The Credit Card Trap - 2 Things to Watch For

Do you know how much the credit industry makes per year and; more importantly, how they make this money? The answers may surprise you, unless you're one of the few people who actually can understand the fine print. The banks and card-issuers take in early $170 billion before expenses, three-quarters of which comes from the steadily-rising interest rates they charge us for not paying off the credit each month. In short, if everybody paid their credit-bills on time, the industry couldn't subsist on the remaining billions of dollars, a sizable fraction coming from the late fees and overdraft charges so many of us incur.
While the above charges are understandable - and even acceptable, as the cost of doing business - there are a few other credit-card practices that should leave you indignant. Did you know that...
1 - If you bank at the same place from which you got your credit card, and you end up defaulting on your credit balance at some point, the bank can possibly extract money from your account to pay off the presumably unrelated credit-card balance (presumably as in, you didn't sign up for that option). Usually their claim to be able to do this is in the legal mumbo-jumbo fine print that requires a magnifying glass and a law degree to decipher, so your best bet is simply to be mindful: call the bank and ask the representative direct questions. You don't ever want to give them this ability, so beware.
2 - This one I like to call the "Grace-period change-up", in reference to my favorite sport, baseball. The worst part of the change-up is the reasoning behind it; or, rather, what it seems the credit card company is trying to accomplish by doing it. If you have say 29 days to pay off your credit card bill before interest is applied, and you've been consistently paying off all your balances on time, some credit companies will change the grace period from 29 suddenly to 25, often before you are aware of it. The devious thing is that this never/rarely happens to people who consistently pay interest by carrying their balance month-to-month. It's almost like the credit companies are trying to trip you up. No; it's exactly like they're trying to trip you up! You've been a responsible customer (and thus, a bad customer) and aren't gaining the company any money. With this one, you must call and demand that they return the grace period to its previous figure - trust me, it works. You could also just avoid the companies that engage in this practice.
Taking Control of the Reigns
Navigating the credit card industry can be time consuming for most of us, as we have working lives unrelated to it. Thankfully, there are just a few overarching rules about which to be mindful, and the rest of the stuff will more or less fall into place. Never hesitate to pursue any nagging questions by directly calling a bank representative; being informed is absolutely the best way to go to take control of your finances.

Solving Your Personal Debt Crisis

Have you financially over-extended yourself to the point where you can no longer keep up with your debt? Perhaps you have lost your well-paying job and are now trying to live on unemployment benefits. You have been running yourself ragged trying to locate another job, but the opportunities are few. You may have to settle for employment that pays you a fraction of what you used to earn, and you know you just can't make it on those lower wages. Meanwhile, your creditors are calling and demanding payments that you just don't have. No amount of explaining is getting you anywhere-they simply want their money, and they will continue to call and harass you until you do something about it.
Can you work with these creditors on your own? Well, you can certainly try, but chances are you really won't make much progress. You don't have the training or the expertise needed to deal with these people, and many creditors are quite adept at intimidating those who owe money. Your best option is to let a professional credit counselor speak on your behalf, and you can do this once you decide to take your financial troubles to a credit counseling agency. This service will be able to accomplish far more, and in a much shorter time than you would should you attempt it on your own. If you have debt that is more than you can handle, a credit counselor can help reduce it for you by negotiating a lower rate of interest.
Once the counselor has evaluated your situation, he or she will discuss what options you have, and how you can begin to get your debt and other obligations under control. It may be suggested that a debt management program is the best way for you to go. What this means is that all your unsecured debt can be consolidated into one sum, and you would be required to make one payment each month that will be dispersed equally to each creditor. Unsecured debt would include all your credit cards, any personal loans, credit accounts at department stores, and any medical bills you may have. This does not include your home mortgage payments or vehicle loans you may have, or anything else you have supplied collateral for.
Participating in the debt management program means that your credit counselor will negotiate a lower rate of interest for you which will result in a lower, more manageable payment. Most of the money you pay right now goes toward interest, which is why it takes literally forever to pay off that credit card debt. Once most of your payment is applied to the principle, the payoff time is greatly reduced. Many people become free of this debt in as a little as three to five years. That's not bad considering you might have been paying for thirty years at minimum payment rates. Of course, all situations are different, and this program may not be the one for you. Your counselor will have other options and suggestions should the debt management program not fit your needs.
If you do choose this particular program, you must be informed that your overall credit scores may be adversely affected to some degree. It may also result in a negative result if you try to get additional credit while you are in the program, apply for a vehicle or home loan, or obtain some other type of financing. It is better to stick with the confines of your budget, make your monthly payment, and wait until the program is finished and you are debt free before you try to rebuild your credit. Your personal counselor will explain all the details to you before you make the decision to participate. He or she will go over in detail all the stipulations and benefits of a debt management program, and then leave the final decision to you. If you come to the conclusion that this really is your best option, the counselor will then contact your creditors to let them know that you are entering into the program, negotiate on your behalf, and make arrangements for you to set up an account to make the monthly payment that is due. This really is a great way for people to pay off their debt and know that they will be financially free in a very short number of years.

Difference Between an Asset and a Liability

An asset is an investment that keeps growing for you. The idea is to buy assets that keep earning money for you to put into your pocket. My Momma, Romayne Leader Frank, opened a savings account in the name of each of her children when we were very young. She taught us to put our chore money and our future paychecks into our accounts to start saving for the future. By the time I went to college, I had saved a nice nest egg for the future.
My Momma, Romayne Leader Frank, taught me in my high school years to make a budget of my expenses, to keep a ledger of the money going into the bank and the money to be paid out for expenses. She also taught me to put my entire paycheck in the bank, to pay all my bills, and to take out only the necessary amount for food and spending money. The remaining money went into my savings account to earn interest and increase over time with compounded interest. This account was my first asset. As a college student, I always had a job to help me with tuition and my apartment rent in New York City.
You want to buy assets that keep growing to increase your bank account. For example, if you own a rental property that you rent out and your tenant pays enough rent to cover all the taxes, insurance and up keep of the property and you still have money growing in your bank account that is an asset. You always want a positive return on your money. You want your money to increase and make more money for you to save and invest.
Over time I learned from my Grandmother, Mary Chernick Leader, my Momma's Momma, and my Father, Dr. Robert J. Frank, about studying stocks for long term investing. You would want to read everything written about the stock to make sure it is a good investment. A detailed study is necessary to do this. I would only purchase a few shares and then I would do dividend reinvesting and just watch my investment grow. Your money grows over time with compound interest.
A liability only has only one function to take money out of your pocket.A liability is a bill that you pay. Your mortgage on your house or car or any other kind of bill that takes money out of your pocket is a liability.
You want your assets to increase and grow so you have more money in your pocket.
What are the 4 things can you do to build up your wealth, your assets?
1) Put your paycheck in a savings account connected to a checking account and let the interest on your savings account compound over time. Pay your bills on time and save the rest of your earnings and do not spend your money for unnecessary things.
2) Think and carefully check on all the factors of the rental property you wish to purchase. Is the location of the property in a good area of town? What is the condition of the property? Is the property well maintained? What condition are the air conditioner, heater, plumbing, electrical, drywall, roof, windows, doors, appliances, and insulation and how are the grounds surrounding the property maintained? Check on the ownership of the property, to see if there are any liens on the property or any past due taxes. You need to know everything before you can make a decision on buying the property. Remember a rental property should bring in enough money to pay the mortgage, taxes, insurance, and maintenance for the property and leave extra money to put in your pocket, your bank account, to increase your assets.
3) If you decide to buy a stock do your homework and know all about that stock. Knowledge is the key to whether it will be a long time investment that will grow your portfolio into a nice nest egg for the future, your asset. Reinvest your stock dividends to help your assets to grow. Start small and think through your investments.
4) Think down the road about your retirement, IRA, Roth, and life insurance. Also decide on having a will or Revocable Trust to protect you and your family. Do your homework so you are knowledgeable about a product and how you can build your wealth, put more money in your pocket and build your portfolio, your assets for your future and your families.

Non Profit Free Credit Counseling

In the past, when the economy was booming, the American consumer's motto was, "Spend, spend, spend!" and most Americans did and it was all fine and dandy until the recession came along. Now a days the average American is being faced with a handful of economic challenges, the unemployment rate, the recession, and the stock markets plummeting a lot of households are suffering. In these troubling times it's very easy for somebody to fall behind on their credit card payments, and if you're unemployed you might have had to rely on credit cards to cover your expenses temporarily. How you got into your credit card debt really is insignificant, its how you plan on getting out of your credit card debt is what's important.
Stop Digging
If you find yourself in a credit card hole, stop digging! That's the rule in getting out of credit card debt is to stop using your credit cards. Start getting in the habit of paying for things with cash, and if you can't afford to purchase something, save your money until you have enough cash to purchase it outright.
Where you are financially is a reflection of your financial habits, so you must examine your spending habits in order to get back on track. Setting up a budget is a great way not only see where your money is going, but to also find out if you have any cash leftover for savings or retirement at the end of the month.
If you haven't set up a budget, and your credit card debt is stressing you out, seeing all your income and expense on a spreadsheet is going to uncover a lot of what your problems are in regards to your spending habits.
Seeking Out the Pros
If you have a ton of credit card debt and you are overwhelmed by the sheer volume of your payments, balances and fees that you see on your statement every month it may be time to get professional help. Fortunately for the consumers that are suffering from credit card debt there are a lot of options available out there, depending on your situation and the severity of your circumstance. If you do some simple internet searches for debt solutions companies you will be inundated by the number of organizations that are advertising for your business, but be careful, the debt solutions industry has a long history of having shady, "fly-by-night" firms, so choosing a debt solutions organization can be just as stressful as the debt itself.
It is probably going to work best if you first try a non-profit, free credit counseling agency. Luckily for consumers in debt there a lot of non-profit, free credit counseling companies to choose from, that provide consumers with free tips, tools and information to help you avoid or get out of credit card debt.
Most non-profit credit counseling agencies will help you analyze or set up a budget for you, and if they uncover a way to help you further they may recommend that you enroll in their debt management plan. A debt management plan is a tool that helps you and your credit counselor negotiate better terms with your credit card companies, if you choose to enroll in a debt management plan or debt reduction plan keep in mind that it will show up on your credit report. Enrolling in a debt reduction program will not affect your credit score, but the fact that you are enrolled in a credit counseling program will show up on your credit report and may hinder some creditors to give out any additional or new credit. If you're in the market for a new house, or in the middle of the mortgage process it's not a good idea to enroll in a debt management plan, but occasionally if you're already enrolled in a DMP (debt management plan) you can ask your credit counselor to temporarily take you off the plan until you're closed on your home.
Credit counseling is not a quick fix, or a silver bullet, getting back to zero with your creditors is a long and arduous journey, but if you practice a little discipline and are completely committed to becoming debt free you can reach your goals.

How Does a Voluntary Repo Affect My Credit?

If someone chooses a voluntary repo or the bank repossesses your car, your credit will be negatively impacted either way. A voluntary repossession is when you fall behind on your car payments and arrange with the lender to give the car back to the bank. If you find yourself facing this type of a decision, there are a couple advantages to a voluntary repossession over having your vehicle seized in the middle of the night.

Whether the bank issues the repossession or it is a voluntary repo, the negative mark stays on your credit score for seven years, lowering your FICO score and making it more difficult to purchase another vehicle.

This will be considered under the "payment history" portion of your FICO credit score which represents approximately 35% of your score.

Most state laws allow the lender to repossess your car any time you fall behind on the payments. The average past due time-frame is 60 days before repossession, however it could happen as soon as the payment falls behind just one payment. The lender has the right to come onto your personal property to seize the vehicle.

When a car comes back to the lender, whether it was a voluntary repo or the bank initiated it, the bank will sell the vehicle. If there is a difference between the balance of the loan and what they receive for the car, you are liable and responsible for the difference.

The bank will either turn that amount over to a collection agency or legally sue you for the balance. Now, either the collection or legal action will show up on your credit report, further lowering your FICO score.

One advantage to the voluntary repo is that you could avoid some of the costs associated with the involuntary repo. If the bank orders the repossession, the lender can charge you the expense it cost them to have a company come and get the vehicle from your property.

In addition, because the bank could repossess your car unannounced, a voluntary repossession gives you the time to remove any personal possessions such as a GPS device, CD's, car seats, etc.

There are a couple options you could try before a voluntary repo to help reduce the damage to your credit report.

• Contact your bank, be honest with them and see if they will work with you. Some lenders will change the due date to accommodate your paycheck. Some will defer a payment to the end of the loan.
• Try selling the vehicle yourself. Use the money received to pay off the loan.
• Try to refinance the vehicle, lowering the monthly payment amount.

Managing Your Debts Properly

One important aspect of managing your personal finance is to have good debt management. If you are able to successfully manage your debt, then you don't have many worries. However, sad to say, not everyone knows how to properly manage their debts.
Most of the time, the problem of debt would root to not being able to identify your own wants and needs. Your needs should be your number one priority because these are important for survival. Needs would include clothing, food, shelter, and transportation. However, these basic necessities can also include wants, causing people to get confused to which one should be really prioritized.
A good example of this case would be purchasing a car. Although there is much public transportation available, there will still be a time where you wish to have a reliable means of transportation that is yours. Hence, you will plan to buy a car. You definitely want to buy a car that is the latest model but you are also aware that this car is quite expensive and if you make little money per year, you might end up in debts just to buy that car.
In a financial perspective, it is more appropriate to buy a slightly used car that will fit your budget that buy brand new which can cause you to fall back financially.
Through good debt management, you will be able to take care of your needs properly with less worry about financial fall backs. When all of your needs are met, you can always save the left money and place it into a savings account or you can use the extra money to buy your wants.
When you buy something you want, it is important to buy it in cash. You will just overextend your financial problem if you buy something you want through debt.
Keep in mind that debts can be very stressful and difficult to manage. However, it is important that you should manage it properly. You need to make a list of your creditors along with the balance that you owe and the interest rates. By doing this, you will be able to include it in your monthly budget.
Once you already have your list, you should plan on how to pay for your debts. It may be difficult at first but once you develop the skill of managing your debts properly, you will feel relieved and relaxed because you can pay your debts on time and prevent accumulating debts.

Boost Your Credit Score With These Tools

While a good credit score can mean the difference between saving or spending hundreds or even thousands of dollars over the term of a loan or the life of a credit card, what can consumers with less than good credit do to rebuild their credit score? Here are a few ideas that may help alleviate some of the stress brought on by the recent downturns in the economy that might have caused some to lose their good rating.

Probably the most likely option for those who've struggled with the biggest losses is the secured credit card. These cards require a deposit that is usually equal to the line of credit the card holds. A larger deposit means more credit to work with. These cards used to be associated with huge fees but recent legislation has changed that. These tools need to be looked at once again as an aid to rebuild your credit score.

The next step in the process may be to acquire a semi-secured credit card. These tend to offer a small increase in the amount of money available to the card holder in excess of their original deposit. This is used as a reward for those who establish the fact that they can make the minimum payments on time every month for several months.

Personal loans are another way to re-establish credit and bolster your credit score. These loans can typically carry a smaller interest rate and can be beneficial to your overall rating even when taken out in smaller amounts. These loans are seen as credit building loans simply because the consumer is making timely payments.

Consumers who have possibly gotten out of debt but still need to enhance their reputation with creditors may want to consider a charge card. These require you to repay the entire balance each month. Although they can carry large annual fees, there is no interest charge because there is no balance carried over. Most consumers will use these cards on expenses that they are paying for with cash or a debit card. Their good payment standing with the company will be reported to the credit bureaus and will help build their credit score.

Last to be considered is an unsecured credit card. Although these cards may have been the demons of past debacles when it came to overspending, many may find that these can be rebuilding tools too. Most will have to suffer a higher interest rate, but being smart about using credit cards is very doable. Simply use prudence and stay within your monthly budget whenever considering pulling out your card.

What Are The Most Common Factors That Can Lead To A Bad Credit Score?

Bad credit is not uncommon in today's economy, and unfortunately a bad credit score can make it difficult when it comes to managing your finances. There are various actions people do either knowing or unknowingly that can hurt their credit history. Here is a brief listing of some actions that you should stay away from.
Bankruptcy:
If you have filed for bankruptcy, you will have a critical fault as well as a bad credit score. Do what you can to avoid a bankruptcy
Collection Status:
Having accounts in collection status plays a major role in your bad credit score. When making frequent defaults, a collection agency may be hired to recover the debt. Unfortunately this shows that you are not sustaining your end of a contract
Foreclosure/Repossession:
When falling behind on your payments, you will most likely ending up foreclosing, or finding yourself in the middle of a repossession. Creditors are going to be determined in getting their money back. When all else fails, they are left with reselling you car or home to get their money. This can crush your score, making it difficult to get approved in the future.
High Balances on Credit Cards:
Your level of debt is determined on how much of your available credit you utilize. Example: when you have high balances on your credit or card or even max your credit card limit, your credit utilization is 100%. Keep balances as low as you can. High balances do much harm to your credit score.
Inquiries for Debts and Loans:
When making an excessive amount of inquiries over a short amount of time will lower your credit score. This consists of 10% of your credit score. Stay away from applying for credit at multiple locations. Check your credit score before applying. Make sure you will get approved.
Late Payments:
35% of your FICO score depends on your payment history. It plays a significant role in your credit score. Making late payments can do serious damage to your score. Keep ahead of your monthly bills.
Shorter Credit History:
Your length of time in the credit bureau contributes 15% of your credit score. If you are just starting out in your lifelong commitment to credit, apply for a bad credit car loan. There are banks and lenders that will work with you. Start by building your credit score proper. Make your payments on time. If you have established yourself in the credit bureau, keep your credit cards open. The older the card, the better it is for your credit history as long as your payments are current
When the Status of an Account is Charged Off:
When ignoring your bills and collectors, your creditors may charge off your account. They are doing so because they assume you will not pay your bills. An open line of communication with your collectors is very important. When you feel you are falling behind, call your creditor and explain your situation. A charge off showing on your credit bureau will cause severe damage to your score.

About The Author
Adam Hartwick has been building online businesses since 2009 and has become a leader in the industry by large amounts of effort and integrity. To find more news and articles about bad credit car loans, visit Lifeline Loan Center

5 Tips That Can Help College Students to Have a Good Financial Life

Are you a college student and tremendously busy in attending classes, completing your projects, doing your homework and going to the parties? Are you so stuck up with your studies that you don't get any time to manage your finances? If yes, then it is important for you to know that most individuals get into debt problems during their college life.
Irresponsible handling of your finances at this juncture of your life can lead you to big money problems in future. So, it is necessary that you organize your finances now to make sure you are walking on the right financial path. Glance through the article to get acquainted with 5 important tips that can help college students lead a good financial life.
Financial tips for the college students
Here are the 5 important financial tips for the college going students:
1. Build your credit history: This is the best time to start building your credit history. Without a decent credit history, you'll not able to take out a home loan or car loan in future. Worse, you may even have to pay penalty for applying for a loan with short credit history. So, issue a credit card on your name. You can also ask your parents to authorize you as a user of one of their credit cards. However, you should use these credit cards extremely cautiously or you may get into unmanageable debt later on.
2. Lead a frugal life: It is said that the early adulthood is a good time to start building frugal habits. This would help you to maintain financial stability throughout your life. Create a budget which suits your lifestyle. This will help you meet your financial goals without starving yourself.
For example, if you have invited some guests in this weekend and need some extra chairs, then you can borrow them from your neighbors instead of purchasing them. You may not need these things in future also. This way you can entertain your guests without wasting money. You can use the saved money for other necessary purposes.
3. Control your debt: If you are planning to take out a student loan to sponsor your higher education, then it is crucial that you shop for a low interest loan. This will help you keep your debt amount within a lower limit. Even if you are taking out a credit card, always work with that company which offers you favorable terms and conditions on the card. In case you are finding it difficult to manage debts within your budget, then you should go for debt counseling as soon as possible. This will help you solve your debt problems efficiently.
4. Earn dollars through your skills: You can try to earn some extra dollars in your free weekends. Just by bar tending in your college café, or singing in the nearest night club, or giving tuition's to kids; you can brush up your skills and make some additional money. The extra dollars will help to give greater flexibility to your budget.
5. Avoid making late payments: Make sure you pay all the bills on time. If you can't pay the bills within the deadlines, then the lenders may impose late payment fees on you. Moreover, the interest rates on the loans can increase, costing you huge amount of money.
Apart from the above mentioned points, you should start saving money from now onwards. This will help you reap benefits when you enter into the workforce. Moreover, you can also use the saved money for meeting your expenses till you get a job.

Ryan Smith is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. He holds his expertise in the Debt industry and has made significant contribution through his various articles.

Managing Your Debts Properly

One important aspect of managing your personal finance is to have good debt management. If you are able to successfully manage your debt, then you don't have many worries. However, sad to say, not everyone knows how to properly manage their debts.
Most of the time, the problem of debt would root to not being able to identify your own wants and needs. Your needs should be your number one priority because these are important for survival. Needs would include clothing, food, shelter, and transportation. However, these basic necessities can also include wants, causing people to get confused to which one should be really prioritized.
A good example of this case would be purchasing a car. Although there is much public transportation available, there will still be a time where you wish to have a reliable means of transportation that is yours. Hence, you will plan to buy a car. You definitely want to buy a car that is the latest model but you are also aware that this car is quite expensive and if you make little money per year, you might end up in debts just to buy that car.
In a financial perspective, it is more appropriate to buy a slightly used car that will fit your budget that buy brand new which can cause you to fall back financially.
Through good debt management, you will be able to take care of your needs properly with less worry about financial fall backs. When all of your needs are met, you can always save the left money and place it into a savings account or you can use the extra money to buy your wants.
When you buy something you want, it is important to buy it in cash. You will just overextend your financial problem if you buy something you want through debt.
Keep in mind that debts can be very stressful and difficult to manage. However, it is important that you should manage it properly. You need to make a list of your creditors along with the balance that you owe and the interest rates. By doing this, you will be able to include it in your monthly budget.
Once you already have your list, you should plan on how to pay for your debts. It may be difficult at first but once you develop the skill of managing your debts properly, you will feel relieved and relaxed because you can pay your debts on time and prevent accumulating debts.

About Debt Management Companies

Many consumers may have run into significant financial troubles in the last several years, and are now beginning to get their feet back under them. However, much of the damage from overuse of their credit card accounts and stretching their monthly budgets too thin still remains, and now many Americans may be looking for a way back to a comfortable financial lifestyle.
One of the ways many troubled consumers are doing so is by seeking the help of debt management companies. Often, borrowers with a history of credit troubles come to these agencies after conducting a close review of their finances on their own - taking into account all aspects of their fiscal life including all incomes and monthly expenditures that are unavoidable - before determining that their problems are too big for them to fix on their own.
Luckily, debt management companies employ a number of certified, experienced financial professionals whose goal it is to help troubled consumers sort out their debt problems and get their life back on track. Likely, they will start with a more thorough review of their client's finances in an effort to better understand their full financial situation before proceeding with any more drastic measures. By working with the borrower to figure out what needs to be done to straighten out their finances, and carefully explaining some of the ins and outs of what landed them in their current situation, they might give their new client a better idea of what needs to be done to dig out from under their mountains of debt.
In some cases, the credit counselor may determine that the consumer can't be helped even by careful budgeting overseen by a professional. As a consequence, they may recommend a program such as debt consolidation. With this debt solution, the counselor will work to find the consumer a lender that will grant them a sizeable loan, typically one big enough to pay off all their outstanding debts at once. The benefit with this method is that the consumer will essentially reduce the number of outstanding debts they have to one, making it easier to keep track of payments and in some cases lowering the interest rate they pay on the balance. However, this method can also do some damage their credit score if they cancel the accounts they paid off, as it may reduce the length of their credit history, their utilization ratio and the number of different account types in their name. In addition, these loans are typically required to be collateralized.
A more drastic method that will help only those consumers in the deepest holes is debt settlement. With this method, the credit counselor will negotiate with their client's various lenders to get the amount of their outstanding balances reduced by a significant percentage. However, in return for slashing the amount they're owed, the lender will almost always demand the remaining funds be paid in one lump sum, which for seriously indebted borrowers can still amount to thousands of dollars. As a consequence, it may take at least several months to save up enough money to pay off these balances.
However, a reputable debt management agency like Consolidated Credit Counseling Services will make every effort to choose the best available option for each client's individual needs. By carefully considering all available avenues for reducing their outstanding debt and getting them back on the right path financially, the consumer will likely benefit from the advice and guidance of their dedicated counselor.