Credit history schemAs we get out of collage and grow older, our needs expand and time comes in life when we need a car and then a house to live in. Expenditure builds up very fast. We Apply for one Credit Card for emergency and before we know it, our pocket is full of credit cards and we have many supplementary credit cards too for our wives, girlfriends and children. We also undertake personal loans to purchase luxury items like furniture, home theater, backyard swimming pool etc. etc.

Whenever we acquire a new line of credit, we are actually reducing our future disposable income. This disposable income keep shrinking till our situation get very desperate.

If things keep going well (we don’t encounter a major problem with our health or job. And we are also lucky enough to survive the mid life crisis that is so common these days that every ones seems to have it. It’s more common than influenza.) and we do keep paying all our obligations on time i.e. Utility bills, mortgage payments, credit card bills, chances are that we do have a very sound Credit Score. Which is quite a good thing, but wait.

Let’s sit down and check each and every debt account. Let’s average our minimum monthly payments and accompanied interest rate. Mine average is quite horrible. It’s 27%. I can bet that your’s will be way more than your best guess.

“What is the problem with these credit card companies” I am now getting angry at them “They are getting money from central bank at little more than 2% and charging me upto 30%?????” Such a banking spread is really criminal. but since I can’t do anything about them, Let’s see what my options are..

After little searching on Internet, I came up with some great options to break out of current situation. Best among them is to seek a debt consolidation loan so I can all these monthly payments into a single payment and also reduce my effective interest rate to a reasonable level.

The Great thing about loans for people with no credit history is that they will sum up all of my debts and one monthly repayment is much lower than the sum of all the minimum payments I currently have to make to all of these credit card companies. I have only one due date to remember and only one check to write… It is a major stress remover indeed.

I have already spoken with a few banks. They are saying that because I have a sound credit history and a good credit score they will be more than happy to consolidate all of my credit card debt into one loan. They said that main reason they are very eager to get my account is that I have proven that I can make the monthly repayments on time and therefore will manage just one monthly repayment without risk.

Even in dire situations too, where the debt collectors are up your behind you, debt consolidation loan is still a great option. Although you won’t be able to get lower interest rates but still Its good in the sense that debt collectors will be off your ass and your monthly minimum payment will be manageable too.

If you own a house and have the mortgage on it which is less than the actual value of home, you have an option of getting a home equity loan. Unlike credit card, this is a secured loan and the interest rates a bottom low on it. By taking out this loan you can consolidate all your debts into the one. You will be able to pay off all your outstanding debts immediately and will be able to save thousands of dollar is interest payments.

If you don’t own a house then you will need to look for some other sort of secured loan to consolidate your debts so you can pay off all of your outstanding debts. paying off outstanding debt is important and vital. debt-consolodation-2

To secure a debt consolidation loan you will have to do some research on Financial Institutions and view their web sites to find out their eligibility criteria as well as terms and condition of the loan. It is very important to read the disclosure and Term and Conditions. If you don’t understand what a particular term means, don’t skip, Just search for it in google or look at Overlooking an important term can haunt you for years to come, so be careful.

Most of these web sites do have a loan calculator of some sort. Normally it is very easy to use. Use it to calculate the monthly repayments, the amount of money you may borrow as well as they give you a good idea of interest rates.

Once you have all this information you should decide which banks or financial institution you will work with and start filling our the loan application. You will also have to arrange all the supporting documents as required by the lender.

Once you get payday loan with bad credit, you must clear all outstanding credit card debt and Cut your credit cards and close all lines of credit so that you may not fall deeper into debt. The point of no return starts beyond that…

Financial planning is a vital tool, use it to stay clear of debt. Try to save yourselves from getting too down in debt. If you get there anyhow then seriously think about bankruptcy as a good option. Sooner you do it.. better off you are..

A debt consolidation loan from is one monthly repayment and one lower interest rate that you can use to consolidate your debt.

Credit cards are a double edge sword. They can help make your life a financial heaven and hell depending upon how you use them. Following are some tips on using your credit cards wisely. The benefits of using your credit card wisely include but not limited to cash back, bonus points, airline miles and at best a great credit score. On the other hand if you decide to use them in an unwise fashion, you might end up in a mountain of debt.

Rule No. 1 is to pay off all you balance every month. You will have to pay interest on your spending if you don’t do that and that interest rate is very tricky. It takes a lot of discipline to pay back balances on time. According to a recent report by Federal Reserve, Almost 40% of all house holds in America carry a substantial amount of credit card debt.

Protect Your Credit Score
Make all your payments before the date they are due. Late fees can pile up quickly as they are around $20 – $50. If you miss more than two payments that will automatically increase your interest rate to “Default Rate” (around 24% to 30%) . Late and missed payments also lower your overall credit ratings. That can trigger interest rates on other loans to go up as well as getting soft loans in future impossible.

Only Keep the Cards You Need
Most of industry experts recommend that you should carry at least 2 and at most 6 credit cards. Stay in this range. If you apply for lots of cards that will damage your credit score. Similarly, closing many cards at the same time will also hurt your credit score. So better safe than sorry.

Read the Fine Print.
It is always good to know the interest rate you will be charged, also it is very important that you know the grace period for paying your balance before they start charging interest and last but not the least be aware of your credit limit.

Beware of the companies that use two-cycle billing? (Because two-cycle billing means you might have to pay interest even when you carry no balance.) Also, 50% of credit cards these days come with a “universal default” stated in fine print. This clause allows credit card companies to increase your interest rate if you are not paying on time their credit card bill or… Yes OR any other bill.

Always Negotiate.
If you have a good credit score (i.e 700 or more) then you may be able to get a better interest rate or convince the credit card company to drop the late fee.

Stay in your Limit
Never exceed 40% of your credit limit on any of your card. Credit bureaus don’t give a dime if you regularly pay off your balance at end of each month. They’re only interested to know how much of your available credit you actually use. If it is excessive, It is likely that your credit score will drop.

The devil in the details
After Bookies, Credit Card companies are worst of all crooks. They market many kind of cards that feature low interest, rewards or other benefits. You should be very very careful about the terms and conditions, especially those terms that are subject to change.

If you’re transferring the balance on your existing card to a new card that promises lower interest, find out how much the company will charge as Balance Transfer Fee. Always insist that the balance transfer be done via electronic fund transfer. This way you don’t accumulate interest on both the old and new accounts. Also you should be aware that most of these low-interest rate introductory offers only apply to the balance transfer. These attractive interest rates might not apply to new purchases.

Reward Cards that provide benefits like cash backs and air miles sound too good to be true. Most of the times they really are too good to be true. They usually charge a higher interest rate, which offset the reward if any. situation is even worst if you carry a balance on such a card.

Worst thing about these reward offers is that companies can change these offers or even cancel them with little notice and may come up with new conditions to earn rewards for example, you have to spend a X amount to earn the X points in reward. (Such a non-sense)

Convenience? Sometimes
Well credit cards are not all evil. They are god send in some situations. for example if you buy an item that proves to be defective or just simply protest a charge, your credit card company is legally bound to investigate the matter. Also If your card is stolen, you’re not liable for any unauthorized charges above $50.

Never Use “Convenience Checks”
Never Never use “convenience” checks that your credit card company sends you through unsolicited snail mail. They’re costly (hidden fees upto 5% of the amount you write). These so called convenience checks have no grace period and carry a hefty interest rate. These Checks also don’t provide you with the kind of consumer protection you get when you make a purchase with your credit card.

Credit Card Protection insurance
Credit card protection insurance is normally useless as it generally covers only the minimum payment incase you become disabled or unemployed. The interest continues to build up and get added to your outstanding balance.

Stay Clear of Store Cards
Each department store credit card account you open drastically reduces your credit score. It might entitle you to cardholder’s discount, but at the end they are costly and not worth it. If you do frequent a store a lot, like twice a month then may be but limit yourself to one card at most..

Re-Establishing Credit
When things have gone bad and credit score has gone sour, easiest way to rebuild credit score is to get and use a few credit cards. But getting back into the credit game this way comes with its own drawbacks and hazards. Credit Card companies try to take advantage of your situation and charge you interest rates in range of 18% to 29% range and give you a very small spending limits. Such cards also have extra fees hidden in the fine print of credit card application or monthly statement. My Advice… Don’t take the bait. These companies will try to issue you many low-limit cards and if you get trapped, you will find your self in another mess of debt, late fees, over limit fees , high interest rates, collection agencies calling…..and what not and what not…

If for any reason you have fallen down the financial ladder into drain of debt, Please Only seek counseling from NGOs certified by National Foundation for Credit Counseling. Know your rights and protect them.