Debt Management is Simpler Than You Think

If like most people you have outstanding loans, credit cards, store cards or any type of debt for that matter, then you will understand how difficult it is to make ends meet. Wouldn’t it be nice to be in the black with money being saved each month? This may seem like a million miles away at the moment but it is possible to accelerate towards this.

Clear Your Debts

One important thing to consider is that there is no point in trying to save money whilst being in debt. Interest rates are so low at the moment that you are going to get next to nothing on your savings. What is the point of having cash sitting in an ISA or savings account earning a small amount of interest when you are probably paying a huge amount more in interest on any loans or credit cards you might have. It’s a false economy!

If you have any savings, unless of course you are saving for something in particular such as a new car, TV or holiday then it’s financially sensible to use the savings to pay a credit card balance off. All of a sudden the money you were using to pay your credit card off each month becomes free to use on something else. You can now use this to over pay on your loan or mortgage. Most mortgages allow you to overpay without penalty by a certain percentage each year, usually between 10 and 15 percent.

It’s slightly different with a loan so just make sure you don’t overpay so much that you completely pay the balance off. Leave £50 – £100 pounds and pay it off the next month. This should avoid any early repayment penalties but check your terms and conditions first.

Hopefully, if you have been sensible with your money, not overspent on luxuries, and used all available spare cash to overpay on your credit cards and loans then you will soon become debt free and just have your mortgage or rent as the only major expense each month. You now have the choice to use the money you would have used on these debts to either save for a deposit on your first house or to overpay your existing mortgage.  Of course, after a few years of trying to clear your debts you may want to use it on a well deserved holiday or a new car. Whatever you do don’t allow yourself to start overspending otherwise you will soon be back to square one.

Clearing unwanted debt can be a long road due to the expenses of everyday life but if you can afford to overpay anything at all then make it happen. If you are lucky enough to receive a bonus from your work then use it to pay off a loan or credit card even though the more exciting thing maybe to blow it on a holiday or new Cinema system. You will be better off for it in the near future.

There is nothing wrong with trying to save money for the future but if you have plenty of outstanding debt there just isn’t any point until this debt is cleared. Get rid of the debt first then look forward to a less stressful future with your finances fully intact.

Coping with Identity and Credit Card Theft

You hear stories all the time about identity and credit/debit card theft but never really think it’s going to happen to you. I thought the same until one day last month when checking my online bank statement I noticed a strange transaction for over £250 with a weird code next to it. At first I tried to think if I had paid any bills or bought anything from abroad that I had forgotten about. I then checked with my wife who I share the account with that she hadn’t made any payments or bought herself a new handbag or pair of expensive shoes. When it was clear that neither of us knew what this transaction was I decided to call my banks fraud department.

After going through all the various security checks and informing them of my concerns I was met with the question “Have you been to North Korea recently?” Now I am pretty certain if I had I would have remembered so I said that I hadn’t. It turns out that my Debit Card had been compromised, cloned and then used in North Korea to draw out £250’s worth of North Korean Dollars.

This left me rather concerned about whether I would get this money back. I started to ask myself if it was my fault for not checking the Cash Machine to see if it had been tampered with. Or should I have covered my hand over the keypad when I entered my Pin number? But in the hustle and bustle of life you don’t think about these things all of the time.

Credit Card Application

To protect myself in the future I decided to get myself a credit card as I had heard that credit card theft is automatically covered plus the thief is stealing from the banks coffers and not your personal bank account. I looked on various comparison sites to see which credit card had the best introductory deal and rates then filled in the application.

Rejected for Credit

I was shocked to be declined and wondered why this could be because as far as I was aware I had a healthy credit rating. It turns out that because I had defaulted on a few payments with my mortgage and loan due to being out of work for 2 months earlier in the year my credit rating had taken a bit of a hit and needed to be built back up before I would be accepted for anymore credit.

Credit Card Advice

For a moment I was quite pleased that my card had been compromised or I might not have realised that I had a poor credit rating. I was thankful I didn’t find out when I might have been planning to move house etc. I scoured the internet for advice on poor credit and ways to repair it and decided I should apply for a credit card for people with bad credit. In the end I went for a Vanquis card. These types of credit card are exactly the same as a regular credit card but carry a higher interest rate and are designed to help with rebuilding credit ratings. If you are sensible with it and pay the balance off each month then the interest rate is irrelevant. These types of credit cards are a lot easier to be accepted for because not all people with bad credit have been irresponsible with their finances. Many people have got into financial difficulty because like me they are made redundant or they have fallen ill and have medical bills to pay.

So to avoid all the problems I have had I would advise that you always check the cash machine before you put your card in, make sure it hasn’t been tampered with or that the face plate and card slot isn’t loose. Make sure no one is hovering over your shoulder trying to get a glimpse of your pin number and always cover your hand over the keypad when you do type it in just in case there is a camera set up.

Credit Cards for Poor Credit

Although some consumers are irresponsible with credit, some responsible people are caught in situations where they are unable to clear their debts on time, for example due to illness, family problems or when one loses a job. Having a bad credit score due to circumstances is not permanent as you can always redeem yourself. Credit Cards for poor credit are designed for people who have bad credit and who want to raise their rating.

There are various reasons that would justify obtaining a credit card for poor credit, for example if you had filed for bankruptcy in the past, it would be important to re-establish your credit. You should take advantage of these types of Credit Card to prove your credit worthiness.

Credit Scoring
If your credit card is approved, your credit card company will be submitting monthly reports to the credit agencies regarding your credit performance. Due to the fact that your credit performance is being monitored closely, if you pay your creditors on time and are able to maintain a low revolving balance, this information will be reflected in your credit records. If you maintain a good record over time, your credit rating will improve and you will be able to qualify for major financing such as a car loan and mortgage. However, if you are not able to walk away from the past mistakes, you will destroy your rating completely and it will be very difficult for you to obtain any type of credit card from any credit card company. It is important to note that if you want to improve your credit rating you must maintain a low revolving balance, make credit card payments on time and also avoid skipping any payments.

With regard to your credit history, credit companies will take caution when extending credit to you. Therefore, when you receive a credit card for poor credit, you will be allowed a small spending limit. However, if you are able to make regular payments for some months, your credit limit will be raised. You should maintain this consistency because if you fail to make payments at the right time, you credit company holds the rights to lower your spending limits and may also increase interest rates.

High Interest
If you are applying for a credit card for poor credit, you must understand that it comes with a higher finance charge as compared to normal credit cards. Therefore when shopping for a credit card, you should visit different companies to determine which one has rates that are favourable to you. Whether you decide to settle for a secured or unsecured credit card for poor credit, the best place to look for it is online. Online application is easy and some companies will approve your application instantly. Applying online also gives you an opportunity to scrutinise different credit card companies, you are also able to determine which ones have introductory rates.

After using these cards for some time and after managing to repair your bad credit history, you can now apply for a normal credit card which has more benefits and low interest rates.