Managing Your Credit
Credit is a major component in your personal finances and good credit can open up a lot of doors for you, just as bad credit can close many of those same doors. It is necessary in today’s economy to learn to manage your credit.
It is not really an exacting science when it comes to managing your credit; all it takes is for you to take the time to learn some of the basics and to stay aware of what is going on with your personal finances.
One of the largest components of your credit is probably your credit cards. Credit cards are a staple of today’s economy and probably a big part of your personal finances. Credit cards are also the easiest way to get yourself into trouble by overusing your credit. Managing your credit many times comes down to your managing of your credit card debt. Read on to learn some ways to best manage your credit and then use our free credit card “chaser” tool to find the best credit card for you no matter what type of credit history you may have.
Credit Card Management
Credit card management comes down to self-discipline and will power. It is very easy to see something you want and just swipe the card. You don’t feel the pain until that credit card bill shows up in the mail. For better credit card management you need to know your options and then form a plan. One way to get on top of managing your credit is to consider a credit counselor.
The reasons for going with a credit counseling service is that they possess an expertise in the area of credit management. Sometimes it may also be necessary to have an outsider come in and look at your situation with an objective point of view. This new perspective may help you to better understand your own credit situation.
A quality, reputable credit counselor will help you in the following ways:
- Developing a budget
- Developing a personalized credit plan
- Informing you on the basics of consumer credit
- Informing you on the basics of credit management
- Providing opportunities to participate in workshops
- Providing educational materials
If you decide to go with a credit counseling service, you will want to take the necessary precautions of finding out as much as you can about that service. Even a non-profit service may not offer the counseling for free or for an affordable price.
When searching for a credit counseling service, be wary of any organization that does not readily provide you with information about that organization and what they can provide to you. You should not have to pay for this information. There are many credit counseling organizations out there, so if you feel uncomfortable about one, mark them off of your list and continue looking.
It is important to go with someone you can trust. Your credit is you lifeline to your present and future financing and should be managed with great care and attention to detail. There are a few ways in which you can check out the reputation of a potential credit counselor.
- Better Business Bureau
- Local Consumer Protection Agency
- State Attorney General
- United States Trustee Program
These are objective organizations that are set up to provide consumers information about businesses and organizations. They provide wide ranging information such as complaints lodged by consumers and whether or not companies are approved to provide pre-bankruptcy counseling.
Credit Card Consolidation
Credit card consolidation is a good way to manage your credit card debt and lower your principle balance. Credit card consolidation consists of taking the balances from tow or more credit cards and combining them onto one credit card that has a lower interest rate.
If you have outstanding balances on multiple credit cards, you may be fighting high interest rates that eat into each payment that you make. Every payment you make on that card; a nice chunk will go to paying off the interest. The higher the interest rate, the more of your payment is wasted on interest on not on reducing your principle.
There are numerous advantages to credit card consolidation. Here are a few that will help you as you consider consolidating your credit card debt.
- Convenience of paying only one bill
- Overall reduction in principle
- Save on interest rates
- Save on intro balance transfer rates
There are things to look for when searching for a way to consolidate your credit cards. If you do not have a credit card with a low interest rate, then you may want to seek out and apply for a credit card that does offer a lower rate than what you are currently paying and transfer the high interest balances.
You should be on the lookout for a few things when considering balance transfers to consolidate you credit card debt.
- Balance transfer fees
- Higher interest rates for balance transfers
- Interest rates after the introductory period is over
- Transfers that put you over your credit limit
There are other ways to consolidate your credit card debt. Credit cards may not be the answer at all; a couple of other alternatives could help you out of high interest credit card debt.
- Home Equity Loan: If your credit cards are
out of control, or your interest rate is just too much, you may want to consider a home equity loan. Any equity that you have built up by monthly mortgage payments and the increased value of your property can be used for loans.These loans are generally low interest loans, much lower than what most credit card companies offer over the long term. This type of loan can pay off all of your credit card balances with high interest rates and leave you with only one low interest loan to deal with.
- Personal Loan: If you don’t have any property equity but do have good credit, a personal loan from your bank or some other lender may be a better alternative than transferring balances from credit card to credit card. Depending upon your credit score, you could get a low interest rate on your personal loan. This could save you on interest payments and provide the convenience of dealing with only one monthly payment.
- Debt Relief Companies: This is an alternative, but it should be the last one you consider. There will be credit score implications for this, as well as a tedious search for a debt relief company that you can trust.A debt relief company is a mediator between you and the credit card company. They work out a compromise with your creditors and you then pay them one monthly payment to satisfy all your credit card providers. This hurts your credit score because you are negotiating a lesser payment than what you originally owed.
Also, credit card companies are under no obligation to work with any of these companies and could refuse any attempt at negotiations. This means you would be paying the debt relief company for nothing and hurting your credit score at the same time.
This is why you should investigate thoroughly any company you intend to use in debt relief. There are a lot of scams out there!
Credit Card Payments
Credit card payments are to be managed well if you are going to manage your credit card balances. If you pay off your credit cards each month for the entire amount, then you never have to worry about interest rates. However, if you are like many people, you keep a balance on your credit cards, and do have to consider interest rates. Interest rates affect how much you have to pay and how much of your payment actually goes toward your credit card balance.
There are a few things to consider when thinking about your credit card payments:
- How much to pay: You must pay the minimum to keep from having your credit privileges revoked, to prevent missed payment fees and to keep the credit card company from raising your interest rates. You want to keep your payments to a level in which your card is not at its credit limit. This can affect your credit report and keep the compiled interest from the month pushing you over your credit limit. This will cost you money in over the limit fees and reflecting badly on your credit score.
- When to pay: It is a good practice to make a payment schedule with a calendar that has reminders for when your credit card bill is due. If you are late with a payment, it can cost you in fees and cause the credit card company to increase your interest rate. If you are mailing your payment, you should give at least 5 business days for the payment to be received, though many companies recommend 7 to 10 days. If you are paying online, you can wait longer to pay, but you should schedule a payment 3 days before the due date. Many companies will charge you a rush fee if you push it to the last day. Always print out a confirmation after the payment has been scheduled just in case there are issues that spring up later.
- How to pay: The standard way to pay is to simply write out a check and stick it in the mail. You also have the option of paying over the phone and having the money come out of your checking account either directly or through your check card. You can go online and make a payment that electronically deducts the money from your checking account. Another way, which is becoming more popular for both consumers and credit card companies, is to sign up for scheduled withdrawals. If you do sign up for this, some credit card companies will offer you a discounted interest rate. This option will take the headache and worry out of missing payments as long as the funds are in your account when the scheduled payment is deducted.
Find The Right Credit Card For You Today!
If you have multiple credit cards, then you will have multiple payments to make. This can make things complicated. With everything else going on around you, it is easy to forget about a due date for multiple credit cards.
Good credit card management allows you to keep up with your credit card due dates and gets you to send in the payments with plenty of time to spare to prevent a late payment. Late payments can cost you a fee, as well as give the credit card companies an excuse to raise your interest rates. This can cost you much more money in the long run.
Use our free credit card finder to help you find the credit card that is right for you today!