Monday, 23 May 2011

A problem called ‘Credit Card Debt ‘

Credit cards are no more a luxury, they are almost a necessity. So, you would imagine a lot of people going for credit cards. In fact, a lot of people posses more than one credit cards. So, the credit card industry is growing by leaps and bounds. However, the credit card industry and credit card holders are posed with a big problem called ‘Credit Card Debt’. In order to understand what ‘credit card debt’ actually means, we need to understand the workflow associated with the use of credit cards as such.

Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card is a representative of the credit account that you hold with the credit card supplier. Whatever payments you make using your credit card are actually your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount you owe credit card supplier. You must settle your credit card debt on a monthly basis. So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You must pay off your credit card debt by the payment due date failing which you will incur late fee and interest charges. However, you have the option of making a partial (minimum) payment too, in which case you don’t incur late fee but just the interest charges on your credit card debt. If you don’t pay off your credit card debt in full, the interest charges too get added to it. So your credit card debt keeps on increasing, more so because the interest rates on credit card debt are generally higher than the interest rates on other kind of loans/borrowings. Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount. If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last month’s interest too. Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a big amount which you find almost impossible to pay. Moreover, if you don’t still control your spending habits, your credit card debt rises even faster. This is how the vicious circle of credit card debt works.

A bad credit credit card

“Bad credit card card” is used to refer to credit cards that can be obtained even with a bad credit rating. The bad credit card cards provide opportunity to people (with bad credit rating) to improve their credit rating. In that sense, bad credit credit cards act as rescuer for such people. So, bad credit credit cards also act as necessary a training ground for people who have not been able to control their spending urge in the past.

Bad credit card cards are commonly known as secured credit cards. The bad credit card card (or secured credit cards) requires the individual to open up an account with the credit card supplier and maintain some cash balance in the account. Why is that required? Well, credit cards are a business for the credit card suppliers; so how can they trust someone who has defaulted on his/her payments in the past? After all, a business is about profits and such risks are a threat to profits. The bank or the credit card supplier will generally pay interest on the balance in your account. However, it’s best to check this with the bad credit card card supplier/bank. The credit limit on the bad credit card card is determined by the cash balance in the account and is generally between 50-100% of the cash balance. These bad credit card cards are also referred to as debit cards, owing to the fact that they work less in a credit-giving manner and more in a debit-giving manner.

There are plenty of bad credit card cards available in the market. When searching for the bad credit card card that is best suited to you, you should consider 4 things in particular: the minimum balance that you are required to maintain in the bank account, the credit limit that you will receive (i.e. the percentage of your bank account balance that you are allowed to spend on your bad credit card card), the fees/other-charges applicable to the procurement of bad credit card card and the rate of interest that you will receive on the balance in your bank account. An ideal bad credit card card would have no fee/other-charges associated with it and would require zero or a very small amount as minimum bank balance. It would also have something like 90-100% of bank balance as its credit limit. Moreover, an ideal bad credit card card would also offer a good interest rate on the bank balance.

Bad credit card cards are really a good concept that provides respite to people with bad credit rating by letting them enjoy the benefits of credit cards while they mend their credit rating.

5 Tips To Help You Deal With Credit Card Debt

Do you tend to be late in paying your credit card bills? Is your pile of notices from creditors getting higher and higher? Do you fear you might lose your properties because you can't pay off your credit card debts?

Being in deep credit card debt is not a thing that can be easily brushed off or treated lightly. Anyone who's been in this situation knows how terrible it feels. However, if you ever find yourself in deep credit card debt, there are things you can do to make your financial situation not worse that it already is.

Tip #1: Budget right away.

Don't wait until you lose your house. As soon as you find yourself in a bad financial situation, make a budget right away. How much is your income? Does it cover your expenditures? Assess your situation and know which expenditures are vital and which are not. Do you really need to eat out three times a week? Do you truly need to have all the bells and whistles that come with your cellphone plan? Must you shop for clothes every week? Your budget needs to cover all your basic necessities: food, housing, clothes, basic utilities and health-related costs.

Tip #2: Face your creditors.

Many deal with their creditors by avoiding them or running away from them. Dealing with creditors this way only leads to bigger and more serious problems. If you find yourself having a hard time paying off your debts on time, the best way to deal with it is to contact your creditors right away. Disclose to them your reasons for not being able to pay your debts and ask if they can come up with a revised payment arrangement. It's important that you let your creditors know that, while you are in debt, you are very willing to pay it off. Face your creditors. Don't let them reach a point where they pass your situation to a debt collection agency.

Tip #3: Deal with debt collectors.

The Fair Debt Collection Practices Act is a federal law clearly stating that debt collectors cannot bug you, give false assertions or do anything that is not fair when they are trying to collect money from you. Read and understand this federal know so you can properly address debt collectors.

Tip #4: Consider credit counseling.

There are groups and institutions that offer credit counseling for those who need help with their financial problems. A good credit counseling organization can help you come up with an improved payment arrangement of your credit card debts. You can present this plan to your creditors for their approval.

Tip #5: File for bankruptcy.

Filing for personal bankruptcy is a last resort to fixing -- and the legal way of addressing -- your credit card debt. However, keep in mind that if you file for bankruptcy, it will remain in your financial information report for years. Thus, you may find it difficult to get additional credit, buy a house or even get a job with a bankruptcy on your financial information report.

3 Ways To Get Approved For A Business Credit Card

If you run your own business--whether it's a retail store, direct sales, hobby shop or freelance consulting--chances are you've thought about getting a business credit card. It's probably a good idea, since it makes it easy for you to separate your business expenses from your home expenses, a task that helps keep your paperwork organized and simplifies things at tax time. When you're ready to apply for a business card, follow this checklist:

1. Choose a card

Some cards offer special deals, financing or rewards for small business owners. For example, some rebate cards offer you a percentage back on everything you buy at a certain store, like a warehouse store or online store. Other cards offer cash rebates when you spend at supermarkets, gas stations or home improvement stores. If you travel often, a frequent flier or travel rewards card might get you the best and biggest bonuses. Choosing the right reward card--depending on the type of business you operate and the expenses you incur--can mean extra money in your pocket all year long.

2. Gather up paperwork

You'll need basic information about your company's financial situation, including the name of your business, the tax identification number, the business address, the number of years you've been an owner, the number of employees, the nature of the business, the business' average annual income, and the amount in the business' checking account. You'll also need to know the legal entity of your business, such as whether it's a sole proprietorship, a corporation, a partnership, a non-profit, etc.

3. Fill out the application

You can find applications for almost all business credit cards online, although in most cases you can also call and apply over the phone (a good idea if you have any questions). Depending on your credit rating, you may have to provide extra documentation of your business' current financial status, so be prepared to mail or fax information if requested. After you fill out the application, approval can take anywhere from thirty seconds to a month.

To find business credit cards online, do an Internet search or check the websites of major credit card companies.