My Loans Consolidated

In today’s society it is sometimes hard not to have a credit card at all. There may be times when you have emergencies and not the cash. Possessing a credit card does not necessarily mean to jeopardize your financial health. All you have to do is to know how to use them to your benefit and not to the benefit of your credit card lender. Here are 10 basic principles you need to understand to your credit card responsibly.

1. Remember that your credit limit is not your income.

People tend to feel like they’re flying when their banks offer them a high credit limit. You need to understand that the higher the credit limit, the bigger your responsibility to keep you and your family financially healthy. The credit limit is not your income. Eventually you have to pay back every penny you used with the interest.

2. Avoid Annual Fees

There are lifetime free credit cards that don’t charge you any annual fees. As much as possible, try avoiding paying these annual fees. You can either call your credit card lender and negotiate this or switch to a free annual fees credit card.

3. Avoid Priced Upgrades

Your credit card lender will offer you to upgrade your card to Platinum or Titanium all the time. Usually they charge you a one time fee for that or annual fee. When this happens, insist on free conversions.

4. Avoid Cash Withdrawals

Cash withdrawals are very expensive because they will charge you a transaction fee. Additionally, you will have to pay interest from the date that you withdraw cash, regardless of whether you pay in full or not.

5. Avoid Revolving Credit

Revolving credit means paying outstanding balance only in installments according to your convenience and therefore attracting interest on the balance after your partial payment.

6. Pay more than the Minimum Amount Due

Paying only the minimum amount will get you into an endless cycle of revolving credit. This will become worse and worse and you will have to pay for so much more than you originally bargained for.

7. Pay Your Dues Regularly

Never forget to make any payment no matter what. Even if your finances for one month stresses you out more than usual, try not to skip payments but pay at least the minimum due for that month. If you are out of town or for some reason will not be able to personally make payments, talk to your bank and arrange with them to make the payments automatically.

8. Time Your Shopping

By timing your major shopping 2-3 days before the monthly statement dates of your accounts, you can enjoy a maximum free credit period of 45-50 days.

9. Credit Card Loans

Credit card loans usually have a low fixed rate interest. If you use credit card loans to buy a car, it will cost you less than if you take out a normal automobile loan.

10. Co-Branded Cards

There are service providers that work together with banks to offer co-branded credit cards. Consider taking these offers especially if it is the service provider that you use frequently.

By keeping these 10 principles, you will make your credit cards work for your benefit only.

Popularity: 3% [?]

Until about 10 years ago, credit card companies in Indonesia were able to issue a new credit card in people’s names taken from a database and mailed it to them. Back in the 1960′s, it was legal in America to do so as well. College students have always been targets by credit companies and back in that time, they were able to issue new cards under a student’s name and mailed it to them.

Although this has been banned by the Congress as they began regulating the credit card industry, credit card companies are still aggressively chasing after new young customers like first year college students. Today, the average undergraduate students have a balance of over $3,000 in their credit card. This is the highest record since 1998.

Colleges and universities are not doing anything against this aggression either because credit card companies are generating income for them by renting space on their campuses to set up tables for their credit card offers. By offering coupons or CD’s or even cash for free, they entice students to apply for a credit card right there on the spot.

Getting these students to decide right there, right then to get a credit card is like a trap that these companies are setting up. This will prevent the students from taking their time to read the fine print on their offers. It will also prevent them from doing their due diligence and compare credit cards. Most of these kinds of credit cards come with annual fees that is charged to the new card even before the student makes their first purchase with it. Many charge only low interest rates for an introductory period. But as soon as this period is over, the rates are on the high end compared to other credit cards.

The Congress is being pushed to enact legislation that will make it more difficult for credit card companies to issue a credit card to anyone under the age of 21. They are already considering regulations to end the many deceptive ways that credit card companies are practicing to entice students. This is in addition to new regulations already passed by Federal Regulators and set to become effective in July 2010.

Popularity: 2% [?]

As the Federal Reserve constantly making moves to keep mortgage rates low, the rates remain low and are even falling. According to the weekly report by Freddie Mac, the 30-year old fixed rate mortgage is down to an average of 4.82% whereas last week it was 4.86%. Last year, the average 30-year mortgages was about 6%.

For the past 10 weeks, as reported by Freddie Mac’s chief economist Frank Nothaft, long-term fixed-rate mortgages has been stable below 5%. This was because the US Treasury and Federal Reserve have kepet the rates low through mortgage-backed security purchases which was $136 billion through April by the Treasury and $740 billion through mid-May by the Federal Reserve. Since March, the Federal Reserve has also purchased $115 billion in Treasury bonds.

Despite a drop in housing starts, the National Home Builders Association reported an increase in homebuilder’s confidence this month, May 2009. A continued rise in mortgage application due to refinancing activities has also been reported by the Mortgage Bankers Association. 74% of all mortgage applications are applications for refinancing.

Popularity: 2% [?]

If you are a parent with a child who is leaving for college you should know that they are going to have all kinds of freedom that they never had while still living at home. You are probably already aware that they are going to have new friends, a new community, new hobbies, new habits,… and a whole new world where they are their own decision maker for their lives. They will also have a brand new freedom in deciding their own destination financially.

College students will be bombarded with offers to get a student credit card which on one side can be very helpful in emergencies. But on the other side, if your child is not mature enough in their character and money management, they will start a brand new journey into a deep financial pit by over exercising their freedom to spend. If they have taken out student loans to finance their college education, with their credit card, their debt will be a snare that will take away their freedom and change it into a depressing future very soon.

Before your child leaves home for college, they need to have a solid basic understanding about managing their own finances. Explain to them the consequences of being in debt, including student loan debt and credit card debt and teach them to plan their monthly expenses using a budget spreadsheet. Encourage your child to be aware of the dangers of using credit cards while in school. Students may quickly see the advantages of having a credit card, but they may not be aware that the minute they start overuse it, they and their parents will have a hard time paying the bills in the end.

College students will be bombarded with credit card offers through their email, snail mail, campus displays, college magazine or newspaper or other publications, flyers all over in the bookstores, tables at athletic events… basically everywhere they go. Many fresh high-school graduates are still very immature in their money management and most likely completely financially illiterate. Credit card providers are preying on their immaturity and financial illiteracy by offering credit cards with very few restrictions and without their parents’ consent.

A report from the US General Accounting Office states that 64% of college students have at least one credit card. 42% of them have an average balance in their credit cards of $577. Moreover, 50% of all the college students in the US graduate with the average student loan debt of $19,400. With the burden of student loan debt, the credit card debt will get them even deeper into trouble.

Many college students are reckless when it comes to paying their credit card bills. They dream of having a six-figure income after graduation and think that $20,000 in debt is not that much to repay. But what they don’t know is that putting off payments on credit card bills will result in a worse financial situation than procrastinating about studying for midterm or endterm exams. Make sure you teach your child that by letting the bills pile up while they have no income, the interest on their credit card debt will build up and in the end they will have to pay a much larger bill that they bargained for in the beginning.

Even with a part-time job, a student can easily rack up too much debt from overspending and in the end are not able to keep up and pay the bills. With so many credit card offers constantly flashing in front of them, it is very easy to have 4 or 5 credit cards, or even 9 or 10 from major credit card providers, stores or gas companies. Teach your child that creditors will frequently call them about overdue payments. Very soon the joyful freedom they experienced in the beginning when they first left home for college will be gone, replaced by stress from being in debt. Make them understand that it is way much harder to get out of debt than getting into it.

If your child is in a situation where they really have to have a credit card, teach them these important points:

1. Tell them that there are credit cards with no annual fee and low interest rate. If they are offered their first credit card, tell them not to just take it, but show them to do some research first. Tell them to compare credit cards first.

2. They will be able to control their spending and debt better by only having one credit card and one limit. They will be able to avoid racking up too much debt and also keep track of how much they owe.

3. Teach them to only use the credit card for emergencies and not for shopping. They may need money for medical services, traveling home or other school expenses that their student loan can pay off later.

4. Teach them really to budget their money. If they do not know how to plan their monthly expenses, it is very possible that they will use their credit card for groceries, transportation and entertainment. Make sure they understand how important it is not to use their credit card for other than emergencies.

5. Tell them that all the big-ticket item purchases are for people who have a steady income and can afford to buy them without sacrificing other monthly expenses such as food or clothes. Tell them to wait until after college or save money to buy the item and not use their credit card.

If your child is already deep in debt, they can go and ask for help from credit counseling services where they can help your child with debt management programs.

Popularity: 3% [?]

The most common option that people would go for when considering to consolidate their loan is by taking out home equity loans. This option may seem to make sense because you may get a lower interest rate loan by using your home equity as collateral. This is even better if you are offered a fixed rate instead of a floating rate.

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Popularity: 3% [?]

Although taking out a consolidation loan to help you pay off your debt completely makes sense, you should understand that it should never be your first step in resolving your debt crisis. There is a much deeper issue than just being neck-deep in debt, and finding this issue inside you and fix that first should be something you do prior to taking our a consolidation loan. Who knows, if you eventually find the deeper issue and are able to fix it, you might not need a loan at all.

You need to keep in mind that consolidation loans offer monthly payments that you can repay over a longer period of time, but with a much lower interest. You monthly debt repayment will be lower then but it wil take you longer to pay it off completely.

If you are like most people, who does not fix the deeper issue of their debt problems first, you would take out a consolidation loan with lower monthly repayment but longer period; and after a few months take out another loan, such as opening new credit card accounts etc, in addition to the consolidation loan that you first took out. People with great discipline problems would also apply for a consolidation loan greater than what is actually needed. Within two-three months, after they do not have to pay a huge monthly payment, they take out another loan which would bring them even deeper into problem than before.

People who are taking out a consolidation loan have to remember not to take out a new loan after consolidating. If your deeper problem that has taken you into this financial hole in the first place is not corrected, it is best not to obtain a consolidation loan.

With a debt consolidation loan comes responsibility. The best thing to do before even thinking of taking a consolidation loan is to learn to be responsible. One way to practice your financial responsibility is by learning to live for a few months on a budget, to control your spending. Start budgeting your finances every month. Cut up your credit cards to prevent you from using them. Budget your monthly income so that you start paying off your debt with the smallest balance. When that is paid off, use all the money you used to pay off your smallest debt towards the next debt, and so on.

Give yourself 5-6 months to learn to live on a budget like that. It will be hard in the beginning but the longer you do it, the less you think about it. It will come naturally like breathing. If 5-6 months is not enough, give yourself more time.

Consolidation loans can be a great help. But you need to understand that the key to succeed getting out of debt by taking out a consolidation loan is discipline and responsibility. It takes a lot of discipline and responsibilities to put your overspending to an end.

Popularity: 2% [?]

With today’s financial crisis, more and more credit card companies are becoming more active in order to recover the money that is owed to them. The situation today is that you can actually be sued by your credit card provider for your credit card debt.

So if you find yourself in a difficult debt problem you don’t think you can get out of, the first thing you should seek is debt specialist or financial counselor. But you need to consider and research these points below to find the suitable debt advice for you.

Find recommendations

Before going out finding all these debt specialists advertisements out there, be sure to give your friends or families a call to find out if they could recommend somebody to you. People who have a very good experience with them would be happy to recommend them if they were really impressed with their job themselves.

Look through the Yellow Pages

Not everybody has converted to online marketing. You might find a very old (read: experienced) debt specialist that you can offer you excellent service. You will also find it easier to spot local specialists from Yellow Pages.

Online Research

There are a lot of debt advisers out there in the internet. Make a list of what you find online or offline through the Yellow Pages and jot down their contact details so you can call them up later on. Try and find at least 5 debt specialists that you have a good feeling about. If you want to call them first, don’t give them your information just yet.

Research

When you think you have had enough on your list, get on the phone and talk to them. Find out what their services are, what debt solutions they offer and how much their operating fees are going to be. Ask them also if it was possible to contact one or two of their satisfied clients to have their testimonials.

Make an informed decision

When you have all the info you need, it is time to make the decision. It is a serious issue to enter negotiations over your debt crisis so you would want to make sure that you feel completely comfortable with the company that is going to help you get out of your credit card debt.

If you want to be completely safe about this, it is best to stick with people who are actually affiliated with legitimate nonprofit organizations. These organizations, such as the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies, charge you a reasonable fee only. ‘Reasonable’ here is about $30-$50 for setting up a debt management plan. Even if you cannot afford paying the nominal fee, they will not turn you away.

Popularity: 2% [?]

Some of the largest banks in the whole world offer debt assistance program such as debt consolidation. It is originally only one of the many financial fields that banks cover. But recently, more and more organizations who are only focusing on debt consolidation appear.

A group of people that are working in the debt consolidation field is similar to an insurance agent or mortgage representative where you bought the insurance or mortgage from. They specialize in a particular financial area and as they become more and more experienced, they become familiar with the different kinds of debt situations and they become proficient in applying the products and programs they have to the situations that they come across.

To get the name of a reputable professional that can actually help you get your financial chaos under control, you can contact your attorney or your accountant. Some attorneys or accountants even offer these kinds of services so you might want to ask them first. Just take the time to discuss with them and find out if they actually have the products and services necessary to address your situation. It is better to do this with somebody that you already trust than with a complete stranger whose reputation you don’t really know about.

Another excellent way to find a good and reputable debt consolidation company is by attending seminars about debt or debt consolidation. Check in your local newspaper for debt consolidation seminars advertised there as there should be regularly scheduled seminars in your area. There is nothing to lose by attending seminars like these.

Find the reputable debt consolidation in your area!

Popularity: 5% [?]

Although it may seem impossible to go to college without taking up a loan, there are ways to still pursue your education without becoming a ‘slave’ to your lender when you graduate. One of the better choices out there is to raise the funds needed years before your child even applies for college, and have a cheaper option such as going to state universities where the tuition fees are much lower.

Another alternative to student loan debt is by really working hard while your children are in high school so that they  may qualify for scholarship or government grants for their education. Although you as the parent may help with some of the education expenses, it is not always a good idea to let the children be totally dependent on you. Here are a few reasons why:

1.) Students who are funding their education themselves either wholly or partly, have a better sense of  responsibility. If it is their own money that they are using to pursue their education, they have the tendency to get as much as they can out of their college education. Some students who think they are entitled to receive free funds from their parents keep going in and out of college, because they are taking it for granted.

2.) The sooner your child understands that it is their own responsibility to put themselves through college education, the harder they will work all the way through high-school to try and get a scholarship.

3.) Studying while also working to pay off their own college education will help your child develop good work ethics sooner. Those who even have the chance to work while study may also have the chance to build up their networking for their future job when they graduate.

As most colleges or universities have offices for student services where students can find lists of job offerings, your child will have a great chance to find a part time job while studying. This option is definitely better than to bury yourself or your child in student loan debt. Statistics tell us that one of every four students today leave school with a huge debt on their shoulders. You do not want your child to carry that load when they graduate. If you want to have a bright future after graduation, don’t cloud your present with lots of bills you have to pay later. This includes student credit card bills.

Now if you do not have money, how would you pay for college? Here are some suggestions:

1.) Some students find the time, the energy and the motivation in themselves to work through college. There are many successful stories of students who graduated with much pride and without any debt. The minute they work they are already on their way to building wealth while their friends are paying off their debts.

2.) Obama’s stimulus bill allows tax relief that is worth $2,500 for tuition that is paid in 2009. This tax relief program will also be available next year.

3.) In the college and university’s admission office you can find financial aid by federal subsidy programs and grants. Contact them to see if you are eligible to receive subsidy or grants.

4.) Check in the internet and admission office for scholarship and find out where you can apply for this. Some local businesses and churches also offer scholarship money that you may apply for.

5.) If you really have to take out student loans for some of your college expenses, there are student loans with low interest which don’t require you to pay until after graduation day.

6.) If you are already employed, some employers offer reimbursement programs for the tuition fees which you can claim after finishing a semester with passing grades.

Check as many possibilities as you can because you never know what is actually available for you. Also one good source for free grants for education is the Federal Government grants which you can also check out here.

Popularity: 2% [?]

In addition to help people who are unemployed, the Obama stimulus package also gives debt relief for students. While the student loan limits will not change and therefore may prevent students from going to college, there are some positives in the stimulus plan. Here are the details:

$2,500 in Scholarship Tax Credit
You can claim up to $2,000 as a tax credit from qualified tuition and related expenses. This results in a total tax credit of $2,500 which can be claimed during your first 4 years in college. Before, it was only first 2 years. If you owe only very little in taxes, you can receive a tax refund for up to 40% of the credit.

Items You Can Claim as Tax Credit
Tuition and fees & now course materials for tuition and fees are the things that you can claim as tax credit.

Who is Eligible?
If you are single – phased out if your adjusted gross income (AGI) is greater than $80,000
If you are married – phased out if your adjusted gross income (AGI) is greater than $160,000

Increased Pell Grant Funding
Funding for Pell Grants has been increased to $5,350 in 2009-10 and $5,550 in 2010/11 from $4,731. These Federal Government grants are specifically designed for the lowest income students and do not need to be repaid.

The 529 Savings Plans
If you don’t already know, a 529 savings plan is a tax-free college savings account sponsored by a particular state or group of states and is only allowed to be used for college expenses. This savings plans have now more options where you can use it to buy computers and other technology related items for your college education.

Federal Stafford & Perkins Loan Limited
The request to increase the loan limits for student loans was not included in the final bill.  As student loan lenders continue to reduce their private student loan programs, it is now difficult for students to obtain credit for college.

Popularity: 20% [?]