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Barter Credit Repair
Restoring Credit is Essential for surviving in today's time.
Today barter is moving back to the system as many people
including business owners find it to be a solution for getting
out debt or expanding their company. This might sound crazy,...
Consumers, Beware The New “Wave” Of Credit Cards
J.P. Morgan Chase About the Author
© 2005, http://www.yourfreecreditreportnow.com Author: James H. Dimmitt James is editor of "TO YOUR CREDIT", a free weekly newsletter with tips to help you manage your personal finances. Subscribe today and...
How Can A Qualified Mortgage Consultant Help Boost Your Credit Score?
How Can A Qualified Mortgage Consultant Help Boost Your Credit Score? By Jansen Drake, CMS 1st Metropolitan Mortgage Marietta, GA – Consumers interested in purchasing or refinancing a home will pay an interest rate based on current market...
Managing Credit Cards Effectively
Credit cards are almost a necessity in today's society. It has become harder and harder to get through life without plastic. If you want to make purchases over the Internet, guarantee a hotel room, or perform a wide variety of other financial...
What's in my credit report?
Your credit report contains a list of every member creditor who has lent you money or provided you with credit in any way. It shows your charge accounts, automobile loans, bank and student loans, home mortgage, and any other credit-related...
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Escaping the Credit Card Death Spiral
You’re burdened with crushing debt and at the end of your rope. There’s got to be a way out. You go to the door every day, expecting bad news. Your minimum credit card payments are eating up most of your paycheck every two weeks. You can’t go to dinner, go on a trip, or save for your kid’s education, and it just keeps getting worse. You’re using your credit cards for living expenses now. This really sucks!
Many people are finding themselves in this situation; the “Credit Card Death Spiral”. As the nation’s credit card burden continues to climb, the number of people facing this credit nightmare is increasing at a frightening rate. It happens for many reasons and is depressing and debilitating. Credit card companies have relaxed the initial requirements to get a card in the last few years. The change is allowing people with marginal credit scores to get a number of credit cards. In addition, many of these cards have higher credit limits than in the past. This combination has encouraged many consumers to take on much higher levels of debt than in the past.
In addition to the relaxation of credit card requirements, lenders are changing the way they do business once a consumer has the card. In the past banks and other credit card issuers would not let you charge over your credit limit. This has changed. Now, many financial institutions will accept a charge even if it puts the account over the credit limit. When the account goes over the limit, they charge a hefty fee, raise the card holder's rate, or both. Many credit card issuers are doing this and it can raise
rates on a credit card to over 40%!
Here’s one common scenario. You have a card with a 12% rate and a $5,000.00 credit limit. Your card’s current balance is $4,475.00 and
you're picking up some clothes and school supplies at a back to school sale. You visit a few stores and pick up some items. Like most people, you don't have your exact account balance memorized. Your last purchase takes you a just few dollars over your limit. The charge is approved anyway.
Imagine your surprise when you get your next credit card statement. Your interest rate has been raised to 30% and your minimum payment, which had been $88.00, is now $168.00.
To really pour salt in your wounds, the bank has added a $39.95 charge for exceeding your credit limit. It gets much worse. Not only does the 29% interest rate apply to the purchases you just made, it applies to your credit card's entire balance!
This type of scenario occurs hundreds of times every day. If left unchecked, you’ll enter the “Credit Card Death Spiral” that many times ends in bankruptcy or, at least, a horrible credit picture. There are ways to escape this chain of events. One choice for many is through a debt consolidation loan.
A consolidation loan consolidates the borrower’s debts by paying off the smaller loans with one larger loan. This type of loan typically uses equity in the borrower’s home as collateral for the loan. Having a secured loan enables the interest rate to be much, much lower than the unsecured credit card loan. The lower rate creates one payment that is substantially lower than the total of the previous credit card payments.
For more on how to escape the Credit Card Death Spiral see my website at The Debt and Loan Consolidation Guide
About the Author
Steve Faber writes about a variety of topics from business to home theater systems.
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