Debt Consolidation Blog

Posts Tagged ‘credit cards’

Signing up for store credit cards can be very tempting especially when shopping frequently at a particular department store or retail chain. However, these popular store cards are often inferior to the traditional offers you may receive from a general credit card. It is important to be aware of the disadvantages of store credit card s before making the choice between a store card and a traditional one.

One of the major disadvantages to store cards are their exorbitant interest rates. The annual percentage rates on most store cards tend to average 20% and above while general cards usually have a lower APR of around 12-15%. If a store card is an absolute must, try to offset the high interest rate by making regular timely payments and not carrying a balance for an extended period of time.

Another major disadvantage to store cards is that having too many of them in combination with regular credit cards cad have a detrimental effect on your credit score. Too many open revolving accounts signals a big risk to lenders as the potential to default is extremely high. Try to limit yourself to one or two major store cards to outlets that you visit frequently. In addition, maintain a low credit to debt ratio by keeping your balance well below the allotted limit given by your creditor.

Another major disadvantage to store cards is that the majority of them do not offer fraud protection. With the increase in identity theft, this feature is almost mandatory for any line of credit you are considering. The absence of fraud protection can leave your credit score open to debilitating damages incurred by fraudulent purchases made on your account.

Perhaps the biggest and most understated drawback to having a store credit card is its inherent pull to cause overspending. Seeing the card in your wallet and knowing that you can have some new clothes or merchandise using only that card may cause you to go well over your budget for items you did not really need. However by simply having the store card, the propensity to use it by shopping at one particular store is increased. On the other hand, traditional credit cards offer more conservative options for spending on everyday items such as gas, groceries, and utility bills. Since these are expenses that you normally incur, using your general credit card to make these purchases does not encourage as much overspending.

In general, store credit cards can seem like a convenient option, especially if you are low on cash. Tempting introductory discounts on merchandise can make it easy to sign up at the register without a second thought. However, it is important to consider the potential pitfalls and disadvantages that come along with store credit cards. In the long run, if given the option, it is better to choose a low interest rate credit card with attractive reward points than a store card with a higher interest rate.

Articles on this site have been acquired from a variety of sources.  No content on this site should be considered financial or legal advice

The major reason behind the current economic crisis is the extreme amount of debt Americans are carrying around.  People were taking out loans they could not pay back, or purchasing homes they couldn’t really afford.  Now millions of Americans are unable to pay off their debts.  Debt consolidation is a service by which you can pay off your loans by coupling or consolidating them together.

       Debt consolidation can take many forms but basically it is a lumping of all your debts into one, in an attempt to lower the rate you are paying.  Think about it this way:  Let’s say you owe 1200 dollars to 5 different people.  Each of those five people is expecting you to pay them back.  However, you don’t have the money to pay them all.  In fact, you don’t even have enough to pay them all 10% of the debt. 

       Debt consolidation is a service where an entity negotiates on all that debt on your behalf. They contact those people and negotiate with them to charge you less.  The people you owe would rather get $900 now instead of waiting around, especially when you might pay nothing at all. This really is a win-win situation all around.  When an entity negotiates a debt consolidation, you are using their reputation to lower your debt.  They tell the people you owe that they will make sure you pay this debt.  In some cases, they even go ahead and pay your debtors on your behalf.

       For you it is great because it ends the phone calls and letters concerning your debt.  Plus, you are no longer juggling which bill to pay, you only have one.  And, because you are using this entity’s reputation, you are charged a lesser amount of money.  The entity charges a small fee and the people you owe are paid something.

       Debt consolidation works a few different ways.  It can be in the form of a loan or a repayment plan.  Both work pretty much the same from your end.  However, the difference lies in how this entity transfers the money.

       When you use a debt consolidation loan, the entity pays your debts for you.  You then take a loan out straight from them.  Typically this happens when you are paying unsecure debt like credit cards, but it can work for many different types of loans.  When you get a consolidation loan it is secured.  Secured means there is some sort of collateral.  For example, your car payment or mortgage are secured loans.  If you default on this loan, your car or home will be taken away.

       For debt consolidation repayment plans, your debts are not paid by a third party.  The debt consolidation service simply negotiates a lower rate on your behalf and charges you the lump sum of all your debts per month.  You pay them and then they transfer the money to your debtors.  This typically occurs when you don’t have collateral for a secure loan.  This is how a debt consolidation service protects itself from you defaulting.  You still pay them a fee; they are still negotiating on your behalf. 

       If you find yourself unable to pay your bills, debt consolidation is a very smart move.  Whenever you have multiple types of the same sort of debt, i.e. student loans, mortgages, credit cards debt consolidation can save you a lot of money.  The most important thing is to find a reputable company that will actually work on your behalf.  Repairing your credit will take time and work, but it is well worth it!

Articles on this site have been acquired from a variety of sources.  No content on this site should be considered financial or legal advice.

During the years the credit card industry has been ‘using’ people and, alas, American people accepted the situation thinking that they had little choice about this problem. Even more, the society didn’t offer further alternatives as firms starting to prefer credit over cash – some firms even require the use of credit cards and they don’t accept cash payment.

When you make a charge on your credit card the charge will triple in three years if you forget to settle it. This is because of the taxes the credit card firms have for card maintenance and the costs they take every month as bills for your card – this is how credit card firms take advantage on people.

It’s true that the American Congress has taken steps to guard the American citizens from the abuse of the credit card companies. However, no matter how the Government are trying to help, you should take care of yourself.

Taking care of your credit card debts starts with a credit analysis so you will see how the things work and will have a good overview of the situation. By taking this step you can repair the damage the credit card corporations had done to your budget by verifying into debt settlements.

Debt settlement allows you to reach the point where you will actually reduce your credit to 40% of what you owe right now. ‘Thanks’ to the recession, credit card companies are willing to accept debt settlement as a solution to recover their money.

Speaking in simple terms you are actually taking back what the credit card companies have taken away from you in a long period of time. This is the action you can take against the credit card firms that have exploited you during the past and you can get rid of the debt and recover control over your finances. For this purpose you will need a professional debt settlement company. A top professional company will be able to make you eliminate at least 50% of your debt.

If you owe more than $10,000 in unsecured debt you should at least think about getting a debt settlement. You have to know that credit card companies should be wiling to accept debt settlement due to the passage of the federal stimulus packages. So basically they are able to accept large amounts of debt settlements because anyway they are covering their losses with federal grants.

Articles on this site have been acquired from a variety of sources.  No content on this site should be considered financial or legal advice.