Spare Dollars » Credit Cards

Five Credit Card Debt Solutions

Jeff W — Wed, 01 Sep 2010 01:24:56 +0000

Five Credit Card Debt Solutions

Nothing puts more stress on American families than being in debt to the point that they are struggling monthly to make ends meet. Recent American Banking Association statistics show that the average family in the US is carrying approximately $8,000 in credit card debt. Additionally, when you consider the pitfalls of having credit cards and using them, there really is no way to responsibly handle and use them. Naturally, the biggest disadvantage to having credit cards is that they are so easy to use and run up their balances.

If you have found yourself in a situation where your credit card debt is getting to the point that it is overwhelming and stressing you and your family out, here are 5 credit card debt solutions to consider if this is the case.

Start paying with cash – we call this step “going green”. Just remember that if you have high interest credit cards with large balances, making the minimum monthly payment accomplishes nothing. Stop using those credit cards and start paying cash for everything. In fact, and we know this is difficult, we recommend that you just cut them up and forget about having more than one or two at the very most to be used for emergencies only.

Think about robbing your piggy bank – if you have a savings account, you should consider what you can afford to take out and apply to your credit card debt. Despite the fact that the economy is unstable and there is ongoing market volatility, stop thinking about hanging on to your money because of job insecurity. Instead, consider the fact that if you are only earning a few percent interest on your savings account yet paying 15% to 20% on your credit cards, you’re throwing away your hard earned money.

Consider a second job – again, this may be a hard pill to swallow, but you may have no other choice if you want to avoid filing bankruptcy. If there is less money coming in each month than what is going out, your debt is only going to keep compounding. Find a way to increase that monthly income so that you can apply more to your debt.

Look into a payment protection plan – should you be concerned about losing your job or if you know this is an eventuality, then you should contact all of your creditors to see if they have a payment protection plan. Paying a few extra dollars a month now will ensure that your payments will be made for a while when you are out of work and looking for another one. It will help to protect your credit rating, but most payment protection plans do have a time limit to be aware of.

Try consolidating your credit cards – you can lower your overall debt by using a single low interest credit card to start paying off the higher interest ones. Either look for a lower interest credit card or inquire with one of your current creditors to see if they offer a balance transfer option.

Five Credit Card Debt Solutions

Credit Cards for Bad Credit

Jeff W — Wed, 01 Sep 2010 01:12:38 +0000

Credit Cards for Bad Credit

When your credit history gets dinged by late payments on your bills, you might be thinking that aren’t any viable options for getting a credit card. Over the past 12 to 24 months, many US consumers have seen their credit scores drop because of the economic downturn that we have been experiencing in this country. If you’re in this type of situation, don’t despair because there are credit cards for bad credit available to many consumers.

There are basically 3 types of credit cards that you can apply for and oftentimes be approved for when you have bad credit. These are:

Pre-paid credit cards – just as the name implies, you get out of this credit card what you put into it. It’s similar to a checking account in that you deposit funds into this type of credit card account.

Secured credit cards – these types of credit cards require that you deposit funds into a separate type of account (usually a savings account) which is used to secure your credit card account.

Unsecured credit cards – a regular type of credit card requiring no securing deposit into another interest-bearing account. The worse your credit score is, the lower your spending limit will be with an unsecured credit card.

What to watch out for

It can be pretty challenging when you start applying for credit cards when you have bad credit. Many people are unaware of the things you need to watch out for. Here are three aspects to be aware of when you are looking for credit cards for bad credit:

Bonuses and perks offered – first of all, many banks will advertise bonuses or perks to entice you into signing up for one of their credit cards. Although they may offer airline miles or even cash back bonuses, they typically have higher annual membership fees and interest rates.

Deposits required – deposit amounts will vary from one bank to the next. Depending on your situation, the deposit required may only be a few hundred dollars. However, it could also be as much as a few thousand dollars. So you want to do your research.

Conversion features – most of the time this feature allows you to convert from a secured credit card to an unsecured one after your payment history is maintained positively for several months. Interestingly enough, most banks that issue credit cards for bad credit don’t tell you this because they don’t want you to know that option is available.

There are some instances where you may be declined when you apply for credit cards for bad credit. Most of these instances are related to how bad a person’s credit history has gotten. In the worst case scenario, you always have the option of a pre-paid credit card. Most of the time, you get approved for these without the credit history check that secured and unsecured credit cards require. Additionally, you want to make sure that information you provide on your application is as accurate as possible.

Credit Cards for Bad Credit

How to Pay Off Debt Fast: Paying Off Credit Card Debt

Jeff W — Thu, 21 Jan 2010 01:14:08 +0000

How to Pay Off Debt Fast: Paying Off Credit Card Debt

First up in our series on how to pay off debt fast is the most infamous debt culprit for almost all of us: credit card debt. Most people who have a credit card carry a balance on the card, which means that in addition to paying off the money owed, interest on the balance is also owed. Due to the fact that credit card interest rates can be high, it can sometimes be difficult for people to be able to pay off credit card debt. However, there are some methods you can use to pay off your credit card balance and get out of debt.

The first step, especially if you have multiple credit cards, is to make a list of all your cards and what the balance is on each card. You will also want to write down the interest rate and the minimum amount that is due each month on the card. Once you have this list together, sort them so that the card with the highest interest rate is at the top of the list. Then, add up the minimum monthly payment amounts to find out what you need to pay each month just to stay current on the bills.

With this information, determine if you can possibly transfer the balance from any cards with a high interest rate to a lower-interest card. This small tip can actually save you a great deal of money. You should also call the companies and ask if you can get a better interest rate. This is not always possible, but it does not hurt to ask. If you are successful in transferring card balances or in getting lower rates, adjust your list accordingly.

With this list, you know the minimum amount you need each month. Figure out how much money you can afford to pay monthly, above this total minimum amount, in order to pay off your credit card debt. Once you have this figure, each month pay the minimum amount on all the credit card bills except the one at the top of the list with the highest interest rate. On this card, pay the minimum payment plus the extra amount you determined that you could afford each month. Once the card with the highest balance is paid off, repeat the process with the card with the second highest interest rate, until all your credit cards are paid off. During this pay back period it is advisable to use your credit cards for as few new payments as possible. This will make it easier to reach your final goal of completely paying back all your debt.

If you have several high interest credit cards, you might benefit from finding other sources of money that you can tap so that you can pay off these cards even faster, thus saving money. If you have money in a savings account that pays low dividends, using it to pay off high interest credit card debt can be wise. If you have a home, consider taking out a home equity loan to pay down your credit card debt, as home equity loans are tax deductible and have a lower interest rate than most credit cards.

How to Pay Off Debt Fast: Paying Off Credit Card Debt © SpareDollars.com

How To Raise Your Credit Score

Jeff W — Tue, 19 Jan 2010 13:00:30 +0000

How To Raise Your Credit Score

So you want to know how to raise your credit score? In short pay all of your bills and make sure you pay them on time every time. I know this sounds overly simple but it really isn’t. To better understand the best way to raise your credit score, lets understand exactly what your credit score is.

What Is A FICO Score?

Your credit score is based on a system developed by a company known as Fair Isaac Corp, which is where the term FICO score comes from. The system calculates a lot of different factors like how long you’ve had credit established, how often you pay your bills on time, what kind of outstanding balances you have on loans and credit cards, along with a lot of other factors.

Your FICO credit score ranges between 300 and 850, with 300 being the lowest and 850 the highest. The higher your credit score the more likely it is that lenders will give you their preferred rate. Having a higher credit score can save you hundreds of dollars a year in interest on mortgages, car loans or anything else that might base your interest rate or payment structure on a credit score.

Get Credit Established Early

When you have something bad happen like missing a payment your credit score will take a hit, however the longer your credit history the lesser the impact that it will have on your credit score. So for example, if you are a young person who has only had credit for a short time and you already missed a payment or two then it is apparent that you arent responsible with your money and your FICO score is going to reflect that. On the other hand if you have had a spotless record for 18 years and you suddenly miss a payment, your score wont take as great of a hit.

Keep Your Oldest Credit Card Active

Having established credit cards is very important to your credit score. When you have had a banking relationship with a credit card company and they are happy with you it shows that you are responsible with your money and you have made a good effort to make your payments on time.

Keep Your Available Balances Low

If you have many credit cards it is a good idea to keep your available balances as low as you can get away with. Even if you have your balances paid off completely your available balance is considered. Look at it this way… if you have four cards with $10,000 available each then credit companies still see you as having the potential to run up $40,000 in debts after they loan to you. This is a risk for the company to take on and they need to accommodate for this risk by charging you a higher interest rate. By keeping your available balances lower you can help eliminate this risk.

Always Monitor Your Finances

This last point is perhaps the most important (aside from paying off your bills of course). You need to monitor your credit as often as possible. You’ve heard commercials offering credit monitoring service to help protect you and your score. These companies are definitely helpful, but whether you need to pay for a service is up to you depending on how much you are willing to do yourself. By law you must be allowed to check your credit score for free once a year and I highly recommend that you take advantage of this. Check to make sure that you recognize all the accounts opened in your name, and if you don’t you need to contact the issuing credit agency to rectify this.

Bottom line, taking care of your credit score is one of the most important things you can do for your financial future. Just a few points on your score can make the difference between locking in the top rate and paying hundreds or thousands of dollars in interest payments.

How To Raise Your Credit Score

Pay Off Debt Fast: Five Easy Ways To Save Money

Jeff W — Mon, 18 Jan 2010 16:16:11 +0000

Pay Off Debt Fast: Five Easy Ways To Save Money

As a society we’ve never had larger amounts of debt, and the numbers just keep increasing. More and more consumers have credit card debt in high enough amounts to buy a fancy car, and we have some serious trouble trying to pay off debt fast. The good news is there are ways to sock away more money and help improve your personal budget. Here are five painless ways to save money and pay off your bills faster.

Reduce Monthly Bills

We have a variety of monthly bills that we pay, things like the mortgage, utility bills, cable, telephone and much more. Many of these bills don’t seem like much by themselves but together can really place a strain on your personal budget. If you are looking to pay off debt faster, try either eliminating or trimming down these monthly expenses. For example, do you have pay channels you rarely watch on your cable bill? If so, cancel it! Perhaps you pay for both a home phone and a cell phone but only need one or the other. Monthly expenses really can add up quickly and are hard to spot when you wonder where your paycheck goes every week. Eliminate these monthly expenses and apply this money toward paying down your credit card balances.

Dine Out Less

I don’t know about you but I spend way too much on dining out every week. We all lead busy lives working our jobs, taking care of the kids and shuttling around running errands so the last thing we want to do is cook a big meal and it’s much easier to order out, but unfortunately dining out on a regular basis ads up quickly and prevents you from paying down debt instead. Assuming you can cut back one night a week of dining out (estimated at $30), you can save almost $1,600 a year that can be used to pay off credit cards faster.

Go Grocery Shopping More Often

Going shopping more often seems counter intuitive to saving money and lowering your personal budgets but grocery shopping may be an exception. When you go shopping for the week do you buy things that you never end up using or throw away? When you waste groceries, especially meats and other expensive items, you are making it hard to save more money. Simply by going shopping on an as needed basis you are less likely to waste money and be able to improve your personal budget much easier.

Sell Items You No Longer Use

Do you have items worth a decent amount of money lying around that you never use? Why not sell them and use that cash to pay off credit cards faster. With popular websites like Craigslist, Ebay or even your local newspaper’s classified section, it’s easier than ever to find someone interested in buying your used stuff. You can sell anything from books to musical instruments to something as big as a car or a boat that you never use. If you aren’t using something that you can sell, put it on Craigslist for free and use that cash to pay off your credit cards. Heck, if you can sell a car or a boat you may even be able to pay off your mortgage faster. That would go a long way in reducing monthly expenses.

Use Coupons For Everything

I know coupons aren’t popular, especially for macho guys (after all we usually associate 85 year old grandmothers but using coupons) but you can save a lot of money every day just by clipping out a little piece of paper. Advertisers are willing to give you big discounts on products you buy anyway so why not take advantage of this? Just by checking my Sunday paper every week I save an average of $20 a week. What’s better is that many companies are offering online coupons that you can print and take with you. Even better than that, many large retailers like Amazon offer coupon discount codes for things you buy online. Before you buy anything online, do a quick search for “[product name] coupon” and see what you find. It’s not uncommon to find a 15% off coupon in less than 30 seconds of searching. Take advantage of all of these and put that money on your credit cards and pay off your debt easily.