Posts tagged: credit card debt

Top 3 Pitfalls of Refinancing Your House To Pay Off Your Credit Cards

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Some people believe that when you have huge amounts of credit card debt, refinancing their home is a perfect solution it all off. Why not? That would relieve some of your interest rates and a whole lot of your stress, and you are already paying on your mortgage anyway, so what could it hurt? But think about it. Is it really a good idea to put more debt into your home? In the long run, it’s really not too great of a deal. The top three pitfalls of refinancing your house to pay off your credit cards may shed a little light no the subject, and it just might change your mind.

1. More interest

No, not necessarily higher interest rates, but more interest. You already have to pay enough interest on your house as it is. In fact, the first several thousand dollars you spend when you begin to pay for your home is wholly dedicated to paying off the interest. It is not until later that you even begin to pay on the principle. Having this much interest to pay over such a long period of time, may actually extend the time it takes you to pay for your home.

2. Longer payment period

If you refinance your home so that you can pay off your credit cards, it takes a lot longer to pay off your home. Having a home loan is a long and drawn out process as it is. If you add your credit card debt to the debt that you owe on your home, this will increase the amount, and the time it takes to pay that amount off. Sometimes, depending on how much credit card and/or mortgage debt you have, you could end up paying off your loan for the rest of your life… or perhaps your debt could even spill over to a burden your children or successors will have to carry.

3. Putting your home in jeopardy

Transferring your credit card debt over to your home loan can be high risk of greater loss. For example, if you fail to pay off your credit card debt, the worst thing that can happen to you is you lose your good name in credit, you file for bankruptcy, your credit score goes down, and you basically have an extremely low chance of ever getting anything on credit for a really long time. Sure, that’s pretty harsh, but think about your mortgage. If you fail to pay your home loan, you are not only putting your credit at risk, but you also run the possibility of losing your home.

Whether or not it’s best for you to refinance your home to pay off your credit cards is completely up to you. The best thing you can do to help you decide is to know the factors that come along with it. If you know you can successfully pay for your refinanced home, and that you can save money doing it, go for it.

Rewards Cards Are My Best Friends

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There are many types of credit cards out there. So when you are searching for a good one, you should take into consideration what you can get back by using that credit card. Sure, you can get the lowest interest rates ever, make your payments on time, and end up saving money, but is there such a thing as making money with a credit card? Many people associate the word “credit” with the word “debt”, but when you use rewards credit cards, you can actually get money back from the things you bought on a credit card. Think of it as buying something on credit and getting a free gift to go with it. How much you spend depends on what the free gift is. Here are a few examples of the kinds of rewards you get by using these certain credit cards.

Points

Rewards cards will often give you however many points for a certain amount of money that you spend using your card. After a period of time, you can cash in your points to get discounts on certain items, such as gasoline, food, clothing, travel, and sometimes you can even trade them in to get cold hard cash. The longer you let your points rack up, the more rewards you get at one time. In a way, it’s like getting back some of the amount you spent on your card.

Travel Rewards

If you use your credit card to travel by air a lot, you can build up your air miles. Buying an airline ticket with your credit card earns you a lot of points, allowing you to get huge discounts on airline tickets. With some cards with specific rewards, you could get points added on if you buy a new car with your credit card. In any case, if you travel a lot, a travel rewards credit card will allow you to get discounts on your traveling expenses.

Zero Balance Credit Transfer

Some credit cards offer you the opportunity to transfer your balance from another card to theirs, giving you the benefit of having interest free payments if you pay them within a certain period of time. This is beneficial if you have high interest rates on one of your existing cards and wish to get them down at least to a low number. This allows you a certain period of time to pay off your debt with absolutely no interest to worry about.

If you are shopping around for a good credit card, why not get one that will give you a little back? Saving money in any case is a huge opportunity, and rewards programs allow you to get back some of what you spent. Depending on the type of person you are and your spending habits, it is up to you to decide what type of rewards credit card will be most beneficial to you. The biggest thing is to pay your credit card bills on time. If you make a lot of late payments, these rewards are not applicable to you because you don’t pay back what you spent.