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Eliminate credit card debt and make life easier and healthy

Being overwhelmed with debt is not good. In the present economic crisis, people should establish their life with financial security. The first thing to do in order to achieve the same is by making yourself free from credit card debt.

Tips to eliminate credit card debt

If you’re eagerly waiting to get rid of credit card debt, then follow the below mentioned tips and keep your credit card balances under control:

  1. Arrange your credit card debts: If you have more than 1 credit card, then enumerate all the details of the cards such as their balance, rate of interest and minimum monthly payments. Try to pay the maximum on the highest interest credit card and then make the remaining payments on the other cards. After the highest interest credit cards are paid off, do the same for the remaining cards. In this way, very soon you’ll be able to get out of this vicious cycle of credit card debts.
  2. Prepare a budget: Make a list of your monthly income and expenses along with your credit card payments. Calculate the monthly equivalent of your annual expenses like taxes and insurance by dividing it by 12 and add it to the list of monthly expenses. Note down the further expenses you do like shopping, eating out and entertainment. Double check whether you can reduce on any of your discretionary spending, so that you can pay some additional amount on your card balances.
  3. Keep the credit card away from your wallet: As the saying goes, prevention is better than cure, so refrain from using your credit card while making any purchase. Always use cash for any transaction, so that you’ll give a second thought before actually buying the item. If you want to keep a credit card as a backup for emergency, then store it under a pile of important papers. So that you’ll not be tempted to use it frequently but only in case of a dire situation for the same.
  4. Use only one credit card: If you have multiple credit cards, then choose the card which is most beneficial for your needs. For example, the card which gives you maximum reward points or the card which has minimum interest. Then transfer the balances from all other cards to the card of your choice. Now use only this card and try to be clear off any debts.
  5. Contact creditors to lower interest rates through negotiation: At present, the average interest rate of credit cards is above 14 percent. Few credit card companies charge more than 20 percent for the card. Usually, the interest rate on the card increases if you don’t make your full payments each month. If you are not able to establish your credit in good standing by making regular payments, then try to negotiate with your credit card company to lower the interest rate. If the company agrees to lower the rate, then it would be easier for you to repay your all credit card debts faster.

If you follow the above mentioned tips carefully, then I’m sure very soon you will be able to make yourself free from this vicious cycle of credit card debt. It may take some time, but if you continue to follow the plan, in near future you’ll be happier and most importantly – a DEBT-FREE person!!

By sally on August 2nd, 2013

How to cut your debt fast and save more for a secure future

Everybody wants to get rid of debt and lead a stress free life. However, there is no short cut way to get out of the vicious cycle of debt. It’ll take a long time, patience and dedication for you to become free from all your financial obligations.

Ways to pay off your debts faster

Following are some of the basic steps that will help you to repay your debt faster and improve your credit score both at the same time:

1. Make extra monthly payments: If you can afford, then try to pay more than the minimum loan repayment amount. This is because your lenders will charge more interest on your loans, if you take too much time to repay the outstanding balances. That’s why, don’t fall for their selfish game and pay back your dues as early as possible.

2. Have a clear understanding about your cash flow: It won’t be possible for you to save or invest your money, if you don’t have any track of your total funds. You should keep a record of your total money that come in or goes out from your wallet after meeting all living expenses. After calculating the cash inflow and outflow, you can easily realize your present financial status that means surplus or deficit. If you are living in a surplus state, then it will permit you to save more money and pay back your all dues. On the contrary, if you are in a deficit, then you should spend your money carefully and try to reduce credit card uses.

3. Systematize your payments: Make all your utility bill payments via direct debit. This method is easier to handle than sending checks on a regular basis. It’ll also help you to save more money as the majority utility service providers will give you discount offers for making direct debit payments. You can easily make automated payments by informing your bank with all the information about your utility suppliers.

4. Opt for a cheaper bank card: Get in touch with different creditors and try to find out the credit card with a lower rate than you’re paying now. Then take initiative to transfer your balance from existing credit card to lower rate credit card which in turn will help you to get out of debt trap faster. Keep in mind that this low rate offer will become significantly high after the completion of offer (interest-free) period. In this situation it would be better for you to switch over from your lower rate credit card account again for the next 6 months and repeat this process.

5. Pay off your highest rate debts first: At first concentrate on your most expensive debt and try to make extra payments to pay that one off as early as possible. Make minimum payments on all of your low rate debts. Once you’re able to pay off your most costly debt, then take care of the next most expensive debt. Repeat this process until you clear your all dues. This tactic will help you to get relief from all your debts quickly.

At last, if you want to get relief from your debt burden, then you should cut down your spending. People always think that money is earned to enjoy life. But it,s not true. People should set aside some money for their secure future and unforeseen circumstances. If you are overwhelmed with debt and relentlessly thinking about it, in reality you may get into severe depression. That’s why you should give up your some luxurious habits to make yourself free from debt burden.

By sally on June 5th, 2013

5 Practical ways to become financially stable and stay out of debt

Everybody has a dream to buy a car or a home. Most of the time this dream doesn’t come true because of huge debt obligations people have to deal with. For that reason, debtors need to be aware and find out ways to stay out of debt and lead a financially stable life.

Tips to stay out of debt

Here are some of the practical and beneficial tips that will help you to stay out of debt and build up an emergency fund to make your dream come true:

  1. Make a list of income and expenses: Keep a record of your monthly income and expenses. By doing that, you’ll be able to know whether or not you are spending beyond your means. Once you track your income and expenses, you can easily make out a proper budget for yourself and stay within it. This in turn will help you to stay out of debt.
  2. Build up an emergency fund: Always try to create an emergency fund for unforeseen circumstances because you don’t know when you may need it. If you or your family members become a victim of an accident or get admitted in a hospital, then at that time this emergency fund will provide you with a financial support. That’s why keep aside a certain amount of money every month from your income.
  3. Cut down your unnecessary expenses: One of the most common financial mistakes committed by people is that they always spend more than what they actually earn. You should try to make purchases as per your needs and not wants. Segregate your expenses into two categories – discretionary and non-discretionary. Focus your budget on the non-discretionary costs like mortgage payments, utility bills, medicines, groceries, etc and reduce the number of your discretionary expenditures.
  4. Pay off highest rate debt first: When you have decided to pay off your debts, then your first and foremost duty is to find out the number of debts that carry highest interest rates. This is because once you get relief from your highest interest rate debts, then it’ll become easier for you to move on to the other lower rate debts.
  5. Use cash more often: Always use cash to make purchases instead of credit card/debit card. When you use credit card to make any purchase, you tend to forget the value of your money. When you’ll have to take out your hard earned dollars from your wallet against any purchase, then you’ll think twice before spending them. That’s why using cash will prevent you from making bad purchases and help you to develop a healthy saving habit. You’ll be able to stay within your budget and avoid falling into a debt trap.

Keep a track record of your total debt amount and monitor your credit report monthly to find out any discrepancy. Always be conscious about your monthly payment, because one late payment can drop your credit score by certain points. If required, you can set up a reminder alert in your cell phone or emails. Try to pay off your credit card bill first since the interest rate is too high. Otherwise one miss payment can make your life miserable. By this way, you will be able to establish your credit and rebuild your financial life once again.

By sally on May 20th, 2013

How different debt repayment scenarios affect your credit score

Paying off your debt may require you to make some tough decisions. One of the hardest decisions you might have to make is to sacrifice your credit score for the sake of getting out of debt. Before you choose a debt relief option, consider how it will affect your credit score. Some options hurt your credit score more than others and that credit score impact may weigh into your decision. Three solutions that are often compared to each other are debt settlement, bankruptcy, and paying on your own.

Debt Settlement:

Debt settlement, if you’re not familiar, is a debt repayment strategy where your creditors accept a lump-sum payment, that’s less than the outstanding balance, and full satisfaction for the debt. After accepting your payment, the creditor cancels the rest of the debt. This isn’t something creditors offer automatically. Instead it’s an arrangement you (or a debt settlement company) makes by negotiating with the creditor.

Paying off your balance at less than it’s face value sounds like a good proposition and it is. But, the downside is that your credit score will suffer. First, you have to be late on your payments before the creditor will agree to a settlement. A late payment can hurt your credit by 60 to 110 points. The further behind you get and the more accounts you’re delinquent on, the more your credit score is affected. Debt settlement, on top of the late payments, can cost 45 to 125 points, depending on your credit score before you settle your debt.

Bankruptcy:

Through a Chapter 7 bankruptcy, the goal is to have most of your unsecured debt completely discharged. After discharge, you’re no longer responsible for the debt. The upside is that you can get out of debt and only pay the cost of filing bankruptcy, which is just a few hundred dollars. Bankruptcy is infamous for its affect on a filer’s credit score. Bankruptcy can end up costing you between 130 to 245 points. That’s a big drop.

Paying on your own:

Paying off debt on your own is often the hardest of all the solutions. It can also take the longest. But, the benefit is that your credit score can actually increase by paying debt on your own. That’s if your accounts are in good standing when you start paying your debt. However, if your accounts are already charged-off or with a collection agency, paying them off won’t benefit your score, but it won’t necessarily hurt your score either.

While some believe the credit scoring system has faults, the good thing is that a bad credit score can be rehabilitated. If you decide that debt settlement or bankruptcy is a better option for you, you can later improve your credit score by through credit repair strategies. As someone who’s goal is to get out of debt, you have to decide what’s most important – struggling with the debt and keep your good credit score or choosing a debt repayment scenario that temporarily costs your credit score.

This post was written by Eliza Collins, a guest writer specializing in personal finance topics like savings, debt relief as well as credit score improvement. You can read more of her articles at the debt settlement blog.

By guest on September 27th, 2011

Creditmagic welcomes guest posts from financial writers

We welcome guest post/article in Creditmagic. It provides the viewers fresh perspectives and viewpoints beyond what we can offer. We usually publish articles that are useful to our viewers. Read on the guest post submission requirements given below.

Guest post – Submission requirements for Creditmagic

Here are the submission requirements for Creditmagic:

Quality: We accept only quality articles in our blog. The articles should be around 400-800 words and written in proper English. The articles should be able to offer something new to the viewers. There should be minimum 50 words author’s bio at the end of the article. Please note that we don’t accept duplicate content. Commercial or self-promotional articles will not be considered.

Matter: We accept unique articles. The articles should written on topics related to credit, debt, personal finance, etc. The articles can be based on tips to solve credit problems, advice to the consumers, etc. News based and market oriented articles will be highly appreciated. The article should be logical and practical.

Style: The article should be written in simple US English. It should be easily understandable. It should consist of few paragraphs. Subheadings and bullets can be used to make it look visually appealing. The article should be written and send in word document or text file.

Single link: You are allowed to give single link to your website or blog in the author’s bio. Kindly note that we don’t allow any affiliate links.

Payment: We don’t pay for the guest posts. However, guest writers get an opportunity to showcase their articles to millions of viewers.

Editing: Our editorial team may edit the article for grammar, tone and readability.

Submission process

If you have an article that fits the requirements of our website, you can send it to us at admin@creditmagic.org. Our editorial panel will scan through your article and let you know whether it will be published in our blog within 7 business days.

By admin on October 8th, 2010

6 Tips on credit card usage before and after job loss

The situation before and after job loss, is very stressful. This can put a financial stress on you and your family. While you’re looking for a new job, it’s important to develop a strategy for dealing with your credit card bills. If you have recently lost your job or you think there may be any recent layoff, it’s important to have a plan in place to prevent your financial situation crumbling under this pressure.

Handling your credit cards efficiently

There are some basic principles according to which you should use your credit cards. However, these principals break when the job loss is looming large on you. But still you need to handle this situation and get out of this stress. There are various ways in which you can do this.

1. Use your credit cards lowly – If you have lost your job, use your credit cards lightly. With more usage the debt amount is going to grow out of control.

2. Maintain tight budget – Maintaining a budget is very important. It can save you extra expenses. Also, prioritize your expenses. Set up a list of your monthly expenses along with credit card bill payments.
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By admin on September 25th, 2010

5 Top financial reform in the market

A new reform bill known as Dodd Financial Reform Bill have been passed to give better protection to consumers. The bill mainly focuses on regulations for Wall Street, and gives more power to the Federal Reserve. Also a new monitoring institution has been designed to focus on the various credit and lending institutions.

The 5 Changes are:

1. The market gets a new monitor: The market gets a new monitor, the Consumer Financial Protection Bureau (CFPB) who will monitor over the lending institutions and the process. This new agency has been created to provide added protection to the consumers. CFPB is also supposed to provide education to the consumers through the Office of Financial Literacy, and take complaints by the consumers against illegal financial practices.

2. Regulation on private student loan: Government took over the power of government student lending (subsidized government loans) in 2009 but private student lending remained mostly the same. Generally, private student loans don’t come with the same protections which government student loans provide. This bill aims to bring the private student loan industry under the thrift supervision of CFPB.

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By admin on August 28th, 2010

6 New card rules to be effective from 22nd August

The Federal Reserve introduced new credit card rules which will take effect from 22nd August, 2010.  These rules will limit certain fees on the credit cards and also make it possible to decrease the interest rate. The new rules addresses not only credit cards, but have outlined some rules on gift cards too. These rules will be an addition to the rules on credit cards which were introduced on 22nd February, 2010. This Act will be called Credit Card Accountability, Responsibility and Disclosure (CARD) Act.

Top 5 Rules on credit cards

1. Limit on late payment fee – Before credit card companies could charge you late payment fees as high as $39. Now, according to the new rule if you have not been late in the last six months the card company cannot charge a late fee more than $25. However, if you have been late before too in the last six months the late fee can go up to $35. Also a credit card company can charge you more than $25, in case they can show that they incurring high costs due to the late payments.

2. Late payment fee less than minimum payment – The late payment fee cannot be more than the minimum payment that you are supposed to make on your credit card. If your minimum payment on a card according to the contract is $20, the card company cannot charge you a late fee more than $20.

3. Inactivity fees – A credit card company cannot charge you inactivity fees in case of no activity on the card account.

4. Rate increase explanation – If a credit card company increases the Annual Percentage Rate (APR) on your card they are required to explain you the reason for the increase in the APR. The card company is also required to re-evaluate the rate increase in every six months, and if there are possible reasons they are supposed to reduce the interest rate within 45 days of the re-evaluation.

5. Only one fee – No credit card company can charge you more than one fee on a single transaction that violates the original card contract. Like if you are late on your payment you can be charged only a late payment fee.

Below is the rule on gift card

The credit card companies cannot inactivate a gift card before 5 years from the date of issuance or from the date of last activity on it (whichever applicable).

These credit card rules along with the previous ones will provide additional protection to consumers, and limit the profitability of the credit card companies. These rules will make paying off credit card debt much easier.

By admin on August 20th, 2010

What if Smart phones replace credit cards?

It’s great news that your cell phone can be doubled up as payment cards. According to recent reports Verizon and AT&T are together planning to bring a phone payment system, and are said to be tying up with T-Mobile to introduce smart phones as a replacement for your credit cards. In future you may be able to make your payments using your phone instead of your credit card.

Till now there are no exact details on the technicality of this process, according to market strategists customers can make the payments simply by holding their phone infront of an electronic reader. The phone will be emitting a radio wave that will connect with the electronic reader in the shop.

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By admin on August 10th, 2010

Medical Debt Relief Act protects credit scores after payment

A bill on medical debt  has been introduced by Congresswoman Mary Jo Kilroy. This bill is going to be known as the Medical Debt Relief Act, 2010. However, this bill handles the issue of reporting of medical debts, mainly those that has been in collections, and has later been paid off.

The main problem with medical bills in collections is that, these generally stay on your credit report even after getting paid. So, this act speaks of removing the paid medical bills which were once in collections from the debtor’s credit report. According to those who have introduced the bill, medical debts are unique as medical conditions can arise all of a sudden unlike consumer debts. So, these kinds of debts should be handled in a different way.

According to recent findings by the Congress in 2007, at least 28,000,000 American adults were contacted by a collection agency for unpaid medical bills. This also shows that hospitals and clinics are turning more towards collection agencies to retrieve payments from the patients.

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By admin on July 31st, 2010