Archive for July, 2011

3 Ways To Use A Credit Card To Avoid Debt

July 8th, 2011

This is a guest post on credit card use from financial blogger Mike Brains.  Do YOU think credit cards are a good option to avoid debt?  Tell us in the comments below.

3 Ways To Use A Credit Card To Avoid Debt

It might seem like an oxymoron – using a credit card to avoid debt. However, it’s not all bad news. Credit cards can offer options if you’re responsible and clever enough to take advantage of them. Avoiding debt in today’s economy is a difficult task at best, and we all need every tool at our disposal to help. Instead of allowing that little piece of plastic to lead us down the debt road, harness its power to pull us out. Yes, it can be done!

Credit cards are a fact of the modern life and have become very useful in today’s financial climate, but only if used carefully. Too many people apply for a credit card and instead of becoming intimately familiar with the accompanying credit card agreement and remembering credit cards are a loan and not “free money”, things can spiral out of control very quickly. The thing to keep in mind is to avoid debt. If you are already enmeshed in a debt quagmire, you need a different strategy.

Here are 3 ways to use a credit card to avoid debt:

1. Don’t purchase anything you cannot afford. A credit card can give you a huge edge on taking advantage of a great price on a big-ticket item, but if you can’t afford it in the first place, walk away. Miss a payment or fail to make the minimum payment at the end of your billing cycle, and you’re looking at steep interest rates and outrageous fees which will eat up any great savings you’re receiving. Buy it and use your credit card only if it’s a fabulous deal, only if you can afford it and only if you can pay it off on time.

2. Observe the limit. It’s not just the limits of your credit cards you should keep an eye on, but also how they affect your credit score. A good credit score is a defining factor in many aspects of your financial life. It can determine whether you get the house, the car, or at what rate. Keep your debt at least 30% below your credit limit. Potential loaners will look at your debt load and this will significantly impact your credit rating.

3. Choose carefully and choose wisely. The type of credit cards you choose should be made according to your lifestyle. The rewards and perks a credit card offers needs to evaluated carefully to determine if they are the best fit for you. For instance, if you travel a lot, then an air miles credit card may be worth considering. If you don’t travel then then rewards such as cashback credit cards might be your best option.

Make smart choices, make your payments on time, and keep your debt ceiling down. These are the best ways to avoid crushing debt while using credit cards.

Guest Post

3 Places To Get Debt Advice

July 2nd, 2011

This is a guest post from financial blogger Mike Brains.  What do YOU do for debt advice — use professionals, or do it yourself?  Tell us in the comments below.

3 Places To Get Debt Advice

With a record number of foreclosures and bankruptcies, finding places to get debt advice isn’t much of a challenge. The challenge lies in getting the right advice for a particular situation. Many people struggle with major decisions in this difficult economic climate, from contemplating the differences between balance transfer credit cards to choosing a low APR credit card that best serves their needs. Others are looking for help with balancing bill payment with a reduced income to avoid the worst case scenario.

Professional debt services can help negotiate payment plans with credit card companies and may also be able to reduce late payment fees and high interest rates from the overall balance. They are also able to help consolidate loans, credit card balances and other expenses into one manageable payment. This alone may be enough to help people with a debt problem to get it under some kind of control.

Some non-profit organizations specialize in debt reduction and can aid in formulating a budget to control spending and facilitate bill payment. Many people do not realize where their income goes, and by analysing spending habits they are able to make necessary adjustments which are beneficial to their complete financial picture. Sometimes all it takes is for options to be laid out in an organized manner for a clear outlook.

Specialized debt lawyers can help with more dire situations when bankruptcy or foreclosure seems inevitable. Although there are options for people to handle either situation on their own, the fact is both choices involve complicated laws and actions that may be better left to professionals for an optimal outcome. There are many different scenarios and it can be confusing trying to negotiate the maze of requirements, conditions and laws which impact bankruptcies and foreclosures.

A serious debt problem is difficult to get under control, and it may take a professional to arrive at the best option. Every situation is unique, and presents a different set of challenges. Often, the financial picture can look quite grim until someone from the outside evaluates the entire  financial position and is able to recommend a beneficial course of action. In any case, consulting some kind of professional debt service might be the best decision someone struggling with money problems can make in the first place.

Guest Post