Debt Payment Sequence

In what sequence should credit card debt be paid off?

Obviously you should pay off your high interest loans first. If the higher interest loans are all on one credit card that is ideal. Focus on paying that credit card off. Next, pay off your lower interest rate credit card debt. In this way you end up paying down your total annual interest at a faster pace.

Remember it is not the total dollar amount of interest that you focus your payments on, but the debt with the higher rate of interest.

Be alert when signing up for credit cards to find a credit card company that will allow you to pay your higher interest loans first. Note that some credit card companies will sequence your minimum monthly payments to pay off higher interest rate loans last.

For example if on one credit card you have a $1000 balance transfer loan being paid off at 4.5%. Then you make a cash withdrawal of $500 with an interest rate of 20% and you also have credit card payments on regular purchases at 15%. Often a credit card company will have your monthly minimum payments pay off the lower interest of the balance transfer first, and then next, the debt of the regular purchases with 15% interest, and then finally, the high cash withdrawal debt and interest. So you end up paying the higher interest rate for a longer period of time. This sequence of payoff prolongs your debt payments substantially.

There are credit card companies that allow you to pay off your most expensive higher interest debt first. Two companies that allow this in the UK are Nationwide and Saga cards. This is the most ideal sequence for paying off your debt: pay off your higher interest debt for a shorter amount of time.

What is the best sequence for handling over-bearing debt?

The first thing to do is to see if you can negotiate the debt down, or negotiate the rate of interest on your debt down.

If you own a home or other property you can possibly obtain a debt consolidation loan. In this case all of our debt is consolidated into one loan with your property used as collateral. Once you have received a consolidation loan you then make one payment monthly on all your debt.

You can approach a non profit consumer credit counseling service. In this case you pay then once a month and they in turn pay all your various creditors. They will also be able to negotiate either a lower debt or a lower interest rate on your existing debt. They can also help to give you some guidance on other aspects of your finances. They can arrange to stop the collection calls that are being made to you.

The final resort would be bankruptcy. Bankruptcy will remain on your credit report for up to 10 years. You are required to appear in Federal Court for one or more hearing. You bankruptcy becomes a matter of public record.

Once you have declared bankruptcy you will no longer be able to use an unsecured credit card, but will need to get a secured credit card. This is a credit card that is secured by a cash fund. This fund is held by the creditor and usually covers 100% of the payments you make with the card. Gradually over time the amount you use to secure the card is reduced, based on your card repayment history. In this way your credit rating is gradually built up again.

Credit in the Naughties

Over the last decade, the economy, credit, and personal finance have been at the forefront. Unfortunately, this increased focus was due to the multitude of problems that have arisen in these fields.  2010 marks the end of an era termed “the naughties” and the beginning of a new decade.  The boom and bust of the naughties was fueled by what many feel was an era of greed and speculation. Will the economy in this new decade improve and will we see new ways of dealing with the current major economic issues?

Here are 10 of the biggest credit issues of the last 10 years.

1. In any given year, roughly 43 percent of Americans spend more money than they earn. This is a big problem that appears to be subsiding thanks to an increasing savings rate.
2. The average family carries more than $8k in credit card debt. This problem is not going to disappear until point number one, spending more than we earn subsides. The easiest way to spend more than you earn is by using a credit card.
3. In October 2003 it was estimated that Americans owed more than $1.9773 trillion. This total does not include mortgage debt.
4. Personal bankruptcies doubled between the years 2000 and 2009. Though this is one of the most common ways of escaping debt and dealing with advanced credit problems, it is not one of the best ways of doing so.
5. New laws were put in place to protect consumers. Credit Card companies have been restricted in the following activities: increasing interest rates with little notice, decreasing spending limits, and credit card cancellation.
6. New laws were also put into effect to protect credit card companies: Consumers who declare bankruptcy will now find it harder to escape from their credit card debt. Credit Card companies are being urged to take more precautions in who they lend money to.
7. The sub prime mortgage crisis began in June 2007 fueled by a decade-long housing boom. Mortgage brokers seeking big commissions talked buyers with poor credit into accepting housing mortgages with little or no down payment Due to a bad economy house foreclosures rose to new heights. For the 12 months of 2008 foreclosures rose 112%.
8. IRS debt is on the rise. This means that more and more people are not paying the IRS the money they owe. Tax debt is a big problem for the United States, as well as those that owe the money.
9. Consumers are not the only ones getting into trouble. Government spending and borrowing is also out of control. In 2007, total debt for the United States, including both private and public sector, grew at a rate of 10 percent.
10. The government is currently facing a debt bill of more than $3 trillion. Much of governments increased spending was geared toward government bail out of many major private financial institutions.

The credit crisis of the naughties has seen the crumbling of the economic foundations of the nation. Will there be major lessons learned for the next decade?

National Debt Levels

If you live in the United States and keep just one eye on the news from time to time you are probably well aware the country is in debt. Not only is this a popular news stories, but there are many websites devoted to the subject as well as a movies and documentaries. Is this a big problem from an economic point of view? Yes, it is important, but it appears that those “in charge” are not overly concerned. Instead, they are letting the national debt grow and grow. Soon enough it may be out of control.

Since September 2007, the national debt in the United States has increased an average of $3.8 billion per day. Yes, that is per day! So you can see just how easy it is for the debt to grow to new levels?

So what is the USA national debt level at this time? Currently, the number stands at roughly $12 trillion. For most of us, this number is so big we have never even seen it written on paper.  It is an exponentially vast level of debt and growing. In fact the number is so large that the national debt clock in Mid Town Manhattan had to remove the dollar sign when the national debt went from $9 trillion to $10 trillion in order to fit in all the digits that were required.  Here is a news clip on this national debt news story.

The number one reason for this debt is the increase in government borrowing. The more money the United States borrows, the more they will have to pay back in the future. Just like consumer debt, national debt grows exponentially over time. The only difference is that the USA national debt involves larger numbers.

Who are we in debt to? This national level of debt does not include the debt of local and municipal governments. The debt is the debt liability of the country or tax payers to lenders within this country and to lenders from abroad, internal and external debt. The US Government borrows by issuing securities, government bonds as well as bills or creating more money supply.

What are the problems associated with government borrowing? Some of them include destabilizing the private sector, and higher interest rates, which are meant to attract new lenders.

Fortunately, it appears that the recession has beaten some sense into both private households and companies. In 2007, total debt for the United States, including both private and public sector, grew at a rate of 10 percent. Now, this number is down to a three percent debt growth rate. The reason for this is that most people and organizations finally saw how much debt they were facing. And with the economy weakening, more and more people were interested in paying off debt as opposed to taking on more.

The national debt by the United States government is a different story.  It will be interesting to see if the government continues to borrow and spend, or finally begins to cut into this debt.  This article is written by staff of Credit Creator.com.

Personal Debt Statistics

More and more Americans are attempting to reign in their debt levels. This is what a recession will do. The fact of the matter is simple: tough economic times show many people just how important their money is. So instead of continuing to spend, they began to pay off debt. In 2007, personal debt increased at a rate of 10 percent. For 2009 this number has fallen off dramatically and is now at three percent. It will be interesting to see if this percentage declines even further over the next couple of years.

Here are some interesting USA personal debt level statistics:

Approximately 43 percent of Americans spend more money than they earn in a year.

The average United States household carries roughly $8,000 in credit card debt.

In the past decade the number of personal bankruptcies has more than doubled. Often bankruptcy is used as a financial tool (almost like a credit cards) by American consumers to handle their debt.

In October 2003, only six years ago, Americans owed a total of $1.9773 trillion. This number has risen significantly since that date. Believe it or not, this number does not include mortgage debt.

The number of Americans facing tax debt is increasing. The reason for this? When the tax bill comes due they do not have the money to pay it, along with other expenses. This forces them to put the IRS on the backburner. The interest charged by the IRS causes this type of debt to increase exponentially over time.

Who is profiting from America’s debt habit? A simple comparison of the rise in consumer debt with the rise in credit card profits is very interesting. Here are some statistics from 2008:

Major USA Credit Card Issuers in 2008:

Chase: $780 million in profits

Bank of America: $520 million in profits

Citi: $530 million overall loss

American Express: $850 million in profits

Capital One: $1 billion in profits

Discover: $710 million in profits

Wells Fargo: $990 million in profits

HSBC: $520 million in profits

US Bank: $1.07 billion in profits

Here are five ways to keep debt collectors from calling or contacting you in any way:

Call and talk to them first. Most people run from debt collectors instead of taking the initiative and calling them from the get-go. Believe it or not, when you show that you are willing to cooperate, it will stop debt collectors from tailing you.

Offer a settlement. One of the best things you can do to get rid of debt collectors is offer a settlement. Not only will this get rid of them for good, but you may be able to pay off your debt for less than what you actually owe. Before you ever pay in full, you should at least think about making a settlement offer.

Don’t let it get this far. Okay, this may not be a fair point, but it is one that has to be made. If you don’t want to keep debt collectors away you should avoid getting behind in your bills. In other words, don’t give debt collectors a reason to call and you will never have to worry about them giving you a hard time. This may be too late right now, but you will have another chance in the future.

Write a letter telling the debt collector to stop. When you do this, they have to legally stop contacting you. The only thing they are allowed to do is send one last letter stating that there will be no further contact. They can also send a notice stating that they or the original creditor is planning on taking further action.

Do you have the money to pay your debt in full?  In this case, you may want to pay your debt in full and say goodbye to the collectors forever. This may not be ideal for some people, but those who know they owe the debt and have the money to pay should consider doing so.

If you are currently dealing with debt collectors you know how difficult it can be. The five tips above are great ways to keep debt collectors out of your life.

How to Use Pre-Paid Credit Cards

A prepaid credit card is not the same as a more traditional credit card. There are details that you need to be aware of such as how to setup, what a prepaid card can be used for, how to use it, and much more. Just like anything else to do with your finances, it is better to get some basic information before you make a final decision.

Here are a few tips that will show you how to use a prepaid credit card:

Setting up a prepaid credit card is simple. You will deposit money into your credit card. However much you deposit will establish your spending limit at that time. If you think about it, a prepaid credit card is more or less a debit card that is not attached to a particular bank account. Instead, you load it with the proper amount of money and when it is gone it is gone. Of course, you don’t have to get rid of your prepaid credit card after the balance hits zero. You can always add more money so you can continue to use it.

Fees do exist. Some people forget that setting up a prepaid credit card can cost a little bit of money. To start, there will be a setup fee which usually does not exceed $10. Find out what the set up fees will be before you begin to setup your card.

But how do I use a prepaid credit card? This is something that many people find themselves asking. Generally speaking, you don’t have to do anything special to use one of these cards. It is used just like a regular credit card. You can use a prepaid card for any kind of useful purchase, such as everything from daily purchases to reserving hotel rooms and rental cars.

Bad credit does not matter. Some people never attempt to setup a prepaid credit card because they feel that their bad credit will hold them back. This is not the case because you are putting money on the card as opposed to relying on credit from the credit card company. This means that you are essentially using your own money. For this reason, your credit score has no bearing on your ability to get started.

No finance charges and no bills. You are using your own money and when it is gone you don’t have the ability to charge anymore. This means that you never have to worry about carrying a balance and getting hit with a finance charge, which can be up to 19% in some cases. Additionally, monthly statements are not sent out for prepaid credit cards; there is no reason for them. Though some prepaid cards will offer this service along with other helpful credit card services.

If you need to use a prepaid card due to a bad credit history, then it is possible to gradually build up a credit history with a prepaid card. You need to read the terms and conditions of the card you wish to sign up for in order to clarify the specific financial institutions conditions and terms for such a possibility in the future. If you have a $1000 spending limit on the card the lending institution will gradually increase your ability to increase the limit.

If you are a parent and would like for your child to have the security of a credit card at college then a prepaid credit card is a good option. You can then have some control over how much money the child is spending and can increase the spending limit or decrease the spending limit depending on how much you put into the card.

Now that you know how to use a prepaid credit card you should ask yourself this question: would this be in my best financial interest?  Here is a selection of some of the best prepaid credit card offers.

Advantages of a Student Credit Card

Have you ever wondered about the benefits of carrying a student credit card? There are many reasons why students should consider applying for a credit card. If used correctly it can be a great advantage.

Here are several of the major reasons:

1. Everyone has to start building credit at some point in their life. A student credit card is a great place to start. This gives young people the chance to begin their credit history while they are still in college. As long as you are responsible you can be rest assured that your credit score is going to increase, and that you will be in good position when you graduate to apply for a car loan, mortgage, etc.
2. Usually a new full time college student would not be able to qualify for a credit card because they are new to the credit market, but banks and lending institutions offer special introductory rates and programs to full time students. It is good to take advantage of these offers. They can include lower interest rates, a reasonably high credit limit and special rewards programs.
3. A student credit card is good for emergencies. As a student you probably know all too well how unexpected expenses can pop up out of the blue. For instance, what would you do if your car were to break down on the way home for spring break? This is a situation that has thrown a curve ball at many unexpecting students. But those with a student credit card can pay for the repairs and continue forward.
4. Managing your credit account teaches responsibility. Every student needs to learn financial responsibility; and the sooner this happens the better. There is no better way to get your financial life on track than to learn how to responsibly carry, use, and pay off a credit card.
5. Can be used for important purchases. How are you going to pay for your books? How about some school fees? It is great to use cash for everything, but this is not possible in today’s day and age. A credit card can help students pay for things they need during their years in college.
6. Don’t have to rely so much on mom and dad. Perhaps the biggest benefit in the student’s eyes is that they don’t have to call their parents anymore when they need money. Instead, they can rely on their credit card to get them through for the time being. Not only does this teach responsibility, but it also teaches the student self sufficiency.

As you can see, there are many great benefits of a student credit card. These are five that should get you thinking about filling out an application.

Personal Finance Blogs

Personal finance blogs are popping up day after day. More people than ever before are interested in sharing advice with others and in the process helping one another to face the challenges of living in our current depressed financial circumstances. As a consumer, no matter your situation, you should consider occasionally reading a few personal finance blogs. Even if you think you know a lot you can still learn quite a bit more, while also meeting other people with similar interests and concerns.

Here are a few ways that personal finance blogs can help you save money and increase your financial knowledge during a bad economic climate:

1. 1. Hear how others are succeeding. You may be able to pick up some great first hand advice from others who are succeeding in ways that you may have never considered. Personal finance blogs offer good information on not only surviving, but perhaps also thriving during a recession.
2. These suggestions and helpful tips are often based on personal experience and therefore bear some weight of authority. In addition, you may wish to ask the writer questions on their experiences in certain areas and thereby improve your understanding of financial opportunities or issues. For example, you may not realize it but your credit score has a lot to do with your personal financial success. If you are lacking knowledge in this area it would be helpful to search for personal finance blogs that touch on this subject matter. There are ways and means to achieve your best credit score, and in turn save money on interest rate expenses in the future and open new loan possibilities.
3. The recession has been and will continue to be tough on many Americans. It will be interesting to learn how others are saving and getting by even when the economy is struggling. Remember the old saying: a penny saved is a penny earned. Financial blogs are full of information on how you can save in all areas.
4. In addition, many personal finance blogs offer tips on where and how you can make a good and useful purchases at great savings. These often include everyday items such as saving on energy use or gasoline use.

If you are interested in learning more from personal finance blogs you can search for this term via Google. Some of the most popular blogs in this niche include: Consumerist, Wise Bread, The Simple Dollar, Get Rich Slowly, and Saving Advice. For a full list of some of the top personal finance blogs check out http://www.wisebread.com/top-100-most-popular-personal-finance-blogs/.

All in all, personal finance blogs can help you in yet unknown ways save money as well as offer helpful tips on how to invest and progress in a tough economy. Take a few minutes each week to catch up on the latest personal financial news!

student credit cards

Are you searching for a student credit card? This can be the case if you are a college student or the parent of a child in this age group. Either way, you need to know that there are many credit card offers for students and teens. Here is some important information about some options. Look for the benefits that most suite your needs

Discover more or less dominates this niche of the credit card industry. They offer many cards that are perfect for students. But even then, you need to narrow down the choices that are offered by Discover. It can be quite difficult to apply for the right offer when you do not take the time to learn the pros and cons of each one.

Here are some of the most popular Discover credit cards for students and teens: Discover Student Card, Discover Student Card Clear, Discover Student Card Monogram Collection, Discover Student Card Tropical Beach, and Discover Open Road Card for Students.  In addition there is Current by Discover, which is a prepaid credit card designed specifically for teens. Which one of these great offers are you going to take advantage of?

When choosing which Discover card is best for you or your teen, you need to know which details are most important. Here are a few tips for choosing the right student credit card:

1. The rewards program. Every Discover card has a rewards program that allows you to earn points towards gifts or cash back. For instance, the Discover Student Card features an unlimited cash rewards program.
2. Interest rate. This is an important detail no matter how old you are. Every Discover student card comes with a zero percent interest rate for the first six months.
3. Set-up and annual fees. Unlike many student credit cards, Discover never charges fees for setting up an account or keeping it active. This can save you a lot of money!
4. Credit needed. As you know, you can only receive a credit card if your credit score is in good shape. The Discover Student Card requires a good to excellent credit rating. All others require only average credit.

There are a lot of credit cards out there for students and teens and you want to make sure you are looking at the best options. You want the best of the best! This is why you should take a close look at what Discover has to offer in terms of student and teen credit cards. You will not be disappointed with the choices and the number of top level features that are available.

See the whole range of Discover Credit Cards.

Student Credit Cards

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Business Credit Cards

If you are like most business owners your career is one of the most important things in your life. For this reason, you want to do whatever you can to make sure you succeed as much as possible. One way you can do this is to take advantage of the benefits of a business credit card. Many companies, big and small, use credit cards to their advantage. If you are not yet doing so you may want to make a change.

Here are a five good reasons a business credit card can help your business:

1. You can build good credit for your business just like you do for yourself. This may not sound like a big deal, but over time it can definitely bring perks to you and your company. Start slow and build your credit over time.
2. With a good credit report on your side you can get lines of credit from partners, manufacturers, etc. This is a huge accomplishment because it allows you to get the products you need when you need them.
3. Access to more cash. What business doesn’t want access to more cash? Money is needed to grow, and sometimes the cash that you have on hand is not enough. Fortunately, with a business credit card you are gaining access to more cash. How much depends on the credit history of your business, and of course, what card you opt for.
4. Your business credit card can earn you cash back and/or rewards points. Do you travel a lot for your business? Do you have salesmen who are always on the road? If so, stockpiling points that can be redeemed for travel perks is a great idea. By paying for plane tickets, hotels, and rental cars with business credit card points instead of cash you can save a lot of money through the year.
5. It is good for your ego! Okay, so maybe this isn’t the best reason to apply for a business credit card. But if you have a small business that is just getting going there is nothing more important than feeling good about yourself. When you have a business credit card you will feel like you are moving in the right direction. And this is a big step in actually making progress. You have to be confident in what you are doing, and a business credit card can help you to do just that.

Business Credit Cards

ChurpChurp | Social Share » Are you an Advocate, an Investor, a Manager or a Hopeful? (Preview) - Mon, 10 Jan 2011
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