Posts tagged: late payments

Should You Get a Secured Credit Card?

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When you get a credit card, it pretty much changes your whole life because it shows you how well you can manage the money you have, and even the money that you don’t have, but that you have to come up with eventually. Better yet, it determines how financially stable you will be in the future, because managing your credit card debt either wisely or unwisely can make or break how well off you are. So how exactly are you supposed to protect yourself from all the risk you are taking when you apply for a credit card? After all, a credit card is something most people really can’t live without in today’s world.

There are two types of credit cards to be considered when shopping for the right one: Secured or unsecured. Secured is basically one that you have to put money down on so that they can use that money if you do not make the monthly payment. An unsecured credit card goes completely on collateral, without any secure amount of money that ensures that you will pay it all back. Depending on who you are, what your spending habits are, and what type of credit history you have, you may be better off getting a secured credit card rather than an unsecured one. Here are a few things to know about secured credit cards that will allow you to know if you fall into that category.

The main thing you would need to ge a secured credit card for is if you have a bad credit history and need to repair it. Secured credit cards are a way to make punctual payments on a credit card and get rewarded for it by having your credit score go up, but this is only possible if your credit card company is willing to report your timely payments to the major credit bureaus. Make sure, when you get a secured credit card, that the company you are going with will report the payments you make on time, otherwise there is really no point in having a secured credit card.

A deposit is required for a secured credit card, as I said before. You must put a certain amount of money into a deposit where the credit card company has access to it, so that if you fail to make payments on more than one occasion, they can sometimes resort to getting it out of your deposit to ensure that it gets paid, one way or another. This is a bit more safe than an unsecured credit card, but with either one, making late payments will not improve, but hurt your credit score even more.

There are a few requirements that come with a secured credit card. These requirements can be things like your age, income, or whether or not you have some sort of bank account. Still, it is easier to get approved by a secured credit card than it is to get approved by an unsecured credit card.

How Should You Choose a Student Credit Card?

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There are specific details that you should pay attention to when it comes to credit cards. They can either help or hurt your financial situation, and being broke AND deep in debt during college is the worst tight spot you could ever be in when it comes to money.

It is important, when you are looking for a credit card to use while you are in school, to find one that will be beneficial to you. You need one that will not allow you to spend so much that you get far beyond your ability to repay in debt, but one that will let you get the things that you need to that you cannot instantly pay for in this scraping-the-bottom-of-the-barrel time in your life. Here are a few things you should pay attention to when shopping for the credit card that is right for you.

APR

Knowing what and how the APR works is important. The best kind of interest rate you would be looking for is a fixed rate, but those are harder to find than a variable rate, and may not be a very low fixed rate. Sometimes you will benefit just as much with a variable interest rate. Make sure you know which you will be getting with the credit card you go with.

If you are on a variable interest rate, it is important to know by what system your interest rate will go up. Of course, this information is more important only if you will be carrying a balance from month to month on your credit card. If not, or in other words, if you plan on paying your credit card off as you go each month, the interest rate will not be such a big deal for you.

Do not confuse the APR with the introductory rate. Some credit cards will offer you a great intro rate, but will end up charging you a much larger APR after the time given with the introductory rate expires. Make sure that you go for the lowest rate possible that will last you longer than six months.

Rewards Cards

The credit cards that give you rewards for the purchases you make are the best kind. These kind of cards allow you, in a way, to get a discount on the things you purchase on credit. Try to go for a credit card that will give you the kind of rewards that you will use, like ones with points that you can cash in for a numerous amount of items rather than just something like sky-miles that you may not use.

Penalties

Read the fine print carefully. You need to know how much your interest rate will go up, and what other kinds of charges they will be pouring onto you if you make a late payment or two. You may not plan on making late payments, but it is important, when you are shopping for a credit card, to know how much you will be charged IF you fail to make a payment on time, and what other credit card companies would charge you that might be easier on you.

Which Is Better: Your Credit Card Or Your Home Equity Line Of Credit?

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So you bought a beautiful mansion with a home equity line of credit about ten years ago on a twenty year payment plan. You are getting nice and cozy in your new dwelling, but you still have ten more years before it is completely paid off. So you sit there and think about how good you’ve got it, at least compared to the early days when you lived in that one bedroom apartment. But do you really have the best deal you could get? Are you paying more than you need to on your home? You could be, and here’s why.

Using a home equity line of credit has been, through the past, the wise thing to do when buying a home. The interest rates on home equity loans were way cheaper back then, but lately they’ve almost doubled from 4% to around 8%. So is there a way you could save a little money on interest while making payments on your house? There very well could be.

Ever thought of using a credit card?

Many people think the mere idea of transferring your loan from a home equity line of credit to a credit card is absurd. But think about it. The interest rates on a home equity loan are higher than many credit card rates. Using a credit card to pay off your home loan could save you money by lowering your interest rates.

When shopping for the right credit card, remember:

The kind of credit card you use is what will determine whether or not you save. If you shop for a fixed low interest rate on a credit card you’ll save.

The credit limit is important too. It is best and most healthy for your credit score if you find a card that will allow you to raise the limit to about double the amount you owe on your home. That way, once you transfer your balance, it won’t appear to creditors that you came too close to your limit.

Once you have the balance transferred

The worst thing you can do is make a late payment on your credit card, especially since you have such a huge amount to pay back. You should always pay at least the minimum of what you owe so that your interest rates won’t get hiked up. Paying late on credit cards allows them to increase your interest rate dramatically, making you pay even more than you would if you had kept it on a home equity line of credit. Not to mention the fact that late payments show on your credit report. It may be wise to keep your home equity line open so that if this happens, you could transfer the balance back.

Whether it’s a home equity line of credit or a credit card that is the best way for you to pay off your home loan is up to you. Depending on your circumstances, transferring your home loan to a credit card could save you a lot of money.