What Is A Balance Transfer And How Does It Works? No ratings yet.

Seeing the current financial circumstances, you must have searched for the ways in which you can reduce your debts and save money. If you really want to make the ends meet and looking for a way in which you can do it then credit card balance transfer is the right choice for you. You choose to swap your credit card balances at all those places where the goods are bought and sold, not knowing you are accumulating debt. So, let us get to know more about the option of balance transfer in detail.

What is a Balance Transfer

 balance-transfer-credit-card.

When you choose a credit card balance transfer, you are actually transferring your debts with other cards. A balance transfer can really come handy in saving money on your existing credit card debt. One of the best things about credit card balance transfer is that you get to pay off your debt much faster. Make sure you have paid attention to the terms and fees before you actually apply for it. It is also important you have a good credit rating in order to have the approval.

Is there a fee for balance transfer

Yes, you have to pay a fee if you are opting for credit card balance transfer. There are people who feel reluctant to transfer their balances just because there is a fee. However, entirely depending on your debt, the fee will be much lower than the amount of interest you have to pay if the debt stays with the original lender.

How do balance transfer work

  • When you have the green signal for transferring your balance, your credit company will get in touch with your creditors. This is when they will go ahead and pay the amount you have sanctioned. Two weeks is the maximum time it will take, otherwise it can also be done in a week time.
  • When you are choosing to transfer your balance, you will indicate who you will be making the payment to, what is the amount you will be paying, and your account numbers, etc.
  • If you have other payments to make before that time, make sure you have made those payments or else you will have to pay the late fees.

Balance Transfer vs. Debt Consolidation: What’s the Difference

Also Read13 Carcinogenic Debt Consolidation Myths You Ought To Know In 2017

What are the different types of balance transfer rates

If you are new card member, you can expect the best transfer rates and usually, it is 0% or low. Credit companies really treat you well and one of the ways of treating you well is by offering incentives such low-interest rates. The main reason behind offering such incentives by these companies is to get your business to them and above all building a long-term relationship with you.

So, while you are transferring your credit card balance, make sure you are aware of the fact that the intro rate is not permanent. The time period will also vary and it will be mentioned in the offer as well. At times, these transfer offers are available on the existing card accounts as well along with promotional  APRs which also have a set time period.

What are things to consider for credit card balance transfer

If you are really looking to save a significant amount of money in interest, then you should go for credit card balance transfer. But, having said that you have to be cautious or else it may prove costly for you as well. If you are still unsure whether you should go ahead with transferring your balance, make sure you have considered the below-discussed points –

Also Read11 Hidden Secrets About Dealing With Debt Collectors

  • Paying down the balance

If you are transferring the balance, it is imperative you have the plan as for how you will be paying it down. If you are making the most of some promotion, make sure you know as for how you are going to pay the balance before the due date of the promotional period. For instance – most of the credit cards offer 0% periods for a maximum of 15 months. But, if you don’t have a positive feel about it, then you can also pay down the balance with that time period. You are also being offered exclusive financing offers where you don’t have to pay the interest, but you need to make full payment for them prior to the end of the promotion. In the situation where you fail to make the payment in full, you have to pay the interest that would have accumulated during the promotional period.

  • Introductory APRs

The decision for transferring your balance should be taken during the promotional period for 0% introductory APRs. In addition teaser rates are also offered if you are a new card holder. As per these offers, you can easily transfer a balance at 0% and the time period also ranges from 9-15 months.

Also ReadZombie Debt: Don’t Get Haunted, Chase Away The Collectors

  • APR

While transferring a balance, one of the key elements you need to consider is the APR on the loan you are transferring from. In addition, you should also consider the APR on the card on which the transfer is being done. The main reason behind transferring a balance is to save money on interest payments. Make sure you have transferred to a credit card with a low APR so that you get to save money. If you have any doubt regarding the APR, you can have a word with the both card companies before you actually transfer.

  • Card use post-transfer

When you are transferring balances, you should also be concerned about how you are going to use the cards once the transfer is done. Do you have plans to use the credit card from which you have made the transfer or you will close the account?

Before you jump to any conclusions, make sure you have considered as for how long you are having the account prior to the transfer and whether closing it will have a negative effect on your credit rating.The average age of your account is a key component in your credit score.

Therefore, is you have an old account, it will prove beneficial for your credit history. On the other hand, if you keep the account open and keep using it, you may not be able to transfer the balance from that particular account in the future.

Also Read13 Practical Ways To Manage Your Credit Card Debt

  • Credit Score Effects

It is important you have considered your credit score before you transfer a balance. If you have faced some issues with your credit in the past, then the odds are high you may not get qualified for the credit card with a decent balance transfer APR. If you have changed the same balance from card to card then also it can have a negative effect on your credit score.

What are the pros and cons of credit card balance transfer

Having a look at the advantages and the disadvantages will give you a better idea of the balance transfer –

Also ReadTop 5 Credit Card Scams In 2016

Advantages of balance transfer

  • You can make the most of a credit card with low-interest rate, especially when you have high-interest rate on your existing credit card. If you transfer a balance to a credit card having a low-interest rate, it can make a dent on your credit card debt.
  • You can also opt for consolidating your credit card debt; this will leave you with fewer credit card bills to pay. When you have plans to move multiple credit cards balances to one single card, you will get deliverance from making payments for the multiple credit cards.
  • You can also shift your balance to a credit card having better terms. If your existing credit card is having bad terms such as short grace period or high fees then it is advisable yocu should move to a credit card having better credit and you should close your old card account.

Also ReadCredit Card Debt Consolidation For Bad Credit – Few Options You Need To Know

Disadvantages of balance transfer

  • Taking into consideration the balance transfer fee, going ahead with balance transfer can prove costly. Before you go ahead with the balance transfer, it is imperative you have taken into consideration the cost of moving the balance.
  • You always have a risk of having more debt.     When you have transferred your balance to a new card, you will have more credit with you. Make sure you have limited yourself from spending on your old credit card; otherwise, you will only end up having more debt than what you have started with.
  • Credit card balance transfer can even hurt your credit score. When you apply and open a new credit card account, it has a straight affect on your credit card. The credit score also gets a hit when you have a credit card balance of more than 30% of the credit limit. Let us assume that you are moving your card balance to a card that is not having enough credit, it can also drop your credit score.

Also Read:How To Manage Credit Card To Increase Credit Score?

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What is Credit Counseling & How It Can Help You Reduce Debt Problems? 5/5 (1)

Getting out of debt without any expert help or advice isn’t for everyone. If you find yourself under some kind of debt, there’s no reason to feel discouraged. Most people need a helping hand to walk them out of their debt. So when you’re seeking help from an outside source to alleviate your financial burden, almost always look for non-profit agencies first. As per the two major non-profit credit counseling trade associations – the National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA) – a near eight million people sought help from their member agencies in 2009. You’re definitely not short of company, there are plenty of debt-stricken people like you in need of help.

What does a credit counselor do?

Credit counseling (known in the United Kingdom as Debt counseling) is commonly a process that is used to help individual debtors with credit card debt settlement through education, budgeting and the use of a variety of tools with the goal to reduce debt.

What is the purpose of credit counseling?

Credit counseling often involves negotiating with creditors to establish a debt management plan (DMP) for a consumer. A DMP may help the debtor repay his or her debt by working out a repayment plan with the creditor.

How Can Credit Counselor Help You Reduce Debt?

Let’s take a look at how non-profit credit card specialists and counselors can help you:

1) They can offer you a free counseling session

Before making you sign up for anything, a lot of nonprofit credit counseling agencies will first spend a good 60-90 minutes with you in an attempt to get an in-depth understanding of your debt situation and overall financial position. While this upfront consultation service is mostly provided free of cost, some reputable firms may charge a nominal fee, usually less than $100. Very often their welcome remarks are something like – what brings you to them today? Followed by a keen inquiry of your short and long term goals. What this does is opens up your mind beyond merely focusing on the immediate hurdle of getting out of debt. They actually encourage you to think about a brighter future.

Also Read – 19 Proven Ways Of Getting Out Of Credit Card Debt 

2) They try to give you straight facts about your financial reality

Counselors like to get the gist of your current financial situation, which obviously requires them to ask details about your earnings and expenses.  They’ll pay a very close attention to your debt, the amount owed by you, the interest rates that you’re paying and how much is wasted upon late fees and over the limit penalties. After they’ve carefully examined these fact, they’ll try to ascertain what’s the best option for you, which entails deciding between such scenarios as changing your financial habits or enrolling you in a Debt Management Plan.

3) They’ll Help Create a Spending plan or Budget for you

If you’re trying to pay down your debt, it’s essential that you create a Spending plan that allows you to live within your means. Creating a Spending plan is a crucial part of a non-profit counselor’s job. After carefully examining your spending pattern, they’ll make recommendations as to where you should try to cut back in order to gain proper control over your finances.

4) They’ll work with you on secured debts as well as Credit Debt

A good counselor, yes it appears we can’t do without this adjective and hence the constant repetition. So a ‘good counselor’ will review both your secured and unsecured debt. The former will include your collateral such as a mortgage, while the latter, mostly the credit card debt. Obviously the foremost priority will be to place you in a situation where you’re still able to purchase groceries, keep the lights on, and pay off your rent or mortgage. Once that has been determined, they’ll try to find the best way to deal with your credit card debt and any other unsecured obligations.

5) If it makes sense – They may recommend a DMP

Under a Debt Management Plan your credit counselor tries to negotiate with your creditor to reach an agreement that allows you to get out of debt within the next three to five years. In last few years there have been millions of cash-strapped credit card holders who’ve enrolled in such plans. In most instances a DMP will:

  1.  Create a three to five years plan to get you debt-free
  2.  Lower the interest rate on your debt to make it easier for you to pay it – it’s mostly below 10% but could be much lower at times.
  3.  Prevent your credit card company from charging you over the limit fees, annual membership fees, and a late payment penalties.
  4.  Freeze your credit card account until you’ve fully paid off your balances. A number of credit card companies even close your account and ask you to apply for a new card once your debt has been paid off.

With that said, it must be noted that a dignified nonprofit won’t recommend a DMP to just about everyone. As per the National Foundation for Credit counseling, 1 out of every 4 people are able to sustain a DMP. The simple fact is that a DMP won’t help you if you are failing to make payments even when your interest rates are reduced or your penalty fees have been waived.

6) They’ll let you know should there be a need to file for Bankruptcy

According to the NFCC, near about 10% of all credit counseling clients should consider bankruptcy. Any good credit counseling agency will inform you if you fit in that 10%. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you can’t apply for bankruptcy without first working with an approved credit counseling agency and a good counseling agency normally provides you with legally required pre-filing counseling. However, it will stay clear of pushing you to use a particular bankruptcy lawyer.

Also Read – Pros and Cons of Your Debt Consolidation Options

7) They’ll gladly let you know their fees

Any reputable credit counseling agency will happily let you know their fees up front and put it in writing. Usually they don’t charge anything for the first appointment. If you enter a DMP, you’ll have to pay a monthly fee which should be just about nominal – probably $50 a month or maybe even less. Still, if you can’t afford to pay that either, most credit counseling agencies won’t turn you away. Both the NFCC and AICCCA membership guidelines clearly state that consumers can’t be denied service based on their inability to pay.

Surely the road to financial freedom is a long and arduous one. If you feel you’ll need some outside help to come to your rescue, and get your finances back on track, then you definitely have to find the right agency for yourself.

Related – Private & Federal Student Loan Debt Consolidation and Settlement

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Don’t Fall For Debt Relief Scams: Tips To Avoid & Protect Yourself No ratings yet.

Millions of Americans are currently indebted on credit cards, medical bills, student loans, and various other unsecured loans or bills. These people are not able to make even minimum monthly payments on what they actually owe. Even all those people who are managing their payments would choose to pay less. Such circumstances tend to make the consumers, with debt, an easy target for debt relief and debt relief scams.

Make sure you have the right knowledge so that you can save yourself from debt relief scams that may cost you more and end up increasing your debt. Such scams often lead to identity theft. The best way is to get familiar with the common debt relief scams and the important tips on how to protect yourself from such scams.

 Debt Relief Scams Tips To Avoid Protect Yourself

Following are some of the common signs that confirm you can be a prey of debt relief scams –

  • They will promise reduced interest rates

You must have come across such claims in promotions on different websites, via emails or phone. First and foremost thing you should know is that no company or law firm can give you an assurance that they will successfully negotiate with your creditor to have a reduced interest rate. You can consider these claims and assurance as red flags.

10 Invaluable Credit Card Debt Consolidation Tips To Help You Get Out Of Debt

  • They will charge upfront fees

If the company is asking you for some amount upfront prior to offering any kind of service then it is completely illegal practice. If the company is not disclosing what they will do and don’t share the charges for offering their services, then also these actions are considered against the law. Such fake companies and firms are only concerned with gaining your personal details and your money.

  • They will claim their programs are backed the government

If it is a fake company, they will advise you to have the legal right to settle your accounts and the government has passed a legislation providing you a right to settle your accounts. Some claims tend to make some people believe that their debts will be reduced, but in actuality, all these are false claims and do not have any relevance.

  • They will offer a fee-based program for bringing down the student loan payments

With a significant rise in the student loans, the scams associated with these loans have also surged. These counterfeit companies will charge for the programs that the student loan programs are already offering for free at www.studentaid.gov. Federal programs offering abridged monthly payments include flexible and income-based repayment plans.

Your Best Options For Paying Off $20,000 in Credit Card Debt?

  • They are not a member of BBB and US Chamber of Commerce

You can easily make out the authenticity of the debt relief company by visiting their official website. Such companies have to be registered with Better Business Bureau and US Chamber of Commerce. A legitimate company will also be a part of associations such as American Fair Credit Council and their official website will have BSI Certificate of Registration. This certificate suggests that they are offering services in accordance with Best Practices for Accredited AFCC Members Checklist.

How to Avoid Debt Relief Scams

If you don’t want to be a victim of debt relief scams, then make sure you have followed the following tips to avoid and protect yourself from debt relief scams

  • Make sure you had a word with the customer support executive. There are chances that these executives are also as sneaky as the details mentioned on the website, but at least you can ask them about the details repeatedly to check the authenticity.
  • Make sure you keep an eye on your accounts. The moment you witness any suspicious activity, immediately cancel your card and file a report.
  • If you are thinking of trusting the reviews given on their official website, then think again. Make sure you have checked the reviews on other websites as well to have authentic information. If the reviews are not in favor then you will know what to avoid.
  • Make sure you have read the complete document thoroughly before you sign up. You should also be aware of any hidden fees that may surface in the later stages.
  • If you want to know the legitimacy of the debt relief company, make sure you have checked its BBB ranking.
  • Make sure you have used a prepaid debit card for your account. That way, the company won’t be able to charge more than what you actually authorize. Above all, they won’t have any access to your funds.

How to choose the best debt relief company

You will come across various companies promising you an average debt reduction. Without a doubt, the results are something you should consider, however, fees, general transparency, and customer support are some of the key factors that you should not overlook.

  • Accreditation

The best and professional debt relief company will be accredited by various organizations such as AFCC (American Fair Credit Council), BBB (Better Business Bureau), and IAPDA (International Association of Professional Debt Arbitrators).

  • Longevity

All those companies which are in business for a longer duration have a reputation to uphold and fewer chances of being involved in malpractices. You can also inquire about the company from your friends and family members about the company’s standing.

  • Clear and Comprehensive Website

When you are in debt, you have so many questions about the debt settlement process. The best debt relief companies will have all the information on their official websites such as fees, services, and related FAQs.

  • Low Fees

You don’t worry about the fees as the best debt relief companies will keep their fees low as compared to their competition.

  • A variety of debts  

All debt settlement programs will settle medical bills and credit card debts. But the best companies will go ahead and settle whether you have student loan debt, business debt or any other particular secured debt.

  • A reasonable timeline

Generally, the duration for settling a debt is two to four years. If you are taking the services of one of the popular debt settlement companies, then there are no specific timelines as the settlement can be done quickly as well.

  • Extensive customer support

With a popular debt settlement company, it is far more convenient to get in touch with the representatives of the company via email or phone. Having chat will be an added bonus. The best companies will assign a program manager, who will function as your contact and advocate the moment you sign up. Such companies will allow you online account management as well.

  • Savings to you

As far as the savings are concerned, the best companies will help you save a minimum of 30% on your debt after paying the company’s fees.

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Secured Debts vs Unsecured Debts – What Is The Difference? No ratings yet.

It won’t be wrong to define credit score as fluid. Even a minute change in the credit report can affect your credit score, this change can be either up or down. A FICO score keeps a check on your payment history, knows the length of your credit history and the amount of debts you have, and whether you have applied for fresh credit. You should be aware of that both the secured and unsecured debts get reflected on your credit report and it influences your credit score as well.

secured debt versus unsecured debt

Before we proceed with the dissimilarities, let us get to know about both secured and unsecured debts –

What Are Secured Debts?

– Also known as liens, this type of debt is protected mainly by a collateral in order to cut down the risk that is involved with the lending like a mortgage. If, as a borrower, you have failed to make a repayment, the bank is authorized to seize your house and they can even sell your house. Just like unsecured debts, the secured debts are also informed to the three credit bureaus.

Secured debt is further divided into voluntary lien and involuntary lien. Let us get in the details of secured debt –

Voluntary lien – It is also termed as a voluntary lien. This takes place when you give your consent of paying money, to the creditor, in exchange for some benefit. The debt is also attached by a collateral, it can also be said that a collateral has secured the debt.

Involuntary lien  – It is, basically, a claim that is being made against the property and there is no involvement of agreement. Even the state enjoys the right to impose this lien. It mainly comprises of –

  • Judgment liens.
  • Real property taxes.
  • Mechanic’s liens.
  • Liens for delinquent income taxes.
  • In some states. landlord liens.

Why secured loans are offered by the banks –

It can prove beneficial for most people as it offers them with an opportunity to have a home loan and along with that it also offers security for the bank. One of the other examples of secured debt is a car loan. When you purchase a car, you will have to sign an agreement that says if you didn’t make the payments (due to any reason) on your car loan, the lender has the authority to take the possession of your car.

How to judge a secured debt ?

There will be times when you won’t be able to make out whether the debt is secured or unsecured. The main reason is that the security agreements are, most of the times, mentioned in small fonts and most of the times people tend to overlook them while buying an item.

The best way to make out between a secured and unsecured debt is by closely reading the contract documents.

ALSO READ – Secured Credit Cards     |     Unsecured Credit Cards

What Are Unsecured Debts?

– There is no requirement for any collateral for these debts. As there is no collateral, it is much riskier for the creditor and this is the reason, as a protective measure, high-interest rate is attached to the loan. Some of the key examples of unsecured debts are – legal bills, personal bank loans, gas cards, medical debts, tax debt, and credit card debts. But prior to exercising this right, the creditor has to file a lawsuit in the court. There he has to prove that the contract is still valid and you have failed to meet the clauses or the points and have a judgment. This means –

  • The loan payment remains the same each month.
  • The time period will be fixed, that is required, to repay the loan.
  • The interest rate also stays the same and cannot be altered during the tenure of the loan.

Well, almost every loan is unsecured in nature, only auto and home loan are two exceptions which are secured.

When unsecured debt is not paid –

If you are not able to make the payment, due to any reason, the creditor will call you to get the payment, he can file a lawsuit, and he can even report to the reporting agency. If he is a nongovernmental unsecured creditor, he is not authorized to seize your assets and for that, he will need a court judgment.

Getting a Court Judgment by the unsecured creditors –

In order to have a judgment, it is important for the creditor that he has filed a complaint in the federal court. The copy of that complaint will also be shared with you. It’s not that the creditor has all the rights, you also have the right to file an answer and contest the lawsuit before the judgment arrives.

Types Of Unsecured Debts

  • Credit cards – Credit card debt is one of the common types of unsecured debts. It has a revolving line of credit nature where you can continue borrowing each month, thus carrying balances over. The best way is to make a payment is to pay more than the minimum each month. If you don’t make timely payments, the interest rate, that is 15.7% on average, can rise considerably to 27% or even higher. The other advantage of paying more than the minimum is that you get to take yourself out of the debt much faster.

Also Read – Credit Card Debt Relief Programs    |     Credit Card Hardship Program

  • Personal Loans – Such loans can be used for multiple reasons such as paying for the home repairs or starting up a business. These loans come with a cap and usually, the bank is behind the funding. Original lending terms will entirely depend on your credit history, so your credit history also bear great significance. When you have a good credit score, the interest rate will also be lower and above all, you get to save a significant amount of money.
  • Business Loans – It has been observed that unsecured lines of credit are being used for cash on demand by the majority of the businesses. Let us assume that an unexpected expense comes out from nowhere, especially the one that affects your business heavily, then this is where the bank credit line can prove handy.

Credit lines can be defined as pools of cash that the business owners can use anytime during the dire straits. Make sure you have the holistic knowledge of the credit line and you should also know how quickly you can have the cash access and what are the interest rates as well.

  • Apartment Leases – Well, rent is not deemed as debt, but when you are not able to pay it, you get indebted to your landlord. If such a scenario arises, your landlord can seek a legal action against you to evict you. However, the good part is that you don’t have any of your belongings at risk of being seized but your debt will be considered as unsecured.

Pros & Cons of unsecured debts –

Pros –

  • You don’t have to worry about getting your assets seized.
  • You get to enjoy shorter repayment term.

Cons –

  • The interest rate is on a higher side.
  • It is quite complicated to get it from a lender.
  • You don’t get to enjoy any tax benefits.
  • You will be allotted lower borrowing amount.

ALSO READ – Credit Card Debt Consolidation   |   Credit Card Debt Consolidation For Bad Credit

Differences between secured debts and unsecured debts –

Let us get to the important part i.e. difference between the secured debts and unsecured debts, here it is –

Secured Debt –

  • There is involvement of collateral as security in secured debt, such as home mortgage loan or a car loan.
  • If you have become delinquent on the secured loan, your assets will be seized.
  • When it comes to secured debt, you can borrow more money and have better interest rates as well because the lender knows that he has the collateral in case you become delinquent.
  • It is imperative that you have paid your secured debt first. The main reason behind this is that you have your assets at risk if you don’t.

Unsecured Debt –

  • In unsecured debt, there no collateral involved, such as credit cards.
  • If you are not able to make the payments, the lender cannot seize your property or any other asset. However, the lender can make you repay using legal methods like suing you.
  • Lenders charge more interest rates or they can also restrict you amount you can borrow.

So, there you go if you have any doubt regarding secured and unsecured debts, then you can refer the above-discussed information.

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Cost of Carrying Credit Card Debt, Stats No ratings yet.

How Much Does Your Credit Card Debt Cost You?

Total Indebtedness

Payoff Principal & Interest @19%

# of Years to payoff debt @ 19%

$10,000

$26,276.59

42 years, 9 months

$15,000

$55,370.41

48 years, 11 months

$20,000

$74,464.22

53 years, 3 months

$25,000

$93,557.98

56 years, 7 months

$30,000

$112,651.77

59 years, 4 months

$35,000

$131,745.58

61 years, 8 months

$40,000

$150,839.39

63 years, 6 months

$45,000

$169,933.22

65 years, 6 months

$50,000

$189,027.02

67 years, 1 month

$60,000

$227,214.61

69 years, 10 months

$70,000

$265,402.22

72 years, 2 months

$80,000

$303,589.81

74 years, 2 months

$90,000

$341,777.43

76 years, 0 months

$100,000

$379,965.06

77 years, 7 months

$110,000

$418,152.62

79 years, 0 months

$120,000

$456,340.27

80 years, 4 months

$130,000

$494,527.82

81 years, 4 months

$140,000

$532,712.48

82 years, 8 months

$150,000

$570,903.04

83 years, 8 months

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Your Best Options For Paying Off $20,000 in Credit Card Debt? No ratings yet.

If you are facing credit card debt, then the situation can be quite scary. You might be wondering how you can get out of the debt and what are your options? Such questions often do make the whole situation more perplexed. So, what you should do to stay on top of your financial situation? If you are facing tough time in paying off your credit cards and want to know your relief options, then refer the below-discussed options. But, before we go ahead and discuss these helpful options, let us first get familiar with the warning signs.

What are the warning signs that shows you have excessive debt?

Below are some of the common warning signs that shows you have too much debt –

  • Living paycheck to paycheck
  • Receiving repeated calls from the creditors asking for the payments.
  • When your request for new lines of credit has been turned down.
  • Only making minimum payments for your credit card bills.
  • Making late payment for bills as you don’t have enough money.
  • When you credit card limit has maxed out.

Need Help Paying Off Credit Card Debt?

pay-off-20000-in-credit-card-debt

These Are Your Best Options

Do any of the above-discussed signs have any resemblance to your situation? You don’t need to worry as there are options available through which you can get your debt under control.

  • Avoid using your credit cards

It may be easier said than done, but it works. You don’t have to be a rocket scientist to use a credit card and you can easily overspend without giving a single thought about it. So, the basic step towards credit card debt pay off plan is to ensure you don’t make more purchases using your credit card.

  • Get all the details right

You need to gather every single detail regarding your credit card that includes paper bills, online accounts, and all the details of the credit cards you have. Then, your next step is to calculate the balances in order to get familiar with the debt you actually have, so that you can have an effective plan to pay that bill.

  • Have a set budget

You can set a budget each month of projected expenses and income. Once you have done this, you actually get to realize if you have missed out any opportunity to direct your money towards paying off the debt. While you may look at it as a laborious job, budgeting can surely help you in eliminating your debt.

  • Make your payments on time

Probably one of the important points here is to make timely payments. If you continue making late payments, the creditors will penalize your payments and often you have to pay high interest rate. So, whether your choice of payment is via mail or online, ensure that it is made on time.

If you are unable to make the minimum monthly payments, then you definitely need to take some extreme step. You will surely be benefitted if you choose to consolidate your debt. Debt Consolidation is a type of refinancing where you combine your multiple debt accounts into one account with a lower monthly payment. With this method, you also get to streamline your debts; this helps you to have one monthly payment, often the interest rates are lower.

  • Make more than minimum payments

If you keep yourself limited to making only minimum payments, then you won’t be able pay off your debt quickly and you will actually end up paying more amount than you actually spent.

  • Concentrate more on the cards having low balances or higher interest rates

You can make a smart move to pay off your credit card debt by paying your smallest balance first. This will help you to attain instant success and above all it will also help in setting pace. According to some financial experts, you should first go for the credit cards with higher interest rate – which helps you to save money in amassed interest. No matter which way you choose, the main focus is towards paying off your credit card debt as soon as possible.

  • Choosing the method of balance transfer

If you are seeking to have a decent credit, then applying for balance transfer can be your best alternative. Using this method, you get to easily transfer your full balance from one credit card to another one that is having 0% interest rate. You will be saving a considerable amount in interest charges and you get to cut down the months from your debt repayment plan as well. Having said that, you have to be extra cautious though, and make sure you stick to the original plan of making consistent payments to bring down your balance.

  • Request rate abatement

You may feel awkward to get in touch with your credit card company asking them to cut down your interest rate, but it indeed works. There is no company that can afford to lose business; therefore some companies will cut down the interest rates to keep you as their customer. It is imperative you are polite while talking to your credit card company but at the same time you should be confident enough to put forward your views as well. In case, the company does not show any interest in working with you, let them know that you will choose to transfer your balance to some other company at a lower rate.

  • Having a good debt relief service provider

Even though you have found the right option to get yourself out of the debt, you have still long way to go. You also need to have a good debt relief program or service provider who can guide you to move in the right direction. Remember one thing, having a good and reputable Debt Relief Company does play a major role in your quest to be debt-free.

Your credit card bills are high and with high interest rates, things are getting out of your hands. Deep down inside you realize that you require an effective way of paying back what you owe. You need to get out of the debt without damaging your credit also. In simple words, you need to have an effective solution that helps you to pay off your credit card bills quickly.

Alas, not every method will prove helpful in getting rid of your debt. The ideal way is to find out a relief plan depending on your financial hardship and while you do that make sure you avoid using all those methods that can make your situation from bad to worse. The following discussed information, in the form of Do’s and Don’ts, will help you make a smart decision.

Credit Card Debt Do’s –

  • Contact your creditors first

While you are struggling with your debts, if you are thinking of not sharing complete information with your creditors then you should think again. The creditors are not that bad at all, they are always interested to keep you as a lifetime customer. You can have a word with your creditors if they are ready to cut down the interest rates, remove the penalties and the fees or to accept a reduced payment until you catch up.

  • Consulting your friends and family members

When you are facing multiple debts, you don’t want the people know what you are going through, ideally it shouldn’t be this way. Most of us have gone through some challenges while using credit. Bearing that in mind, you can sit across with your family members or friends to see if they have also faced such situation and what solutions they used to get out of it.

  • Gather information about the company

The fact cannot be denied that there are multiple companies offering legitimate debt relief services, but along with that there are scams too. Make sure you have checked Better Business Bureau and cross-checked online reviews before you sign on any document.

  • Stick to the action plan

In order to get out of credit card debt, you need to have an effective plan; all you need is to stick to that plan. You should know that you can’t get deliverance from your debt in few years. It may require extra efforts from your side or even may need to cut back your expenses.

Credit Card Debt Dont’s

Now that you are aware of the things you should do, let us take a look at the things you have to avoid –

  • Avoid using a solution without having knowledge of the cost

No matter what option you finalize to get out of the debt, it does have a cost – there is a balance transfer fees of 3% per balance that you choose to move, there are interest rates for consolidation loans, and even debt management programs have their own fees. So, make sure you are aware of the cost element before signing for a debt relief option.

  • Avoid using credit cards

Till the time you have eliminated your debt completely, make sure you avoid using credit card. It has been seen quite often that people tend to start charging before they have paid off their debts completely, make sure you don’t commit such mistake. Yes, while you using a relief plan, you can use your credit cards, but it does not mean that you actually should.

  • Take expert advice

Yes, you are facing tough time paying off your debts but it’s not that this problem is unsolvable. You should take expert guidance and make sure you don’t feel embarrassed sharing your problem with your friends and family members. There are so many credit counselors who can help you get out of the debt. They are there to help you out and they are not going to laugh at your sufferings. These experts have years of experience in dealing with such situations and will be able guide you in a better way.

  • Avoid the old bad financial routine

Once you have dragged yourself out of the debt, it is important to stay that way. You can go online and learn how you can use your credit cards tactically so that you don’t have to deal with the debt problems again in the near future. Developing better financial habits can really prove helpful in maintaining your fiscal health.

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11 Hidden Secrets About Dealing With Debt Collectors No ratings yet.

If you are falling behind on your payments, the debt collectors will keep bothering you by calling time and again. But, you don’t have to feel intimidated and in fact, there are ways in which you can handle the debt collectors. Let us get to know more about the debt collection and the ways in which you can avoid debt collectors –

What is debt collection?

In the event when a debt is not paid for a certain period of time, it gets reported as ‘delinquent’. After a specific period of time, the creditors or your credit card company will quit trying to collect the debt. There are probabilities that your creditor may sell your debt to some third-party debt collecting agency in order to have at least some amount back and finally remove the debt from their record.

Earlier, it was your creditor who was sending you the bills. However, since you still have outstanding debt, the new debt collection agency will send you the notifications and reminders to pay off your debt.

dealing with debt collectors

Who is a debt collector?

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them. Here are some questions and answers about your rights under the Act.

Related post: Credit Card Debt Consolidation For Bad Credit

How to deal with the debt collectors?

Let us get familiar with the tips for dealing with the debt collectors –

  • Get the details in writing

As per the Debt Collection Act, the creditor or the collection agency, within five days of contacting you, should send you a written document stating the owed amount, the name of the debt collection agency or the collector, and what action to take if you have the belief you don’t owe the amount.

  • Go ahead and make the call

It is appreciated when you yourself give a call to your debtors. Mr. Bovee, who is the founder of Consumer Recovery Network, is of the view that people tend to have an altogether new mindset when they are the first ones to make a call to their creditors. When you are the one who is giving a call to your creditor, you are more prepared with a set strategy and know what exactly needs to be told.

Related post: Credit Card Debt Consolidation

  • Stay Composed

While you are having a conversation with your creditor or the debt collection agency representative, make sure you are calm and composed. If you lose your cool, you are going nowhere and you will only make things harder for yourself. If you don’t feel comfortable talking to your creditor at that moment, you can always ask your creditor that you will give him a call later. You can also tell your creditor that you will be recording the conversation; this will make your creditor to behave while having the conversation.

  • Know Your Rights

When it comes to debt collection, the debt collection agencies, usually, leave no stone unturned to traumatize you. This is where you should be familiar with the Debt Collection Act that has so many things that the debt collectors or your creditors can’t do. Following are the things you should be familiar with –

  • Misstatement of the debt amount.
  • Use of foul language.
  • Wrongly claiming to be a debt collection representative.
  • Calling before 8 am or after 9 pm unless you have given the confirmation.
  • Intimidating to sue unless they actually have plans to take a legal action.
  • Annoying you by calling time and again.
  • Calling you at work even you have asked them not to.

Related post: 13 Carcinogenic Debt Consolidation Myths You Ought To Know In 2017

  • Discuss with an attorney

It is always better to seek the assistance of a consumer law attorney or bankruptcy attorney. Most of these attorneys provide a free consultation. A consumer law attorney will make you understand whether collection actions, used by your creditor or debt collection agency, are legal. A bankruptcy lawyer will guide you what the collection agencies can and cannot do to collect from you. Some attorneys offer both services as well.

  • Ask Questions

If the creditor or your debt collection agency says you will be sued or your property will be seized if you don’t pay, you don’t need to worry and you should ask for the specifics. When should you expect to receive the notification for the lawsuit or when will the collection agency take the money from your bank account? Be aware, some of these threats can be false as well, so try to gather more information about this, it would only come handy.

Related post: Top 12 Debt Calculators To Steer Your Way Out Of Debt

  • Take Notes

Make sure you have the pen and a paper ready while you are having a conversation with the collector. It is important to note down the name of the person with whom you are having a conversation, the time of the discussion, and what was the discussion about. Don’t, by any chance, overlook the significance of these details. All these details will help you to have a record whether the creditor or any representative from the collection agency has broken the laws.

  • Save the emails

If you are having a conversation with your collector via emails, make sure you don’t delete them. In fact, such conversations have great significance and make sure you have read all of them thoroughly.

Related post: Your Best Options For Paying Off $20,000 in Credit Card Debt?

  • Know how much you can afford

It is always better to take some time out and decide the amount you can comfortably afford and make sure you only agree to that amount only. One of the best ways to work out the best debt settlement is to be able to make a round figure for paying off the debt. If you have given confirmation to a payment plan, there are chances you will end up paying more over time. If you do express your confirmation for a payment plan, it is important you have understood that total amount that you will be paying.

  • Have a discussion on your terms

It is important to know you don’t have an obligation to have a word with the debt collectors whenever they want. Yes, you do have a choice, so it is advisable to wait until –

  • You have a pen and a paper.
  • You have reached your home.
  • You are prepared with a script as whatever you will say will be recorded.
  • You are in a quiet and comfortable place.
  • You feel calm and relaxed.

Related post: 19 Proven Ways Of Getting Out Of Credit Card Debt

  • Stay Prepared

Make sure you have a Debt Collector Call Script  ready. You can have a script like this – “Before I say anything, it is important you prove to me that you are entitled to inquire me about my debt. It is my humble request to send me a debt verification letter and make sure you send it on the company’s letterhead”. Organize all your financial documents in such a manner that it helps you to answer all the questions easily and above all quickly.

If you are finding it difficult to come up with an effective repayment plan, you can take the assistance of a credit counseling agency that will do all the debt negotiations on your behalf.

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Your Options To Get Out Of Credit Card Debt No ratings yet.

BEGIN WORKING TOWARDS DEBT RELIEF TODAY!

If you’re struggling with credit card debt problems, you are definitely not alone. Millions of Americans are struggling with high credit card interest rates, unstable employment, and a fear of their unknown financial future. If you are looking for a way to resolve your credit card debt, there are many options available and the solution that’s right for you depends on your specific circumstances.

Below is a brief introduction to some of the various debt relief options for your review so that you will be better educated about debt relief options.

cost-of-carry-credit-card-debt

1. Do Nothing – Continue Making Minimum Monthly Payments

Many people struggle to make their minimum monthly payments. With credit card interest rates generally above 15%, it could take up to 30 years to payoff $30,000 of debt. At 25% or higher, it is virtually impossible to pay off your debt by making just minimum payments. This is compounded by the fact that minimum payments merely cover interest and little or no part of the principal balance is being paid down. Credit card companies make more money the longer you stay in debt.

If you are facing a financial hardship and maintaining minimum payments is too difficult for you to make ends meet, our program may be able to help you to negotiate reductions on your debt, avoid bankruptcy, and come to an agreement with creditors.

2. Bankruptcy*

Bankruptcy is usually a last resort – most people file for bankruptcy only if they have no other choice. While bankruptcy can possibly erase most debts completely, it creates a public record that stays on your credit report for up to 10 years. This can make it hard to be approved for a car loan, home loan or refinance, obtain life insurance, or even get a job. Because of the long term challenges a bankruptcy can create, it’s important to carefully consider bankruptcy before proceeding.

Chapter 7 Bankruptcy is a straight bankruptcy and requires a liquidation, or sale, of all of your assets that aren’t exempt. Bankruptcy basically wipes out all your qualified debt and you start fresh all over again. However it has become more difficult to qualify due to the stricter bankruptcy reforms of 2005. Regardless of whether you qualify, you may want to avoid a bankruptcy for your own personal reasons.

Chapter 13 bankruptcy is a little different. This is a reorganization of your existing liabilities but allows people with a steady income to keep ownership of exempt property. The court orders that you pay all your disposable income to a court appointed trustee, who in turn disburses payments to your creditors in a repayment plan over a duration of 3 to 5 years.

If you have questions about bankruptcy or are considering it as an option, we advise you pay to retain an experienced bankruptcy attorneylicensed in your state.

3. Consumer Credit Counseling

 

Credit counseling services allow you to work with a certified credit counselor to devise a plan that is tailored to your specific needs and goals. They do not erase or reduce the debt. Instead they work with you to budget money so that you can pay off the debt. Collection efforts by your creditors may continue while using a credit counselor and most plans require you to pay your entire balance plus interest over the life of the plan, which is usually five years or more. Consumer credit counseling agencies usually work on behalf of the creditors and are compensated by the creditors themselves. This does create a potential conflict of interest, so be sure to understand if they are collecting fees from both you and your creditors.

4. Debt Consolidation

debt consolidation loan is when you take your all your current debt and “consolidate it” into one bigger debt. Because you probably already have too much debt that was obtained with just your signature (unsecured), you will typically either need some security like a house or other collateral to obtain the loan.

It may not make sense to borrow your way out of debt or change unsecured debt into secured debt, because you could be putting your house or vehicle at risk. People lose their homes this way. Also, right now, it may not even be an option for some homeowners because of the state of the housing market, and depending on your credit score, you may not qualify for an unsecured loan. This option does not reduce or settle your debt, it will only shift your debt from one creditor to another, which may not be a very effective path to resolving your debt.

5. Do-It-Yourself Debt Settlement

This is where you basically take matters into your own hands and do everything from setting up your own budget to negotiating directly with your creditors. Out of all of the options, although this is the cheapest, it may also be the most dangerous. If you have three or more credit cards it could be hard for you to even get started.

First, you’ll have to identify the person with authority to even begin negotiating your accounts. Finally, if not done properly you could be taken advantage of or make an agreement that your credit card company later decides to rescind.

6. Debt Negotiation

Debt Negotiation is an aggressive method of debt resolution in which we negotiate with your creditors on your behalf to get them to agree to accept less than the full principal balance to satisfy your debt. The amount that the company can settle for will vary from creditor to creditor and from one program to another.

Settlement negotiation is one of the most effective options available to consumers since creditors know that if you get into such a bad financial position that you can’t pay your monthly payments, you may decide to declare bankruptcy or simply do nothing. Therefore, creditors are usually very willing to settle for a lower amount, given your hardship, than risk getting nothing at all.

To qualify you must owe unsecured debt, such as credit card debtmedical bills, personal loans, or deficiency balances from a repossession. Another important qualification is that you must be experiencing some sort of financial hardship which is making your ability to pay your bills in full problematic. Common problems that people are facing when they begin seeking advice are divorce, medical problems, loss of job, unpaid monthly car loan payments or a reduction in income. A financial hardship applies to any number of situations that prevent a person from being able to pay back their debt now or in the future.

Debt relief companies may have relationships with your creditors and have been negotiating on behalf of thousands of people every day. Although each situation is unique, it is not uncommon for a debt settlement company to negotiate reductions of as much as 40% – 60%* of an outstanding amount and help a customer to a debt-free life in just a few short years. A qualified debt settlement company charges a fee only after they have achieved a satisfactory settlement for you.

Although debt settlement may affect your credit, it can be a better option than bankruptcy and can improve your credit rating over time much faster as you begin to settle your debts.

Which Debt Relief Option Is Right For You?

When it comes to resolving your debt there is no completely “pain free” way of doing it. If you want to resolve your debt in the SHORTEST amount of time and for the LEAST amount of money, then debt settlement may be the best option for you.

We believe that we provide a better alternative to Bankruptcy, Consumer Credit CounselingDebt Consolidation, attempting to do it yourself, or simply doing nothing at all to address your debt problem. A reputable debt relief company like ours can provide a more holistic approach to debt reduction.

Our trained debt relief experts will give you a free, no obligation consultation and help review your debt situation to see if you qualify for debt relief through debt settlement negotiations.

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Credit Card Payoff Calculator – Free Download No ratings yet.

Pay off your credit card at different interest rates and payment amounts with this credit card payoff calculator. This Credit Card Payoff Calculator for Microsoft® Excel® and OpenOffice can help to find an answer to a few of this questions and easily can be a first step to your debt reduction. This calculator is the first one in the series of debt reduction calculators.

ALSO SEE – Credit Card Interest Rate Calculator

What will this credit card payoff calculator do?

Calculate the payment required to pay off your credit card debt in a specified number of years, or calculate how long it will take to pay off your card given a specific monthly payment. This credit card pay off calculator for excel is pretty simple spreadsheet that can solve for a minimum monthly payments, for a time to pay off, for total interest as a sum of both interest on cash balance and balance on card purchases. This all will help in getting the answer to the question of how long it takes to pay off your credit card balance by making only minimum payments.

credit-card-payment-calculator

EMI Loan Calculator

Back to the template, basically this is a simple credit card payoff calculator that is created using microsoft excel built-in financial function, PMT and NPER function, which you can create yours just by following the formula I used in this template. That’s all guys. You can download the file below. The main worksheet is not password protected, so you can learn the excel formula inside.

CLICK HERE TO OPEN CALCULATOR (Online)

Free Download

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