to agree a lower APR rate with them. Basically, credit card debt negotiation is about asking your current credit card suppliers for help/assistance in clearing off your credit card debt.

If credit card debt negotiation is successful, it will save you not only money (due to reduction in APR) but also the hassle that is associated with looking for a new credit card (to transfer balance).

However, if the credit card debt negotiation, with your current credit card supplier, doesn’t yield the desired results, you will have to look for other credit suppliers who can help you in consolidating your debt. Again, you will need your negotiation skills (rather credit card debt negotiation skills) to get a good deal from them.

If your credit card debt negotiations work out well, you might be able to get a really low standard APR or you might get a longer term on 0% APR (or you might get both). These are really the most important things and your credit card debt negotiations should concentrate more on these than anything else.

The other thing to include on your credit card debt negotiation would be the credit limit and other benefits. Here, you are basically trying out the possibility of getting a better credit card as part of your credit card debt negotiation.

For people with really bad credit rating, getting an unsecured bank loan or getting another credit card (for balance transfer) is really difficult. For them, getting an unsecured bank loan or credit card is what you would term as credit card debt negotiation.

So, don’t hesitate in going for credit card debt negotiation. It is surely an option available for all.

Technorati Tags: Haggling With Your Creditors

Balance transfers are one of the big methods that are common used to try to get some control over an out of control credit card debt.  While many balance transfer offers you get from credit card companies in the mail are not a great deal, some of them can really help if you are just trying to get the debt you are trying to keep up with under control.  And getting that debt to a credit home where the interest rate is not only reasonable but not constantly changing is a big goal of making balance transfers.

There are some general guidelines you can use to pick which balance transfers to even consider in the first lace for moving your debt.  It is worth your while to be a wise consumer and chose a credit agency carefully because it is a competitive market and, as with anything else, there are good guys and bad guys out there.  Some guidelines to take into consideration are…

§    If you can do business with a company that you already have accounts with, that’s better.  Not only do you have a history of how they treat their customers, it will not affect your credit score to just use an account you already have established.
§    When moving your debt to an offer for a lower interest rate, make it is not an offer with an expiration date.  Some very low interest rate offers are only for a few months which really don’t do you that much good.   Better take 3-4% for the life of the loan than zero percent for three months.
§    Keep your eyes open for transfer fees.  These hidden charges can take all of the value out of a seemingly good offer.  If they say there are no transfer charges, make sure that’s the truth.  Read all of the fine print of any offer whether it’s from a new credit source or someone you have worked with for a while.
§    Only respond to offers you get in writing.  Stay away from phone solicitors or email offers.  There are more scams than respectable offers done this way.

Also keep an eye on the credit ceilings of the offers you are getting.  If the offer is to use an existing credit account, you should know how much credit they can offer you and how close you are to using that credit up.  But it is of no value to you to go through the trouble of arranging a balance transfer to try to capture a lower interest rate only to find that they could only accommodate a small amount of the needed funds. 

The other kind of balance transfer other than just moving debt from one credit card company to another is to move funds to a secured loan.  A second mortgage is a secured loan because you are putting up your home equity as collateral.  These types of loans are easier to get because you have something to put forward for it but you are taking a risk because of the security you are putting up. 

Use the same sense of good common sense and examining the creditors when you choose a company to take out a secured loan.  Two things you can over look that can come back to haunt you are early cancellation fees and variable interest rates.  If you are putting up your home, you deserve to lock in the interest rate.  And when you look at the final paperwork, look for those early pay off fees.  If everything doesn’t look just right, don’t be afraid to get up and walk out.  There are plenty of credit companies out there to deal with and you can find one who will do business fairly and honestly with you.  You just have to have the patience to keep looking.

Technorati Tags: debt transfer, moving debt

In this modern time where the economy has been such a challenge for everyday people like you and me to keep up, it’s easy to get into credit trouble when your credit bills begin to stack up.  So if you are in the position to just start learning the ropes of the world of credit cards, there are a lot of things you can do to avoid credit card debt before it sneaks up on you and keep your nose clean, as they say.

This is an outstanding goal for you if you are just getting your first credit cards.  If you know or talk to anyone who is battling tens of thousands of dollars of credit card debt, you know what a jail sentence it can be.  Once that credit card debt gets that high, the time it will take even under the best of conditions to bring it down runs into the years if not decades.  And for all that time, thousands of dollars of money goes down the drain to credit interest that doesn’t buy you any food, tickets to the movies or new clothes.  It just goes away with no value to you at all.

But if you are new to the world of credit, getting a credit card is a good thing.  But once you get one, keeping it under control is job one.  You will find it amazingly easy to use a credit card once it comes.  In fact, the retail world makes it difficult to conduct transactions any other way.  You can pay for gas at the pump that way and even charge your groceries at the grocery store.  And while all of these great uses for credit are helpful, you can end up with a whopper of a credit card bill at the end of the month.  And if you don’t pay that bill off, that is the first step on a lifelong jail term in credit card debt jail.

So there are some guidelines you should follow to both use credit responsibly but also to keep building your credit rating which has a real value to you.  Remember that what the credit card companies don’t tell you is that making a charge on a credit card is a loan.  Even if you just charge ten bucks to go to the movies, you took out an unsecured loan to finance that movie ticket. 

So once you start using a credit card, keep in mind that you will be paying back everything you run up on it.  It is NOT free money.  A good practice is to save every receipt every month and keep a running tally of what you have spent on credit.  Now only can you use that to cross check your credit card, it keeps you honest because each time you add a charge to your credit card, you can update your tally so you know for certain that you will be able to pay it off when the bill comes.

Paying off the credit card each month is the number one best way to keep your credit problems under control.   Now it isn’t a bad idea to let a little bit of the debt drift from month to month.  This builds your credit history and credit rating which will pay you well down the road when you want to buy a larger purchase.  But by staying on top of your credit and what is going onto your card, you will start out with the kind of habits that will lead to a life of good credit use without credit card jail.  And that is a wonderful gift to give yourself early in life.

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