Avoid The Eternal Credit Card Debt Threaten

When talking about credit cards, the first thing that comes into our minds is "Woww, I'm important!". In the primeval times of "plastic money", it meant having a lot of money put into a little slip of plastic. As time went by, more and more people began to use it and knew very little about the stumbling blocks. We throw some light on the things people overlook, regarding credit cards.

Curtains Drawn

There are some people who say that they know how to handle credit cards, raking up pots of money with a series of four or five cards, then use one to back up another and so on... And they even make money on it!

Of course, they do not tell you the other side of the story, which is to use the money to make individual business operations that give them twice the interest they are paying. They always pay back because they are buying and selling all the time and they even have cash to keep in their pockets.

And We Nitwits Fall For It

We think that it is only our side of the deal that counts, we have only one credit card and as soon as the balance gets too big, we begin to make the minimum payment, in the hope that dear Providence will give us the cash to overcome our debt. Even though we know it technically, we do not acknowledge the fact that we are paying double interest.

One is the fee for using the card, which takes on the shape of a percentage and the other is the percentage rate that you must pay for financing. In addition to this, the interest rate is high, considering it a short term APR. Despite that, we make it a long term debt, because we keep postponing the big payments, getting into a downward spiral with a "finish line" that says "BROKE".

Hey, Wait A Minute!

I am certainly not saying that credit cards are bad. They have their advantages and disadvantages like every other financial tool. It is just that they must be used for what they were invented for.

With a credit card, you do not need to carry cash around and, if you are in need of a little cash to buy something you can not pay for with plastic, you can draw it from the corresponding ATM and pay for it when your monthly balance comes.

Use The Right Tool

If you need another kind of sum, do not use a credit card. That's what loans are for. It is like using pliers to hammer a nail. You end up spoiling the pliers and you might even end up with a smashed thumb. My father, a man whose wisdom I discovered completely only after he passed away, used to say, "Use tools for what they are meant for".

What Can A Loan Do For Me Now?

Once you have a credit card debt, you can use a loan to pay it off. But do not crucify the card! Learn how to use it and make the best of its advantages and stay away from its disadvantages. A loan can give you even more profit if you use it right from the start, using your good credit rating, obviously before it is spoilt by credit card default.

Melissa Kellett is an expert loan consultant who has worked for twenty years in the financial industry and helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and many other types of loans and financial products. If you want to learn more about Bad Credit Personal Loans and Unsecured Bad Credit Personal Loans you can visit her site http://www.speedybadcreditloans.com/
Article Source: http://www.articlealley.com/http://melissakellett.articlealley.com/avoid-the-eternal-credit-card-debt-threaten-1020514.html

Will opening a new credit card hurt my ability to take out student loans?

I am starting law school in the fall and will need to take out students loans. Although I always pay my credit card on time and have never missed a payment, my douchely credit card company has raised my interest rate twice. It went from 9% to 16% and recently, without mentioning it to me, went up to a whooping 23%, which is just disgusting. I need my stupid card to cover emergency and education related expenses. Applying to schools is expensive and I need to be able to slowly pay off things like review classes, application fees and seat deposits. I need my savings to help pay for moving expenses and a car which will be necessary for the school I'm going to. Will opening a new card with a lower interest rate hurt me when I'm applying for loans? I can pay off my current card by April and will be able to close the account. However, I will need a credit card to pay for a seat deposit which will be $1000 over the course of April and June. I would like to put it on a card with a lower interest rate, I have several offers, but will it kill me when I am applying for loans?
I don't carry balances every month. It depends on the month. I always pay WAY more than the minimum payment. I simply cannot afford to pay 1,000 dollars in application fees all at one time. However, I slowly chip away at this balance over the course of 3 to 4 months and I never use more than 10% of my available balance. I have had my available balanced raised before my interest rate was raised as well. I have never had more on my credit card than was in my savings. I just need the card to control cash flow. I just need to know if a new card will severely lower my credit?

Answer
FICO is sooo complicated.

Here are the things that can hurt:

Closing out old accounts (credit history is a big factor in your score).
Closing out accounts with high credit limits (artificially increases credit utilization, also harmful).

Opening a new line of credit is a hard pull on your credit report (5 points usually). Also, having too much credit card debt is bad (keeping your credit utilization under 30% is ideal).

If you close out that account, your FICO will drop. No one can possibly predict how much. Generally, closing out a paid off account may affect your score for 6 months to a year. Again, if this is an older account and/or has a high limit, the affects are potentially longer and more damaging.

If you are attending a university with a credit union affiliation, go there and inquire about their credit cards. By law, credit unions have to cap the amount of interest they can charge on credit cards at 18% and many of them are much lower. If you close that old account and get a new card with a similar limit, your FICO won't take as big a hit, but make no mistake, any account closure will affect it. Hopefully, your current credit card isn't your only item with a revolving balance and is relatively new. In that case, your recovery time will be minimal.

Sad, isn't it? No matter what we do, these card companies still retain the upper hand.
-----------------------
Bottom line - the hard pull on your credit report will lower your FICO temporarily but it will recover in 6 months.

Whether or not having another revolving account open will affect your ability to get student loans is something we cannot predict. Lenders look at how many accounts you have open and how much of those accounts are utilized. Keep your balances under 30% of the total credit limits. Two accounts could hardly be considered too many open lines of credit, but we don't have your financial statements or know how much you need in loans.

Sorry about all of the scam answers you're getting. They are reported, but Yahoo doesn't remove them. Pretty soon, Yahoo answers is going to be taken over by the spammers and scammers and legit people are going to flee in droves.

Think you can answer this question better? Kindly help others and answer below.

Sponsored Ads: