Posts Tagged ‘budget’

Choosing Secured Credit Cards to Strengthen Limited Credit Histories

November 6th, 2011

Consumers who are looking to boost a very low credit score after debt settlement may want to consider the benefits of applying for a secured credit card account. Secured credit cards are typically easier to get than traditional unsecured credit cards but there are some guidelines for selection and use. Not all secured credit cards offer the same benefits and if you are trying to strengthen your credit score, it is important to make the right financial decisions for your spending habits and your lifestyle.

Understanding Secured Credit Cards

Secured cards differ from traditional cards in that consumers are required to make an initial cash deposit into an account with the card provider. That deposit amount varies by provider but will become the credit limit for the cardholder. When purchases are made, account holders will receive a statement in the mail similar to traditional statements. The balance should be paid in full within each billing cycle to ensure you have full spending power.

Choosing the Right Card

There are several things you should look for in a new secured credit card to make it advantageous to your current financial situation and future credit goals. These considerations include:

Credit Reporting

A very important term of a secured credit card for the cardholder trying to improve a weak credit history is to ascertain whether or not the card provider will report account activity back to the consumer credit reporting bureaus. Secured cards from providers who do not report account data to these agencies are not beneficial to your credit improvement goals. If there is not evidence of the provider reporting credit data to consumer credit bureaus, contact the company directly to inquire before selecting a card.

APR Terms

Since secured credit cards are often offered to those who may be a credit risk to card providers or those who have a limited credit history, the annual percentage rate on this type of card will generally be higher than APRs on traditional credit cards for consumers with good credit ratings.

Fees and Penalties

Again, secured cards are often used by those not yet proven to be creditworthy to traditional lenders. As a result, many secured card providers tack on fees for multiple services including monthly account maintenance. Secured cards may also have stiffer penalties for late payments or for overextending your credit card’s spending limits. These fees and penalties will be outlined in the fine print of the card agreement so be sure to read it thoroughly and carefully.

Deposit Requirements

While many secured credit card providers will require between $300 and $500 in upfront deposits, some providers may insist on more. Find a card that has a deposit requirement that is reasonable for your personal budget but will also give you some spending power after monthly account fees have been deducted.

Using a Secured Card

Secured credit card use is the same as using a traditional credit card. You should be careful to never exceed your limits and that you have the financial capabilities to repay what you have spent. Even though money was deposited into the account beforehand, you still have an obligation to pay back what you have charged on a secured card. Additionally, you should make a point to pay the bill on time and in full each and every month if you expect it to boost your credit rating.

Using your card regularly for specific purchases like gas and groceries can allow you to better track your spending and stay in control of your personal budget at all time while on the road to a better credit score. After using a secured card for several months or for as long as a year with good management of your account, you may improve your credit history enough to qualify for a traditional card with a good interest rate.

Posted in Credit Card Debt

Credit Debt Management Tips and Solutions

October 15th, 2011

Credit debt management can be difficult but it is possible to get the hang of it. All you need to do is create a monthly budget. In this budget, you can record your income as well as your expenses. Some expenses are inevitable and these include mortgage, food, electricity and rent to name a few. There are also expenses that are simply not needed. You don’t need to buy expensive clothes every week. You don’t need to dine at exotic restaurants every weekend either. So, the first thing you should do is cut down on all the unnecessary expenses. After this, create your monthly budget plan and lastly, make sure you follow it strictly.

The last bit is the most difficult. Many people plan their monthly budget with a lot of enthusiasm but when it comes to adhering to the plan, they fail. It is important to let go off all the luxuries and stick to basic necessities, at least until your finances come back to normal.

Try sticking to cash payments. Keep away from your credit cards. Credit cards mean more credit and that will not help you in the long run. Use your credit card only in the worst case scenario or emergency. Another good idea is to merge your credit cards into one. This will help you save immensely. Having only one credit card will make things much easier for you to manage and keeping track of it should not be a problem. It will be more feasible to pay it on time and also pay down your debt faster.

There are many people who have an extreme amount of debt on their credit cards. Start paying them off immediately and begin with the debt that has the highest interest rate. Put down everything in writing to make it clearer. Jot down the due date for each payment and the rate of interest. If a credit card has a smaller balance, you can pay that off first so that in your mind it will be “one credit card less!” That is actually a big relief. Your motivation will be stronger too. Just remember that one credit card is enough. Go for the consolidation.

One of the best techniques for credit debt management is negotiation. It may be a bank or it may be a private lender. Just don’t rule out the chances of negotiation. Try getting them to lower the rate of interest or make it your goal to pay it all off at once. The best way to negotiate is to offer an amount of money that is substantially less than the amount you owe in total. Creditors will likely agree to it if they are worried about losing all the money they lent you! Their fear is your advantage.

If paying off your debts has become a huge problem due to expenses that were totally unexpected or resulted from a pay cut, you could work part-time to supplement it. You can use the internet to earn some extra dollars sitting at home. There are a number of online jobs. You can work and pay your debts off to get closer to your financial goal.

Posted in Debt Management, Debt Solution