Credit Cards & Loans
Financial Experts Advise Caution with Zero-Percent Balance Transfer Credit Cards
Now that the spending holidays have passed, there is a lot of consumer concern about eliminating the debts incurred on cards and starting credit repair initiatives. For consumers that overspent and now face the inability of being able to repay their debts, it is important to explore debt relief options before choosing one, especially for those considering a zero-percent balance card.
Balance transfer credit cards give consumers the option to transfer existing card balances from other cards with the theory that it is easier to pay down one debt, especially at a zero-percent interest rate. However, there are some precautions to take with a zero-percent balance transfer card.
Consumers are being advised to look at every detail of the credit card offer before signing on to transfer balances. What you don’t know about balance transfers could cost you more in the long run. It is advisable to first look at the length of time the 0% rate is being offered and be assured you can repay the balance within that time frame. Many consumers fail to realize the zero-interest offer is only for a promotional period. Once that time frame ends, the interest rate could be much higher than you can reasonably afford.
The other important aspect of balance transfer cards consumers need to understand concerns the fees for card use. Transferring of balances from other cards is not without Read more…
Restart Old Debt in Exchange for New Credit Card?
People struggling with bad credit know how difficult it is to get approved for a new card. But what if you were given the chance to open a new card with the agreement that you’d pay off an old debt? Would you accept the offer?
In December 2011, the Wall Street Journal reported a credit card arrangement just like this. Consumers with bad scores were able to get a new card, but it required them to pay several hundred dollars per month toward an old debt. Is it worth it?
How Old Debts Become Duds
After a certain amount of time, creditors and collectors lose their power to pursue you for a delinquent debt. The statute of limitations, which determines how long you can be sued for a debt, is different for every state, but ranges from 3 to 15 years. In most cases, the statute of limitations on debt is six years or less. If a collector sues you for a debt you haven’t touched in several years, all you have to do is Read more…
No Preset Spending Limit – Can Cards Affect Credit Score Negatively?
Chase Bank recently announced a big change to its Freedom cards – the credit limit will be replaced with credit access lines, in other words the cards will no longer have a preset spending limit. The concept of no preset spending limit isn’t new, charge cards have used these spending limits for years. More cards with revolving lines are replacing the “hard” credit limit with a “soft” one that can be exceeded with no over-the-limit fee.
One of the biggest problems with the no preset spending limit is that you don’t have a physical signal telling you to stop using your card. If you have a traditional credit limit and you’ve chosen not to have over-the-limit transactions processed, you’ll get denied if you try to make a purchase that puts you over your limit. Even before you get denied at the register, you can check your available credit to see how much you can purchase. Without a credit limit, you’re prone to the type of overspending that leads to missed payments, delinquencies, and other debt problems.
Credit bureaus and scoring models handle some no present spending limit accounts in a way that hurts your credit score. Remember that 30% of your score is based on your credit utilization – the ratio of your credit card balances to their limits. Creditors who have Read more…
Be a Great Applicant Despite a Bad Credit Score
A bad credit score can hold you back from a lot of things – buying a car, owning a home, getting good insurance rates, and even from getting a job. Most of the time, your credit score isn’t the only factor that’s considered when you put in an application. Don’t be an all around bad candidate just because your credit is bad. Look great – on paper – even if you have a bad credit score.
Don’t keep making credit mistakes.
The older the negative information on your credit report, the better you look. So, from now on, make sure you pay all your bills on time. Remember that creditors report 30 day late payments, so if you missed your due date by a couple of days, make your payment before the next statement arrives. You’ll still face a late fee, but you’ll avoid having the late payment being entered on your credit report.
Pay off some debt.
You’re a better candidate for credit cards and loans when you have less outstanding debt. When you do have credit card balances, it looks better when those balances are below 30% of the credit limit. So, if you can’t afford to pay off all your balances, at least pay down the balances that are close to the credit limit.
Keep your applications to a minimum.
Even an applicant with a great credit score looks risky when they start applying for several Read more…
Potential Disadvantages of Balance Transfer Cards on Credit Score
When you are considering applying for a new credit card that offers balance transfer capabilities, it is important to consider the effect the balance transfer card will have on your finances in general – specifically your credit score.
In most cases, people will apply for a balance transfer credit card with the intention of relieving other credit card debts. For some, this may mean there is already a danger of having a low credit score due to slow payments or a lack of payment when they can’t keep up with their financial obligations. With a low credit score, there can be long-term financial problems and a balance transfer credit card can make the situation even worse.
Here are some additional considerations to make before applying for a new balance transfer credit card:
The Inquiry Will Hurt
When you apply for any credit card or line of financing, the lender will check into your history to determine if you are creditworthy. When you submit an application, the inquiry being made will impact your credit score. It may not make a big dent but if your credit score is already low, it could Read more…
Duo Cards About to Make Debut. Debit & Credit in One Card!
A new kind of credit card is set to draw consumer interest soon. The US Fifth Third Bank has announced its plan to introduce a new kind of credit card on the market for the first time. The card, dubbed the Duo Card, will combine both debit and credit card accounts on one plastic card. Consumers using the card will have the option to use the card by accessing their bank account directly or their line of credit. This will eliminate the need to carry multiple cards in a wallet and still have access to your money.
The Duo Card will also feature popular credit card programs such as rewards programs where customers can cash in points earned on purchases to repay loans received from the bank’s line of credit. Additionally, like a traditional credit card, interest rates will vary based on consumer credit scores. Currently the annual percentage rates are Read more…
How to Deal When Your Kids Hurt Your Credit Score
As a parent, you may choose to provide financially for you children even after they have turned of legal age and accountable for their own finances. However, it is important to realize that while your gestures may be nice, the fallout from the gesture can do your credit score serious damage. You will then need to repair your credit if you wish to continue keeping a solid score for your own financial well-being.
Why Lend Your Credit
Many young adults lack the financial history necessary to get credit. It is a Catch-22 situation and in some cases, parents agree to step in and co-sign for credit cards, car loans, or student loans. Parents typically do not agree to pay the monthly note but as a cosigner on a financial obligation, the parents ultimately become responsible whenever a payment has been missed. By the time a late payment has gone overdue, many parents will find their score has already dropped and their credit history has been affected.
While young adults may lack credit experience, it may not always be a wise idea for parents to Read more…
Getting Approved With a Low Credit Score
By now, you probably know that banks, insurance companies, and other businesses check your credit score as part of the process. You’ve probably experienced one of the downsides of having bad credit – having your applications denied. Fortunately, there are ways you can be approved even if you have bad credit.
Make a Bigger Down Payment
When you’re applying for a mortgage, the lender may approve your application if you can make a larger down payment. A larger down payment means you’re accepting some of the loan risk and possibly even lowering the amount of the loan. You may have to increase your down payment by several thousand dollars to qualify for the loan.
Use Non-Traditional Tradelines
One of the unfortunate things about your credit reports with the major credit bureaus is that they only contain major accounts like credit cards and loans. They don’t include payment history from all the other accounts you faithfully pay on time each month, like your rent or your cell phone bill. Some lenders may be willing to Read more…
Application Denied? It May Not Be Bad Credit
If you have credit card or loan application denied, don’t assume it’s because you have bad credit. Even people with excellent credit scores get denied for credit from time to time. That’s because banks consider more than just your credit score when they’re deciding to approve you for a credit card or loan. Here are some other reasons your application could be denied.
You’re not old enough to have credit. Generally, you have to be at least 18 years old to be approved for a credit card or a loan. New changes to the credit card law require that credit card applicants under age 21 have their own source of income or have a co-signer to be approved for a credit card.
You don’t have enough income. Credit card companies are now prohibited from giving a credit card to anyone who doesn’t have sufficient income to pay back the credit card balance. On top of that, they have to ask only for your individual income, not your household income as they’ve done in the past. Credit card applications don’t state the monthly income requirements to qualify for a credit card. So when you write in your income, you don’t know whether it’s enough to get the credit card or not.
You have too much debt. The amount of debt you have is another factor that banks take into account for your credit card or loan application. Even if the amount of debt you have isn’t taking a toll on your credit score, it could still keep you from being approved. If the bank thinks Read more…
Do You Know Which Loan Types Benefit Your Credit Score?
When you are attempting to improve your credit score and repair your credit mistakes from the past, there are certain loan types that can help the process. Part of the requirement for having excellent credit is the type of loans you have as well as how you manage those loans on a consistent basis. Your credit score will also benefit from having a variety of loan types. The more diverse your background, the better it is for you.
Why Do Loans Help?
Your credit score is a reflection of how you manage your credit, bill payments, and limitations of credit. While it seems counterproductive that the more loans you have the better your credit will benefit but it genuinely is the case when it comes to personal credit.
The logic behind this is that the lenders want to know you have the ability to juggle multiple account types and terms without problems. This ensures them you will be less likely to default on repaying their loan since your history shows strength when it comes to monthly obligations. Your ability to handle multiple account types also helps lenders to understand you are financial stable enough to see through your commitments.
What Kind of Loans Will Help?
A basic rule of good credit is to never have too much of one thing. For instance, you can have a great credit history payment-wise but if you only have Read more…