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CREDIT CARDS AND BANKRUPTCY: OPPORTUNITIES FOR REFORM

It’s that time of the season again, the fall, when you pack up junior’s items and ship them off to college. You remember the days when you had to pack up your bags and attend college as well. As we all know, the older you get, the more you want to go back into your youth and change the things ways were. From saving your money to fixing those costly relationship mistakes, these were just a few things that many human beings would love to go back and change.

Believe it or not, a lot of people that are into their focused career wanted to go back into college and change the way they used their credit card. Credit card companies are set up all over campuses and are targeting kids without jobs and uninformed kids. In the long run, the companies are hoping that the child doesn’t read the terms or services and racks up a hefty balance, so that they are paying it off for life.

A credit card is only a danger if your child isn’t informed on the issues. Like drugs and alcohol, you must inform your child the importance of paying off your student credit card. If they’re not informed on the issue, you may find them racking more debt than you could ever imagine. This is why it’s important that you inform them.

A few key notes that you should supply to your child before they are head off to college are the importance of the APR rate, what bankruptcy can lead you to, and how important your credit score is. If you emphasize these three important factors to your child, he/she may be more informed than half of the college he/she is attending.

The biggest mistake most college students today make is that they have the mindset that they can pick up a credit card and spend, spend, spend, and not have to worry about paying off the bill for a while. They assume that they can pay it off a little at a time until they get a well paying job that will pay it off in full. What they don’t realize is that these credit card interest rates add up very quickly. Every dollar that isn’t paid off in full, the interest rate will be applied to that unpaid balance. So, if you have a $5,000 unpaid balance your interest rate of 20% or so will be applied to this total.

With most student credit cards, the interest rate will usually be a little higher than most credit cards. This is because it’s a child’s first credit card and he/she has to prove that they are responsible adults. If they’re not responsible with their money, they will find that their future will soon lead to bankruptcy.

In the long run, a parent must inform their student that a credit card isn’t necessarily a danger but they should inform them how important it is to pay off their credit card. They must enforce that they should only spend what they can afford and to treat the card as if it were cash. If these steps are applied, a parent and child can sleep well at night.

Not many people are familiar with Secured Credit Cards. These cards are usually associated with bad credit mainly because they are the only cards available to those with a recent bankruptcy on their credit report. However these cards provide advantages not only to those with bad credit but also to those who want to build their credit and those who want to purchase expensive goods without having to pay out big amounts in full.

Especially for those with bad credit, secured credit cards provide an excellent tool for raising credit score without having to pay excessive interest rates for financing. They may require a bit of sacrifice at the beginning but in the long run, using secured credit cards to improve credit score surely pays off.

Secured Credit Cards Explained

Secured credit cards work just like any other credit card, the only difference is that in order to obtain credit you need to deposit an amount in a predefined account. That amount will, from then on, be your credit limit. Some companies will apply a multiplier to the amount thus increasing your credit limit even more. For example if the credit card comes with a 1.5X Multiplier, if you deposit $1000 on your account, your credit card limit will be $1500. If the Multiplier is 0.8X Then your credit card limit will be $800. This will depend mainly on your credit score and history.

Raising Your Credit Score

Those who have bad credit or no credit at all will find in secured credit cards, the best solution for credit repairing. Sometimes credit score gets so low that there are no chances of getting approved for an unsecured credit card or for a personal loan. Secured credit cards on the contrary, are never declined due to credit reasons.

Though the amount for the deposit may not be easy to obtain, once you start using your credit card, your credit will start improving. The continued payments on your credit card balances (preferably in full) will be recorded into your credit report and this will contribute to raising your credit score month after month.

The process may continue indefinitely. However, it will come the time when you will be able to get approved for an unsecured credit card. Then, you will be able to claim the money from the deposit and use it for better purposes like building a savings account to face unexpected circumstances without having to resort to finance.

Purchasing Expensive Items

There are many stores that offer to purchase certain goods (especially electronic equipment) in installments with credit cards. However, some of these items are so expensive that credit limits on unsecured credit cards will not cover for them. Instead of paying in cash, you can use a secured credit card and earn some money on the deposit. There are some secured credit cards that will pay you interest on the money you deposit. It is an excellent way to transfer the cost of financing to the store and to earn some money at the same time.

Credit cards can get you in trouble financially faster than you can say, “I want a credit card.” Many people get in over their heads within just a few weeks or months.

If you are having trouble paying your credit card bills and are getting “failure to pay” notices, you might be starting panic. Well, don’t panic yet. There are some things that you can do right away to get your finances back in order.

First, you should realize that you’re not alone. There are more people in trouble with credit cards than there are those who are not. So, don’t feel so embarrassed by the situation that you hide it from everyone – including yourself. Face it and deal with it and you’ve taken a good step to helping the situation.

Here are a few tips to help you deal with your credit card debt:

Create a Budget. Creating a budget is the first, critical step you must take to get your spending under control. Write down how much money you are taking in from your salary and other sources.

Then, decide on your absolute, must have expenses for day-to-day necessities. These expenses will include food, housing, transportation to and from work, and health-related expenses. The money that you have left should be put to work towards paying off your credit cards and other bills.

Contact Your Creditors. This is an important step to take, especially if you know you can’t pay all your bills with the income that you have coming in. Remember that you can’t hide from your creditors. It will only make things worse. If you contact them immediately, they will be more likely to work with you to create a payment schedule that is easier for you to follow than if you wait until they’ve contacted you numerous times trying to get payment. The one thing that you don’t want them to do is to turn your account over to a collection agency.

Dealing with Collection Agencies. If the credit card company has already hired a collection agency to get their payments, you must deal with that too.

Many collection agencies will hound you at work or at night with threats about what will happen if you don’t pay. Some of these threats are just scare tactics. There is a federal law, the Fair Debt Collection Practices Act, that governs the actions of collection agencies. Basically, the law says that they can’t call you at work or at times when you would normally be sleeping. It also says that they cannot make threats, especially untrue threats, that they will take your car, house or other assets.

Credit Counseling. There are non-profit companies that have been created to help people who are in financial trouble. These companies will help you set up a budget and create a payment plan that will get you on the road to paying off your debts. Many of these will help you contact your creditors and mediate with them on your debt repayment schedule. Be sure that the company you deal with is legitimate or you could end up losing more money than you can afford.

Bankruptcy. Bankruptcy should be your last resort. Try everything you possibly can to pay off your debts without going this route. If you declare bankruptcy, it will remain on your credit report for many years making it difficult for you to get financing to buy a home or for other emergency funds in the future.

Don’t wait until you are so mired in debt that it’s impossible to get out. Begin right now and don’t give up until you are feeling comfortable that you are meeting your obligations without difficulty. You CAN do it!

Taking is a credit card these days is as easy as buying a chocolate. Apply for a credit card online, get instant approval and have the card in your hands in less than 15 days. As simple as that; but what happens when we overdo our spending in a gush and then at the end of the month, we realize we do not have the money to pay off the credit card bills.

Credit Card Bills are not a new thing we have heard about. It happens when the credit card holder/s becomes a defaulter time and again and this pile of debts keeps on building up. This debt incurred in credit card spendings is called as Credit Card Debt. The result of not paying bills on time is of course pilling up of bills is double interest rate which wouldn’t help in any way. The high rate of interests can also result in bankruptcy, often leading the banks to forgive all the debt on a particular person, until an unless such bankruptcy is challenged by a third party or blocked by a bankruptcy judge.

In fact credit card debt are not a good thing as, as per the APR which is higher than the normal rate of interest, the debt keeps on increasing with each passing day. So, it is always good to pay at least the minimum balance for each month to save oneself from the ripples of the storm. If there is one thing which can be done to save oneself from being called a bankrupt or being in a situation where you are not in a situation to pay –off your credit bills is to spend only that much which is within your means.

his way you will be able to buy what is essential or necessary and also pay your bill on time. Try out the Credit Cards of Kotak Mahindra which have a CPP cover and which offer you good facilities through which you can save at least some money out of your spendings. To know more about the Kotak Credit cards or to have more information about these card, log on to the website of Kotak card and enjoy the benefits…