By now, most budget-conscious girls know the basics about managing credit debt:
- Always pay more than the minimum on your credit card to avoid interest piling up
- Always pay your bills on time
- Don't buy what you don't have the money for
This is the Budgeting Babe's credit card mantra.
However, as I watched Frontline on PBS and learned more about how the industry works, I realized there is much more to consider when using credit. For instance, your payments on a mortgage, unrelated cards and other bills can alter the APR of your existing card. This could have a severely damaging effect on your past purchases.
Let's say you bought a computer and furniture on credit the month you moved into your new condo, when your APR was around 8%. After one late mortgage payment, your APR of an unrelated card can hypothetically raise to as much as 40%! (Typically the increase would not be this dramatic.) Based on your new APR assigned due to an unrelated loan, you will pay much more than originally thought for your initial purchase. The process is perfectly legal.
For more fascinating credit industry tidbits, go to the frontline credit Web site:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/
You can take quizes, learn about the industry and watch the entire PBS show online free of charge. It will make you think twice about using your credit card vs. using your debit card for purchases during the holidays.
14 comments:
I'd recommend paying *all* of your CC debt each month, otherwise it just keeps getting bigger.
Great article.
I referenced it from inside an article I posted today:
Credit Card Management
Nice blog. Please check out my online debt consolidation blog. It is all about online debt consolidation.
Hey, you have a great blog here! I'm definitely going to bookmark you!
I have a debt to income ratio
site/blog. It pretty much covers debt to income ratio
related stuff.
Come and check it out if you get time :-)
Instead of letting the credit card company take advantage of you... take advantage of the credit card company! While many people get sucked into over-spending because of special bonuses and other "tactics", if you use these credit cards wisely, you can save a ton money and earn a variety of benefits.
Probably the most tempting offers made by credit card companies are 0% APR credit cards. While many people look at 0% as being FREE MONEY and get further into debt, if you're smart with these offers, you could save a ton on interest charges and pay off your debt more quickly. If you keep your spending under control, these cards can be a great way to save!
People also get sucked into higher interest rates by applying for reward credit cards. Because these offers normally have higher rates than standard credit cards, many times the "rewards" don't outweigh the increased interest charges. But if you only use these offers for SHORT-TERM purchases you can pay off quickly, you'll be earning added benefits such as airline miles, cash back, rebates, free gasoline and more!
With banks and lending institutions, if you play your cards right... you can be the winner! Use their special bonuses and rewards to benefit you... not them!
ASAP Credit Card
Referenced this article on:
Who reads your credit report
When it came time for me to start looking for a credit card (I only have one) I collected pre-screened applications for 3 months. Then I sat down and threw away anything with variable interests, minimum finance fees and other anonymous or non-specific fees. Then I looked for the lowest interest rate. I ended up with a 7.9% APR and Zero interest for a whole year. Of course I hardly ever use it and when I do I pay it off as soon as I get the bill. But if your looking to save extra pennies to pay off the bills you have, you can find them easily. This is how I save for slightly larger purchases. First I designate a cute little jar labeled "Spare Change", and I well, put every bit of change I come accross in the jar. Next, I start rounding up in my check book. I round all my purchases for checks I write and debit card purchases up to 25cents, 50cents, 75cents, and a dollar. Then when I get my statement each month the difference goes into the jar, usually about $10 a month. I use this to put towards a purchase I really want but wasn't budgeting for or you can use it to add a little extra to your credit card payments!
Hi, Thank you for having this info on the web. I enjoyed your post. If you may have any interest in
debt consolidation student Loan consolidation
then I know where you may get your solution. For your comfort, I have enclosed the link, so if needed you can visit the site. Thanks again for your lovely blog
Credit scores are overated. My credit score is next to nothing yet I have in excess of one million in retirement at 35 years old. The only way to drive up your credit score is to borrow money. I learned a long time ago listening to Dave Ramsey on the radio (www.daveramsey.com) that the best way to build wealth is to forget the credit cards and borrowing money. To this day I've paid off over 30K in loans, and I own my house free and clear.
My family thinks I'm nuts because I have no debt and OH MY GOD "You don't have a car payment".. LOL As dave always says "Live like no one else, so later you can live like no one else".
Cancel the cards and get outta debt for good.
Whoa- I have to put my two cents in! lol
Credit consolidation leaves marks- people should know that. A great resource for all things credit is www.creditboards.com -
Credit is like a muscle- use it or lose it. I too have no bad debt- but I believe firmly that credit is a tool that can help you become financially free much faster, because leverage is everything. It just takes knowing the difference between good debt and bad.
Credit cards can be a wonderful convenience but they can also be destroyer of our future if we use them with complete unconcern. If you don’t want special rewards such as hotel rewards, gas rebate etc, if you expect to always pay your monthly bill in full your best choice can be a credit card with no annual fee and longer grace period.
Never transcend the credit limit on your credit card. Ideally keep your balance about 25 % of your credit limit.
If you have a good credit history, you are a valuable to negotiate with your credit company. Call them and ask about and ask about lowering your interest rate. Undoubtedly, they want to keep you as a customer. This is often possible, but never advertised.
I believe they call that universal default.
consolidation bill and consumer debt rss feed
When someone is dealing with monay troubles it is easy to lose control and end up creating more debt while trying to pay off existing debt! If someone finds themselves in a situation were they are living outside their means they should get some advise from professionals who can help them with their problems and assist in implementing a debt consolidation programme.
Post a Comment