Top 12 Debt Calculators To Steer Your Way Out Of Debt No ratings yet.

At, it is our mission to leave no stone unturned in making you debt-free. Whether you have medical billsstudent loans or credit card debt, we will help you to get rid of your debt. This is where a debt calculator will be of great help. Now, speaking of debt calculators, it is imperative you are familiar with different calculators available out there.

A debt calculator is programmed using an exact formula in order to carry out the calculation of the principal and interest payments. This will give you a clear idea of the exact period it will take to pay off your credit card debt or any other debts. Following is the list of best debt calculators online which are easy to use and very accurate.

Top 12 Debt Calculators


1. Simple APR Calculator


Most of the auto finance companies and various other lenders offering low promotional rates can help you enjoy considerable savings on you next auto purchase. If you have low-interest rates, the total interest rates will be quite less and will also bring down your monthly payments. You can use Simple APR Calculator in order to compare varied APR options.

2. Student Loan Calculator | SoFi


In order to get out of debt quickly, there are two principles applied by this calculator. Initiating by seeing what is the exact amount you can save via consolidating your student loans. Afterward apply that savings to the credit cards, auto loans, and other debts to pay them off quickly.

3. Loan Amortization Calculator


With the help of an amortization calculator, you can easily find out the payment details for any type of loan, commonly it is used for mortgages. This calculator mainly requires the principal amount, the term, and the annual interest rate. On the basis of this information, the calculator will calculate the monthly payments required to pay off the loan in the given term. This calculator is also sometimes termed as emi loan calculator.

4. Debt Repayment Calculator By Credit Karma


A debt repayment calculator can really prove beneficial in letting you know exactly how long it will take to pay off your debt and how much interest you get to save by adding an extra principal payment to your next scheduled payment.

5. Debt Payoff Calculator – The Simple Dollar


There is no doubt that debt consolidation is a huge step to take. However, the significance of a having a plan still cannot be ignored in order to pay off your debt in full. With the help of debt payoff calculator, you will get to know as for how you can accelerate the debt payoff. The process is not so tricky; all you need is to apply a small part of consolidated loan’s monthly payment savings to the balance of the consolidated loan and you can easily save hundreds and thousands in interest and reduce the years from the loan.

6. Debt Snowball Calculator


When you use debt snowball calculator, it tends to speed up your debt payoff and it is done using rollover method. When the payment for first debt has been made, you will have some freed-up payment amount, you can use this amount to make the payment for your next debt even faster. You can continue with the same process in order to pay off all your debts.

7. Debt-To-Income (DTI) |


Your debt-to-income (DTI) ratio has a great significance; experts say that it is as important as your credit score. It is the amount of debt you are having as compared to your income on the whole. Lenders really consider this ratio and take a decision whether to lend you money or extend credit.

If you have a low DTI, this will suggest that you have maintained a right balance between the debt and income. Lenders also want to see this number on the lower side, usually below 36. If you have successfully maintained a lower number, chances are more of getting a loan or credit you are looking for. Now add all your monthly debt obligations, make sure you have included mortgage (insurance, principal, taxes, and interest) and student loans, home equity loan payments, car loans, credit card debt, etc. In order to calculate, total recurring debt is divided by gross income.

8. Avalanche Calculator

debt-snowball-payment-calculator is a free, online debt snowball/avalanche calculator and management tool that will help you quickly develop a debt elimination payment plan.

9. Unbury.Me


If you are buried deep in debt, the feeling of having no hope of getting out can be scary. But, you don’t have to go through all this as Unbury.Me has made a simple calculator tool that can help you regain your financial foothold.

This online tool provide payment choices on the basis of two options –

  • High-Interest Method.
  • Debt Snowball Method.

Once you enter all of your debt information, you can quickly compare which debt reduction method will work best for your situation and finances. Make adjustments in your monthly payments and the chart will show your outstanding principal balance, how much interest you’ll pay, and a debt freedom date. As soon as you enter the debt details, you can compare which debt relief method suits you the best. You need to make adjustments in your monthly payment amount and the chart will show you the remaining principal balance, the interest rate you need to pay.

10. Debt Eliminator From Tcalc.timevalue

Debt Eliminator From Tcalc.timevalue

Ms. Suze Orman is the person behind the customized plan. The information you enter in this calculator does not get stored. All you need is to type your name, credit card number, and other loans. Each debt will have its separated row; this will give you a better idea of your balances. Once you have mentioned all your debts, you need to click the button of Next. You will be asked whether you will have to add additional amount towards the monthly amount. Following this, you need to click Find Your Plan in order to get the information about debt payoff plan.

11. Credit Card Interest Calculator

This calculator will decide how much the monthly payment will be applied to the principal and how much is the interest. Then the calculator will tell you the term until the credit card is paid off and what is your interest cost until payoff.

12. Debt-Free Calculator – Getting out of debt with CNNMoney


You can have a look at your debts with this debt calculator from CNN. All you need is to list all your credit cards along with other loans; the outcome of your loan will be decided on the following variables –

  • Fixed monthly payments.
  • Debt-free deadline.
  • Minimum payments.

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Secured Credit Cards – Get One To Rebuild Your Credit History No ratings yet.

What Is a Secured Credit Card?

Before, we proceed further let us have a close look at what is a secured credit card? It is a tool that plays a pivotal role in building your credit history. It offers you an access to a credit line, and moreover, your payment activity gets reported to the credit bureaus. Secured here means that the card is backed by a collateral i.e. your cash deposit. On the other hand, unsecured means that there is no deposit or any form of collateral is required. A secured credit card is an ideal choice for all those with little or bad or average credit. Let’s say that you don’t have a credit history or you have recently become bankrupt, then in these cases, a secured credit card is the best option for you.

Benefits of a Secured Credit Card

8 Unexpected Benefits of Using Secured Credit Cards

A secured credit card has various advantages, mainly for all those who have little or no credit. So, let us get to know more about the advantages of having a secured credit card –

  • Grace Period – When choosing a secured credit card, it’s key that you choose one with a grace period. Without a grace period, you’ll owe interest on every purchase. This would make improving your credit history tougher than it should be.
  • Help you establish a solid credit history.
  • Most secured credit cards are accepted as a form of payment when traveling abroad. It’s a good idea to read the terms of your secured credit card in order to be aware of applicable charges when using it outside of the U.S.some secured credit cards with low foreign transaction fees and no annual fee. You require a credit card to make a hotel booking, buy a ticket, hire a car, or book airline tickets. If you have a secured credit card instead of a debit card or cash will also enable you to make the purchases.
  • They typically report to credit bureaus. Unlike a prepaid credit card which lets you spend like a credit card, a secured credit card reports your payments to the credit bureaus to be included on your credit report.
  • Having a secured credit card offer you a chance to rebuild your credit ratings. All you need is to pay your bills on time on a monthly basis while keeping your balance low.
  • If you can have your account in good shape, even the lenders allow you to earn interest on your secured credit card deposit. Some secured credit cards place your deposit into an interest-bearing savings account. Depending on the interest rate, you might be able to earn a few bucks .You can have your deposit back along with the interest once you graduate to an unsecured card.
  • Generally, secured credit cards come with low limits as compared to the unsecured credit cards, you tend to have a cap on your spending. The best part is that you can save yourself from getting in too much debt which, in turn, can harm your credit score


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

Which Are The Best Secured Credit Cards Of 2016?


For best unsecured credit cards you can visit Nerdwallet.

What Is The Difference Between Secured & Unsecured Credit Cards?

While choosing a credit card, not everyone is equipped with a sound financial knowledge. This is where you need to have holistic information between the secured and unsecured credit card so that you get to make a smart decision. Let us dig deep to know the difference between these two in detail –


– As for a secured credit card, you need you to have money, as collateral, in an account. The deposited amount plays as your credit limit, you can also raise your credit line, all you need to make more money deposit with the issuer. As for an unsecured card, there is no cash deposit required and the card limit is mainly dependent on your credit history. Talking about the secured credit card, the range can vary between $200 to $500 and as for the unsecured credit card, the range can vary between hundred to thousand dollars.

Do you qualify

– The credit history plays a pivotal role in deciding for which type of card you actually qualify for. If various delinquencies have been responsible for a low credit score, chances are more that you qualify for a secured credit card. If you have a bad credit score, you won’t be able to qualify for an unsecured credit card. There are unsecured credit cards that are not complicated to qualify but on the negative side, they come with high fees and interest.

Also Read – Top 5 Credit Card Scams In 2016

Fees and Annual Percentage Rate

– When it comes to APR and fees, a secured credit card is far more expensive as compared to an unsecured card. When it comes to a secured card, you have to pay an annual fee and a monthly service fee. With the unsecured credit card, you can have a low APR with a good credit. Most of the unsecured cards charge no annual fee from the users.

Report to credit bureaus

– When it comes to secured credit card, there are strong probabilities that they get reported to the credit bureaus and on the other hand, unsecured credit card don’t.

When Do You Think It’s The Right Time To Have A Secured Credit Card?

The moment you pay off your debts, there is a mixed feeling, both positive and negative, that you go through during debt payoff journey. I can still recall that moment when I was paying off my debt, I was going through shame and gratitude, and various other humanly feelings, including a lack of freedom. Well, I was the one who is responsible for my debts and it would my actions that will get out of this ordeal.

It’s not that credit cards did the shopping on its own, it was you who voluntarily took out the student loans. However, I fought hard to get myself out of the debt. And finally, when I came out of the debt, I found myself at a crossroad. I knew, deep down inside, that I have to build my credit from the scratch, as it was in shambles though there were some options that were at my disposal. Eventually, I finalized the option of having a secured credit card that can help me in rebuilding my credit. You can also find some secured credit cards which are best for rebuilding your credit.


When you have dearth of options –

Once you have made a considerable amount of consumer debt, it’s not that easy to get a new credit card. Such case comes up when you have worked with a debt relief company. Entirely depending on the report submitted by the credit bureaus about your payoff, your score can be jeopardized. Not to mention the possibility of your score being already low in the first place, thus you will left with only a few choices. This is where a secured credit card comes into play. The majority of the credit cards are unsecured, this means that the bank takes a risk believing that you will make the repayment of your charges. A secured credit card is the one where you “secure your card” by depositing a specific amount of cash with the bank. This protects the bank and you get the access to your card.

When you are interested in rebuilding your credit –

One of the key elements behind a secured card is offering you the ability to rebuild your credit once again. You may have to struggle hard if your credit score is below average. The best secured credit cards allay this issue by offering you with an opportunity to show that you have made considerable amendments in your ways. This is when you should use all those new practices that you have picked during the debt repayment or credit card debt consolidation. You want to use the credit card, every month, for previously budgeted for purchases. Over the course of time, this will start improving your credit.

Most common questions you need to ask before getting a secured credit card

Secured Credit Card Questions

5 Things To Consider Before You Get Your Secured Credit Card

A secured credit card cater to one key purpose i.e. rebuilding your credit seeing that you don’t have many options. Once you have paid your debt, you may generate a feeling of conflict to have a new card, though if you plan to have the access to the credit in the near future, you want to consider this option. Following are some important things that need to be considered when getting a secured credit card –

  • The funds are provided by you in order to secure the credit card. The issuing bank will be holding these funds on deposit.
  • Ensuring that the issuer reports to all the three bureaus – TransUnion, Equifax, and Experian on a monthly basis. There are certain issuers who prefer to report only once to the bureau. This will not prove helpful for your efforts.
  • There are chances that you will be turned down for a secured credit card. Every bank tends to have its own requirements. It is imperative that you have done your homework ensuring that you have what they seek.
  • Make sure you are aware of fees. There are secured credit cards that can overcharge. There are chances that you won’t be able to get around the fees out there, but you don’t want to pay those hefty payments.
  • It is imperative that you make your payments on time. If you are not able to, you should wait until you can and then go for the card. Make your best efforts not to reach the maximum limit of the card, but ensure that the utilization rate is kept low in order optimize your efforts.

Wrap Up

I know, you will think that a secured credit card is something that you can avoid. But in reality, it is not and there is an availability of good ones. It is your task to make a smart decision to see yourself in a better position. That’s acceptable. If you are looking to rebuild your credit, having a secured credit card is one of the best available options that you have in order to get back on the track.

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Zombie Debt: Don’t Get Haunted, Chase Away The Collectors No ratings yet.

In the past, if you had debt and you were not able to pay it, there may be a possibility that those debts have been declared as ‘uncollectable’. In other words, it can be said that the company has stopped showing interest in collecting the debt and there can be two reasons responsible for it : the company didn’t show any interest in collecting it and secondly they had stopped bothering to get in touch with you.

However, of late, a new variety of debt collector has surfaced to purchase these old debts and they are leaving no stone unturned to collect them once again. The worst part is that you start receiving letters and phone calls asking you to make the payment for your debts. So, at this moment you should have all the information about the zombie debt and what you ought to do in order to deal with the collectors.

Related Post:  Credit Card Debt Management

What is ‘Zombie Debt’ ?

– In the situation where you are not able to pay the debt or you are not paying the debt deliberately the lender, on the other hand, can make you pay the debt using varied methods. These collectors can send you harassing letters, you can receive threatening phone calls or in the worst case even wage garnishment. There have instances in the past where the debtor has moved away or simply have no funds to pay the debt.

After a while, it can be a costly affair for the collector to continue making attempts for debt collection. The majority of the lenders don’t try collecting the debt after six years as it has already crossed the set limitations and you, as per the laws, you don’t have to pay the debt. However, even after so many years, these old debts enjoy some worth and if the old surety has stopped making efforts to get it paid, other companies take their place. These un-collectable debts are then sold, at a smaller amount, to other companies dealing in debt collection.

What is Zombie Debt? How To Get Rid Of Collectors [INFOGRAPHICS]

Even these zombie companies make a meager payment in order to have these debts, getting paid on even a small amount of the loans can prove profitable for such companies. As per an estimate, such companies pay around 3% of the face value of the loan. Let us say, in the case where the original debt is $1,000, the new creditor will make a payment of around $30. If the company can make even one person to repay $1,000 debt in full, it will end up covering the costs to over 30 identical loans.

Well most of the times, the debt is quite old and debtor have forgotten about it, and it may no longer be highlighted on your credit report. Or perhaps, the debtor has officially announced bankruptcy but didn’t remember to incorporate that debt in the bankruptcy plea. There is a fixed time period on how long a lender can try for the collection of the debt. While the debt remains valid after the set time period has passed, as per the law you are no longer required to make the payment for that debt.

Related Post:  Credit Card Debt Settlement Process

Time-Barred Debt Accounts for Debt Collection Activities

The most comprehensive data available about the age of debts being collected by debt buyers  comes from a  2013 FTC study of the debt-buying practices of some of the nation’s largest debt  buyers.

This study found that nearly 25 percent of debt acquired from the original creditor  and more than 60 percent of debt purchased from other debt buyers was over three years old at  the time of purchase.

More than 30 percent of the debt purchased from other debt buyers was  over six years old.

Chased By A Zombie Debt – Tips To Get Rid Of Debt Scavengers

 kill zombie debt infographic

In order to save yourself from paying a zombie debt, you need to be familiar with the below-discussed steps –

  • The debt collection company can be sent a certified letter asking them about the owning of the debt and asking them to prove it that you actually owe it.
  • In case you receive a letter, you should keep it with you.
  • You should not be talking for too long on the telephone. If in case you do get a call, you can ask them the address of the debt collection company and send them a letter.
  • Make sure that you avoid having a discussion with the collector till the time you have received a judgment against you. The Fair Debt Collection Practices Act states that the debt collection company should provide you all the details.
  • Make sure that you don’t accept that the debt is yours. There are strong odds that they can use this information against you.

When you have the details regarding the debt, you can decide on whether the time period, for paying the debt, has been crossed or whether it is your debt in real terms. At times, it can be because of some computer error, identity theft or some fraudulent method just to accumulate money from you.

Related Post:  Credit Card Debt Negotiation – An Expert Guide

When the last time an activity is being registered on the debt is actually the last date when the statute of limitations for the debt actually begins. Generally, it is the last payment that you need to make. Under the guidelines of FDCPA you, as a debtor, cannot be sued for the collection of debt if it is more than six years. There is a set limit i.e. 7 years and when it is passed, the credit card debt should be removed from the credit reports.

Another letter should be sent to the debt collection company if they keep on contacting repeatedly. Since, majority of the zombie debts are beyond the limitations of set time period, the debt collection company might not be able to go ahead with the legal action.

Old Debt, Statute of Limitations on Debt

Letter to Collection Agency to Stop a Zombie Debt which is outside of the statute of limitations

This sample letter describes the collection agency to stop because the debt is outside of the statute of limitations, plea a cease and desist under the FDCPA – Download pdf

About paying the debt –

Once the set time limit, for paying the debt, has been crossed there is no way you are going to be benefited by paying the debt. The majority of the debt collection companies/agencies inspire the debtors to pay their debts through guilt, inculcating fear, lack of knowledge. But, it in the case where the debt has crossed the statute of limitations, which can differ significantly by debt’s nature and state, you don’t have to pay anything.

At times, these agencies may guide that you can pay less debt as compared to what you actually owe . But on the other hand, this can have a negative impact. Unless they have offered a written offer-in-compromise, paying any amount will still make you liable for the debt. This also means that any amount that you pay will end up restarting the statute of limitations.

If you really think that you should pay off the debt then you have every right to go ahead and do so, at the same time you have to be certain as who is actually benefiting. The money is not going to get transferred to the original lender instead it will go to the debt collection company/agency.

Fair Debt Collections Practices Act –

There is Fair Debt Collections Practices Act (FDCPA) that offer protection from getting harassed when these agencies collect the debt. The act also lays strict rules against the debt collection practices. In addition to others, setting a statute of limitations while the collection of the old debts is one of the most important ones.

  • There is a provision in the law where the debt collectors are being refrained from passing on any lie regarding the debt or what can happen in the case when you don’t pay your debt.
  • The debt collectors are also being prohibited from sharing any information about the debt that is incorrect.
  • If the debt has been inactive for a minimum time period of six years, you cannot be sued for your debts. And the debt should also be removed from your credit report.

Sump Up

Make sure that you have verified the debt, this will surely save you from harassment. If the debt is too old, it is not mandatory to make the payment for the debt. Gain holistic information about statute of limitations in your area and see whether the debt is showing up on your credit report.

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What Is Debt Consolidation? How It Is Beneficial In Getting Debt Relief? No ratings yet.

Well in today’s fastidious generation, almost everyone does own several credit cards as money has always been the utmost power. Debt consolidation in today’s generation is the main component of banking. For a normal lay man, it comes like aspirin to a dead man. Debt consolidation today is essential but first the customer must know its pros and cons to avail its benefits. Let’s give a brief glance over it. Firstly, let us try and understand what debt is.


What is Debt?

Debt is any amount that the borrower has to pay the one he has borrowed it from. All the money that one is liable to pay is termed as Debt. Debt could be of various types and amounts, but the one borrowed from the banks always come with timeline. The customers borrow money from the banks through their credit cards, for various purposes like shopping, travel, medicine etc. The bank then provides them a due date for fulfilling the amount. Thus, the customer then becomes to liable to pay back to the bank within a limited time period with a definite rate of interest. It is not necessary that the customer will do that from one bank; a customer may even borrow from various banks and have a lot of debt accumulated, to be paid off at different rates of interest. When the debt is accumulated and thus has to be paid off in bulk, there arises a need to consolidate the debt.

Also Read – Your Options To Get Out Of Credit Card Debt

What is Debt Consolidation ?

Debt consolidation means refinancing the debt,  that entails the provision of taking one loan to pay off many others that might be liable for the customer to be paid to the bank. Debt consolidation is a comprehensive project; this commonly pertains to a personal financing process of individuals. It is primary in addressing the high consumer debt, but, also refers to a country’s fiscal liabilities in terms of corporate debt or Government debt. The process secures for its customers, a lower overall interest rate to be paid for the entire debt borrowed and also provides the valuable convenience of servicing only one loan at one time. Thus, consolidation of debt is one way to turn several loans into one. Rather than paying various loans at different rates of interest, the banks entitle the customer to pay just one, that too at a limited rate of interest.

Benefits of Debt Consolidation

Debt consolidation makes debts easy:

Debt consolidation makes it easier for the customer to pay off his debts through one comprehensive loan rather than paying it off through various loans which levy heavy rates of interest. Debt consolidation avails the customer a facility to pay off their credit card debts through one loan where the bank consolidates all the loans of the customer into one and nullifies all the various rates of interest that the customer had been paying initially and makes it one which could be easily paid off by the customer. Thus, instead of paying several amounts separately the customer now operates one loan without bothering about all the different ones.

Makes Calculation Easy:

Debts could be tedious to pay off. Whenever it comes to paying off debts, one has to be very particular and regular about the deadlines imposed by the bank and also that the amount paid is correct. Banks do calculate the amount for its customers but it is very necessary for the customer too, to know how much amount has to be paid to whom. Hence the customer keeps the track of the amount to be paid to each bank making it hard for him to maintain an account. Consolidation of debt takes off that hassle where the bank itself consolidates all the loans into one, making it their headache to pay off all the rest of the loans. Thus, consolidation of debt makes it easy for the customer to calculate since the headache is reduced to just one loan. Consolidation helps the customer to rely on one bank without traveling across the various to maintain a detail of his debts. The bank takes in account all the details and provides the customer one fixed amount to be paid, each month with a minimal rate of interest which is decided as per the customer’s credibility.

Also Read – What is Credit Counseling and How It Can Help You Reduce Debt Problems?

Helps you compare amongst different banks:

Consolidation helps you compare amongst different banks, as the banks are many but there are a few which offer a very low rate of interest. Thus, a customer prefers the bank which offers a lower rate of interest. Consolidation gives customers a chance to pay off their debt at a lower rate of interest which is decided as per the preferences of the customer without making him indebted with the thrust of exorbitant sum of money. The customer compares different banks and their different rates of interest offered and hence decide which one suits the best. This helps the banks lower down their rates of interest in lieu of the others to curb the competitive spirit.

Also Read – Credit Card Debt Negotiation – An Expert Guide

Helps the customer build up a good credit score:

Consolidation helps a customer build up one comprehensive loan, which levies one rate of interest which is comparatively lower than paying off several rates of interest. This helps customer build up a good credit score since the customer is no longer liable to pay off several amounts which make him indebted to a huge sum of money which might be difficult to pay off. Also, paying off several rates of interest makes a customer liable to higher amounts of rate of interest. Paying off one amount makes the customer easy with his debt and hence he pays on time, making his credit score reach to a good number. Credit score is a score by which a bank judges a customer’s performance in paying off their dues. A good credit score helps a customer build up a good reputation and hence the banks lend money to the customer much more easily. Thus, it is necessary to have a good credit score.

Also Read – Private & Federal Student Loan Debt Consolidation and Settlement

A lower rate of interest:

Consolidation of loan is necessary as it helps the customer to lower down its rate of interest as per his needs. Paying off several loans to different banks always demands more money as every bank has a different policy and a different rate of interest. This makes it heavy for a customer to pay off his loan as per the requirement and the deadlines set by the bank. Consolidation helps the customer choose a particular rate of interest according to what suit him and has to pay only for one single loan. The bank holds the responsibility to pay off all the loans of the customer in lieu of the one consolidated loan but the banks also takes in consideration a guarantee from the customer to not to spend more from the credit card. Thus, the customer can set up the norms as per his needs and requirements with the bank which helps both the bank and the customer.

Also Read:  Credit Card Debt Settlement Process

Consolidation of loan is thus very fruitful and beneficial who find it hard to calculate and find out the amount of the rate of interest and also the installment to be paid each month. Also, it relieves the customers from heavy rates and exorbitant amounts of money. To make money grow faster and to deal with it easily without any fraudulence it is important for the customers to take up the credit card bill consolidation.

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Credit Cards: Everything You Need To Know Before Applying [INFOGRAPHIC] No ratings yet.

I won’t be wrong in saying that in our day to day lives, credit card is considered one of the decisive products amongst all the available fiscal products. It’s not just a vague statement, you can easily see people around you making payments, for most of their expenses, using credit cards and I am sure you also do the same.

Credit Card Defined

Well, it can be defined as a tool. Whether it proves beneficial or harmful will depend on your proficiencies and the knowledge about the credit cards should be used. Modern credit cards are a rectangular piece of plastic, metallic alloy, and graphic that identifies a financial account. The front side of the credit card contains RFID (Radio Frequency Identification) chip, you have your account number beneath that chip, followed by the expiration date, and your name. When you flip the card, you get to see a magnetic stripe (often called magstripe) that will contain your signature and Security Code (CVV/CVC).

Credit Card Functioning

A credit card is a pact between you and the bank or any other fiscal entity. Your first step would be apply for a credit card and if the credit history meet the bank’s standards you will get an approval. Entirely depending upon your bank or the card’s issue, the card might come with an annual fee. You will receive a bill, on a monthly basis, along with a credit card statement for which you will be asked to make a minimum payment on your balance.

Let us assume, you have decided to make the minimum payment, but this can lead to accumulate more debt because of the interest rate of the credit card. Well, you can save yourself from paying interest on your card, all you need to do is to clear off your balance before the month ends

Your Credit Score

Your credit score is a three-digit number that is based on the information in your credit report. It is one of the factors that lenders use to determine your creditworthiness when you apply for a new credit account. There are few things which negatively affects your credit score. A credit score is supposed to be about how you handle credit, so it seems counter-intuitive that non-loan actions can bring your credit score down.  Unfortunately, the reality is that even if you aren’t borrowing money, you could still be hurting your credit score. Here are 5 actions that can bring down your score .


Credit Card Pros and Cons

Credit cards have its share of advantages and disadvantages. Let us share them in detail –


●        Credit history – One of the key benefits of having a credit card is that if you use it wisely, it can have a positive effect on your credit score. When you use your credit card on a regular basis and make timely payments, you can help in building a healthy credit history that sends a message to the potential lenders that they can trust you.

●        Help in saving money – Like we discussed above timely bill payments can improve your credit history, this can also help you in qualifying for low-interest on mortgages and cars, helping you to save significant amount of money.

●        Security – Probably, one of the key benefits of having a credit card is ‘safety’. When you carry heavy cash in your wallet, you always have a fear of losing it somewhere or it might get stolen. With a credit card, you don’t need to have those cash in your wallet.

●        Convenience – Nowadays, credit cards are accepted everywhere and it has taken the place of checks. In addition they are much faster.

●        Immediate access – If you like anything or in dire straits, you can use your credit card then and there.

●        Balance Transfer – Some credit card companies offer low interest rates. With the help of these offers, you can even move your balances to the lower-rate credit cards.

Related Read: Credit Card Debt Consolidation: 5 Smart Tips For Consolidating Debt

Now that we have discussed the pros, let us take a look at the cons as well.



●        Overuse – If you want to revolve your credit, it makes it easier to spend beyond your means.

●        Teaser rates – There is no doubt that low introductory rates can be luring, but they don’t last for long. But, the moment these rate expires, the interest rate on your balance rise up significantly.

●        Documentation – When you have a credit card, you have to save all your receipts and ensure that you check them against your statement on a monthly basis. Moreover, before you actually receive a credit card, your bank will ask for various documents and paperwork that can be overwhelming at times.

●        Debt trap – When you have a credit card, you should know that it is just a form of borrowing. Credit cards are basically buy now and pay later, but there are risks attached to it. If you have forgotten paying off your balance in full each month, you will end up racking up the interest. Your credit card debt can therefore go out of hand, mainly if you are making minimum payment.

●        Hidden costs – It’s not just the interest rate that you need to take care of. If you are making late payment or have missed payments repeatedly, you will charged a fee. If you have exceeded your credit limit then also you need pay a penalty. So, it is imperative that you have tracked your spending and ensure that you have paid all your bills on time.

●        Make a right choice – Ensure that you have made a right choice for a credit card, or else you might end up paying more than what you need. If you have plans to spend extravagantly, make sure that you look for a 0% purchase card.

Related Read: Top 5 Credit Card Scams In 2016    |      Credit Card Hardship Program

Why use credit cards?

With the advanced technology and communication happening behind the scenes to help you make the payments using your credit card, a thought must have crossed your mind that what makes the businesses to use credit cards. First, when the merchants offers you convenience and more spending power, they can flourish their business. The banks or the fiscal entity charge interest from you when you carry a balance that piles on from month to month, which is profitable for them. Every time you make a transaction, the card issue gets a fee from the acquiring bank and the bank get to earn a fee paid by the merchant. Certainly, you are benefited too, you get to enjoy a simple way of paying for the varied things. In addition to all the convenience and flexibility, you also get to build your credit on using your credit card responsibly.

Using a credit card responsibly

– If you have a credit card, it is imperative that you have used your card responsibly. In order to do that, the first thing you have to ensure is to make timely payments.

If somehow you have failed to make the payments, you will have to face the following consequences –

●        Even if you have gone one day ahead of your due date, you will have to pay a late/missed fee and it usually ranges from $15 to $35. If you are continuously missing your payments, it will have a negative impact on your credit history and you will face difficulty when you try to secure a loan.

●        If you make late payments, the creditor has the authority of increasing your interest rate. This increase in interest rate also increases your finance charges that make it difficult to carry a balance and extending the time that it takes to pay off the balance.

●        If you think that the interest rate is too high, you can have a word with your lender. If you have maintained good history with the company, you can also have lower interest rate and in some cases, your annual fee can also be exempted.

●        Your credit history is being used by the creditor in deciding whether you are worthy enough for a loan or a credit card. Ensure that you have the access to your credit report and it is you who has the authority of making improvements in your credit score.

Related ReadSecured Debts vs Unsecured Debts   |   Credit Card Debt Relief Programs   |   Unsecured Credit Cards For Bad Credit

Are credit cards for everybody

– For this question, straightway there is an NO. Let us take the example of tools, if they are given to a novice, it can prove hazardous. Let us say if you have personality traits like lacking self-control, not ready for the personal responsibility, in a process of repairing your finances, then make sure you avoid using credit cards till the time you have made yourself both emotionally and mentally prepared.

Credit card glossary

– This section will cover all the important terms that are related to credit cards and it is important that you are familiar with them –

●        Adverse credit – This is related to the people having a low credit score that is the result of the poor management of the debt.

●        Affinity Cards – These cards are offered via an alliance between the leading banks and NGOs (non-profit organizations). Whenever you buy something, using this card, your bank will donate some percentage to the nonprofit partner.

●        APR (annual percentage rate) – It is a numeric representation of your interest rate. While choosing credit cards, APR comes handy in comparing how expensive a transaction will be on each one.

●        ATM cash withdrawal – If you are using your credit card to withdraw cash from an ATM, it can prove costly to you. The interest rates on the cash withdrawals are quite high as compared to what is being charged for the balance transfer and purchases.

●        Credit card issuer – It can be your bank or a financial entity from whom you are getting your credit card. Some of the leading names are – Citibank, Bank of America, and Wells Fargo.

●        CCA – Also known as Consumer Credit Act. It got updated in 2006 and is legislation that is framed for the protection of the consumers while they are borrowing the money.

●        CCA: Otherwise known as the Consumer Credit Act 1974. It was updated in 2006 and is legislation designed to protect consumers when they are

●        Credit limit – When it comes to the credit card, it is one of the things that matters the most. The credit limit on your credit card is the highest amount that you can borrow on your credit card without facing any penalty. It also affects how much you can spend on your credit card.

●        Credit Rating – When you borrow money, the lenders will first have a look at your credit ratings in order to determine your suitability.

Related Read: Credit Card Debt Consolidation For Bad Credit


Interest – It is applied by the banks when they lend money. The interest rate is calculated as a percentage of your balance.

Types of credit cards

Credit cards are of various types, let us get to know more about these cards –

Standard credit cards –

Such cards can be seen anywhere and everyone has it in their wallets. These cards are offered by the banks and various other financial institutions. They are unsecured in nature, this means there is no need to surrender a security amount in order to prove that the money can be repaid. The method that is used to calculate the percentage rate for these cards can vary.

Reward Cards –


There are credit cards that offer reward programs influencing your daily spending. There are various perks such as discounts, cash, or points. On the negative side, these cards come with various limitations. This type of credit card is an ideal choice for all those people who pay off their balances every month.

●        Balance Transfer Credit Cards – These cards help you to transfer a credit card balance, with high interest, onto a credit card with a low-interest rate. Today, the market is flooded with balance transfer credit cards offering low annual percentage rate of 0%.


●        Reward credit cards – These cards offer you with an opportunity to receive incentives when you use a credit card of a particular company for buying. Most importantly, in order to receive approval, you need to have impressive credit. Travel reward cards are the favorite for the regular travelers as they get to earn free hotel stay, free flights, and various other perks.

●        Student Credit Cards – These cards are specially made for the college students seeing the fact that the students have either no or minimum credit history. A first-time credit card applicant will surely have a gala time after being approved for the student credit card as compared to other credit cards. These credit cards come with additional benefits such as low-interest rates on balance transfer, rewards but such features don’t have much relevance for all those students planning to have their first credit card.

Related Read: Credit Card Hardship Program: Little Known Debt Relief Alternative


●        Secured credit card – As per this type, the line of credit is secured by a set amount paid by you to the bank or lender. The amount to be deposited will vary mainly according to your credit history and the bank you are working with. So, let us say that if you are looking for a credit line of $2,000 then you need to put down a deposit of $2,000.

●        Unsecured credit cards – This type is quite common. These credit cards are not secured by any collateral. Issuers of these cards should use ways like garnishment or courts to collect the unpaid debts. You will qualify for these cards on the basis of your credit history, earning potential, and fiscal standing.


●        Prepaid cards – These cards are similar to debit cards, however, they are not fixed with any checking account. For this type, you need to load some amount on the card in order to use it. The purchases are extracted from the card’s balance. Only when more money is added to the credit card that the spending limit gets renewed. You don’t have to pay any finance charges as the balance is extracted from the deposit.

Frequently Asked Questions –

What is a Grace Period?

A- It is the amount of time you have for making the payment for your balance in full prior to the addition of the finance charge. Most of the owners prefer longer grace period as it offers more time for the payment of the purchases before being facing any interest.

What are the chances of getting approval for a credit card?

A – If you have been responsible with the credit in the past, there are high chances of getting the approval. In case you have a bad credit qualifying for a credit card can be difficult. It is not that you won’t get a card but the fees and the APR will be on a higher side, moreover, the credit limit will also be quite low.

How many credit cards do I need?

A – It varies from person to person, but it is advisable to avoid having more than one credit card. There are people who like to keep multiple cards as they like to have a high credit limit, want to have better terms, and better rewards. Make sure that you know that if you have too much credit, it makes it difficult to have credit in the future.

Does it hurt my credit if I apply for more than one credit card?

A – Whenever you apply for a credit, a credit inquiry will be there on your credit report. Receiving increased number of inquiries is considered risky and it may lead to lowering your score. These inquiries will have less impact on your credit score when you have more information about your credit report.

In case you have a short credit history, it can considerably lower your score by few points. Before applying for a credit card, make sure you have done research work to determine which credit card suit your financial situation

Is there any need to pay an annual fee?

There are some credit cards which charge an annual or membership fee for using their card. This fee is applicable whether you are using the card or not. The fee, charged by the companies, can vary from $25 to $100 a year. But, not every credit card charge an annual fee.

What if I don’t make timely payment for credit card bill?

If you are making a minimum payment, the remaining balance along with the interest gets added to your next bill and it will negatively affect your credit score as well. If you have failed to make a minimum payment by the due date, you will have to pay a late fee and in the worst case, the company might increase your interest rate as well.

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