Feb 25 2010

Debt Solutions – Pay Off Credit Card Debt

Category: Credit Card Debt — @ 6:56 am

In 2005, the average American had $8000 dollars of just credit card debt. Of course, the total amount of debt was much higher once you consider a mortgage, personal loans, home equity loans, student loans and a few bucks from mom and dad. Most people have more than one and in some cases a wallet full of the plastic cards. $8000 is a mountain of debt that most people can barely make the minimum payments on let alone try to figure how to get rid of it. Lets look at some options that will help you eliminate that debt.

Adjusting your payments on a credit card can affect your financial picture in the long term. The minimum monthly payments on credit cards use to be 2% of your total debt. If you have $8000 of debt and you are paying the 2% minimum or $10 which ever is more, prepare to pay that card off for 54 years and accumulate $23,000 in interest. The first payment would be $160 and it would trickle down to $10 as you paid the minimum each month. This calculation is based on an 18% interest rate. If you could maintain that payment of $160 each month, you could pay of the same credit card off in just under 8 years and pay less than $7000 in total interest. Just by maintaining your payment, you can see how you can eliminate much faster.

Credit card companies have doubled the minimum payment to 4% now. This has caused some people to file for bankruptcy since they could barely afford the 2% minimum. Now you have to pay $320 instead of $160 if you are the average American. If you can afford to pay that amount, it will take you less than 3 years to pay it off and expect to pay $2000 in interest. By doubling the minimum payment, you can pay it off much more quickly.

Let us also look at interest rates. It is easy to forget to look at the interest rate when making any financial decision. If you have several federal student loans accumulating interest at 3.5% and you have an equivalent amount of money in the bank, most would want to take that liquid money and pay off the student loans. This would be a mistake because you forgot to look at interest rates of investments. If safe and secure bonds are paying you 5% and you are only losing 3.5% on those loans, please do not pay it off. You can invest and pay the minimums on those student loans and capture that 1.5% interest difference. The same goes for credit cards. Pay off the ones that are higher first. If you have multiple cards, pay the minimums on the lowest interest cards and put the rest towards the highest. Once the highest interest rate credit card is paid off, figure out which card has the next highest interest rate and repeat. Do this until you are down to one card and you should be paying that off quite fast if you do not decrease the total amount that you are putting towards your credit cards each month.

As you can see, the more you pay per month will have an astounding effect on your total payments in the end. The first step is to budget yourself so that you can stop using credit cards, the next is to figure out how much you allocate to paying them off each month. Start by being aggressive on the highest paying cards and work your way down. The effects off paying off that debt will help you breathe easier and know that you are back on the right track.

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Feb 23 2010

A $13,942 Credit Card Debt – Mom’s DIY to Remove Negative Items From Credit Reports

Category: Credit Card Debt — @ 8:18 am

As a DIY work at home mom, I decided to remove negative items from my credit reports without getting help from credit repair clinics and attorneys. Initially, I did think of hiring the credit experts to do the tedious tasks of deleting negative items off my credit reports. But with my existing $13,942 credit card debts, paying hundreds or even thousands of dollars to credit agencies or services to repair my credit is simply out of the question.

It’s worth it to pay up to $3,500 for repaired credit but the fact is that there is no guarantee that my credit files are fully repaired. If paying hundreds or even thousands of dollars to remove negative items doesn’t clear my credit reports and raise my credit scores, I might as well use the amount to pay off my credit card debts first and fix the credit on my own.

Have you ever been told that you can not remove negative items from your credit reports yourself and you need a professional agency to do it for you? This is a myth to credit repair that you and I have believed all these years! Attorneys and credit repair clinics would like you to believe the only way to clear your credit is through them. The truth is you can improve your credit better and faster yourself.

It doesn’t matter if you currently have no credit or even very bad credit, you can do the removal on your own. The first thing you need to do is get a FREE copy of your credit report from each Credit Bureau. You are legally able to obtain a FREE credit report every 12 months by calling each Credit Bureau — Equifax, Experian and TransUnion.

Next, you need to go over every line of your reports and look for the errors. Once you have identified the negative items, you need to write a letter and challenge or dispute them. If the items can’t be verified within a reasonable amount of time, they must be removed from the credit reports. By going through the process of disputing items over and over again, it is possible to delete negative items on your credit reports.

Whenever you get the updated reports carefully review them to see if you have lost the negative items and to see if anything else has changed. Don’t be surprised to find that while disputing one negative item, for no apparent reason, another negative item or two have disappeared.

The logic is that many creditors don’t have time to deal with a bothersome piece of paperwork to defend the negative items. If they fail to respond to the credit bureaus’ requests to verify the items, you eventually repair your credit.

Take note that you do not get results each time. Patience and persistence are important keys to success in repairing your damaged credit reports. People who have successfully cleaned their credit report say that they have denied a bankruptcy or judgment and have received verification from the credit bureau that it was in public record. They denied a second time and some even a third time, and finally the credit bureau deleted the bankruptcy from the report.

You can remove negative items from your credit reports if you will spend time reading correct information related to removing negative items on credit reports, little secrets of attorneys and clinics, getting correct government forms and going through the process of disputing items over and over again.

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Feb 22 2010

Credit Card Debt

Category: Credit Card Debt — @ 8:55 pm

If you can’t sleep at night because of credit card debt worries, you’re not alone. Many people get in over their heads charging things they think they can’t live without.

You don’t need to cut up all of your credit cards. Save your major bank cards, but stop charging needless temptations on them. You need a couple of major bank credit cards to maintain or build strong credit scores.

The credit cards you should cut up, department store credit cards, cost you too much in interest. Plus, these types of credit cards lower your credit scores. When mortgage lenders compute your credit worthiness for real estate financing, they deduct points for unfavorable department store credit lines.

Here are a few things you shouldn’t charge on your credit cards:

1. Gasoline. Why charge something that gets burned up before you pay for it? Think about how much per gallon you pay when you pay interest.

2. Food. Many people use their credit cards to purchase groceries that they pay for over the next year or longer. Also, because it’s so easy to pay with plastic, they buy extravagant and unneeded items. What’s more important–junk food or a good night’s sleep?

3. Clothes. Think before you buy clothes on credit. Don’t charge clothes on your credit cards unless you can pay them off right away. Children’s clothes wear out or they outgrow them before you’ve paid off the credit card debt.

4. Utilities. Because it’s so easy to pay utilities with an automatic credit card charge, many people end up paying for their air conditioning when they’re heating their homes. Put your automatic utility payments on your debit card instead.

5. Automatic services. Examine your next credit card statement. Total up items like cable or satellite TV, Internet services, and other automatic monthly charges. Can you pay these charges off each month or are you getting behind?

Make your life easier. Stop charging consumables and monitor your credit card debt. You’ll improve your credit scores and sleep well.

Copyright ? Jeanette J. Fisher.

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Feb 22 2010

How Does Credit Card Debt Affect Your Credit?

Category: Credit Card Debt — @ 2:25 am

As you probably know credit card debt affects your credit. Every time you apply for an apartment, loan, your credit history is pulled to examine your credit worthiness. Information about every account that you have open or closed is listed on your report.

A credit report typically has the names of the companies that issue you a credit card. Information which includes, when the accounts were opened, their highest balances, their lowest balances, their current balances, the credit lines that are on each credit card, when the last payments were paid, the last payment amounts, whether the accounts are open or closed, and whether the accounts are currently in good standing.

The person who is examining your credit will see how much of your account lines have been used. If you have used all of your finance lines that your accounts allow then this negatively affects your credit rating. Having too many open accounts can also hurt your rating because it shows that you rely too much on borrowing money and most lenders look down on that. The last thing they want to see is that you are over extended.

Your credit history will show if you have missed any of your payments or if you have defaulted on any of your cards. If you have defaulted on any of your accounts then this will lower your credit rating and will negatively affect your chances of getting any loans.

Missing too many payments can negatively impact your credit rating and shows that you do not pay your bills on time. If you have credit card debt then you should try to charge no more than half of your credit line on each card; this will improve your rating and will help to keep your credit history under control.

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