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Save Money Do Not Borrow it on your Credit Card

May 30, 2018   Home Mortgage

Let’s face it we have all been in a position where we have needed a little hard cash depending on if it is at the end of the month or a unforeseen bill that needs paying straight away. However before you go off down to the ATM and take that cash out on your credit card, let’s just take a look at the reasons why you should be careful before borrowing from the credit card company.

Firstly every time you take money out of the ATM the fee for that money comes into play immediately. The cash advance that you are thinking about can have between 2 and 4 percent Higher interest rate than your regular credit card rates.

Not only will you be charged by the credit card company for borrowing the cash you will also find that you are charged a percentage by the ATM vendor. Those handy little ATM’s in the gas station can charge up to 1% to give you the cash! That is an extra 1% you have to pay to get that money.

Confused? Ok let us take a quick look at how this all works:

You see on a market stall a fantastic stereo that you have wanted for ages. The vendor being a street trader would prefer it if you pay in cash (lets face it if you use your card there he gets charged for the fact that he is using the credit card companies facilities). You decide you must have it so you go to the ATM and draw out $200 on your credit card.

This cash will be the last thing that your credit card company lets you pay off the card. So if you have $500 on your card and you take a further $500 out at the higher rate of interest as it is cash, you will pay that rate of interest until you reach zero balance even if you pay off $500 the next day! So you will still end up paying over the odds to borrow that money.

Eventually when you hit the zero balance you will notice that you have over the time that you borrowed the money been charged three times. Once by the ATM where you got the money from. Once by the credit card company for taking the cash option and once more by the credit card company who will charge you a higher rate of interest for the privilege of having cash in your hand.

Is it really worth it to get something a few days early?

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Consolidate Maxed Out Credit Cards Using Your Home – Post-Holiday Spending Tips

May 17, 2018   Personal Loan

During the holiday season many families will turn to credit cards to finance Christmas expenses. This makes it less stressful to make ends meet, especially during the holidays. Sometimes we don’t even realize how much damage is done until the credit card bills start to arrive in January.

Credit cards are very convenient but have their pitfalls. Credit cards bear very high interest rates, often more than 20% interest and in the case of department store cards up to 30%. Interest is calculated monthly so if you get caught up in a pattern of only making minimum monthly payments, they can take years to pay off. Credit cards that have balances more than 75% of their limits will damage your credit rating/credit score.

The last thing you want to do is go into the next holiday season with credit cards that have balances from the spending you did the past holiday season. The best thing to do if you have accumulated balances on credit cards from holiday spending is to consolidate maxed out credit cards using your home.

There are many reasons why it is a great idea to consolidate maxed out credit cards using your home. Here are just a few:

1. Using your home to consolidate maxed out credit cards will enable you to start the New Year on a fresh foot and with a single monthly payment.

2. Using your home to consolidate maxed out credit cards will increase cash flow because a home equity loan or line of credit will bear a much lesser payment than what you are paying to your credit cards on a monthly basis.

3. Using your home to consolidate maxed out credit cards will reduce the overall interest that you are paying to loans and credit cards. Home equity loan and home equity line of credit interest rates are much less than what you are paying to your individual credit cards.

4. Using your home to consolidate debt will improve your credit because all of your credit card balances will be reduced to zero and the less debt reporting to your credit report, the higher your credit score will be. Also, as we mentioned when credit card balances exceed 75% of your limits, it reduces your credit score and will trigger a message to appear on your credit report that indicates that your credit card balances are too high in proportion to your credit limits.

It is important that if you consolidate your maxed out credit cards using your home equity that you don’t continue to use your credit cards. Put them away and only use a single card and make sure to use the card in denominations that you can afford to pay off in full each month. This will ensure that you don’t find yourself in the future with a new payment on a consolidation loan and paying credit card balances.

Start your New Year off with your finances in order and without the stress of having to pay a windfall of credit bills.

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