Credit Card

The Concept of Pay to Delete

July 8, 2014 by illinois

Those with debt understand what a drain it can become and how easy it is to think debt settlement and credit clean up schemes will rid them of the problem. Whilst they are times when these types of services can be beneficial, more often than not they are no more than a costly exercise for both your credit score and budget.

There is no such thing as a quick fix to rid you of your debt; it will take time, knowledge and diligence. For those who have been told different they are either going to be sold what they believe to be a solution when in fact it is not. One such thing is to use “Pay to Delete.”

What is Pay to Delete?

The idea behind Pay to delete is once you have a delinquent account that has been logged with a collections agency this is automatically placed on your credit report and stays there for years. Even if you contact the agency and pay the debt it is not removed from your credit report. Whilst this seems unfair when you have paid a debt for it to still have an effect on your credit, it needs to stay on your record so that potential lenders can obtain a complete picture of your credit history therefore regardless of whether you have paid the debt because it went as far as a collections agency this will leave a black mark against your future credit.

This is where pay to delete can raise itself. In principal the idea is that you agree to pay off what is due and ask the credit agency to request that the credit reporting bureau removes the information. Great in theory, but this goes completely against the policies upheld by credit bureaus.

Does Pay to Delete Work?

Pay to delete rarely works regardless of how tempting it may sound, if you search the internet for “Pay to delete” you will immediately be offered templates for sample letters that you can send to the collections agency. It is better to phone them, all they are interested in is recovering as much money as possible, taking the time to write a letter can come across as desperate and some will take advantage of this type of psychology. Some agents may resort to dishonest tactics to get you to pay quicker and you could end up in a pay to delete agreement when the agents have no intentions of upholding their end of the bargain, just remember whatever is agreed you need in writing.

If you manage to reach this type of agreement the agency will try and dispute the debt with the credit bureau in the hope that it will get removed. As the credit bureau forbids pay to delete in practice there is a slim chance that this may work.

Pay to delete alternatives

Pay to delete is not illegal it is uncommon, but if this is your chosen method and it doesn’t work there are alternatives to repair your credit score, although these are not as quick.

Fixing your credit report when it is showing an error

When you check your credit report and find a debt you do not owe, do not use pay to delete under any circumstances. You should not pay a debt that is not yours, when it is uncovered you need to contact the credit bureau and open a dispute. Should the error be more fraudulent you must dispute and also set up a fraud alert as this will stop any further credit being obtained in your name.

Fixing your credit score when the delinquent item is valid

If you owe the debt pay it off as soon as possible. Although this may not be easy there are options:

– Arrange with the collections agency to pay affordable amounts off over a period of time.

When the debt is paid it may be worth asking them when the debt is paid to stop reporting it or to request that past entries are removed, however just as pay to delete this will probably not work but worth a try.

There are a number of factors that determine your credit score meaning there are other ways to improve this, even when you are paying off debts.

The perfect credit score

Perfect credit scores do not exist and everyone has more than one. Whilst there is nothing you can do to obtain a perfect score you can try to achieve the best score possible by:

Paying all bills on time.
If you are experiencing problems call the lender and work out a payment plan, this will stop any further negatives being added to your score.

When it comes to improving your finances slow and steady should be your mantra as there really is no quick fix.

The Most Credit Card Debt: The Top Ten States And How It Affects You

June 12, 2014 by illinois

Credit cards are confusing for the majority of consumers and have even led some people to bankruptcy. There’s no denying that an increasing number of Americans are using credit cards to address their everyday needs. However, the surprising truth is that most credit card debt is decreasing, even though more people are using credit cards more than ever.

This trend could either be due to people paying off amounts of their card balances or that people are charging less often and only on important things. This decrease in outstanding credit card debt is considerable, with a $27 decrease each year, and means lower interest rates for old and new users. But what does it mean for a state to have the least or most credit card debt?

Ten States With the Most Credit Card Debt

In order, the states with the most credit card debt are:

Alaska, with a grand average of $4,472 per consumer
New Jersey ($4,431)
Connecticut ($4,351)
Maryland ($4, 214)
Georgia ($4,192)
Delaware ($4,165)
District of Columbia ($4,115)
Virginia ($4,068)
Rhode Island ($4, 056) and
Texas with $4, 047 in credit card debt per consumer.

But what do these numbers mean? Figuring out the debt average of a state is complex procedure and outstanding debt is only one aspect of that process. Even states that have a relatively high average credit balance can have low interest rates for their consumers if the difference between their balance and their state credit limit is far enough apart.

Another interesting thing to realize is that the majority of the states with the most credit card debt are located on the East Coast (with the exception of Alaska and Texas). Why is this so? Because East Coast locations not only have a higher population but also a higher cost of living. In these states, having a good credit score is instrumental in living comfortably.

However, this doesn’t necessarily mean that the states with the most credit card debt are poor. On the contrary, many of these high credit states are some of the wealthiest states in the nation when it comes to median income.

One of the most surprising statistics about the states with the most credit card debt is that they also have the best credit scores. While this can be attributed to a larger pool of credit card users, it’s also partly because of how credit cards function. Paying out a full balance in one transaction doesn’t affect a credit score significantly. However, paying on time (even if it’s the minimal amount) and keeping the debt-to-limit ratio low builds credit scores tremendously throughout the life of the loan. This means that more credit is given for low, continuous payments which is then spent, and more debt is accumulated.

Increasing State Averages and What They Mean

So, now that it’s understood how states with the most credit card debt can have reduced credit averages while having more credit card users, what about states that are increasing their averages of have high averages even with decreased debt?

Despite having an average consumer debt of $4,472, Alaska has actually reduced its state credit card debt by $200 since their total in 2012. This is largely due to new income medians being set in place, meaning that Alaskans don’t have to incur as much debt in order to get the things they need to live. In addition, as Alaska is becoming more populated there’s more difference between the state debt limit and the average consumer’s credit balance, as well as more credit card users.

On the other hand, Hawaii increased its debt significantly between the first quarter of 2013 and 2014. Their state credit debt jumped a shocking $49 per person, the highest spike of that time period. This is a result of a variety of variables, such as higher costs of living, unchanging income medians, and a decrease in tourism due to the subdued economic landscape of the United States.

Curiously, it can then be inferred that the state with the most amount of debt, Alaska, is actually in a better financial position than Hawaii, despite having more state debt because Alaska is steadily decreasing the amount of debt that they owe while Hawaii is rapidly increasing theirs and getting it closer to the state credit limit.

What Credit Card Debt Means To You

Having credit cards isn’t necessarily good or bad. Although having a large amount of debt is undesirable, it’s also an important tool for living comfortably in a credit-based state while still being within the confines of a constant income. The most important thing is to use common sense and moderation while keeping track of the purchases and total amount of debt that’s being incurred.

Secure Your Financial Future by Paying Off Your Credit Cards

December 27, 2013 by illinois

The number one financial problem that people face is credit card debt. When it is properly managed then it can help us even out our bill payments and pay unexpected bills. The problem is when we start to get behind and the repayments start to spiral out of control. It takes hard work and willingness to change but by creating a plan and making paying off your credit cards a priority you can become debt free and secure your financial future.

Signs Your Credit Card Debt Is Dangerous

Credit cards are very profitable for the institutions that offer them and so they make them easy to obtain and easy to increase spending limits even though some people default. It is up to us to use our credit cards properly or risk finding our debt levels at dangerous levels. Here are some signs that you need to take action about your credit card debt.

Paying the minimum amount an your credit card accounts
Not having any savings
Delaying paying bills because you do not have the money to pay them
Getting reminder calls about bills or late payments
Pay one credit card bill with another credit card

These are signs that your finances are under stress and that you need to take action before your finances are harmed and future options are taken away.

Get All of Your Information and Make a Plan

The best way to ensure your financial future and to start paying off your credit cards is to make a plan. The way to start planning is to gather all the information and yes, you will need to make a budget. A budget is not a punishment for getting into financial but a way to understand where all of your money goes from each paycheck and how much debt you actually owe. These are the building blocks that you can use to make a plan that allows you to reign in unnecessary spending and target debt in a useful way. Information that you will need to make your budget and list of debts includes:

Recent pay slips
Paid and outstanding bills
Credit card statements
Loan and mortgage documents
Bank statements
Overdue notices

When you have all of the documents then you can put together a list of debts and payments and a budget that lists your regular payments so you can see your financial position. This will help you to plan out how you can firstly get your debt under control and secondly how to start paying off your credit cards in a structured way.

The next step is to look at way s that you can increase your income or lower your spending so that you have the maximum amount of money available to reduce your debts. This takes real commitment because every step you take will mean more work or sacrificing something but remember that if you do not take action then you could face financial oblivion. Some simple ways that you can increase income and reduce expenses such as:

Doing more overtime at work
Taking a second part time job on the weekends
Cutting service such as satellite and cable
Eliminate morning coffees, snacks and expensive restaurants
Only make necessary purchases

The best way to reduce debt quickly is to choose either the smallest debt or the debt with the highest interest rate and then put every spare cent you have into reducing that while paying the minimum on your other debts. This will rapidly reduce the debt and when it is eliminated you will be able to devote that amount to the next debt in line.

One of the best ways to stay motivated is to give yourself a small reward every time you have been successful in making the next step in paying off your credit cards. This reinforces that you have done something good and helps you attack the next debt with renewed enthusiasm.

Other Ways to Help Ease Credit Card Debt

In some cases you might find yourself in a situation that needs stronger action. A good way to start is by contacting your credit card providers and discussing the situation with them. They may be able to give you an extension of time to pay for a short period or to reduce the interest rates that you are being charged.

Consolidation can be a great way to roll all or some of your debt into a single monthly payment. This can be done with a consolidation loan or by taking advantage of a low or no interest credit card balance transfer offer. These will give you the breathing space you need to begin paying off your credit cards.

If things have progressed to a stage where you are not able to obtain more credit and cannot make payments to cover all of your debts then seeing a debt specialist at a debt consolidation company may be helpful. They can negotiate a payment plan with your creditors on your behalf and help you to get your finances back on track.

Getting a Credit Card with No Annual Fees

December 10, 2013 by illinois

It is possible to get credit cards with no annual fees and this is good news for the card user. But there are many cards that come with an annual fee and you need to be reassured that the fees that you are paying are going to be worth the facilities that the card will offer. There is little point paying for a card that’s benefits that you are entitled to revolve around travel and you don’t travel. It is the same with all types of cards that involve an annual fee that you check what services that you are paying for because you might find the same service on a credit card with no annual fees.

Check Out What They Are Offering

It is important that when you are looking for a credit card and you are considering applying for a card that has an annual fee that you carefully look at the options that are being offered. Are they something that you will use or will benefit you in some way?

You need to work out the costs involved, are the costs of the products that you are getting in return for your annual payment worth more money than your payment or less. If you could purchase the goods singularly then you might consider using a credit card with no annual fee, it will be cheaper and if you do need the products or services then you can buy them without the card.

To recap:

Check out the offers available
Check out the individual prices of the products they are offering

Claiming the Benefits

If you are looking at a credit card that has an annual fee, then it is possible that they are going to be entitled to certain benefits. But check out how you are able to claim the benefits before signing up. Many companies have these great schemes but the claiming process either takes too long or is too complicated and this can mean that many people are losing out on the benefits that they are entitled too.

Sometimes there are fees associated with claiming the bonuses or the points for the credit card and this can amount to being even further out of pocket. You might have to dig deep to find this information and if there is yet more to pay then you might be better off using a credit card with no annual fee.

If you are certain that the card that you have got is the right one for you, have you checked out the cards that offer you a no frills account and they don’t ask you to pay for this service. It might be just as good.

What You Can Get

It is possible that you are able to get some great deals from opening up new credit card accounts and this can mean that you can get added benefit from opening the account. But it is important that you aren’t just opening the account for the free deal, especially if you are not planning to use the card, too many credit card applications can harm your credit file.

If You Have Had the Card for Sometime

If you have had the card for some-time and you have seen the advantages and you like the card then it is possible to talk to the card provider and ask if they would consider reducing the annual fee. They might consider the business that you are bringing and the benefit that they are giving you and this important. But if they refuse to give you a reduction in the annual fee it might be time to look for a credit card with no annual fees. It will mean that you can get the same great service without the extra charges each year. If you have the card for emergencies then it is not going to be used and you are going to be paying for a service that is not getting used to the full value. You are losing out because you are paying for a service that isn’t being used and this is going to be a drain on your budget, it would be better to have a credit card with no annual fees as a card for the emergency. It will be there when you need it and you will not be paying for services that you don’t need or use.

It can be possible to try out new cards and get the new deals it is just important that you are only apply for a new card no more than once a year at the most because it will have an effect on your credit file and it will affect the products that are going to be offered in the future and if you want the best products it is important that you conduct your credit file to your best ability.

How to Use a Credit Card Wisely

November 6, 2013 by illinois

The credit card has a poor reputation and while and is seen by some people as something almost evil. In reality it is just a piece of plastic and the person that has the credit card has control of how and when it is used. When you use a credit card wisely then it has many benefits that you can take advantage of to add convenience to your life and to always have source of simple to access credit available in emergencies. Used unwisely credit cards can become a financial millstone that drags down our ability to plan for the future.

We have compiled some reasons to use a credit card and some reasons that you might stay away from a credit card. You can read through them and honestly look at yourself and your financial situation and then decide if you should use a credit card or avoid them to put yourself on the right footing to have a better financial future.

Reasons to Avoid Using a Credit Card

Here we have compiled some reasons why you might consider a credit card is not the best thing for your financial future. It is important to be honest with yourself so that you can make the right decision.

Do not budget and tend to spend when you have money and go without finances are tight.
Do not take your finances seriously and are happy to live from paycheck to paycheck.
Will purchase things spontaneously without considering the longer term.
Cannot commit to paying any credit card balances off by the end of the month.

The facts are that if you cannot take control of your spending and budget wisely, a credit card can become a burden because it allows you to buy things now and pay for them in the future. This makes it very easy to rack up large amounts of debt that then attract a high interest rate.

It is not uncommon for people that have credit cards to be completely unaware of how much they owe until they receive their monthly statement. Even then the most highlighted figure on most credit card bills is the minimum monthly payment. This amount is the minimum that you can pay and people naturally pay this amount. This is also the amount that is most advantageous to the credit card company because it keeps the debt earning the highest amount of interest for the longest time.

Reasons to Consider Using a Credit Card

Builds a credit history.
Tracks spending and allows you to look through your purchases making budgeting easier.
Has protection if it is lost or stolen unlike cash.
Is convenient to use.
May have special insurance, discount or bonus offers.
May offer extended warranties on purchased items.
May have a rewards program that uses points or cash back on purchases.
Allows you to charge back fraudulent, not received or not as described purchases.

The credit card is a tool and just like a hammer when used responsibly and wisely a credit card can help you build a strong financial future. Credit is a vital part of many people’s lives and having a good credit history can help to reduce borrowing costs when we are looking to buy a house or a car. This means keeping our credit file clean with no missed payments, no late charges and a strong record of paying back debt. Using a credit card and paying it off monthly allows you to make a single payment for all of your purchases and builds up this positive credit history.

When you use a credit card each purchase is recorded and is immediately available online. You can track your purchases and payments and see that you are staying within your budget. Unlike cash if your credit card is lost or stolen you can easily get a new card quickly without losing anything. Carrying large amounts of cash can be a nerve racking experience and with a credit card it gives you secure access to your funds without having to make yourself a target for robbery.

You can use a credit card just about anywhere today from a convenience store to a gas station and a restaurant to a grocery store. A quick swipe and the payment is made and by selecting the best credit card offer you can be rewarded for every purchase you make. There are cash back offers and point systems that allow you to earn simply by using your card.

Other cards have benefits such as extended warranties and insurance that covers certain purchases adding value. These are all great reasons to use a card if you were going to make the purchase anyway. The seller is paying a small fee for using the credit card system and you can take advantage of the financial institutions wanting you to use a credit card by maximizing the benefits and paying them off before interest is charged.

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