Credit Card Debt Help
by Bob Kish
A charging penalty in basketball could cost you a
bucket. In the world of credit card debt, however, charging penalties could cost
you buckets of cash over the long term. As a result, paying close attention to
how you use your credit cards is essential to successful financial management.
By definition, credit cards are a device used to
obtain consumer credit at the time of purchase. In and of themselves they are
neither good nor bad. How you choose to use them is up to you. Make the right
choices and they become powerful tools of freedom and flexibility offering you
rewards while building your credit. Get carried away with credit cards and you
may find yourself being suffocated under a mountain of debt. In the end, the
choice is always yours.
Many people do not understand what good credit
means and how the choices they make will affect their future – both positively
Good credit is one measure of how trustworthy you
are. As far as paying your bills on time this makes you a good credit risk
because lenders trust that you will pay your loan back with interest on time.
Having good credit has many benefits such as lower
interest rates, higher credit limits, ease when trying to borrow money, etc. In
fact, many insurance companies and even employers are starting to pull credit
checks on individuals prior to granting insurance or offering jobs.
If the credit bureaus indicate that you are behind
on credit card payments or that you have a lot of outstanding debt or late
charges, you may lose out on a variety of opportunities only available to those
with good credit.
Bad credit, once established, can take a lot
longer to repair than it did to create. For example, once you have derogatory
information on your credit report it can take up to seven years or more for
negative information, like a bankruptcy, to be removed.
Credit repair services will help you repair your
credit by helping to remove inaccurate information on your credit report; they
also specialize in debt consolidation. Credit repair services put all of your
debt together into a lump sum, which they calculate into a reasonable monthly
payment which is then distributed to your creditors.
A benefit of consolidating creditor debt is that
your credit repair center will work with your creditors so that you are not
receiving constant phone calls and collection letters. Credit repair services
can also decrease the interest that you’re paying on old credit card debt.
If you’re working with your own creditors you may
be able to negotiate a settlement which usually consists of a creditor offering
you a pay off at a percentage of your original debt. If you take this route the
item on your credit report will show paid in full although it will also state
that you settled on the debt, and the amount settled for.
Trying to reestablish your credit is a good idea.
Be aware, however, that there are credit card, and loan companies which prey on
people with bad credit. Most people have good intentions of paying their bills
but due to any number of reasons, say the loss of a family member, termination
from a job, or any other type of emergency are often unable to comply.
If you have bad credit and obtain a credit card
aimed at people with less than perfect credit you will be paying very high
interest rates, some cards will charge a large balance on your new card before
you have even used it; such fees are called account set up fees and you may also
pay annual fees as well.
Secured credit cards are another way to
reestablish good credit. The idea here is that you put down or secure a certain
line of credit with your own money. For instance, if you wanted a credit card
with a thousand dollar limit you would secure the card by paying a thousand
dollars which is then held at what ever financial institution you're doing
business with. The available balance is the amount you have secured, so if you
use your card you will need to make payments on time, after so many months of
consistent payments the credit card company may release the security you put on
your card, giving you unsecured status.
Avoid payday loan companies if at all possible –
the interest rates are often astronomical and you may find yourself caught in a
vicious cycle of only paying the interest. Payday loans or cash advances are a
trap that can leave you scraping each week to just pay the interest on the
There are a number of places you can go for free
credit card debt help online. One option is to visit a site that will help you
with debt consolidation. Debt consolidation via a lower interest rate loan is a
viable option. However, stay away from companies that charge inordinately high
debt consolidation fees.
A new alternative now available is one of the p2p,
or peer to peer loan networks online. Peer to peer, or p2p, simply means that
other people will band together to loan you money. Often these are unsecured
loans meaning you don't have to put up any collateral. One of the best places to
go for a P2P loan is Prosper. A prosper loan is for three years allowing you to
spread out your payments.
Know your rights. For those in the U.S., read the
fair debt collection practice act to know exactly what your rights are. This act
offers consumers a thirty day grace period in which you can dispute a debt. Your
creditor can take legal action with in that time even if they have not received
a written dispute from you.
There are also sections under the law that will
help you prevent collection abuse or harassment you need to learn about statues
of limitations when a debt expires as well. Collection companies can no longer
request payment on that particular account. Most statues of limitations are for
debts four to seven years past their default date, every state has their own
laws on limitation statues.
The Fair Debt Collections Act can be found on the
Federal Trade Commission (FTC) website at http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm.
For anyone trying to repair their credit, knowing
and utilizing the laws is important. Even more important is good financial
planning to make sure you don’t fall back into the same mess again.
If you can't control your credit card spending
then don't use a credit card. Cut up all your credit cards except one for
emergencies (travel, etc.). If you can control your credit card spending, then
choose a credit card that also offers no annual fees along with rewards.
Reward cards are offered in a variety of areas and
come with a number of different options. One of my current favorites is the
Amazon credit card. Every so often I receive a $25 gift certificate that can be
used to purchase any of the millions of items that Amazon sells. The certificate
is earned according to the amount you accrue on the card. I believe at the time
of this writing that $2500 in purchases equates to a $25 gift.
I also use a Discover Card that offers 5% back on
all gas purchases. I had previously used a Citi Bank Select Dividend card for
that but when they cut the rebate to 2% I immediately set about looking for one
with a better percentage and found it in Discover.
Likewise, keep a lookout for the best reward cards
and don't be afraid to switch to those that offer the best reward in the area
that you are interested in.
In summary, credit cards themselves are not
inherently bad. In fact, used correctly they can save you a lot of money while
offering you freedom and flexibility at the same time. However, use them to your
advantage. Use reward cards and don't have any late payments. You'll improve
your credit rating and save a bundle.
Get credit card debt help at EzCashAz.com
And, for great interest or an unsecured personal loan visit the p2p loan site, p2pWealth.com.
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