Can a bad credit rating save you from bigger problems? Hasn’t it done just that for many young people? I’ll explain how with a couple true stories.
Good Credit Rating Story
My friend started his adult years with good credit. Soon he was able to get credit cards at will, as well as finance cars, snowmobiles and more. He made the payments, and went deeper and deeper into debt while he was at it. When he was 30 years old, he had over $20,000 in credit card debt, plus loans on cars and business tools.
Eventually it was just too much to handle. After considering bankruptcy, he was convinced that the credit card companies would reduce his balance due if he just threatened to declare bankruptcy. However, he had to stop paying on the cards, or the credit card companies wouldn’t believe he was in financial trouble. He did this, and then drafted a nice letter to the companies, explaining his situation. Most cut at least 30% off what he owed, but he had to pay the remaining balances immediately, which he did with a home equity loan.
As a result, his bad credit rating wasn’t as bad as if he had actually declared bankruptcy, so he was able to rebuild his credit score. He also started to rebuild his credit balances. His good credit rating enabled him to begin again the process of overburdening himself with debt. He lives a stressful life, to say the least.
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Airline credit cards have steadily been gaining popularity in the past few years. Airlines and other companies related to the travel industry benefit as customers utilize their services more frequently; brand loyalty is strengthened as well. Consumers with a good credit history gain by obtaining greater value from their credit cards. Fundamentally, airline credit cards operate in a similar manner; purchases charged to the credit card earn travel points for the card holder, these points can be redeemed in various ways, for example contributing toward free travel, hotel stays, service at a car wash, etc. Four key features to consider while selecting an airline credit card are given below.
Low Interest Rate: The cost of credit is measured in terms of the annual percentage rate (APR). A good credit profile helps to obtain a low APR, i.e. prime + 4%. Most credit cards offer a “variable rate” plan in which the APR changes with certain economic indicators. The interest rates vary with the cards and are influenced by other offerings such as the grace period, annual fee, bonus points, etc. A card holder who does not carry a monthly balance need not really worry about interest rates; however, people who do carry their balances forward can select from a number of airline credit cards that charge a low interest rate. Some cards offer an introductory rate of 0% interest on balance transfers over a period of time, which is typically 12 months.
Preset spending limit: The spending limit in airline credit cards can vary from a few hundred dollars to thousands of dollars. The minimum monthly payment is liable to increase with higher spending limits. Some cards allow users to spend over the credit limit, the amount over the limit and the resulting penalty are settled in the subsequent month’s payment. Credit card bills can quickly balloon to unmanageable proportions. Therefore, inveterate spenders are well-advised to carefully consider the preset spending limit before settling on an airline credit card.
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What are the advantages of the Forex Market over other types of investments?
When thinking about various investments, there is one investment vehicle that comes to mind. The Forex or Foreign Currency Market has many advantages over other types of investments. The Forex market is open 24 hrs a day, unlike the regular stock markets. Most investments require a substantial amount of capital before you can take advantage of an investment opportunity. To trade Forex, you only need a small amount of capital. Anyone can enter the market with as little as $300 USD to trade a “mini account”, which allows you to trade lots of 10,000 units. One lot of 10,000 units of currency is equal to 1 contract. Each “pip” or move up or down in the currency pair is worth a $1 gain or loss, depending on which side of the market you are on. A standard account gives you control over 100,000 units of currency and a pip is worth $10.
The Forex market is also very liquid. When trading Forex you have full control of your capital.
Many other types of investments require holding your money up for long periods of time. This is a disadvantage because if you need to use the capital it can be difficult to access to it without taking a huge loss. Also, with a small amount of money, you can control
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Debt is a way of life for many Americans. We owe money on our homes, our cars, our possessions (from furniture to clothes), and our education. Many Americans are so mired in debt they aren’t even sure just how much they owe and to whom — even worse they sometimes don’t even remember just what caused their debt.
Some debt is good for you. For example, what you owe on your home can provide a nice way to balance out your income tax. A little debt is not a bad thing either as making regular payments to various creditors helps build your credit rating which makes it easier for you to obtain loans at good rates. However the truth is that most Americans have more than a little debt — and many owe far too much money and are already, or soon will be, in financial trouble as a result.
Finding yourself owing a lot of money is not the end of the road and you can stop your cycle of debt by taking four positive steps to break the cycle.
First, attack your high-cost debts. This likely includes credit cards where you may be paying high minimum payments and high interest rates. Pay off the balances on credit cards carrying the highest interest rates first. Continue making your minimum payments for lower-interest cards but concentrate on paying off the highest interest. When the high-cost cards are paid off then work to eliminate the balances on your other cards.
Second, reach out to your creditors. If you are going to be late or have difficulty paying your minimum payments then contact the credit card company. Even if you can make all your payments in a timely fashion there are two benefits you can reap from contacting the card issuer. First, you may be able to negotiate lower rates or more favorable terms. Second, they might be able to recommend alternatives that can minimize damage to your credit rating.
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