Credit card debt » Credit Score

Effectively Eliminate Credit Card Debt

admin — Sat, 25 Dec 2010 08:46:28 +0000

First and the foremost thing that hovers around in our minds, when we are in a tight debt situation is how to completely eliminate credit card debt. Harassing collection calls, mounting liabilities, and bad credit score is enough to drive anyone crazy. To avoid such a harrowing situation, it is wise to go in for consolidation solution and legally eliminate your dues forever.

Credit Card Companies On A High

Seeing the data of the profits earned by the credit card companies, one can well imagine the huge interest earned by these companies in short span of time. In 2006, credit card companies earned USD 90.1 billion in profit from interest charged to customers on their cards. Not only this, they also earned USD 55.2 billion by charging various fees to the customers, in addition to the heavy interest.

If you are late, only by a day in paying the minimum amount, the credit card companies impose heavy penalty and charge almost double as interest. This actually amounts to extortion and burdens the consumers, even more for those already deep in crisis. These companies specialize in exploiting your debt burden.

To get rid of the financial mess, you have to look at various options, if you finally intend to pay off the entire debt amount and breathe easy for the rest of your life. An easy option to achieve it is credit card debt consolidation.

Easy Installments Is The Key

To legally eliminate pending dues, it is always wise to go in for credit card consolidation, by getting a loan from the bank for the entire amount to be paid. Later, one can pay off the loan in easy monthly installments, according to your own convenience and pace.

You might also qualify for a home equity loan or line of credit, if you have a moderate credit. This way, you can reduce the interest amount that you need to pay up. Thereby, reducing the number of creditors and gradually eliminate credit card debt. Just a single monthly installment is all that is required from your side. Pay religiously and see that you will shortly meet all your financial goals.

Practicing credit card consolidation can surely rid you of all your woes and completely eliminate pending amount. So, spend wisely and do not be obsessive-compulsive buyer, this way, you will be saved from the vicious cycle of debt.

By: Asheesh Mani

What Happens If I Don’t Pay My Credit Card Bills?

admin — Mon, 05 Jul 2010 09:50:52 +0000

When facing amassing credit card debt, it is not uncommon for many individuals to ask “Why pay my credit card bills?” Granted, while this option is there and it may give you some extra cash for a few months, here are a few of the major repercussions you might be facing should you decide to go delinquent on your monthly payments:

1. Creditor/Collection Calls:

This might be the worst part of a delinquent debt-the constant calls from creditors demanding their money. Collectors have been known to call 8-10 times a day, at home, at work, on your cell phone. And these are the ones who follow the rules. Creditors have been reported to speak to bosses, neighbors, and family members (which of course is illegal). Once they get you on the phone they can be even worse. They use a number of psychological techniques to demean you and force you to give them checking account numbers or other bank information. In other words, they will do anything they can to make you pay. (Please keep in mind that your rights are protected by the Federal Trade Commission. To find out more information, please consult the Fair Debt Collection Practices Act.)

2. Damaged Credit Score:

Creditors will begin to report missed payments to credit bureaus which will inevitability have an affect on your credit score. These marks can be removed once a settlement is reached or payments are made.

3. Interest/Late Fees/Over-the-limit fees:

Not paying does not mean that interest will stop accruing. Once you go delinquent, many creditors will immediately raise your interest rate to the highest possible interest rate, about 30%. In addition, they will charge late fee penalties ranging between $30-50, and if your balance exceeds the credit limit, they are more than happy to tack on over-the-limit fees.

4. Legal Action:

Eventually, if a debt becomes very delinquent, a creditor may opt to take legal action which can result in liens, garnished wages, or other legal judgements requiring you to pay your debt. However, this is typically a long and complicated process that companies would like to avoid. Nevertheless, it does happen.

If you are considering not paying your credit card bills, it may be the perfect time to considering professional help. There are a number of financial companies that can help you find a Credit Card Debt Relief solution to your financial dilemmas. Why wait? Contact one today, as the first step in finding a solution to your economical problems is usually asking for help.

By: Scott Wallitsch

Credit Card Debt Reduction Tips and Advice

admin — Mon, 10 May 2010 07:32:01 +0000

During times like these, keeping up with bills is a major headache, especially since interest rates are soaring and prices are soaring as well. If you have credit card bills to pay, you may find that keeping up with payments will start getting more difficult the more that you use your credit cards. Here are some tips to achieve credit card debt reduction:

Stop using the card

Stop using all your cards and look at the interest rates that you have to pay on each. The interest rates are a big reason why you are finding it hard to keep up with bills payments. On top of your principal debt, they will charge you extra because you borrowed money to make purchases. Don’t fall deeper into the debt trap by stopping the activity on your card immediately.

Pay bills wisely

Paying bills wisely means paying more than the minimum amount due on the card. Paying the minimum only will only keep you in debt and stretching the amount of time they can continue charging you an interest. This also means paying bills on time. By paying bills on time you can avoid all the late charges that you will otherwise incur because of bad account management.

Consolidate

If you have many credit card debts, try to consolidate them under a bank program that will help you pay them off at a lower interest rate. The advantage of this is that you only need to pay one bill and will be able to manage your accounts better without hurting your credit score.

By: David Patullo

Credit Card Debt Negotiation

admin — Thu, 22 Apr 2010 18:41:47 +0000

Debt negotiation on credit cards is more commonly known as, credit card debt settlement. Credit card negotiation would be the next step for those have failed with attempting to consolidate your debt. If you are 3 months or more past due or cannot keep the monthly minimums of your card payments current.

Generally this works much the same as a debt settlement but usually only involves unsecured credit. The special nature of unsecured credit allows the debt settlement company to negotiate a pay off usually in the rang of 40-50% of the balance because in the event that a bankruptcy must be filed they run the risk of not getting anything back.

In this type of transaction when a settlement is reached the debt settlement company will make a one time payment to the creditor to satisfy the balance of the loan.
You then owe the debt negotiation company the amount of the pay off plus any fees that where agreed upon.

A draw back to this process is it can have a negative impact on your credit score and the fees may be high at some companies. Another option is to self arbitrate.

If you have all intentions and ability to pay your debt you may wish to contact your creditors yourself. This allows you to negotiate a lower interest rate or a more realistic repayment plan.

If you decide to take the self arbitrate route, you will want a written agreement between you and your lender or collector that makes note of the fact your settlement has been ‘paid as agreed’ or ’satisfied in full’.

Self-arbitration or working with a credit card debt negotiation program you can be beneficial and successful. Positive debt negotiation on credit cards will be successful if you are determined to pay your debt(s) and be debt free once and for all. A debt free lifestyle is truly amazing.

By: Tim Grimsley

Wipe Out 60% of Your Credit Card Debt But Take a Lower Credit Score – Is That a Fair Deal?

admin — Thu, 22 Apr 2010 09:21:04 +0000

Most people never blink even once before flashing their credit cards. The credit card companies like to call it the power of the card. This surreal power has forced many a credit card users into bankruptcy. Any type of credit has to be paid back, sooner you pay better will it be for your finances.

However credit companies have always depicted only the brighter side of the credit card industry. They prefer to constantly keep the credit users in debt. Somehow the users too have been obliging by spinning credit cards and maintaining a rolling credit. This is how most of the users are severely down with credit card debt. They need to do something about it with the least amount of delay. For these people the only two solutions are debt settlement and bankruptcy. We take a look at both these terms to demystify them.

Bankruptcy will be a court procedure to take stock of all your assets. You first have to be eligible for bankruptcy. Once you have filed papers the courts will appoint an arbitrator to take stock of all your assets. Then orders are issued to liquidate your debt. On the other hand if you go in for a debt settlement your debt will be negotiated with the creditors. You pay up 50 percent of the outstanding amount. The balance is waived by the Credit company in exchange for the one time payment.

You loose out on your credit score on both the counts. In bankruptcy your credit will take 8 to 10 years to recover. This is a very long period by any stretch of imagination. If you go in for a debt settlement, your credit will be hurt but not as much as bankruptcy. Within a short period you will be eligible for good loans and can enjoy the fruits of cards. Despite the marginal damage to your credit score, debt settlement is a great option for debt relief.

By: Lisa Archer-Jones

Not Paying Your Credit Card Bills

admin — Wed, 21 Apr 2010 10:06:43 +0000

A lot of people when faced with mounting debt will ask “Should I pay my credit card bills?” Yes it will give you some temporary relief and extra money in the short term but can have damaging consequences down the long road.

When you first go delinquent it is very common that you will receive constant calls from creditors wanting you to pay what you owe them. They will hound you calling 10 or even in some cases 12 times a day. They can usually find out your cell phone and work numbers, even in severe cases they will contact distant family members, which is against the law for them to do. Now if they are lucky enough to get you on the phone they can use many practices that can demean you and scare you into giving into their demands. They will try anything in the book, even threaten you to get you to pay them. You are protected however, by the Federal Trade Commission and should find out what your rights are before speaking with anyone.

Your credit score will be ruined by them reporting to the credit agencies that you are late on payment or have become delinquent. This can be damaging to you if you try to finance a big ticket item such as a house or a car. Please remember that you can always reach a settlement or once you make payment that your scores can be improved.

You can have many late, over the limit and interest fees that can be tact on to the original amount you owe. When you are in delinquency these creditors will charge you the maximum interest rate possible, usually over 30%. The late penalties can add up as well, usually $25-$50, and if you exceed your original credit limit, watch out, they will add those over-the-limit fees as well.

If your debt becomes very delinquent, the creditor can take legal action against you. It is possible that they could garnish your wages, get a lien or other legal judgments requiring you to pay up. Just remember this is a long process and companies do not like to get this involed. Just be aware it can happen and sometimes they are ruthless.

If you are in a situation where you can not pay maybe it would be good to seek out a professional. There are a lot of institutions that can help you in a financial crisis

By: Bryan Burbank

Tactics To Reduce Credit Card Debt

admin — Mon, 19 Apr 2010 21:45:54 +0000

Almost on a daily basis we receive emails from individuals who have gotten in over their heads with credit card debt. The most common question is, “what can I do to get out of debt?” Of course, asking the question means that they’ve already taken the first and most important step: they have faced the situation and understand the importance of changing it. One major sign of trouble is if you’re having trouble making the minimum amount due each month. If you find yourself in this situation, act now – not later by following these five steps:

Get a copy of your credit report and your credit score. You can get a copy online through any of the major bureaus. Once you have it in hand, review it carefully. With the exception of true emergency situations, take a break from making any purchases with your credit card. Make a commitment to refrain from using your credit cards until all of your debt is cleared up. If you have high-interest balances, get a 0% or low interest balance transfer card and transfer as much as you’re allowed. Then use that introductory period to pay your balance down. If you must make purchases with your credit card, deduct that amount from your checking account and put it in savings so that you have it available when the credit card bill comes due. Be careful to pay at least the minimum amount due on each and every credit card – on time, every time. This will help ensure that you won’t be charged costly late fees or incur a higher “default” interest rate.

By: Denise Wolf

How Do I Cut My Reoccurring Credit Card Debt?

admin — Sat, 17 Apr 2010 21:43:57 +0000

Humans are born smart and they are very adaptive to any environments in order to keep them survive. They will only get into trouble when problems got out of hand due to their attitude – Ignorance.

It is human nature that we keep spending money on things we need – but not the things that we actually want!

Due to our ignorance, it is much easier for us to rack up credit card debt regardless how old we are as many senior citizens paying high amount of money to repair their damaged credit score.

Nowadays, college students and young working adults are very smart at spending money. In other words, they do not have to be very frugal at spending money, but they are indeed skillful at handling their personal finances.

There are situations that arise in life that can make it simply impossible to avoid that debt at that point in time. When this happens, it leaves many people wondering what they can do in order to help cut that credit card debt and help to make it more manageable.

It is in these situations when it is very wise for a person to know what options are out there and what steps they can take in order to help get themselves back on track and leave as little a mark on their credit scores as possible in the process.

How do I start?

Step 1: Analyze how much money you owe

First of all, you have to analyze how much of debt you currently are in with your credit cards.

Step 2: Use the Compare and Contrast method

You must compare and contrast between what you owe and what reliable income you have coming in on a monthly basis.

Step 3: Hit the ‘minimum payments on the card’ target on per month basis

Is it possible for you to cut back a bit on your spending for a month or two and have enough to pay off the debt? If so, your best option is to probably take the interest hit and simply make the minimum payment on the card for the given month and live frugally in order to pay off that card in the shortest time possible.

This method, which can involve missing one or two payments but still paying the minimum payments on the card, will indeed incur some interest charges; however it will help to avoid leaving lasting damage on your credit score and avoiding you having to proceed down the painful path of bad credit repair.

Step 4: Debt consolidation is your last resort

This takes place when the debt is either in too many places or is simply too large to handle. If you cannot manage to pay off the debts within a couple months no matter what you can put together, then seeking debt consolidation as soon as possible would be a very wise move.

Credit card debt can be scary, however debt consolidators can help you to cover that debt and prevent permanent damage to your credit. This works by having the consolidator cover that debt for you and then setting up a manageable payment schedule that you will make monthly to the consolidator until your debts are paid off.

By: J.J. Yong

Warning-Transferring Credit Card Debt May Be Hazardous to Your Financial Health

admin — Thu, 18 Mar 2010 07:24:25 +0000

Credit card companies now make it so easy to transfer one credit card balance to another. We get so bombarded with all the advertisements for balance transfers it’s hard to decide what company to do business with.

Transferring your balance from one card to another is basically the same as consolidating your debt with actually go through the process of a formal debt consolidation loan. Transferring balances from many accounts to fewer accounts will not necessarily raise your score, because the same total amount is still owed. This may actually lower your credit score because it could be an indication that you are unable to manage your money and need to transfer your balance to make it easier to pay your debts.

The only reason you should transfer one credit card balance to another card is to save money and reduce your total debt owed. The mistake many people make is by not reading the credit card agreement or credit card disclosure agreement which is what the credit card companies are hoping for. When you receive your monthly statement you are shocked to see the new interest rate and can’t seem to understand why you balance has not gone down although you are sending in your monthly payments. It is important to pay off the full balance before the introductory rate special ends. If you charge an item on the new account after the special ends the interest rate may drastically increase or may increase if you make a late payment.

If you are unable to pay off the balance before the introductory rate ends the balance transfer is not worth it. Here is a balance card transfer calculator that will show how much money you can save http://www.credit-card-surplus.com/balance-transfer-calculator.php with a balance transfer. Do some comparison shopping before selecting a credit card that offers an introductory balance transfer rate. Two good sites to use when comparison shopping are http://www.bankrate.com and http://www.cardreport.com.

If you are not disciplined you may end up in more debt than you originally owed due to the guidelines of the new low interest or 0% interest credit card you transferred your old balance to. To pay the new balance off faster you must pay more than the minimum monthly payment; try to pay at least double the minimum monthly payment. The goal is to get out of debt and the fastest way to get out of debt is to get a lower interest rate and pay more than the minimum monthly payment.

Here are 7 tips to use when considering transferring debt to another credit card.

1. Find out the APR or interest rate of the new card, if the interest rate it too high don’t transfer the debt.

2. Ask if you will be charged a fee for transferring your balance, if there is a charge shop around for another credit card.

3. Find out what the guidelines are for the new card. Don’t get a new card that charges late fees, annual fees or over the limit fees or increases the interest rate if you make a late payment.

4. Find out how long the balance transfer will take and make sure you continue to make payments on the old account until the transfer is complete.

5. Check your monthly statement to verify that your old credit card company is reporting your balance as zero. But don’t be tempted to charge on the old account.

6. Check your monthly statement on your new credit card to verify the balance is reported correctly. If not, write a letter to have your account balance updated.

7. Some companies offer transfer checks that can be used to transfer balances. Be aware that some companies charge a fee for using the transfer checks so keep this in mind when adding up all the fees that can come along with transfer of an old balance to a new credit card.

Closing an account and opening a new account affects your credit score in several ways. Ten percent of your credit score considers new accounts and your score may decrease as a result of opening the new account. If you decide to close the old account, the account was in good standing and you had the account for several years closing it could decrease your credit score. Since the total amount owed accounts for 30% of your credit score, you score may increase since the balance you transfer will be reduced by the introductory rate special.

Do your homework before transferring one credit card balance to another credit card. Also, if you know your credit score from each of the three major credit bureaus call each bureau and ask how transferring your balance to a new card will affect your score. Make a decision to become debt free and pay your debt off faster by always paying more than the minimum monthly payment. Transferring a balance is relatively easy but you must do research to determine if the transfer will affect your credit score in a negative way.

By: Harrine Freeman

Eliminating Credit Card Debt

admin — Thu, 18 Mar 2010 07:22:54 +0000

The overwhelming task of eliminating your debts can often seem like an uphill battle. Without the knowledge and expertise of a professional on your side, unfortunately, the odds are not in your favor. In order to reduce your debt, you have several options; however, if you want to maintain a “good credit rating”, you have to pay you bills on time; anything else will cause your credit score will suffer. With that being said please consider the following:

Option 1 – Consumer Credit Counseling

Consumer Credit Counseling companies were originally established to help credit card company’s recover revenue from clients that were falling behind on their bills. Choosing to use a Consumer Credit Counseling service can have negative effects on your credit that last up to 10 years. These services are also considered Chapter 13 Bankruptcy by most lending institutions. The bottom line is that Consumer Credit Counseling companies work for the creditors and banks.

By using their services, you will end up paying back your full debt, plus interest. These companies do not always provide financial relief as consumers often find out.

Option 2 – Debt Consolidation Loan

Borrowing from Peter to pay Paul is no way to get out of debt. It is however, the premise behind debt consolidation programs. Debt consolidation programs require that financial institutions provide consumer loans based on items of equity. For example, a home equity loan is used to “combine” your debts into a single monthly payment, which can often take 10 to 20 years to repay depending your on financial situation. This may seem like a viable solution in the short term, but missing payments on a secured loan could cause you to lose your home or the collateral you pledged. Many people who decide to go the debt consolidation route find themselves worse off than they originally were. It is not a good idea to exchange your unsecured debts for secured debts.

Option 3 – File Bankruptcy

While bankruptcy may seem to be the most expedient method for removing your unsecured debt, it is not, by any means, the best answer. A bankruptcy will remain on your credit record for 7-10 years and seriously affect your ability to rebuild your credit. Even after a bankruptcy has been removed from your record, you are still required to disclose it on forms and applications; even applications for employment. If you fail to answer this question truthfully it can be considered a crime. Additionally, certain types of bankruptcy can require a court-appointed trustee to control and oversee all aspects of your personal estate. Bankruptcy can have an adverse affect on your credit rating and lifestyle long after the legal matters are over. This is not a decision to be taken lightly. Bankruptcy is an option that should only be explored as an absolute last resort to solving your financial problems.

Option 4 – Debt Negotiation and Settlement Programs

Debt settlement programs provide their customers with a viable
solution to an otherwise complex problem. By helping eliminate your current debt, Debt Settlement programs allows you to regain control over your financial affairs and allow you to become debt free within a reasonable time frame. Debt settlement is fast becoming the only true option to financial recovery! However, I will say it again, even in Debt Settlement you have to pay you bills on time; anything else will cause your credit score to suffer.

Debt settlement is not a Consumer Credit Counseling Service or a
consolidation loan. Debt settlement is a legitimate and legal way of solving your debt and credit problems without the need for bankruptcy. Detb Settlement programs were designed to lower your current debst by 40-60%. Traditionally, this is accomplished by negotiating approved payoff amounts with your creditors. A Debt Settlement program can typically be completed within 36 months or less and eliminate most, if not all, of your current debts.

By: Alan Barnes