Two simple debt strategies

Two simple debt strategies

With the cost of living increasing day by day, many of us turn to credit cards in order to pay our everyday bills. It is therefore not surprising that credit card debt has become an American epidemic, with people often losing their houses or having to take second jobs to pay off their credit card debt and just to make ends meet.

If you are one of the people who are paying off their credit card bills very slowly or perhaps you’re even missing payments, don’t worry there are solutions for you out there. This website aims at helping people in debt to get out and become debt free.

Here are three simple debt strategies you should be aware of when paying off your credit card.

Debt solution 1 – Consolidate all your loans into one manageable monthly repayment

Debt consolidation is when you put all your loans into one manageable loan. For example, you will find a lender who will pay off your debt for you. Perhaps you have become behind with your mortgage repayments, or your auto payments and of course your credit card bills.

Let’s say you are $1000, the lender will give you $1000 fee to pay off your current debt. You will agree an annual interest rate between the two of you and therefore you only pay the new lender each and every month, as opposed to paying different creditors each and every month.

Now as long as the lender offers you an interest rate lower than what you are currently paying, this makes perfect sense and you should go for it. You will certainly save money in the short and long-term.

Debt solution 2 – Not-For-Profit Debt Management Agency

This is a fantastic solution which not many people are aware of. A debt management program gives you advice, can help you manage your finances and of course help you pay off your credit card debt.

In most circumstances you will discuss your financial situation with your dedicated agent and they will ask you some questions to make sure that you qualify for their assistance.

You will tell them the credit card companies and other lenders where you are paying off a monthly fee, and in most cases they will contact these credit card companies and renegotiate a new fee for you. In some cases, they can even renegotiate the amount you actually owe.

As soon as you have been approved, you will send a monthly check online transfer to the debt management agency who will then pay off your creditors accordingly.

Look around for a not-for-profit debt management agency has been accredited, and you will in most cases not have to pay the service.

Can you be clever and use 0% APR credit cards to eliminate other credit card debt?

Can you be clever and use 0% APR credit cards to eliminate other credit card debt?

If you get offered the use of a new credit card, and the credit cards interest rate is at 0% APR, it may very well be in your interest to use this type of credit card to pay off other credit cards with higher interest rates.

For example, if you owe $1000 within interest of say 5%, you’d be better off transferring this credit card debt to your new 0% APR credit card for as long as the 0% repayments are valid for.

Let me briefly explain to you what APR actually means.

Most people think that APR is the simple interest rate a credit card company or a loan company states is the repayment percentage. This is not strictly true.

APR stands for Annual Percentage Rate. And the APR is a consideration of the actual cost of the credit to you, i.e. the cost of repaying that credit over a specific amount of time.

What you really want to do to make it 100% clear on the exact amount of interest you will be paying for a loan is to ask the credit card company exactly how much you will be paying interest over the specific lending period.

If a company offers 0% APR credit card for a period of six months, they will normally then hike up their APR after the initial six months is over. The reason credit card companies do this, is to lure you in as part of their marketing strategy. They use this 0% APR as a loss leader so to speak, hoping that you will continue using their credit card after the six-month period, and this is where they really make their money off you.

Be clever and read the small print. I’ve known people who have constantly change credit card companies with 0% APR credit card over a five-year period. This means they are literally paying nothing for the money they borrowed, no interest whatsoever.

I hope you enjoyed reading this article about 0% APR credit cards.

Should you use personal loans to pay off your credit card debt?

Should you use personal loans to pay off your credit card debt?

This is a question I am often asked at least twice a week.

Because of the current economy, credit card debt is a very common amongst the middle and working class households of America. Simply, most Americans have more month left at the end of the money (if that makes sense). For this reason, we get ourselves into debt as we see the cost of living increase above the inflation rate.

When people get themselves into debt, and there salaries cannot pay off their debt, they turn to personal loans and even freeing up some equity in their homes to pay off credit card debt that has accrued over many months and in some cases years.

Is this a good idea?

Well using the equity in your property is actually quite a good idea to paying off your credit card debts and overall debt management strategies. You see often the interest you negotiate with your mortgage company will often be considerably lower than the interest you’ll be playing towards your credit card company.

If you are in the lucky situation where you own a home or any other equity, it is certainly a good idea to free up some of your equity to pay off your debts. If however, you do not have any equity be it in your home or your car or any other investments, and you are seeking a personal loan to pay off your credit card debt, then this is a much riskier strategy.

You see, in order to get a personal loan consolidate your debt without any equity, you will be punished by paying extortionate interest rates, as the broker or loan company will insist on a higher return based on the higher risk.

If you had collateral or equity, then the lender would know that they would be paid back the money they lend you one way or another. Without any equity or collateral, there is no guarantee that the lending company will receive their money back; and just like any investments the return is always based on the risk.

Unfortunately some people have to use their 401k further debt relief, however this is not advisable as it can really affect your future. I understand that being in debt, with credit card bills piling up in the mail can be very suffocating… You simply do not know which way to turn. However, please bear in mind that your 401k is your own well-being so I would not use this to pay off your credit card debt.

There are always pros and cons to different strategies to pay off your immediate credit card debt. And really is up to you as an individual to make the decision as you know how it is affecting you both now and in the future.

You can negotiate a better interest rate on any repayments that you owe with beef your car or credit cards. Remember the phrase. “If you don’t ask you don’t get”. It can’t harm you calling your lender and explain your situation and see if they can put the debt management strategy in place for you.

I hope you’ve enjoyed reading this post on whether you should use personal loans to pay off your credit card debt.

How to avoid debt payment scams on the Internet

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How to avoid debt payment scams on the Internet

There are many times you have probably received an e-mail or some other Internet-based communication telling you the person or company will be able to consolidate all your debt repayments simply and effectively, but most importantly cheaply.

These debt scams have been around for many years however become more prominent with the emergence of social media such as Facebook and Twitter.

If you are in debt, you could easily consider parting with your well earned money simply because you feel trapped and you panic about your next moves with regards to pay off your debt. If you have bad credit history, this motive increases somewhat.

Here are three debt scams that are currently doing the rounds on the Internet. Now you are aware of them, and be on your guard.

Debt Scam 1 – The law states you do not have to repay your loans

This scam is almost comical. As if there is a law United States or any country for that matter that will let you off paying back your borrowing. It simply doesn’t matter if you borrowed your house, your car, a holiday or even your grocery shopping. If you have borrowed money you have a legal obligation to pay it back. If you don’t pay it back, it will affect your credit history and in turn you end up in debt. Therefore if you receive an e-mail and it says something like, “have you borrowed money recently and you can’t afford to pay it back? Well you are in luck. There is a US law that means you do not have pay the money back that you borrowed, as the borrower had no legal right to lend it to you in the first place. Please do is give us a call and we will consolidate your debt 100%”.

If you receive an e-mail that is like this all sounds anything like this, it is completely untrue.

Debt Scam2 – Free Government tax loopholes and grants

You have probably received e-mails before that will tell you that you can apply for a free government grant which will pay off all your debts you have accrued over the years and all your problems and credit issues will be gone in an instant. They may sugar coat this for you, by saying you can now use the interest payments money to pay for things like holidays, cars and other shiny objects. If you fall for this you will simply become in further debt.

Debt Scam 3 –We will take over your debt free

There are some instances where ‘companies’ will claim to pay off your debts and take it on themselves at no cost to you. Really! Why would a company want to take on your debts? And how do they make their money? If you hear something that sounds too good to be true, then it normally is. There are some instances however where companies offer very good debt consolidation facilities, however it is never at no cost. So be sure to do any due diligence before signing any contracts.

Thank you for reading this post will be more debt Consolidation advice coming soon.