Cutting up your credit cards

Are you fed up with credit card companies? Are you having trouble paying off your minimum monthly payment every month? Do you wish there was some way to get yourself out of debt quickly and easily? Well, there is. But it starts with one simple step that will help change your life forever: Get rid of your credit cards!

That’s right. While some people can live life with a credit and not encounter any problems, for others out there a credit card can become a dangerous crutch. You start off by paying a few bills off with your credit card when you come up short one month. Next, you’re putting the family vacation on there, Christmas presents or even just some luxurious purchase. And, before you know it, you’re maxed out and wondering how it got this far.

Before it gets too late—or before you even think about applying for another credit card—get rid of the credit cards you have now. By cutting them up, you’ll limit future purchases and spending and help yourself stay out of debt. If you don’t, you’re simply setting yourself up for future troubles with the cards. This is the first step to staying out of debt and eliminating the debt you already have.

Consolidating your credit card debt

Once you’ve cut up your credit cards, it’s important to immediately take the proper steps to reduce your debt quickly without harming your credit score. Credit card consolidation is one simple and easy way to start paying off your debt now in a more effective, less costly way than simply paying off the card every month.

If you were to make the minimum monthly payment on your card every month, it could take you years to pay off your total balance because of high interest fees. However, by consolidating your debt, you can start saving right away simply by making the move.

Consolidation works by taking all your credit card debt, rolling it into one easy-to-manage account and allowing you to attack it together. By doing this, you will also likely receive a much better interest rate on your debt and lower monthly minimum payments, meaning you can maintain your account for less than you would be able to without consolidation and you’ll be able to make payments that actually put a dent into your debt.

For those who want to know about other options, debt settlement might also be right for you. You can opt to make a large payment on your total debt for a discounted price provided you can afford to make a lump sum payment right away. Either way, you’ll save yourself thousands of dollars in the long run.

Watching your debt slip away quickly

No matter what option you choose when you consolidate your debt, it’s important to remember that paying down your debt, not accumulating more, is something that will make a positive impact on your life.

Remember all those sleepless nights you’ve encountered as a result of credit card debt? Remember when you wanted to buy a new home but couldn’t because your credit score was too low? Remember when you tried to score a new job before your potential employer noticed the blemish on your credit report?

No matter the reason, eliminating debt is a great way to change your life. It’s easy to apply for credit card consolidation and even easier to start saving money while doing something good for your life. Get started now and see the difference right away.



By: Dometri Quick

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Do you think you are a typical American citizen? Well, if the answer is yes, your household also has a debt of about $14,500 and you annually spend more than you earn. Not an American – ok, don’t worry! The situation in Canada, the UK or other developed countries is not very different.

But how to get out of debt if you are not able to pay your monthly obligations? It seems difficult to find a solution but the earlier you start in reducing or consolidating your debt, the better. With time it becomes even more difficult.

Many advisors recommend starting with a debt consolidation in order to recover control over personal money management. Debt Consolidation means in general, taking out one loan to pay off several others. This often is done to secure a lower and fixed interest rate and has the convenience that you only need to service one loan instead of many. If you manage to get a considerably cheaper short-term bank loan or you can achieve a mortgage refinancing or a home equity loan, you save a lot of money and will be able to pay back your debt faster or even at once. As a first step you should consolidate all of your short-term debt into one loan in order to reduce your monthly payments. Important: Start with your credit card debt as you usually pay a much larger interest rate than even with an unsecured loan from a bank.

Risks and Problems of Debt Consolidation

You should know that Debt Consolidation has its drawbacks also. First of all it will be difficult to obtain a cheap loan if you have a poor credit score or even worse if you’ve declared bankruptcy.

These days, more and more people are suffering difficulties in servicing all their debt repayments, with the consequence that they are getting negative credit report entries and thus decreasing their credit worthiness. If you don’t get a loan due to your poor credit score you are in trouble and it is recommendable to request help from a professional financial consultant. There are several options for credit repair programs and bad credit debt consolidation [1], which help to improve your credit score and enable escaping from this catch-22. But in recent years, reports in the media have raised concerns about the use of consolidation loans [2,3]. Many people are tempted to consolidate unsecured debt into secured debt, usually secured against there home.

Robert Watts and Roya Nikkhah from the Sunday Telegraph [3] report: “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 loans and car finance deals”. Although the monthly payments can often be lower, the total amount repaid might be significantly higher due to an elevated loan period. There are other alternatives to a debt consolidation loan, where unsecured debt is not “shifted” to secured debt, but is eliminated through a settlement or payment plan. Debt consolidation can be confusing for many people, so it is helpful to learn more about different options [1] before taking a decision.

What consumers need to know is that Bad Credit Debt Consolidation often only treats the symptoms of debt and does not address the root problem. “The problem is that people see their monthly repayments are lower and then go out and spend the difference. They don’t understand the long-term picture or the trouble they’ve got themselves into”, says Mr. Treharne, head of personal insolvency at the financial services group KPMG. Good debt management is 80% made in our heads and only 20% based on financial technical knowledge. Only if we manage to change our behavior, a Bad Credit Debt Consolidation will be a sustainable solution. Everybody knows that this is not an easy task, but there are proven systems for improving Debt Management and achieving our financial freedom.

The first step is as simple as difficult as well:

Stop Spending – stick to your budget!

This is common sense and the traditional Grandma’s way of handling money, but it always works. Statistics show that more and more people forgot this golden rule of money management and pulling them deeper and deeper in the dept swamp. There are hundreds of publications providing systems and money management plans. One of the most known approaches is the “Debt Snowball Plan” from Dave Ramsey [4]. Ramsey’s money Debt Snowball System helped already hundreds of thousands of people change their lives through simple determination and following a plan that works: Stop everything except minimum payments and focus on paying off the smallest debt first. The advantage of this system is that paying off the smallest debt gives you quick feedback, and you are more likely to stay with the plan and keep stepping up to the next larger bill. Once you have a real debt management plan in place, its only a matter of time. Important for the success of the system: avoid using credit cards as you need to control your expenses. Credit card debt is a mayor problem in developed countries and this seems to be a psychological problem of our modern civilization. With plastic money you don’t “feel” the money you are spending and the card remains like new even after using it hundreds of times. Cut out habits that make you spend more and use common sense to control your budget. Only following these “simple” rules, Debt Consolidation will be sustainable and not just a symptoms cure.

Literature

1. Bad Credit Debt Consolidation - Credit Optimization Strategies, Two-Approach Job Assistant and Career Information Guide

2. Wikipedia, The free Encyclopedia

3. Robert Watts and Roya Nikkhah, More people have loans that risk homes, Sunday Telegraph, 7/7/2007

4. Dave Ramsey, The Total Money Makeover (critical review)



By: Oswald J. Eppers

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Demand for debt counseling is at a record high; 17 straight quarterly fed rate hikes, slowing home values (harder to get a debt consolidation loan), rising tuition costs, rising gas prices, bankruptcy reform… the list of consumer catalysts into debt counseling programs just seems to keep growing. But what are your options and which program is right for you? Read on.

First, some startling statistics: there is over $13 trillion in consumer debt out there, and over $2 trillion of it is revolving. When interest rates rise, that revolving debt hits the consumer’s pocket book. For example, it has been estimated that over $2 trillion of mortgage debt that is based on adjustable rates (”ARMs” or Adjustable Rate Mortgages) is going to re-adjust over the next 2 years… increasing American consumer interest fees by over $50 billion! What does it mean, it may mean that you cannot afford to pay your bills, and for many people, that means credit card debt payments are too high to afford which leads to Debt Counseling.

Debt counseling could mean a variety of things, from a traditional debt management plan that cuts interest rates and lowers monthly payments to a more aggressive negotiated debt settlement program that attacks principal as well as interest. Make sure that you sit down and do the budget analysis (http://www.bills.com/guide) and assess your monthly budget. The amount that you can contribute to paying down your debts should be the first step in evaluating your debt counseling options. If you can afford more than 2.5% of your total debt amount in a monthly payment, then credit counseling may be the best debt counseling option. If you can only afford 1.5% of your total debt monthly, then seek help from debt settlement or debt negotiation firms. If you cannot afford to make any payments, then you may want to evaluate bankruptcy in addition to your debt counseling options.

The next step in choosing a debt counseling program is to prioritize what is more important to you: your savings or your credit rating. If you just want to save the most amount of money while getting debt free as fast as possible, then debt settlement may be best. If you are looking to buy a home in the next year or two, and your credit rating is your number one concern, then you will not want to go delinquent on your bills and may want to explore a debt consolidation loan or credit counseling.

With any debt counseling program, it is important to remember that no one size fits all; make sure to shop around and find the best program and an honest and ethical company that has a solid Better Business Bureau rating before jumping in.



By: Brad Stroh

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Is there really a difference between credit card debt elimination and debt consolidation?

The processes are quite different to one another in that debt consolidation is all about rolling your outstanding balances into one easy personal loan with lower interest charges and lower repayments to help improve your cash flow each month.

In contrast, debt elimination is all about creating a plan to eliminate your debt completely - not just carry it over into a different form of loan.

Creating an effective plan to clear all your debt completely depends highly on how much debt you already have and whether or not you’re already behind on any payments.

Obviously the target of your goal is to end up with zero balances on all your outstanding debts. But it’s important to get a clear picture of precisely where you are financially right now so you’ll be able to create action steps to get you where you’re going.

Once these things are determined, you might consider as part of your debt elimination plan consolidating your current balances over to a loan with lower repayments so that you’ll have more available cash at the end of each pay period.

You should also consider your total spending habits at this stage of your planning. Look carefully at what you’re spending now and see if there’s anywhere at all you could cut back.

The real plan kicks into effect once you’ve established your goal (zero balances) and your action steps (reduce payment amounts).

With reduced repayment amounts, you should now have a few extra dollars each month to put toward reducing your debt more quickly.

When people see simple debt elimination plans written down like this, they believe it can be quite a simple process. And they’re right. It can be very simple. The biggest problem comes a few months down the track when a new bill arrives or a surprise repair is required.

Discipline with financial goals is difficult to maintain over the long term for most people and at the first sign of trouble the temptation to get out those credit cards and start spending all over again is very strong.

If this sounds like you, then don’t think you need to work at your credit card debt elimination plan on your own.

There are plenty of debt counseling services available, all willing to help and support your debt reduction goals. In many cases, the specialists can even negotiate with your current creditors for even lower interest rates than you can get on your own.

The easiest way to find out if a debt counselor can help you with your credit card elimination plans is to call and ask questions. You’ll be surprised at how easy it can be with someone at your side to guide you.



By: Roger Vetruba

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It is true that with a credit card you get an opportunity to buy anything instantly then be it a bag or a laptop. It is more like your own personal bank, from where you can draw a good amount of funds at point of time. But unfortunately, we forget that nothing in this world comes for free and even this lucrative financial support can turn into a big bag of debts, if used extensively. But now you do not need to worry about your credit card debts as numerous credit card debt management programs are available in the financial market to take care of all your credit card debts and directs the ways to manage all these debts sincerely.

A decent credit card debt management program constitutes of various effective measures that incorporated in a well planned manner to solve your deplorable debt management. It works on the basic strategy of first taking control of all your debts and then through a steady and gradual procedure all the credit card debts are paid off. As matter of fact, it not only clears your already exiting debts but also offers valuable techniques so that you can keep yourself away from the creation of another list of debts in future. Hence, while taking any credit card debt management plan, do not forget to consider all these steps to ensure a safe and good credit card expense in future.

Anybody, who is trapped in the vicious web of heavy credit card debts, should immediately search for a good credit card debt management plan provider. Nowadays, almost every bank, money lending agency and finance companies are offering the assistance of credit card debt management. However, it is mandatory for you to execute a productive market research before finalizing on any such debt management program. For this purpose, you can utilize the medium of internet where you can find categorized detailed information about their plan, work strategy and offered services. This kind of a research will allow you to draw a comparison between all different plans, so that you can easily pick the one that suits you the most. The company providing these management plans will first of all analyze all your debts as well as the rate of interest you have to pay. Then the financial planners will gauge your repaying capacity, so that an efficient monetary plan can be formulated. From this you can estimate the amount that you have to pay for clearing debts each month. Once this track sheet is prepared, they will then contact your creditors personally to negotiate the amount of debt and the levied rate of interest.

Another major problem with the concept of credit cards is that many people think that if they manage to use multiple credit cards, they can actually avoid the burden of debts. However, it is merely a misconception as with numerous credit cards, you can only increase your number of debts and rate of interest. Thus, if even you have been following the misleading theory of multiple credit cards for evading your debts then immediately reduce your number of credit cards and half of the credit card debt management job will be done.

 



By: ashtongabriel

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Everybody loves shopping and how nice would it be to shop free of cost or on other’s money! Well dreams are big and so are the resources. Today’s techno man loves to spend even money through technology. So he or she gets more prone to using plastic money i.e. credit cards rather than cash. But as all of us know all technologies have their own drawbacks as well. When cash isn’t directly flowing through our pockets you forget how much you are spending actually. And slowly yet strongly you get into the trap of debt ness, a vicious circle which is hard to break. The more you pay off the more is still to pay due to the high rate of interest and late payment fine. The end result is bankruptcy.

How to Save our Soul from Bankruptcy:

Does a large chunk of your monthly income drains towards credit cards bills? Are you falling behind the schedule of credit card repayments? Is your monthly minimum due growing uncontrollably month to month due to late interest charges? Then it’s high time now to settle your credit card debt through credit card debt negotiation. What is this credit card debt negotiation? This negotiation as the name suggests is a way of settling the final amount to be paid to the bank to erase off debt. It’s a win situation for both parties. Bank knows it well that you can’t clear off the bill. So it thinks that it’s better to get a lump sum amount from you rather getting nothing.

The Process behind the Negotiation:

By this method you can reduce anything ranging from 30% to 80% of your final debt amount. The bank and you decide a common amount to be paid by you as lump sum. In return the bank frees you from debt once and for all. After you have paid the amount decided, the bank can no more harass you with further bill payments. For this credit card debt negotiations you can directly go to the bank or else hire a third party. But in this case you have to pay the third party too and the percentage reeducates won’t be very suitable for you. Also the credit card debt negotiation is better than declaring bankruptcy as it is a much messy course of action than negotiating. And it can act as a major drawback in your history of credit card.



By: Article Manager

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There are many people who use their credit cards indiscriminately but do not know how to face their monthly credit card statements. Therefore, if your monthly expenditure exceeds your income then you need to go in for credit counseling. As the name suggests the credit counseling companies help you and provide advice on managing your debts and clearing them. However, even these companies are helpless if you continue to indulge and keep spending without adhering to any financial discipline. Therefore, if you want get control of your finances, work towards curtailing your needs. You must know the right time to approach a credit counseling agency for help. You must seek credit counseling services when you are unable to pay minimum credit card monthly payments and are regularly delayed in paying one or more of your regular bills.

Additionally, you must approach these agencies when you are regularly hunted by collection agencies and your creditors refuse to accommodate you any more. When any of the above listed situations arises, you must seek professional help. However, you need to be really careful in selecting the firm to approach. You must know that many credit counseling firms are set up just to make profits from poor already harassed individuals. Therefore, you must select only those firms that are accredited by the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

In most circumstances credit counseling is done free of cost. Therefore, you must be cautious of companies that demand very high fees to sort out your financial problems. In addition to this, after you have selected a firm, you must ensure that your payments are actually going to your creditors. Many fraud firms are set up in the name of providing credit counseling. However, these agencies fool poor debtors coming to them by not passing there money to creditors or passing the money quite late. An authentic credit counseling agency will never show you rosy dreams of a debt-free future. Therefore, you must always stay away from firms that paint false dreams. You must always try to look for genuine credit counseling companies who can tell you the actual result of low interest rate debt repayment.

A genuine credit counseling agency will inform you that your credit rating will go for a toss if you get a debt repayment plan drawn up. However, you must know that it is better to have a poor credit ranking then moving towards a negative rating due to bankruptcy. You must always keep in mind that bankruptcy can leave a black mark on your file that will last for a whole decade. Remember that creditors like individuals with no financial problems or outstanding debts. This is the goal that genuine credit counseling agencies help you achieve.



By: John Ca. Baker

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found yourself drowning in debt. Credit card debt mainly. It may or may not be comforting to know that you are not alone. Credit cards are too easy to obtain and use. Combine this with our “buy it now and pay for it later” society and you have a recipe for financial disaster.

When you don’t know how to use credit wisely, you can quickly find yourself in a financial hole. A hole that is very difficult to climb out of. Like over-eating, excessive drinking or gambling, over-shopping can be hard to stop. Especially when it is so easy to have everything you want. Just swipe that plastic card at the checkout counter, and bring it all on home.

The need for Credit Counseling is similar to counseling needs for other addictions. You first must realize that you have a problem, and be willing to look for help.

Then do some research to find the counselor that is right for you. Some are non-profit, some are for-profit. Some are government approved, some are not. You can find them on the internet or your local yellow pages. A good place to start could be your local clerk of courts. They may have a division for bankruptcy cases which would have a list of counselors.

A good counselor may educate you on how to wisely use credit, and help you set a budget for yourself so that you do not outspend your income. But what about the debt burden you already have? If your current credit card debt is at least 75% of your annual salary, you will probably never ever be able to pay that off. No matter how good your counselor is.

The credit card companies help to ensure that you cannot pay off your debt by raising your interest rates to excessive amounts. Congress has discussed passing laws to keep credit card interest rates fixed for previously purchased items. But don’t expect that to actually happen. It just makes for good PR for your local congressman.

You must also find a way to eliminate the debt you have. A good debt elimination program will allow you to legally discharge 100% of your credit card debt, without bankruptcy, consolidation, or refinancing. This can be a one-time fresh start on your financial future.

Debt elimination may not be for you. Other solutions may include debt settlement, consolidation, or refinancing your home. Once you have identified that you need a solution, then you need to find a program you are most comfortable with.

Credit counseling may help you learn to live within your means now, but will not help you eliminate the burden you have already taken on. You may combine both counseling and an elimination program to truly get your financial life back on track.

Like the alcoholic, drug addict, or compulsive gambler, nothing will improve your financial situation until you understand that you need help, and you take action to obtain that help. Just stopping the use of your cards is a good start. But the interest will keep building. So every day you wait is another day deeper in debt.



By: Jim Vrana

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