Friday, October 31, 2008

Did you use your Credit card for Good Thing?

Ok. How to use your credit for Good thing?

Build up your credit score. In order to build your credit to prove your creditworthiness to potential lenders, you need to use credit responsibly and consistently.

Use credit in an emergency. While it always is best to have a savings fund set aside for emergencies, credit can be used when an unexpected expense arises and you have no other option.

Consolidate your debt. You can use a loan or a credit card to consolidate multiple debts into one so that your finances are simplified.

Shop securely online. A credit (or debit) card is nearly essential for online shopping.

Track family spending with credit cards. If each family member has his or her own credit with which to make purchases, you can figure out exactly where your money is going and how you might be able to cut back.

Turn a credit card into a low-interest loan. If you have a credit card with a low interest rate attached, then you might consider using it to fund a somewhat large purchase that would require another loan anyway.

Use a loan to make a big, necessary purchase. If it was not for credit, most people would never be able to buy a house.

Use a credit card for safety. Especially when out of town or planning to make a large purchase, a credit card eliminates the need to carry around large sums of money.

Use a credit card for convenience. Especially when out of town or planning to make a large purchase, a credit card eliminates the need to carry around large sums of money.

Make a purchase that appreciates in value. A mortgage loan is considered a “good” debt because homes generally appreciate in value over time.

Earn rewards or cash back. You can get something in return for the purchases that you make anyway if you put them on a credit card with rewards. In fact, you might even want to volunteer to put others’ purchases on your own card – so long as you trust them, of course.

Take advantage of 0% APR. If you have credit card debt that you would be able to pay off if not for that pesky interest, then consolidating your debt onto a new credit card with a low introductory APR might be just what you need.

Take advantage of tax breaks. Some types of debts, such as mortgage loans and student loans, allow you tax breaks.

Thursday, October 23, 2008

How come you in Big Debt?

How does people get into huge debt? Did you ever know about that or you just never want to think about that?

Lot of people misunderstand and misuse credit cards. Many of them live to the limit of their paychecks. Some use their credit card as if it were an increase in salary rather than an increase in debt. Many actually believe that credit gives them extra spending money.

The main cause of families to go into credit card debt is the fact that it is built on impulse-they fritter their money away. Many Americans love to shop when they’re bored, nervous, or anxious. A day at the mall can relieve the tensions of everyday life. Shopping offers hours of escape, a chance to forget our problems and treat ourselves. That’s when “impulse shopping” occurs. We might head to the mall to buy a pair of sneakers, but once there, our eyes start to wander. On impulse, we suddenly pick up things we would never buy if we had to pay for them with cash.

Impulse also causes us to be overly generous when buying birthday or Christmas gifts, to grab the tab in restaurants, to buy expensive status brands, or to buy more than what we need so we won’t feel silly charging a small amount. Impulse shopping causes us to dig ourselves into debt. In other words, at the end of the month, we really don’t know where our money went.

Impulse shopping is very common. The next time you head off to the mall, see how many out of these truths apply to you:

* More than half the things we buy are impulse purchases, bought on the spur of the moment.
* Impulse shopping causes us to spend nearly three times more money than we had originally planned to spend.
* Half the impulse items bought are unnecessary and often go unused.
* Impulse items are seldom compared for cost or quality.

There are quite a lot people, who can’t control this impulse, shopping has become as addictive as gambling or overeating. For them, shopping has become the number one over-the-counter remedy for life’s aches, pains, and disappointments. Most compulsive shoppers suffer from low self-esteem; they have problems in life that make them feel powerless and unimportant. Shopping helps restore their sense of self-worth and gives them a temporary feeling of being in control. A lot of compulsive shoppers come from abusive, alcoholic, or broken homes. What’s surprising is that compulsive shoppers are intelligent, ambitious, and very optimistic about the future.

The next major contributor for huge debt is the interest charges. What people must understand is that the interest is charged each month on the unpaid balance and not the amount you send in. Most credit cards charge an annual interest rate of 18 percent, which works out to about 1.5 percent monthly.

These two factors combined together cause a surge in debt. Unless managed in a right way, one could get into deep trouble.

Ps: Did you agree with that?

Friday, October 17, 2008

Did you know Alternative of Debt Reduction?

Alternative Solutions to Debt Reduction

These days there are number of people who are in debt. For many, debt is the root cause for all evils. If you’re struggling to cover your bills and are being hassled by collectors, you may curse the day you applied for your first credit card. If you’re straining to make minimum payments that feel like maximums, you may swear you’ll never borrow gain. If you’ve just graduated with massive student loans, you may question why you ever thought going into debt for education was a good idea.

There are few alternative solutions available for Debt Reduction. This includes debt settlement, and credit counseling programs. Let us look at the differences of both these programs:

Debt Settlement Program:

* A debt settlement program reduces the total outstanding debt by 50-70% of the original balance
* One can be debt free in as little as 3-36 months
* Usually provides a custom designed payment arrangement that fits your situation and can finally get you out of debt
* Not only reduces the total amount of debt, but also can get you out of debt and satisfy your creditors all at the same time
* Helps rebuild your credit and avoid bankruptcy
* It’s a win – win situation!!!! You are out of debt and you pay off creditors!!!!
* Debt reduction programs such as one offered by provides an easy and convenient payment method. They are professionals experienced in debt settlement, debt reduction, and debt negotiation.

Credit Counseling Programs:

* Credit counseling programs get some interest reduced without any reduction of the actual balance
* Scientific studies have shown that credit counseling does not work 95% of the time, because people get frustrated at the slow pace and lack of progress and drop out, only to find themselves back where they begin
* There are no credit counseling programs that will eliminate credit card debt faster while saving you a substantial amount of money
* Many clients who join credit counseling programs file bankruptcy like chapter 7 or chapter 13

Regardless of the program one should always find ways to eliminate debt and keep the finances under control. Given the above two options, debt settlement offers the best advantage for debt relief as it completely eliminates debt rather than prolonging it over an extended period as most credit counseling programs do.

Article Written by Naz

Monday, October 13, 2008

How to Rebuilding Credit Card History?

Did you know how to Rebuilding Credit History?

There are several ways one can rebuild their credit history or if they want to get their first credit card:

1. Check the credit report: Contact all three credit bureaus and get a credit report from them. Federal law entitles you to get one free report from each of the three major bureaus once a year. One can order reports by calling 877-322-8228 or by visiting Once receiving the report see if there are any errors, outdated information, or if you are a victim of identity theft. If so, one has to clear them up before applying for new accounts.

2. Checking and Savings Account: Set up checking and savings accounts. Usually, lenders see these accounts as a sign of stability. Make sure that you don’t bounce any checks.

3. Apply for the right credit card: Get a right credit card for your situation. For example, if one is a college student who has no credit history, if will be difficult to get a Visa or Mastercard. One can apply for Amex cards, but they usually charge a fee. However, one can start a credit history started this way. Sometimes they wave their fees for the first year. Whatever the case, don’t go overboard. Limit yourself with not more than one or two cards.

4. See if someone could co-sign: One can build the credit faster if one can convince someone with good credit history to add you as an “authorized” or joint user on a credit card. But this has a draw back that if for any reason the person who sponsors defaults payments, your credit history will be also tarnished.

5. Get a installment loan: For someone to have a good credit history, one should have both revolving accounts (eg: credit cards, lines of credit) and installment accounts (eg: auto loans, personal loans, mortgages). If one opts for a loan, make a large down payment so one can refinance in a year or so when their credit has improved.

6. Safe guard your credit: One has to use the card regularly to generate a credit score. Don’t charge more than you can pay off each month or 30% of the card’s limit. Pay all your bills on time, all the time. Don’t take too many cards or loans, a few accounts is enough to build a good score.