Credit Card Tips Blog

With the current state of the economy, the unemployment rate is creeping up and is higher than ever in many areas. Although the consumer is unemployed, the payments that are due on credit card accounts and other sources of consumer debt are simply not stopped, so how does one deal with debt while they are without work? Here are some tips and techniques that you can use to effectively manage your debt load – despite your unemployed status.

Rely on Your Savings. In the case that you have developed an emergency fund or savings account, this is the time to use it. The time between now and when you are seeking a new job is the crunch time when it comes to your finances. Use your emergency fund wisely to cover only what you need, not what you want. Now is the time to set a budget and really determine your wants and you needs, only when you learn to differentiate between these two is when you can truly begin to save the money that you require for your expenses.

Use Credit card insurance to cover minimum payments. If you have enrolled in credit card insurance than now is the time to use it. This credit card insurance is used in times like these to ease the stress on the finances that can come with unemployment. Although these costs may come at a monthly fee – you will be thankful that you have signed up for protection in the past.

Cut back. While you are unemployed and searching for a job it is time to cut your expenses down to the bare minimums. Consider cutting back the cable programs that are available or getting rid of the extra cost of a cell phone each month. Wherever you can find a way in the budget to save a couple of bucks, your wallet is going to thank you in the end.

Know your expenses. Now it is time to determine what your monthly expenses are. Knowing these monthly expenses allows you to find the money in the budget to repay debt when you know exactly how much is to be paid to each account, every month. Do not allow yourself the opportunity to overspend in any one category, as it can lead to stresses on other parts of the finance.

Find more money. Liquidate your assets or take advantage of personal loans from friends and family members. Now is the time that you should do whatever it is that you need to that will enable you to make it from month to month. Searching for a new job can be stressful; you don’t want to add on the stress of being unable to pay the monthly bills.

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Using a credit card is not rocket science, but unfortunately, especially for first time card holders the card does not come with an instruction manual. Confused card holders that are unaware of policies are often the card holders that end up in debt with high interest rates, balances that have been carried from month to month and the fees associated with late payments and the card holder allowing the balance to exceed the credit limit that has been granted. Simple credit card “rules” could prevent these credit mistakes that could leave you in debt and cost you the good credit rating that the card holder has worked so hard for.

Don’t Carry a Balance

Carrying a balance can cost the card holder money each month in convenience fees referred to as interest. The monthly payment will often increase if there has been a balance on the card and are accounted as the cost of using money that isn’t yours! Many consumers are unaware that repaying the credit card up to twenty days later means that the purchases were repaid within the grace period of the credit card and therefore are not subject to interest fees. However, the card must be balance free from to month to save money this way.

Pay at Least the Minimum Payment… Pay More if You Can

Missing the minimum payment on the credit card can cost you more than high levels monthly payment and fees for missing the payment. It can cost you the good interest rate that you have been granted. Once a payment is missed on the credit card the credit card company can raise your interest rate, as you have begun to show risky payment behavior! If you are carrying a balance, your monthly payment can increase as much as ten percent.

Paying the minimum monthly payment to a credit card that is at its limit could take up to ten times longer to repay than paying double, or even triple the monthly payment. These minimum payments are designed to repay interest, with a tiny portion of the balance. Paying only the minimum payment is a great way to get into debt, and stay there.

Watch out For Fees

When using a credit card, it is important to remember that they are often one of the highest costing financial services that are available to consumers. There are many fees associated with the card including over limit fees, late payment fees, foreign transfer exchange fees, balance transfer fees and even annual fees that allow for use of the credit card. Watch these fees and you can save hundreds of dollars per month throughout the lifetime use of the credit card.

Using these tips, you should be able to use the credit card wisely and reduce the chances that you could be facing credit card debt in the future. Be sure to use the card wisely and purchase only what you can afford to repay – any other behavior is ultimately going to lead to debt.

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Credit card balance transfers are available from leading credit card companies looking to take business from the competition and have the card holder open an account with their own credit card company. There are often special offers associated with the switch, and with every new account consumers are given the option to transfer balances from other credit cards. Are balance transfers truly worth it? What terms are associated with the transfer? Before taking advantage of a balance transfer option, it is important to be an informed consumer – here is everything that you need to know about balance transfers:

Watch Out for Fees

A balance transfer is almost never free. There are fees associated with the transfer that are automatically added to the new balance. With most credit card companies, this fee is an even three percent and added on to the balance that is being transferred to determine the balance of the new credit card account. Aside from this fee, watch out for other one-time transferring fees which can cost the consumer up to $49.00. Speak with the credit card company to ensure that these fees are minimal and ask about the chances of waiving the fee before the balance transfer is requested.

Look for Introductory Offers… but Read the Fine Print

Introductory offers are ways that credit card companies lure consumers to their company with the use of a balance transfer. These offers include no interest on balance transfers as well as purchases for periods from twelve to eighteen months. The longer the term, the more beneficial for the consumer as you can have more time to repay the credit card directly to the principal, rather than to the interest the principal has accumulated. However, after the term has been completed, if a balance remains on the card the consumer could be liable for interest rates that were higher than the initial card.

In the fine print of the balance transfer agreement you will often find the following stipulations; monthly payments must be made on time and not missed to ensure that the balance transfer zero percent interest rate remains valid. Missing a payment or being late could mean that you could be charged up to twenty percent interest.

Check Your Repayment Plan

Are you able to realistically repay the balance of the credit card in the time before the introductory offer f the balance transfer expires? If not, than you should avoid the balance transfer. Create a repayment plan and calculate how much money would have to be repaid to ensure that the credit card would be entirely repaid in the term before the balance transfer expires. If you are not able to repay the credit card balance in full, than you should avoid the balance transfer – as it could cost you in the end!

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In today’s world of convenient financing, a good credit score is must as it can affect everything from renting a home to placing a deposit on a vehicle for leasing. However, there are some people that have not established credit or have misused their credit in the past – resulting in a low score. For these people, the option is now available to pay a deposit in return for the privilege of using a credit card in the process of rebuilding the credit rating.

Secured credit cards are those that require some sort of collateral to be placed on the account to secure the line of credit that has been offered to the consumer. Most often, this source of collateral is a cash deposit that is given to the credit card company upon the opening of the account which will be held until the account has been established, or until a new credit card account can be opened when the applicant is approved for a traditional non-secured credit card.

At the end of this term when the card holder decides to close the account or the account has been approved to a non-secured status, the deposit is returned to the card holder. This money is returned in the form of a check or can be applied to the balance of the card – as long as the account and the credit card is in good standing.

Who uses secured credit cards? Secured credit cards are beneficial for those with little, no or less than favorable credit, trying to pump up their credit score. The activity that is on the credit card is reported to the three major reporting agencies on a monthly basis and therefore can affect the credit rating positively when the card is used wisely – in as little as six months. Secured credit cards are available for those who are new to the country and require the use of a credit card to rent a vehicle, a hotel and even place a deposit or shop on the internet.

Of course, this secured credit card often comes with a price. The higher interest rating is often applied to secured credit card – as the card holder is deemed riskier than consumers that are approved for non-secured credit cards. As we have learned, the higher risk a consumer for a credit card company, the higher the credit rating that the consumer is going to be subject to.

Secured credit cards often come with an annual fee for the cost of convenience, especially if the credit card company is offering a lower interest rating. This annual fee may be worthwhile, especially if the consumer is going to carry a balance on the credit card. Therefore, the interest that would be paid through the term of the card is often higher than the annual fee that would be associated with the credit card.

Secured credit cards are an important tool in building the credit rating and can be obtained from a variety of companies. Simply contact the company or visit the website to determine which secured credit cards are available and the terms that are associated with each.

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Credit card debt can be overwhelming, when minimum payments seem high and there is just not enough money within the income to make all of the payments and pay for your day to day expenses. There are five steps that you can use to successfully overcome credit card debt,

1. Recognize the Debt

   It is impossible to get out of credit card debt until the consumer realizes how dire the situation can be. Recognizing the debt and establishing amounts that owe to each creditor is the first step of the debt repayment process. Take a pen, paper and recent statements to tally up just how much debt has been accrued. Be sure to include credit card debt, personal debt with loans to friends and family members and any outstanding bills, loans and credit lines. Tallying it up is an eye opener which can often shock the card holder into beginning an aggressive debt repayment plan.

2. Stop Spending

   Put the credit cards away for this portion of the debt repayment plan. Whether you have to freeze the accounts with the credit card company or literally put the credit cards on ice – it is important to avoid accumulating any additional debt once the repayment plan has been started. After the credit cards have been put away it is time to establish a repayment plan!

3. Make a Plan to Repay the Credit Card Debt

   A plan to repay the credit card debt can include the list that you have created in step one. In addition to these total amounts owing, calculate the amount that these debts are costing each month by multiplying the interest rate by the balance of the outstanding debt. Tally the list and arrange the debts from most expensive to least expensive. Number one is going to be the most expensive debt which you will repay first, when number one has been repaid you will work your way down the list repaying the same amount that you have established in the budget for debt repayment.

   How do you know how much should be allocated towards debt repayment? For optimal results, fifteen percent of the income should be allocated towards debt repayment. Any less than fifteen percent and you could risk the debt taking over your life for years to come and any more could mean stress on other parts of the budget.

4. Create a Budget

   A budget will need to be created that allows you to allocate fifteen percent of your income every single month towards debt repayment. This budget should include portions for fixed and variable expenses, savings as well as the debt repayment. Variable expenses are often cut in half when the consumer has been spending outside of their means to accumulate high levels of debt. Sacrifices now will mean financial preparedness later!

5. Stick to Your Budget and Repay the Credit Card Debt

   Seeing statements arrive in the mail that outline the zero balance of the credit card are some of the most rewarding moments through the debt repayment process. Sticking to your budget will enable you to establish some sort of financial security and repay the debt while learning valuable personal finance skills that can help you in the future.