Credit card debt - What you must do about it

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Eliminating Debt and Avoiding Bankruptcy
Americans generally have one thing in common - debt. Were you expecting something else? Sadly, whatever plans we make or whatever we claim when we are in our youth, we manage to some how get into debt. For most people, especially applies to student type loans and credit cards. Yes, college somehow changes how we do things. Next thing you know you are married with some children, a hefty mortgage, c... Read debt consolidation 1 article



Debt Management Guide
When in deep debts, any wishful thinking that debts will disappear over time might prove to be more disastrous. People who emerge from debt are not just lucky; it is their determination to find a way out that has helped them become debt free. Taking assistance from a debt management company is one of the most effective means to deal with bad debts.

What is debt management?

De... Read debt consolidation 1 article



Credit card debt - What you must do about it
For the average American family, debt, and especially credit card debt is spiraling out of control at a record pace. The average household credit card debt has risen dramatically from $3000 in 1990 to over $8000 today. Personal bankruptcies are also at an all time high, prompting Congress to consider a radical bankruptcy law overhaul, designed to weed out those who are merely taking advantage of the system loopholes while directing many to more palliative alternatives such as a debt management program.

Of course some debts are considered necessary and indeed wise choices. For instance, few if any could afford a house if we had to wait until we could buy it outright. Generally speaking, a home is an asset that, over time, appreciates in value. Another debt that "makes sense" is a student loan. All data points to a direct correlation between income and educational level. However, what about that big screen TV you really didn't need, or that new car when a used one would have served the same purpose and not have created a financial nightmare. We need to start telling ourselves NO!

According to the experts at The Credit Counseling Foundation, Inc. (www.GoDebtFree.com), statistics show that about 60% of all credit card holders do not pay off their entire balance each month. With average interest rates still hovering around 15%, this increases the cost of everything you buy by at least 15%. And if you are only making the minimum payment, you could be looking at 20-30 years to pay off that balance depending on your interest rate. Minimum payments are designed to cover mostly interest, thereby keeping the holder chained to their credit card debt. One may ask with interest rates at 30 year lows why are credit card interest rates still so high? Simply put, there are no regulations on credit card interest rates requiring that they mirror prevailing interest rate indexes. Along with late fees, user fees and penalties, these interest rates, which can be greatly increased due to just one single late payment, are all implemented to generate tremendous revenues for the issuers, while at the same time creating a situation of unwanted indentured servitude for the debtor.

When faced with this overwhelming problem, what is one to do? Well the first line of attack is to cut up all credit cards. Only buy what you can afford to pay for in full. If you decide to keep a credit card, pay it off every month. This may sound like basic, common sense advice, but what about the average Joe who has already accumulated too much debt and cannot pay it off? If you are extremely disciplined and have the extra cash, you may want to formulate a plan to pay off the higher interest cards first. For most us who neither have the cash flow nor the self-discipline to adhere to such a plan, or don't want to lose the built up equity in our home by taking out a line of credit or re-financing which, by the way, could put the family home at risk should future financial setbacks occur, a good alternative would be to use a non-profit 501 (C) (3) credit counseling service. These companies can afford their clients many benefits that they could not ordinarily accomplish on their own. Interest rates can be reduced, accounts can be brought back to current status through re-aging, and maybe best of all, can stop those annoying and embarrassing creditor calls. It can get you a workable monthly payment while shortening the payoff term to typically 4-6 years. This can save thousands in interest costs! Another overlooked benefit is that all credit cards put into a debt management program are closed, thus eliminating all temptation no matter how hard you find it to say NO! All this without the trauma and stigma caused by bankruptcy or settlement.

Since there are literally thousands of these debt management companies out there, how does one go about choosing the right one? In addition to using a non-profit agency, check factors like the company's Better Business Bureau report, are they accredited by a nationally recognized certifying agency such as ISO or COA, are their counselors certified as well, how long have they been in business and word of mouth recommendations. Another consideration is whether to use one of the local community funded agencies or a private one. Although the local agencies have the advantage of being able to meet you face to face, due to limited budgets they can lack the expertise of private companies as they are often staffed predominately by volunteers and don't offer the array of modern on-line and technological services which today's consumers deserve and most large creditors demand in order to extend the debtor their most favorable terms. Moreover, many locals encumber their clients with restrictive guidelines, going as far as limiting the number of haircuts you can get or movies you can view.

If you have reached the point where you are transferring balances just to keep afloat, making minimum payments and getting nowhere or getting harassed by creditors and view bankruptcy or settlements with your creditors as both far too damaging and morally unacceptable, you may want to consider contacting a reputable credit counseling/debt management organization. A good starting place besides the BBB, would be one of the debt management organizations that belong to the American Association of Debt Management Organizations (AADMO). Most of all, don't despair! Help is out there, just do your homework and choose wisely. With the right agency to guide you combined with a true commitment to getting out of debt once and for all, there is indeed light at the end of the tunnel.

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Credit cards for people with bad credit

Is there something out there called a bad credit credit card? Well, when a bank or Credit company such as Bank of America, Washington Mutual or Chase receive an application from you, they use a statistical system to determine whether or not to grant credit to you by assigning numerical scores to various characteristics related to creditworthiness. This means the creditor's measure of your past and future ability and willingness to repay your debts. This system is based on your credit history, which is a record of how you have borrowed and repaid debts. If this record shows late payments, skipping payments, exceeding card limits or declaring bankruptcy you are considered a person with "bad credit".

Then you're condemned, you're hopeless.. Nobody will ever lend you money or give you a credit card anymore, you may think but then you should think again. Even people with horrible credit histories who have been in a financial mess because of previous debt can get credit card offers. So, the answer to the question I asked in the beginning of this article is "Yes": You can get a secured or prepaid credit card.

Banks and other credit companies need customers, even thoses in a bad financial situation. So these secured or prepaid cards offers are specifically targeted to help people with poor credit, so that they too can have all the benefits that follows such a card.

What distinguise a secured card from an unsecured is that the card's account is usually related to a savings account. This is the way the card is secured. Let's say you have $1,000 in your account, then your credit limit will be $1,000. With this build in security, you will never be brought into a debt situation again. After using this card for a while, most banks or finance companies will gradually grant you credit that exceeds your saving account balance and you will at the same time repair your credit history. This bad credit credit card is a great offer, that you should take advantage of if you have a messy financial history and want to rebuild your credit.




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Credit card debt - What you must do about it
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