Bad Credit Loan Articles and Blog Posts
- Evaluate sources of income. Many people talk about developing a budget. Starting with the income is important to gaining a perspective of what money will be coming in over the year by months. This is especially important if there is any seasonality to the income, such as bonuses and periods of high earning. This is also an excellent time to evaluate potential ways to increase income from different sources.
- Understand all expenses. Once there is a detailed understanding of total income, it is possible to evaluate the impact of all the expenses that are a part of living each year. It is easy to look at total income and forget about both regular expenses and contingent expenses, such as major auto repairs, medical costs, and unexpected losses. Once those are totaled up, and a contingency and savings fund is added in, the net shows the real cash flow for the year. Assuming it is positive, that amount is what is available to increase total savings and net worth. If there is a gap based on realistic numbers, that will explain why there seems to be more month than money every pay cycle.
- Maintain an emergency and contingencies fund. Unexpected expenses are simply a fact of life. They are the biggest busters of savings plans, both eliminating the ability to save and draining what is already set aside. An emergency fund of at least two months income is considered a prudent financial planning step.
- Maximize savings and investments. Note the expectation of calculating expenses includes a specific allocation for savings. Simply planning on saving what is left over from paycheck to paycheck is often nothing more than a plan for failing to save. In fact, there should be a specific amount set aside each pay period, with additions coming from what is left over. As Americans age, more are getting concerned about retirement and are focusing on saving. Really building net worth includes both setting aside cash and developing a prudent investment plan.
- Make retirement a priority. There are a number of ways to save for retirement that provide the potential for real tax savings. It should be a priority to fund IRAs and 401ks each year, and to work with a financial planner to ensure the best approaches to developing a long-term savings and investing strategy. This is where the concept of time value of money is most important, with early savings making a big difference in total funds available at retirement.
- Apply the “Pay Me Now or Pay Me Later” concept. Most financial planners point to the single greatest secret of financial security as living beneath, rather than above, one’s income. On the other hand, the greatest mistake is living above one’s income. In the first case, a family can set money aside and have it earn its own income, working for a secure future. In the case of overspending, one is not only losing the potential to earn income, there is the added burden of paying interest. Many are surprised to learn that they can still be paying for the shoes they bought their grade-schooler when they start college if they put it on a high-interest credit card and only pay minimums each month. Avoiding that trap is essential to achieving long-term financial freedom.
- Avoid interest expenses. While credit can be a useful and necessary financial tool for certain things, it is useful always remember what interest really is. When debt is incurred, interest works in the opposite direction from when it is earned on savings. In other words, it either works for or against the average person. Pay credit cards in time to avoid interest charges, pay mortgages and car notes on a bi-monthly basis, and take the opportunity to avoid any unnecessary loans, no matter how small the interest charges seem to be.
- Manage credit cards and personal credit wisely. While this sounds much like avoiding interest, it implies even more discipline. Instead of having multiple credit card accounts and small loans, consolidate them into one or two with the lowest possible payment. This makes it easier to maintain credit ratings by not missing small payments. Also, it is easier to understand the total paid each month when it is in one or two larger amounts. Importantly, avoid the trap of getting further into debt with new accounts after consolidating existing amounts.
- Buy a used vehicle. Other than home mortgages, the biggest lifetime expenditure for many families is for autos and trucks. Simply buying a good used car and paying cash, while saving the difference, can mean as much as an additional $100,000 to $200,000 in retirement savings.
- Save any unanticipated income. Rather than spending an extra bonus, increases in salary or other additional income, consider setting a large part of it aside into the savings, investment, or emergency fund. If the amount is large enough, it can make a significant difference over the ten to twenty or more years it accumulates in a 401k or other investment.
The holiday season is meant to bring happiness. It is a time to share with family and friends. It is a time to indulge in large meals, attend parties, and share gifts. It can also be a time when a person goes into too much debt. Avoiding the holiday debt problem is possible, it just takes a little bit of creativity and some planning.
1. Take Advantage Of Your Credit Card Rewards.
Many credit cards give you points or cash back options on your credit cards as a reward for using their card. Take advantage of the rewards that you have accumulated by cashing them in for gift cards that you can give as gifts or taking the cash to use for holiday spending. offer. Many cards will offer special discounts to their card members if they shop at that store. You should also look at different reward programs that your credit or debit cards may certain stores using the links from the credit card page. You can find percentage off discounts, free merchandise discounts, and free shipping for your purchases. As an additional bonus, the money that you spend on the card will help you accumulate more rewards that you can use during the next holiday season.
2. Watch For Real Discounts.
Black Friday is not always the best day to shop for the holidays. Retailers may offer some discounts on this day that are truly deals, but overall pricing throughout the stores are the same, if not higher, on regular merchandise. Watch for deals throughout the year for holiday gifts and stash them away until the holiday season. If you are not they type of person to store gifts all year, wait to go holiday shopping until the first week of December. Retailers begin to rapidly drop prices at this time to move more merchandise…
Another way to reduce holiday spending is to shop online. You can use comparison websites to find the best deals on the products that you wish to purchase. You can also take advantage of your search engine by searching for online codes for additional discounts and free shipping. Make sure that you jump online on the Monday after Thanksgiving. Known as Cyber Monday, retailers offer unbelievable online-only deals on holiday gift items.
3. If gift cards are your favorite choice of gift, there are several ways that you can reduce the cost of giving these gifts.
If you are going to give a gift card that is not for any specific store, such as a Visa or American Express gift card, you should reconsider. Both of these types of cards often charge you a fee just for purchasing the card. Most bans will sell you these same types of gift cards at no cost. Five bucks may seem trivial, but if you are handing out 10 or 20 cards, these fees can add up quickly.
Gift card exchanges can also be very beneficial to your holiday costs. If you received gift cards that you do not want to use, you can cash them in or trade them for others that you can use for gifts. Even if you do not have any old cards that you want to trade, you can still visit these gift card exchange sites and purchase gift cards at below face value. These cards are guaranteed to be worth the face value on them, and no one will ever know that you bought them at a discount.
4. Avoid Store Charge Cards.
Many stores will have very loose credit approval standards during the holiday season. They will offer an immediate discount if you sign up for one of their charge cards at time of purchase. When you are making a very large purchase, the discount and thought of paying for the purchase over time becomes very tempting. It is important to avoid that temptation. Store credit cards often carry a very high interest rate. Any discount that you receive during your shopping trip will be quickly wiped out by the interest on the debt.
The best way to take advantage of “store credit” is to use their layaway service. Many stores offer layaway plans that cost only a few dollars to use. You can pay for the merchandise over time, and then you can have the merchandise out in time for the holidays. Many stores will even adjust pricing if the products you have on layaway go on sale or have their prices reduced, giving you additional savings.
5. Take Advantage Of The Dollar Store.
You do not have to go on a shopping spree for gifts at the dollar store, but they are a great place to save money on other holiday necessities. You can find boxes of holiday cards, tissue paper, wrapping paper and shipping supplies all for a dollar. You may find some great holiday decorations and stocking stuffers while you are there. There is no reason to spend a lot of money on these holiday expendables.
Of course one of the best ways to control your holiday debt is to save for the holiday season throughout the year. Start a Christmas Club at your bank or credit union and put money into the account every payday. If your bank does not offer this service, open up a free savings account and use it for holiday money. If possible, have the money directly deposited from your paycheck so that there is never any risk of it not making it into the account. Being prepared for the holidays and knowing what you have to spend can help keep you out of debt.
Having a competitive credit score is crucial for a consumer’s success in the world of debt. Traditional lenders weigh credit scores heavily when they leaf through applications for credit cards, auto loans and mortgages. A consumer who does not have a good credit score will have difficulty receiving fair interest rates and terms. A secured credit card is an excellent product for helping a consumer who has poor or non-existent credit to grow his or her credit score. A consumer’s credit score can change drastically within six to 12 months just because someone issued that person one secured credit card.
What Is a Secured Credit Card?
A secured credit card is a special card for people with bad credit. Consumers who do not have any credit history may obtain a secured credit card, as well. The secured credit card gets its name from the security deposit that consumers have to submit to qualify for the card. Secured card applicants have to deposit funds that the card company can hold for a specific period. The fund serves as security for the lender in case the debtor ends up defaulting on the card.
Does the Credit Card Company Keep the Deposit?
The credit card company will not keep a debtor’s security deposit forever. The lender will state its intended period in the terms when a person applies for the card. Many providers return security deposits after one year of faithful payments. The consumer has to keep the credit card account in good standing for the provider to return the deposit. Some credit card companies may hold the deposits for a long period, and others may have shorter periods. Nevertheless, the deposit stays in a bank account until the time comes when the cardholder meets the return requirements or terminates his or her account.
Does the Security Deposit Earn Interest?
Many credit card companies place security deposits into accounts that accrue interest for the consumer. However, not every company does that. Therefore, a consumer who wants to earn interest will have to examine the terms carefully to see if interest earning is an option. The person may want to select an alternative credit card company if he or she finds that one company does not earn interest on the security deposits.
How Much Is the Credit Line on a Secured Card?
In most cases, the consumer’s credit line is equal to the amount of money that he or she submits to the credit card provider. A consumer can usually request credit line increases with the submission of an additional deposit. However, a few providers offer their customers additional unsecured credit lines. For example, a person may submit a $49 security deposit and receive a $200 credit line. The credit line depends on the provider’s rules and the consumer’s history. New applicants should always research several providers before choosing one.
How Is the Secured Card Different From a Regular Credit Card?
The only difference between a secured card and a regular credit card is the invisible security deposit that the consumer places. Secured credit cards have Visa and MasterCard emblems on them just as regular credit cards do. The consumer can use a secured Visa or MasterCard at any location that accepts regular Visa and MasterCard products. Additionally, the credit card companies report the payments the same way they report them for regular cardholders. Most secured accounts show up as regular credit card accounts. However, a prospective cardholder should always verify that information with the credit card company first.
How to Get a Secured Credit Card
The first step in getting a secured credit card is finding one that suits the consumer’s needs. The person will want to compare at least three secured cards to ensure that at least one of them has some of the features for which the consumer is searching. For example, one consumer may want a secured credit card with a low APR. Another consumer may be more concerned with the annual fee than he or she is about the APR. A different person may be interested in transitioning from a secured card to an unsecured card. Not all card companies offer unsecured versions of their secured cards.
Applications for secured credit cards are usually very short. The person will need to supply basic personal information such as social security number, telephone number, address, employment information and the like. Some providers will run a credit check while other providers will base their decisions on the person’s ability to pay. Once the applicant obtains an approval, the system will prompt that person to send a security deposit. The credit card company will place the security deposit in the bank and then issue a card with a credit line that equals the security deposit.
How to Use a Secured Credit Card to Improve Credit Score
A consumer may notice a credit score increase as soon as the new credit card account opens. The number of accounts does factor into a person’s overall credit score. Therefore, a person with bad credit may see an initial spike after obtaining a secured credit card. However, the person will have to practice responsible credit usage to keep the spike and to raise the credit score further. Timely payments are one of the most important parts of a person’s credit score. A consumer will want to avoid making late payments at all costs. Late payments can make a credit score plummet. Therefore, the secured card payments have to be on the top of the debtor’s priority list.
Utilization is another factor that affects credit score. Having a credit card and not doing anything with it can affect a credit score negatively. A cardholder should always use his or her credit card even if it is for small purchases such as fuel purchases. Furthermore, the individual will want to pay close attention to the overall balance and the amount of money that he or she is borrowing. Using the entire balance of a credit card is a harmful move. A smart debtor will keep his or her utilization down below 50 percent. A 30 percent utilization number is ideal, but anything under 50 percent will show the creditors that the person is not desperate.
Building one’s credit score takes time. Credit score boosting is not something that happens overnight. However, a consumer can cause a consistent rise in credit score by following some of the above-stated strategies. The person should see significant credit score results after six months to one year of timely payments. Eventually, unsecured providers will send offers for the person to apply for their cards.