According to Creditcards.com, about 40 percent of Americans carry credit card debt from month to month without paying it off. The website also says the average interest rate on those credit cards is more than 13 percent. So it’s easy to see why cardholders often struggle to pay down their credit card balances.
Here are 7 tips to get out of credit card debt:
- Stop using your credit cards until you pay them off.
Interest rates of 15, 20, or even 25 percent or more can cause credit card balances to grow rapidly. People often find themselves on a debt treadmill, struggling to make the minimum payments and watching their principal balances grow. Stop chasing your debt balances. Use cash or a debit card until your credit cards are paid off. That way, you can focus on paying down your balances. And you won’t be tempted to spend more than you can afford to pay.
- Track your expenses to ensure that you spend less than you earn.
It’s a basic concept, but some consumers don’t know exactly how they spend their money each month. They may
The first and most important step to effective financial planning is developing and implementing a budget. That, of course, sounds easy and even simplistic. But it’s more difficult than it seems. Budgeting simply means to live within one’s financial means.
Needs vs. Wants
You have a limited amount of money to spend each month, so you need to separate your needs from your wants. Your “needs” usually include housing, utilities, food and clothing — the things you can’t live without. Once your needs are taken care of, any remaining money can go to unnecessary “wants” — those items that are nice to have, but not required to live. They usually include things like cable TV, Internet service, restaurant meals, cell phones with many features, etc.
You need to be careful not to confuse wants and needs. A very common reason people get into serious debt is by failing to live within their means. They use credit to supplement their wants, but eventually this will cause financial trouble. For example, you need a place to live, but you don’t need a 3,000-square-foot home. A home is a need, but
A personal loan, sometimes also referred to as a Signature Loan, is a loan that can be used for many purposes. A Signature Loan is an unsecured personal loan. It’s not secured by the equity in your home (such as in a home equity loan) or by some other personal property or asset (such as a car loan). Depending on the bank or lending institution, these types of loans are commonly available for amounts ranging from $500 to $20,000.
Consumers typically use a Signature Loan for purposes such as:
- Debt Consolidation
- Major Purchases
- Vacations, Holidays
- Unexpected expenses
- Home Improvements
Generally, a personal signature loan is a fixed rate, fixed term loan offering the following:
- Terms from 2 to 5 years
- Interest rates will vary based on credit score and income
- Loan Amounts up to $20,000
Understand the Terms
These types of loans can vary widely depending on the lending institution. Generally speaking, most personal or signature loans are unsecured, meaning they do not have collateral attached. Because of that, these loans will be more difficult to obtain. Lenders will require that applicants satisfy their requirements for creditworthiness. The terms and conditions of each loan
There are two basic categories that most loan types fall into – Secured and Unsecured.
Secured loans are those loans that are protected by an asset or collateral of some sort. The item purchased, such as a home or a car, can be used as collateral, and a lien is placed on such item. The finance company or bank will hold the deed or title until the loan has been paid in full, including interest and all applicable fees. Other items such as stocks, bonds, or personal property can be put up to secure a loan as well.
Secured loans are usually the best (and only) way to obtain large amounts of money. A lender is not likely to loan a large amount with assurance that the money will be repaid. Putting your home or other property on the line is a fairly safe guarantee that you will do everything in your power to repay the loan.
Secured loans are not just for new purchases either. Secured loans can also be home equity loans or home equity lines of credit. Such loans are based on the amount of home equity, which is simply the current market value of your home minus the
Going through life without a checking account is similar to riding a bike with a flat tire. You will eventually get to where you need to go, but it would be so much easier without the flat tire. Checking accounts are essential tools for any consumer to manage and track their money while building a good credit history.
Benefits of a Checking Account
There are numerous reasons to have a checking account:
- Bill Payment – Pay bills by writing checks or using online payment services.
- Cash – Keeping cash in your account instead of your pocket or home will help avoid loss and theft.
- Debit Card – These cards, which are tied into your checking account, give you quick and easy access to your money and can reduce your use of credit cards.
- Saving – Use your checking account to cash checks without paying fees, and pay your bills without buying money orders.
- ATM Card – This is an easy way to get cash when you need it, make deposits and check your account balance.
- Proof of Payment – Checks provide a paper trail or written proof that you paid someone. Each time you write a check that ultimately clears your account, there will be several records of
Millennials, those born from the early 1980s to the late 1990s, have been considered through the prism of youth for many years now. But we’re growing up and starting to act like adults. Now that millions of people from Generation Y are in their 30s, this generation is starting to have children. In fact, there are well more than 20 million millennial parents already. Even though there are endless publicized (and not invalid) reasons why some millennials are avoiding parenthood, thousands of us are taking the plunge every month. So for new millennial parents, and for those considering the idea, here are three ways to prepare for parenthood, financially speaking.
A recent Pew survey found that 75 percent of childless, unmarried Gen-Yers want to have kids someday. Famously, this generation is strapped with debt from school loans and other sources. About 20 percent of millennial parents are currently living in poverty. In many cases, this is unavoidable. There’s nothing morally wrong with living in poverty, but the challenges of raising children in such a financial state are undeniable. It is difficult, though not impossible, to become financially stable if you already have children. But it’s a
Buying a car can be a challenge for buyers with limited, new or poor credit. The good news is that loans are available for buyers in most credit situations. The trick is knowing how to access them. Do you have less than stellar credit? Downright bad credit? Here are some tips to help you get a loan, even if your credit has seen better days.
Before the Loan
This is the time to be realistic about your credit, learn your score and map out your car budget.
But first, some encouragement: Even if you have bad credit, you can still get a car loan. You will, however, pay a higher interest rate than will people with better credit. According to a recent report by Experian Automotive, 28 percent of new-car buyers and 54 percent of used-car buyers in the third quarter of 2014 had credit scores below 660. Customers with scores above 660 are generally considered to have good or great credit.
Borrowers with scores below 660 are seen as more of a credit risk, and can be grouped into one of three categories, based on score:
- Nonprime: Borrowers with scores between 601 and 660
- Subprime: Borrowers with scores between 501 and 600
- Deep subprime: Borrowers
A debit card is a financial tool that makes banking and spending money more convenient. However, you need to know the basics of how debit cards work and the best ways to use them.
What is a debit card? A debit card is linked directly to your checking account. You can use the card to get cash at an ATM. You can also use it to spend money anywhere that a debit card and/or a credit card is accepted. But, when you use a debit card you are not borrowing money (like you do when you use a credit card). Instead, you are spending the money that you currently have in your checking account.
What is the best way to use a debit card? There are two ways to use your debit card to make purchases – debit or credit. While both ways spend the money you have in your checking account, they are different.
- Debit transactions – Funds are generally deducted from your checking account almost immediately. Usually require the use of your PIN, and sometimes your bank may charge a fee for this type of transaction.
- Credit transactions – This is a signature transaction and no PIN is required. More retail locations
Payday loans are short-term cash loans based on a borrower’s personal check, which is held for future deposit or via electronic access to the borrower’s bank account.
Borrowers write a personal check for the amount borrowed, plus the finance charges, and immediately receive cash. In some cases, borrowers sign over electronic access to their bank accounts to receive and repay payday loans.
Lenders hold the checks for a short period of time – generally 14 days – at which time the loan and the finance charges must be paid in one lump sum. Borrowers can typically repay the loan in cash, allow the original check to be deposited at the bank, or pay only the finance charges and roll the loan over for another pay period.
If the account is short on funds to cover the check, the borrower usually faces a bounced check fee from their bank in addition to the costs of the loan, and the loan typically incurs additional fees and/or an increased interest rate as a result of the failure to pay.
Be Careful, It’s Easy to Get Into Trouble
Here’s an example of how you can get into trouble with payday loans. Richard was $200 short of having enough money
Having a credit card can be a very important financial tool for many individuals. In general, credit cards are safe, reliable, and convenient to use. The responsible use of a credit card will reflect positively on your credit report, putting you in a better position should you need to secure a larger loan such as a mortgage or car loan. However, for some people, managing a credit card is harder than getting one.
Anytime you use a credit card, you are borrowing money you are obligated to repay. What you purchase does not matter – whether it’s a $500 set of tires or a $6 lunch from McDonalds. If you don’t pay your balance in full each month, your creditor will add interest to the total amount you owe. The key for any money management system as well as for credit card use is to make sure that you are not spending more on a monthly basis than you are bringing in.
Get to know all of the responsibilities in using a credit card. Educate yourself on exactly how a credit card works. Is a credit card or borrowing money really necessary, or would another option such as cash or a debit
There are many different types of credit cards in the market. So how do you find the card that is right for you? Perhaps begin by thinking about how you use credit …
Unsecured credit cards require no collateral or down payment and provide you with the ability to make purchases up to your credit limit. If you do not pay your balance in full each month, a finance charge will be applied to any outstanding balance. Your minimum monthly payment is generally 3-5% of your balance. A word of caution: making only minimum payments on your account will greatly increase the time it will take you to pay off the balance. You can avoid paying finance charges by paying your balance in full each month.
General-purpose credit cards are cards that can be used to pay for just about anything – clothing at a department store, gasoline, meals at restaurants, medical services, utilities, products for sale on the Internet, as well as to get cash advances. Another advantage of using this type of card is that it combines many different types of expenses into a single bill, making payment easier. These types of cards are issued by banks and other lending
Step 1 – Research
Many people buy cars based on what they look like or what they are familiar with. Instead of buying the same type of car that you’ve always driven, it may be wiser to list the attributes you are looking for, and then do some research. Really think about what you want versus what you need. For example, do you care most about safety, size, cargo space, reliability, etc? There are great resources on the internet and in bookstores for car reviews. Come up with a list of options that would fit your needs.
Step 2 – Find Financing
Once you know what you are looking for, think about if you would like to buy new, used, or lease. What financing options are realistic for you based on your income and credit? You can visit our articles on these topics for more information. Don’t borrow more money than you are comfortably able to repay. Your credit score will directly impact the interest rate you will pay on your loan. For example, an individual with a FICO score of 720 is likely to be offered a loan for about 5.75%. Same loan amount, but applicant B has
Money is one of the biggest sources of frustration in marriages. The main reason is that a lot of people have trouble talking about money. Talking openly and honestly about money can reduce stress in your marriage, and can lead to greater savings when you and your spouse on the same financial page.
Communicate. Why is it that we have such difficulty talking about finances? Some of us are embarrassed about our spending habits, the amount of debt we have, or the amount of income we earn. Others take the approach that money and finances is something that people don’t talk about — even with the closest of friends and family. The most important thing in any relationship is honesty, and this must hold true with your finances as well. You must let your financial partner know if you have credit card debt, a poor credit history, a bankruptcy, or struggle with the basics of money management.
Here are some tips to follow when discussing money with your spouse:
- Understand your own weaknesses. Do you tend to overspend on certain things or events? Do you get defensive when talking about the bills? Knowing what your own flaws are will show you what you
You need to be aware that there are investment frauds out there that could do serious damage to your finances. This article will help you spot and avoid some of the common persuasion tactics used by fraudsters.
Investment scams can take many forms and criminals can move fast when it comes to developing new pitches for the latest fraud. The most common securities frauds tend to fall into the following general schemes.
Pyramid Schemes – Fraudsters claim that they can turn a small investment into large profits within a short period of time. In reality, participants make money solely by recruiting new participants into the program. The fraudsters behind these schemes typically go to great lengths to make their programs appear to be legitimate, multi-level marketing programs. Pyramid schemes eventually fall apart when it becomes impossible to recruit new participants.
Ponzi Schemes – A central person or “hub” collects money from new investors and uses it to pay “returns” to people who invested earlier. They don’t invest or manage the money as promised. The scam is named after Charles Ponzi, a 1920s-era con man who persuaded thousands to invest in a complex scheme involving postage stamps. Like pyramid schemes, Ponzi schemes require a
A home equity loan, or line of credit (HELOC), allows you to borrow money using your home’s equity as collateral. This essentially is a second mortgage that lets you turn equity into cash, allowing you to spend it on home improvements, debt consolidation, college education or other expenses.
To begin, let’s make sure we understand these two important definitions:
Collateral is property that you pledge as a guarantee that you will repay a debt. If you don’t repay the debt, the lender can take your collateral and sell it to get its money back. With a home equity loan or line of credit, you pledge your home as collateral. You can lose the home and be forced to move out if you don’t repay what you’ve borrowed.
Equity is the difference between how much the home is worth and how much you owe on the mortgage (or mortgages, if you have a home equity loan or line of credit).
Example: Your home goes UP in value
Let’s say you buy a house for $150,000. You make a down payment of $20,000 and borrow $130,000. The day you buy the house, your equity is the same as the down payment — $20,000. $150,000 (home’s purchase
If you recently filed for bankruptcy, a stable income and two to three years of solid money management can help rebuild your credit history. Here are some ways to help rebuild your credit.
Make all payments on time. A late payment damages your credit score. And every late payment reaffirms your creditors’ belief that you are a bad credit risk.
Open a bank or credit union account. If you don’t already have a checking or savings account, consider opening one. This sends a positive message to lenders about your ability to manage your finances.
Avoid high-interest loans. Payday loans and cash advances have extremely high interest rates. Try to avoid them and make sure you know what is expected of you before you take out a loan.
Apply for a secured credit card. A savings account can be tied to a secured credit card, limiting the amount you can spend while establishing a positive credit history.
Get educated. There are computer programs, books and courses available that teach people about financial planning and money management.
Show that you are a responsible consumer. If you have a credit card, always make timely payments. Pay your utility bills on time. Don’t live beyond your means or purchase anything