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Archive for April, 2012

Using Credit Wisely Is Easier Than You Think

Written by Toi Williams on Apr 30th, 2012 | Filed under: credit cards

Before obtaining a credit card, consumers should know how to use credit wisely.  This is not as difficult as you would imagine, as following a few tips and techniques can help you use your credit card in the most beneficial way.  Learning how to use your credit card correctly will help you avoid financial issues in the future and reduce the amount of stress and anxiety that you feel when dealing with your finances.

Use Credit Cards As Little As Possible

People can get in trouble fast when the balances of their credit cards become unmanageable.  Credit cards carry high interest rates and the balances of the credit cards can skyrocket fast with the addition of interest and financing charges.  To keep your credit card payments from eating up a large share of your household income, you should use your credit cards as little as possible and you should pay for most of your purchases with cash, a check, or a debit card.

Choose Your Purchases Carefully

Every time you make a purchase with a credit card, you should think, “Is this purchase so important that I need to borrow money for it?”  If the answer is no, it probably isn’t worth placing on the credit card.  It is important to remember that credit cards are borrowed money and you will eventually have to repay everything, with interest, to the company that extended the credit.  Instead of using your credit card, it is better to save up until you can pay for the purchase with cash.

Secure Your Credit Card Information

Keeping your personal information secure will eliminate a number of serious problems related to credit cards.  Thieves love to steal credit card numbers and other personal information so that they can obtain items and money for themselves.  Credit card theft costs consumers billions of dollars each year.  Credit card information should only be given to companies and individuals that you know and trust.

Eliminating Your Debt Can Bring Big Benefits

Written by Toi Williams on Apr 29th, 2012 | Filed under: debt relief

Getting rid of your debt can be one of the best goals to aim for because of the wide range of benefits provided.  Carrying a high debt load can be very expensive, with double digit interest rates taking a huge chunk out of the family’s finances.  As time goes on, the amount of interest compounds to increase the balance of your debt quickly, making the debt more difficult to eliminate.  It is never to late to get started on eliminating your debt and you will be very happy that you made the effort once you begin to see the benefits.

More Disposable Income

One of the best benefits of debt elimination is that you will have more disposable income each month.  People with large debt levels have to set aside a large portion of their salary to service the debt and the interest accrued on the debt.  Many people get into trouble when the amount it takes to service their debt exceeds the amount of disposable income they have available and they cannot pay their debts or their other obligations.  Eliminating your debts can increase your disposable income by a considerable amount and you will find that you have more money for other items that are needed to make your life easier or to save in a savings account for the future.

Stop Wasting Money On Interest Payments

Paying interest to creditors has been compared to throwing your money down a deep, dark hole because it provides you with no benefit.  If you are paying interest to creditors, you are paying more than market value for everything that was purchased with the borrowed money.  The interest rate paid for borrowing money through a loan or credit card is substantial and adding interest to the debt increases the balance that you will have to pay off to eliminate the debt.  The faster you can eliminate paying interest, the better off you will be.

Understanding Payment Protection Insurance

Written by admin on Apr 27th, 2012 | Filed under: collections

If you have ever formally lent money to a person and are not yet familiar with Payment Protection Insurance (PPI) then you could be seriously missing out on some of your rights if anything were to happen during the period of the loan. Also known as credit insurance, loan repayment insurance or credit protection insurance, PPI is the insurance that will protect you if your borrower dies, gets sick or becomes disabled, loses their job or faces any other problem that prevents them from repaying their debt to you.

As you might imagine though, PPI is not an absolute right when lending money but instead an insurance product that you can purchase before entering into the loan agreement to protect you against the possibility of non-payment in the future. This type of insurance can be used to protect all kinds of different loans like car loans, mortgages as well as loans from finance companies. Since the laws regarding these sorts of insurance policies can frequently change, it is a good idea to stay up to date on the news regarding your rights for PPI claims in the UK.

While this type of insurance for lenders can be very useful it is also important that they enter into the insurance agreement carefully and choose the PPI coverage that is right for them. In the past there has been some controversy surrounding PPI and the actual amount of effectiveness when applied to a non-payment situation. While some of those concerns were justified, it still remains that if you choose a trusted PPI institution then you will have nothing to worry about should it ever come time for you to make a claim.
Some people wonder why they should ever even bother with PPI coverage and the answer is the exact same reason that it is important to have a health insurance policy. While you never want it to happen, if the worst case scenario becomes reality then it is always better to have something that will be able to back you up so that you don’t end up spending, or in this case, losing a huge sum of money.

So while PPI is often sold to banks it can be purchased by anyone, making the lending process a much safer one. Some people are eager to get into investing as a lender and for those that are weary to put get foot in the door, PPI can help alleviate those concerns.

These Mistakes Can Destroy Your Credit Score

Written by Toi Williams on Apr 26th, 2012 | Filed under: credit score

There are some common mistakes that can greatly harm your credit score and making these mistakes can make it much more difficult for you to get credit in the future.  These mistakes are typically made because people do not realize how harmful they can be and how long it can take to repair the damage to their credit score.  Avoiding these mistakes is one of the best things that you can do for your finances.

Not Securing Your Credit Card Information

Not keeping your credit card information secure and releasing credit card information to unknown parties is one of the biggest financial mistakes you can make.  The world is full of criminals that would like nothing more than to have your credit card information to use any way that they wish.  Thieves generally strike when people are distracted and they can open multiple accounts in your name with very little information.

Repairing the damage to your credit score can take years and cost you a lot of money.  Preventing your personal and credit card information from being stolen is not difficult if you are careful.  Do not give your credit card information to anyone you do not know over the phone or online.

Carrying A Credit Card Balance

Carrying a balance on your credit card can cause a number of issues.  Some people experience a steadily increasing balance that becomes difficult to pay off.  Other problems include increased financing fees and paying hundreds in interest payments to the credit card company.

The best technique is to pay off the balance of your credit card each month so that you are not paying interest and financing fees on the money borrowed.  Paying off your balance each month can also raise your credit score by demonstrating that you can use credit responsibly.  Cardholders that consistently pay off their balance each month are often offered credit limit increases so that they will have more credit available when it is needed.

Bad Habits That Hurt Your Finances

Written by Toi Williams on Apr 23rd, 2012 | Filed under: mindset

There are certain bad habits that many people perform on a regular basis that can harm their financial security and cost them money.  It is easy to adopt these bad habits without thinking and the habits can be difficult to break once they have become ingrained.  Breaking these bad habits has the potential to save you hundred of dollars each year and increase your ability to handle any financial issues that arise.

Forgetting To Check Your Credit Report

There are many good reasons to check your credit report on a regular basis.  Checking your credit report lets you review the information that has been submitted about you for inaccuracies that should be corrected.  The credit monitoring companies are required by law to investigate any claims of errors on your credit report and correct them if inaccuracies are found.

Checking your credit report can also alert you to instances of fraud being committed in your name.  Identity thieves commonly steal personal information and use it to open credit accounts in the victim’s name that can be abused and used to obtain money and merchandise.  If there are accounts that you do not remember opening on your credit report, it is a good indication that you have become a victim of identity theft.

Neglecting To Budget

There are a number of different reasons that are cited by people that refuse to budget their money, but the fact is that it is much more difficult to manage your money if you do not have a budget laid out.  A budget helps you see where your money is going each month and helps you identify areas of overspending that can be reduced to save more money.  The most effective way to take control of your finances is to create a budget and track your spending to ensure that you are sticking to the budget as closely as possible.

Financial Products To Avoid

Written by Toi Williams on Apr 21st, 2012 | Filed under: mindset

Recent innovations in the financial markets have resulted in the creation of a number of new financial products that are sold to consumers as a necessary investment in their future.  Unfortunately, some of these products do more harm than good, requiring a significant investment for very little gain.  The companies that sell these financial products make a handsome profit on the deal, so they have a large incentive to keep selling these products to the uninformed.  Here are some of the financial products that should be avoided.

Credit Card Payment Insurance

Many credit card companies began selling credit card payment insurance to their customers as a way for the customer to ensure that they would not be penalized if they were unable to make their credit card payment for a short amount of time.  For a nominal fee charged to the credit card each month, the company would waive the credit card payments for a predetermined amount of time if the account holder became seriously ill, disabled, or unemployed.  Although this sounds like a good idea for consumers, the amount charged for the insurance is high and the chances that you will qualify for the benefit in the future are very low.  A better idea is to keep credit card balances as low as possible and have enough savings to pay off the credit card immediately if you have to.

Payday Cash Advances

Payday cash advances are used by individuals that need a small loan to handle a financial issue before their next paycheck arrives.  These advances can range from $100 to $1,000 and generally must be repaid within two weeks of obtaining the loan.  The interest rates charged for these short term cash advances often work out to be the equivalent of a 300% interest rate and there are additional fees charged for originating the loan.  In many cases, the person taking the advance cannot afford to pay back the entire amount in two weeks and ends up taking out another cash advance to cover the first one.  There are other solutions available to most people for short term financing and it is best to explore these options and avoid payday cash advances completely.

Steps For Creating An Effective Budget

Written by Toi Williams on Apr 18th, 2012 | Filed under: mindset

Creating a budget is one of the best things that you can do to take control of your finances.  Financial trouble generally occurs when the person is overspending on a regular basis and creating a budget solves this issue by showing you how much you are spending and where your money is being spent.  With a couple hours of your time, you can create a custom budget that helps you spend less and save more.  Here are the steps to creating an effective budget.

Step 1 – Tracking

The first step is to track your spending to see how much you are spending each month.  Writing down all of your transactions shows you what you are spending your money on and identifies areas where spending could be cut.  For two months or more, you should write down every single transaction that results in the exchange of money in a transaction ledger.  The list should include everything from housing and utility payments to fast food and vending machine trips.  Once you have tracked your spending and determined the average amount spent in each category, you can continue to the next step.

Step 2 – Creating

The next step is to categorize your spending and create a budgeting plan.  Create broad categories, such as Food, Utilities, Entertainment Spending, etc., and budget for the most important items first.  At least 10% of your income should be budgeted for your savings account.  If there is any money left over, you can dedicate it to any other miscellaneous categories that you have, like vacation fund or clothing allowance.  The goal is to create a budget that gives you a set amount to spend on necessary items and reduces unnecessary spending.

Step 3 – Adjusting

Adjusting your spending will not be very difficult if the budget was created correctly.  Most of your spending will be payments that you were making anyway, so few changes should be needed.  The plan is to spend less than you earn and make sure that you are saving for the future.

Rules For Becoming A Smart Spender

Written by Toi Williams on Apr 13th, 2012 | Filed under: mindset

Do you want to become a smart spender?  It will take time and commitment as it is very easy to waste money on items that you do not need.  The trick is to manage your spending so that you can obtain the things that you need and have some money left over to save for the future.  By following these rules, you ensure that you are spending wisely and not overspending on items that are unnecessary.

Keep Track Of Your Transactions

The easiest way to get into financial trouble is to spend your money without tracking where it is going.  Keeping track of your transactions can help you identify unnecessary expenses that can be eliminated and areas where you are spending more than you intend.  Create a budget and track how much you are spending in each area to get a handle on your finances.

Control Your Spending

Being able to control your spending will go a long way towards eliminating unnecessary purchases.  Before you go shopping, make a list of what you need to buy.  While in the store, stick to this list and do not go browsing around.  People that shop without a list are estimated to purchase 30% more than they intend on the average shopping trip.

Limit Credit Card Use

Placing lots of purchases on a credit card is sure way to run up unmanageable debt.  Credit card purchases are constantly increasing in cost due to the addition of interest charges and financing fees.  High credit card balances can take years to pay off and cost you thousands of dollars in interest payments before the balance is gone.  Paying cash for your purchases encourages you to spend within your means and keeps you from accumulating debt.

Tips On Acquiring A Credit Limit Increase

Written by Toi Williams on Apr 11th, 2012 | Filed under: credit cards

Increasing your credit limit is not a difficult task to accomplish if you set your mind to the task.  The goal is to have a credit limit that allows you to pay for major purchases with ease.  An increased credit limit can be beneficial in many different ways.

A credit limit increase provides you with more purchasing power and greater financial flexibility.  A credit limit increase allows you to purchase higher valued items or pay substantial bills without having to spend your savings.  A higher credit limit also demonstrates to other creditors that you use credit responsibly, making those creditors less hesitant to issue additional credit to you.

A credit limit increase is typically granted to people that the company has been doing business with for a while or has had a credit card account from the credit card company for a few years.  The company already has a business history with the customer and can look over their own records when deciding whether to issue more credit to a customer.  The credit card company will review the account for compliance with the rules governing the credit card agreement before agreeing to a credit limit increase

It is very important to keep all credit card accounts in good standing if you would like to increase your credit limit in the future.  If the account has had any recent issues, such as a late payment or an over-the-credit limit fee assessed, there is a good chance that the request for a credit limit increase will be rejected.

Creditors like lending money to individuals that will pay back all of the money borrowed, along with all of the interest that is due.  Creditors feel safe extending credit to these people because their credit histories demonstrate that they will pay back the money spent using their credit card.  If you can demonstrate good credit skills and responsibility, you will find that many creditors are interested in doing business with you.

Some Of The Fastest Ways To Get Into Financial Trouble

Written by Toi Williams on Apr 11th, 2012 | Filed under: mindset

There are literally thousands of ways to get into financial trouble, but some ways drop you into a deep pit of debt faster than others.  These mistakes are commonly made by multitudes of people across the nation and cost consumers hundreds of thousands of dollars each year.  Avoiding these mistakes is very important to your financial security, so be on the look out for these debt traps.

Store Branded Credit Cards

Using store branded credit cards is one of the fastest ways to rack up a large amount of debt on items that you do not really need.  Companies entice consumers into obtaining these cards by offering a discount on the first set of merchandise purchased with the card.  These credit cards can only be used at the retailer that issued the card and often carry a higher interest rate than multipurpose credit cards.  The higher interest rates and fees on these cards make every purchase cost more than it should.

Neglecting To Save

Not having any savings available means that you will have to rely on expensive credit to handle any financial emergencies that may arise in the future.  Unexpected expenses, such as medical bills and emergency home repairs, are cited as one of the biggest contributors to high debt levels and eventual bankruptcy.  It is important to save at least 10% of your income and have at least 6 months worth of expenses in your savings account to be able to handle any financial issues that may occur.

Forgetting To Budget

If you are not following a budget every month, there is a very good chance that you are spending more than you intend on items that may not be necessary.  Creating a budget for your monthly expenses will help you take control of your finances and track your spending so that you can see what you have been spending your money on.  It is important to create a budget that leaves some room for fun and entertainment and dedicates a portion of your earnings to savings.