I remember the lecture my mother gave me a few weeks before my first day of college. She sat me down and said, “I have something important to tell you.” Right about then is when I rolled my eyes and braced for the, “Young men are the devil’s spawn and should not be trusted,” and the, “You are going to a place where there will be great temptations,” speech. What I got was not really a lecture, but a talk about how it was time to start building my credit.

I really never gave that topic much thought. I always thought that getting a credit card was for grown ups, and Lord knows I didn’t quite feel like a grown up at the time. She told me I should start thinking about applying for a credit card. She also warned me if I did so, she would NOT bail me out if I started charging up the world. That alone scared me. I had a full time job, but what if I couldn’t handle the payments? What if I went temporarily insane, and decided to charge everything I could. It was too much for me, and I told her, I didn’t want to hear any more nonsense about me getting a credit card.

She of course persisted for the next two weeks, and I finally told her that I would look into it. I then asked the million dollar question, “How do I find the one that is best for me?” She blank stared me. Then she blink. Then she shrugged her shoulders and said, “I don’t know, that’s your problem.” Cue the crickets.

So there I was, eighteen in 1992, trying to get a credit card, but not knowing where to start. Luckily on the fist day of classes, I was in the school book store and found an ad for a student credit card. Without giving it much thought, I applied and to this day I still have a card from that company. Was that the best way of going about it? Probably not. I suppose if I did the research I could have found a card with a better interest rate, or a better limit.

Now days, the internet has changed the way people research topics. I’ve found the best way to find a good product is to find a site that helps you compare similar products side by side. Are you interested in credit cards that offer airline rewards? How about credit cards that offer hotel and travel rewards? Maybe you are just looking for the credit card that would be right for your business, or one with low interest rates. There are even credit cards for poor credit.

Some people feel loyal to certain credit card companies, it’s only natural when you’ve had them for so long, but why not see if they can offer you a better card? Your time is precious and getting the best credit card for you is important to your lifestyle.

We allow the credit card industry to make fools of us and we do nothing about it. If someone told you that you were being made a fool of, wouldn’t you address the issue? I know I would.

Credit card companies have revenue of $76.03 billion dollars and the majority of this revenue comes from late penalties and over limit and cash advance fees. $29.2 billion came from late penalties, $15.2 billion from over credit limit fees and $3.04 billion from cash advance fees. This amount is 62% of the credit card companies’ revenue and this does not include finance charges. Nice profit!

The above is the reason why credit card companies can afford to mail over 5 billion credit card offers per year. This equals to 6 offers per household per month. Maybe the $2 billion in postage alone is a reason why our government does not look into the credit card industry seriously.

Every bank and retailer wants you to have their credit card. Having their credit card enables them to make huge profits. In 2001 both Sears and Circuit City reported that over half of their corporate profits were from finance related revenue. Do you think this could be the reason why retailers always have an employee at the front door of their store offering you to sign up for their credit card and in return you receive a special gift or extra “so called” discount? Most special gifts and extra discounts end up costing you more than the original purchase due to finance charges.

I may not be able to confront these institutions that are trying to make a fool of me, but I can fight back by believing that “Cash is King” and using cash instead of credit will save me money in the end.

Experts recommend debt consolidation for recovering control over personal money management. Debt Consolidation refers taking one loan in order to pay out other loans. In such case, you only have a tension of serving one debt consolidation loan and can secure a lower and fixed interest rate. You will save a lot of money and will pay your other loans faster if you are able to get a cheap remortgage or a poor credit remortgage at cheaper rate of interest.  Debt consolidation will minimize your hassles of paying so many monthly loans. So, first you have to consolidate all your debts into one debt consolidation loan.

Though it sounds easy to do debt consolidation but there are certain risks and problems involved in it. Debt consolidation too has some negative aspects.  As you must have known by time that we take a debt consolidation loan to pay our other loans and it should acquired at a cheaper rate, but getting a cheaper loan or cheap remortgage is very difficult. You should have a good credit score for applying a cheap loan and if you have been declared bankrupt sometime, it’s even worse.

People are finding it more difficult to repay their loans these days. This results in creating a negative credit history and ultimately it decreases one’s credit worthiness. So, if you are facing a difficulty in getting a debt consolidation loan or a cheap mortgage due to your poor credit score, you should take the help of a financial consultant.  Robert Watts and Roya Nikkhah report says: “Rising interest rates and large credit card liabilities are driving increasing numbers of consumers to take out controversial loans that put their homes at risk. Five interest rates rises over the past 11 months will leave scores of people unable to meet monthly repayments on credit cards, personal secured loans and car finance deals”.

Lots of people are going for Homeowners Loan and secured personal loans. Secured loans also offer far high borrowing levels than unsecured loans. Another point is that the repayment period with secured loans is far longer than with unsecured loans, it simply means that your monthly repayments will be far lower. Secured loans and secured personal loans are comparatively easily accessible to the people who have a poor credit than a standard, unsecured loan because these secured loans are taken against any asset.

You can consolidate all your other loans into one and can pay back with an ease with a secured loan or a secured personal loan. You are saved of repaying several loans and have to keep only one in mind.  Secure loans are very popular and widely available; even you can get a secured loan online too. There are types of secured loans; you can choose the one that suits your needs. One is considered wiser who compares various available deals in many secured loans and then makes a decision based upon it. One should study all about interest rates and other factors before going in for a secured loan.

If you have ever had a loan denied it was probably humiliating, embarrassing, and a harsh reality check.  So much for that bright red Mustang convertible you wanted.  Or maybe it was for an old, beat-up, rusty sedan you thought you could afford to drive back and forth to work.  Sadly, that new five bedroom, brick home with the sun porch is out of reach.  Or was it your last hope for a deposit to rent a simple one bedroom apartment for you and your family.  Some people know before they ever apply for a loan that they will be denied due to a poor credit rating.  Others are completely surprised to find out their credit history is hurting.  How does this happen?

Sometimes it’s just a lack of discipline or good organizational skills.  This leads to poor paying habits and late payments which can damage your credit.  Sometimes it’s temporary circumstances beyond your control such as a job layoff, divorce, illness, etc.   You are forced to choose between putting food on the table and making a credit card payment.  That’s a tough one.  Thankfully, there are ways to improve your credit rating with a little effort.  The following five tips can help.

1. Often, a big part of your credit score depends on your debt to credit ratio.  I’ll give you an example.  If you have a credit card with a $1000 limit and you carry a $900 balance this would make the percentage you owe to the percentage available 90%.  On paper it would look like you were in a credit-tight position.  There are three ways to improve this.

A)Apply for another card.  Whatever the limit is becomes part of the calculation.  If it is $1700 you now have a total limit of $2700.  This brings your ratio down to 33% ($1000 original credit + $1700 additional credit divided by $900 balance=33%).  That’s a big difference.
B)You can do the same thing by asking your current credit card company to raise your limit.
C)Pay down your current balance.  Make it a priority!

2.Always try to pay your bills on time.  Chronic slow or late payments lead to denials or approvals with ridiculously high rates.  If you just can’t seem to remember when to pay bills try using a   personal planning calendar, PDA, or numbered folder.  I use a folder that has multiple dividers numbered 1-31 for each day of the month and additional dividers for each month.  You can get these at office supply stores.  File your bills in the divider where you will see them the week before they are due. Check the folder daily.

3.Get a copy of your credit report and contact the credit bureaus if you find errors.  Ask to have them removed.

4.If you have a credit card for every store you have ever entered….cancel some!  No one needs fifty retail credit cards.  Retail cards are sometimes viewed less positively than bank cards so get rid of them first.

5.Piggyback on the good credit of a friend or relative.  Have them add you to their account (but don’t use it).   Once you’re on, ask the creditor to report this account to the credit bureaus.  Be careful with this one.  Don’t abuse the goodwill of your friend or family member by using the account without asking first!

In our credit-driven society it’s way too easy to bite off more than you can chew.  Throw in a couple of life’s little emergencies and you can quickly get into trouble.  The tips here can be helpful, but I suggest you don’t just use them for temporary gain.  If you go to the trouble to improve your credit, go to the trouble to keep it good. Look at your habits and try to change them if necessary.  I know this is a tough one that we all have trouble with, including me.  Hope this helps.

Getting too deep in debt before you are even out of your twenties is a very bad thing and in this article I am going to discuss with you some very serious matters regarding the ways that debt can absolutely ruin your life and damage your chance of ever having a comfortable future financially. Learning how to plan for your future right now by understanding how not to get too deeply in debt is your key to a much more successful financial future.

Understanding how severely debt can damage your adult life is very important because it is real, it is something that can happen when you least expect it, there is no doubt about that people. Those credit card payments that are draining you each and every month are going to be the death of you. Not literally but financially, it is not looking like a very bright or frugal future at all. Credit card debt can destroy your chances of ever having a good credit rating later on in your life.

Staying away from credit cards, or actually, staying away from TOO many credit cards, is and will be your wisest decision that you have ever made because your financial future will be much brighter because of it and who knows, you might even be able to save yourself some money each month because of not having an overabundance of credit card payments being mailed out each and every month, which would be absolutely wonderful!

Debt from credit cards, mortgages, medical bills and many other things, is all of the reasons why too many people are unable to go one single day without being stressed out about their finances. Debt relief from paying off all of those bills, or atleast some of them, will provide you with a much more comfortable feeling each and everyday, because of not having to worry about whether or not you are going to be able to pay your monthly bills.

Finding help on the internet is another good source of getting the financial advice and information regarding all sorts of debt and why it is so very important to not let your debt ratio get completely out of hand. Letting your monthly payments get out of control is a very bad mistake that far too many people make and if you can learn how not to get in too much debt now, it will definitely help you have a happier financial future.

Learning, no matter how it is you are doing so, is the best way to retain the type of financial knowledge that is needed to guide you in the appropriate path, so that you do not end up in debt trouble. There are plenty of financial and debt advisors out there that can provide you with the appropriate information, hopefully preventing debt crisis from occurring with you.

Do not let debt control you, you learn how to control how much debt you allow yourself to have.

The next 5 steps are not difficult. They only take commitment. You can do it. The feeling of freedom and success when the bills are not hanging over your head will make this all worthwhile.

Ready to get stated? Let’s go.

Step #1. Work out where you are now

You may not have looked at your financial position for a while. Maybe that’s why you are suffering under a load of debt presently. But you need to take stock of your financial position now. Unless you know where you are now, it’s hard to work out how to fix things.

Just get a pen and paper and all your credit card bills and look at the situation honestly. List out all your debts and their interest rates and the minimum monthly repayments.

Don’t get worried about how much you owe. It’s been said that anyone can get rid of all their debt within 5-7 years, including their mortgage. That means you too.

Step #2 Stop spending more than you earn NOW

This is the first thing that must be done to start the ball rolling for your financial success. This is most probably the reason you need to take action now. Look at your living expenses and cut out those things you can’t afford.

Also cut up all the credit cards except one for emergencies and commit yourself to only spending what you can afford from your own income.

Step #3. Find some cash to pay down those debts

Once you have come to grips with Step #2, the next step is to work out ways to put some money aside every week or month to start paying down those debts, preferably faster than the minimum monthly requirement. Pay as much as you can. It’s better to pay down these debts than to put the money in the bank. This is because the credit card interest is a lot more than you can receive from the bank for funds on deposit. The aim is pay down the highest interest debt first.

If you have 2 credit cards with the same interest rate, pay off the one with the smallest balance first. That will give you a boost and the resolve to keep on going.

Step #4. Build a Savings Fund

Once you have those credit cards under control it’s time to think about putting some funds aside to start building some savings. You’ll be surprised how fast your money grows if you religiously keep adding to the balance and don’t touch it. If you really need to purchase an expensive item like furniture or car it is better to save for it than to borrow, if at all possible.

Step #5. Pay Down That Mortgage.

Since the interest rate on your mortgage is usually a lot less than credit card and store debt you can leave this item till last. Also it is increasing in value over time – unlike your car, TV, Video, furniture and boat. You will be surprised how many years you can cut off your mortgage repayments by just adding a few extra dollars each month to the payment.

These a just a few basic rules to help you get back on your feet financially. The main principle here is to work on reducing your credit card debt. Once that is done use those freed up funds to build your nest egg and pay off the mortgage. That’s the plan that works.

Now get those documents out, do the sums and start on your road to financial freedom.

These days credit card or plastic money is very popular and used extensively. It is indeed of great utility if used in a calculative manner, but it is also the main cause that leads many people trap into credit card debt. Let see how it happen to most of people.

Many of retailers are implementing easy payment scheme for their products or services, with some fraction amount of money for monthly installed, you can buy thousand of dollars of items or go for a luxury vacation which you can’t afford to buy if one lump sum of money is needed, these monthly installment are automatically charge to your credit card. Every month, you just pay the minimum amount of your credit card balance and you continue spend on your credit card. Let use a case study to review on how a person credit card debt can grow and how it will take to get rid of it.

Case Study

Scott earn $2,500 a month, he is holding a credit card with interest rates of 12%. All his credit cards allow him to pay a minimum of 3% or $10 which ever is higher. His credit card limit is $15,000.

Scott’s credit card balance at current month is $4,550 ($3000 in principle and $1550 interest). He tends to pay the minimum of his credit card balance and each month he will averagely swipe about $500 on petrol and other utilities.

Let see how’s Scott’s credit card balance grow:

Month 1

Credit card balance = $4,550.00

Minimum Payment = $136.50

New Credit Card Spending = $500.00

New Balance = ($4,550 – $136.50 + $500.00) = $4913.50

Month 10

Credit card balance = $7976.02

Minimum Payment = $239.28

New Credit Card Spending = $500.00

New Balance = ($7976.02 – $239.28 + $500.00) = $8236.74

Month 20

Credit card balance = $11109.85

Minimum Payment = $333.29

New Credit Card Spending = $500.00

New Balance = $11109.85 – $333.29 + $500.00) = $11276.55

Month 30

Credit card balance = $13662.60

Minimum Payment = $409.88

New Credit Card Spending = $500.00

New Balance = $13662.60 – $409.88 + $500.00) = $13752.72

Month 36

Credit card balance = $14961.02

Minimum Payment = $448.83

New Credit Card Spending = $500.00

New Balance = $14961.02 – $448.83 + $500.00) = $15012.19

If Scott continues his practice, his will hit his credit card limit after 36 month compare to current month.

Let say Scott stop using his card with the balance at month 36 of $15012.19 and continue paying the monthly minimum. It will take him 228 months which equal to 19 years to just to pay off his $15012.19 debt.

The above example is just a simple case study to show you how your credit card debt may piles up so quickly without you even aware of it. You need a lot of time and spend a lot of money on interest in order to get rid of this debt. In real life, many people have more than one card and other loans to support; hence situation may even worse.

How to get rid of credit card faster & affordable?

If you are already at this situation, the first thing you need to do is to change your behavior of paying the minimum only. Paying more each month will definitely pay off your debt faster but the question is you may say that you can’t afford to pay more than the minimum. In actually fact, the easiest, faster and affordable way to get rid of your credit card debt is maintain your current minimum monthly payment.

For example, we use back Scott’s case. If he affords to pay the minimum payment of his $15012.19 debt, which is $448.83, this is his affordable payment. If he continues to pay $448.83 every month instead of the minimum of his credit card balance, he will need only 43 months to pay off his debt as compare to 228 months. This mean, Scott will have his debt free life in less than 4 years instead of 19 years.

In Summary

Credit card will remain important in many people life, use it intelligently for your convenient, but you much carefully manage your credit card balance, don’t let this plastic money drag you into financial crisis; the ideal way is pay the balance in full each month.