Debt Views

According to CardTrak, the typical American family had about $6,600 of credit card debt in 2007. That might sound pretty normal to you, but did you know that just by learning to use their credit cards more intelligently, those families could save up to $1,500 a year? To really see the benefits of intelligent card use, think of how that $1,500 could become $45,000 by retirement age – and much more if it was invested.

Yes, little things like interest and fees really add up over time. Fortunately for card holders, there are several ways to reduce the amount of money they throw away on interest each month.

First, try to negotiate a lower interest rate. Call your bank or card issuer and politely let them know that you’ve been offered a lower interest rate by one of their competitors (even if you haven’t). To be successful, stay jovial and polite. Be realistic about the interest rate you request. The average interest rate in America at the time of this writing is 12-15%. The higher your score, the lower the rate you can reasonably expect. Also, you’ll need to have a positive history with this card issuer that you can point to when asking for reduced rates. If you’ve been delinquent on payments, they won’t be as eager to set a lower rate for you. Remember, card companies make their money from the interest and fees you pay. If they think you are a credit risk, they will increase those fees to minimize their financial losses.

Next, prioritize your credit card payments. If you have two or more cards that you pay for each month, pay a higher amount to the card with the highest interest. You want to get that one paid off first, because it’s costing you the most money. Then pay the next-highest amount to the card with the second-highest interest rate, and so on. If you have a lot of outgoing payments, you should check with your bank or credit union to see if you qualify for a low-interest loan. With a loan, you can consolidate your payments into a single monthly payment with lower interest.

If you have a small amount of debt that you can pay off in six or twelve months, look into a 0% interest credit card. By transferring the debt to such a card, you can put all of your payments toward the principal balance, not toward interest. Just be aware that most 0% cards have an introductory period that lasts from three to fifteen months, with six months being the most common. After that period ends, you will be responsible for interest on your balance.

To plan for the future, take all the money you would have spent on credit card interest and put it in a savings account. When you’ve got enough, invest it in a mutual fund. Forget about it. Then, when you’re ready to stop working, you will have quite a chunk of change to fall back on. Who would have thought that interest payments could be managed in a way that would lead to a comfortable lifestyle in your later years?

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There is no real easy way to do this other than to pay someone outrageous fees to do it for you. What you can do is to do it the exact same way the expensive companies do, but saving all of that money that, well quite honestly you can’t afford or you wouldn’t be in this mess.

Cleaning up your credit takes time, understanding and most importantly patience. In order to start taking the steps to clean things up, let’s understand what makes up your credit report.

Quite simply, your credit report is a listing of all open forms of credit you have or have had over the past 7-10 years. This will include anything you have co-signed as well. That is something to really keep in mind. If you think co-signing helps put a friend, it may, but at a cost to your credit rating as it counts towards what you can ultimately be responsible for.

There are also three key credit reporting firms that can be researched when companies pull your credit. They are Equifax, Experian and TransUnion. They are three individual companies. This is important because they often have three different ratings, include different information from one to the other, and have to be negotiated with individually as well. Not all credit card companies report to all three agencies and not all companies request credit reports from all three agencies.

Your credit reporting listings will be comprised of some very important details. Such details as, when you opened your account, how much your total credit you have, how much is last reported that you owe, when and how often there have been delinquencies, what level of delinquency there was (30, 60, 90 days or more), and the current status of the account. All of these items factored together are what make up your credit score.

Since this is not the point of this article we will over simplify how your credit score is derived by example. If creditors have given you a high amount of credit it does help, especially if you are not currently utilizing a high percentage of the allowable credit line. If you have shown little or no delinquencies and if any they have been held to less than 30 days, this will keep your score high as well. Increasingly important these days is how long you have held accounts open and in good standing. An account that has been current for 3 or more years with a single 30 day delinquency will still be held more credible than an account less than a year with no delinquencies.

Now what to do is quite simple. Review each of your credit bureau reports. Cross off everything that is in good standing and is in no harm to your credit. Everything left at this point you are going to challenge.

The reason why you are to challenge everything is also quite simple. Each and every item that is challenged, the credit bureau has no choice but to forward the challenge to the respective company that provides or provided you credit. That company then has 30 days to respond. If they are unable to or simply fail to in the allotted time, the credit listing item is removed.

It is quite difficult to remove anything such as a bankruptcy or charge-off but you can sometime have comments added allowing all future viewers of your credit report to also see the comments. In most cases, you will simply be surprised as to what is inaccurate in your credit report or how easy it is to get many things removed.

Anything that does get responded to by the respective credit company is considered “verified” and will remain on your credit report. However, you don’t have to give up there. You may and should send a second notice, but this time including any information or evidence you have that a payment was made on time, etc. This will start the process again but providing a bit more information for the credit company to have to “verify” and dispute.

The process does take time. The process does take patience. However, what you will have at the end is an accurate credit report, a more consistent report amongst all three credit bureaus, and a feeling of empowerment that you are in control or your credit.

For more details on how to write a letter to the credit bureaus and where to send them, stay tuned for our next article detailing this information as well.

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You may have heard about 0% credit cards and wondered if they are for real or not. There are many different credit card offers out there, and of course when you see the 0% it seems like it would be the best option. But, when you sit and think about it you might wonder why one credit card would be 0% and the other would be 26%, what’s the catch?

Usually there is no real catch; you just have to look at the fine print. You never know what you are in for unless you read all the terms and conditions associated with the card.

0% Doesn’t Mean 0% Across the Board

While there are some legit 0% credit cards out there you need to look at the fine print before you simply assume that you can buy everything with no interest. Usually when you look at the fine print you will realize that the 0% applies to one aspect of credit card use. This isn’t to say that you shouldn’t take advantage; you just need to know where the 0% does and does not apply.

If you have some credit card balances that you would like to transfer than you may want to look for a 0% credit card. There are many credit cards out there that offer 0% balance transfers. Depending on how much you need to transfer this can save you a lot of money. Many people use these cards to do away with those high interest credit cards so that they can actually start making a dent in the amount of money that they owe instead of just paying off the interest each month.

Other people like the 0% credit cards that allow for them to make specific purchases that come with no interest. These may be purchases at specific stores or for specific products, but depending on what you purchase these credit card offers really can save you a lot of money. You’ll need to be sure to read all of the fine print on these cards to be sure that it is something that will save you as much money as you would hope.

There are other credit cards that have a 0% introductory rate. Often times this 0% is good for the first six months or a year that you have a card. This is a nice way to consolidate debt, make big purchases, pay for car or house repairs, or just buy things that you have been putting off because you didn’t want to pay interest. Many of these cards also offer a cash back program and rewards programs.

Before you choose any one of the 0% credit cards that you come across you should read through all of the features. If it is only 0% for a limited time what will the interest be later on? Do you need to pay off all of the items that you bought during the 0% time? These cards can save you a lot of money, but if you don’t understand all of the specifics they can also cost you a lot of money.

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