Financial Future

Over half of Americans are buried in debt and desperate for some help in gaining control of their outgoing cash, while finding ways to keep enough to pay the bills. What was once considered impossible, refinancing with bad credit can now be done without the overwhelming hassles.

A bad credit refinance could actually help your credit in a number of ways.

With the many other default loans on your record, refinancing to deal with it will show that you have taken steps to take control of your situation. This proves to other lenders you are capable of making the right decisions with your money.

Refinancing means that you are aware of your financial problem and would like to start putting some of your cash, now going to interest, in places that will really raise your credit score.

When exploring the options of refinancing with bad credit you will notice that most lenders are happy to consolidate, meaning you only make one payment a month. No more late payment penalties, miscalculated interest, and keeping up with too many statements; bad credit refinance and you will be taken care of.

Some people can actually refinance and get a lower interest rate at the same time. This can be a blessing when it comes to having a little extra cash saved up at the end of the year.

Now that you know how refinancing could help you with your debt situation you need to know what it will involve. The truth is, you will be surprised at how easy it really is but don’t expect it to be free. Bad credit refinancing usually costs a little, but getting your score up and under control will be well worth it. Here are a few of the things you may need to know before applying for bad credit refinancing.

Interest rates when refinancing with bad credit are typically much higher. If you are looking into consolidating this may be worth it but otherwise you should make sure it won’t be worst then your current APRs.

When refinancing with bad credit there will more than likely be fees to pay, along with penalties of paying loans off early or in one lump sum. You should explore all your options and investigate each loan thoroughly before heading to the bank.

Loan application fees are standard whether doing a bad credit refinance or you have perfect credit. Check into several lenders before choosing the one that fits you best. You can easily explore your options further online.

The bottom-line is you never know what you may be able to do until you try. With the great competition between lenders, more are willing to assist you in refinancing with bad credit just to have another consumer on their side. Investigate all the possibilities and you will more than likely find the perfect lender to help you out.

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If you’ve ever seen a commercial for a debt consolidation service, you probably know that many of these services encourage you to consolidate all of your debt in one loan usually by taking out a home equity loan or refinancing your home to consolidate your debt.

Debt consolidation can work well if you’re having trouble with a lot of high interest debt and qualify for a home equity loan or refinance. In fact, many consumers find that by consolidating their debts, they can get a handle on a financial situation that seemed completely unmanageable.

But when you start thinking about debt consolidation, you should be aware of what works well in a refinance or home equity, and what doesn’t. In short, you don’t want to put debts into a consolidation plan that will cost you more to pay off than if you had paid them separately.

One example of something that should not be included in debt refinancing is a medical bill, say to a hospital or doctor, that carrie s no interest. If you consolidate this debt, you will end up paying interest that you would not pay if you paid the debt separately.

Low-interest and no-interest debts like medical bills and student loans are easy to identify as items to leave out of a debt consolidation.

It may be more difficult to identify which items with high interest rates should be left out of your consolidation.

Why, you may wonder, would you ever leave a high-interest item out of a debt consolidation? Isn’t that the point, to pay off high-interest items by consolidating them?

That is part of the idea, but the overall idea is to consolidate debts so that you pay less in the long run. If you have high interest debt that will be paid off in less than a year, it’s definitely worth the effort to calculate the difference in cost, overall, of paying the debt separately and including it in a debt consolidation plan.

Financial difficulties are stressful, and you naturally want to get out from under as much of your existing debt as possible, especially the debt with high interest that seems to be eating you alive.

That is a good strategy, and a fixed-rate home refinance is a very good way to accomplish that goal of getting your debt under control. It’s important, though, to make sure that you are consolidating the right debts, and not making more difficulties for yourself by consolidating low-interest debts, or even no-interest debts, into a debt consolidation plan.

Knowing what kinds of debt to include in your debt consolidation can make paying off your debts easier because you’re not paying more on certain debts, in the long run, than you should. This makes your long-term debt payoff easier. And because you’re consolidating the debts with higher interest, you will be able to make your other debt payments more easily by rolling the high-maintenance debts into one loan with one payment.

The savings to you over time, when you consolidate the right debts the right way, will be enormous. The immediate peace of mind you gain may be even greater.

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You’ve done a great job in getting your charge card accounts but like a lot of consumers, you may find yourself in a bit over your head because life has a way of throwing obstacles in your path and those obstacles generally cost money. It is a good idea to have a low interest and no fee charge card account for emergencies.

Sudden loss of a job and then needing to make car repairs can put a real dent in your bank account. The way Americans get in over their heads is when they start living off their charge card accounts. If you’re buying your groceries or paying your bills using your personal credit cards, it is time to look at your household finances and create a budget that you can live on.

Rules To Live By

A good rule of thumb for drawing the lie about when to use your credit card accounts is never use your cards for anything you can pay cash for.

Credit card companies basically don’t want you to pay your balance in full every month. They prefer that you pay a minimum payment every month and keep the interest rolling in on your account.

There are some companies that charge their cardholders yearly fees, interest on their balance and a fee for managing their accounts. If you have one of these types of charge cards, it’s time to look at paying off your credit cards and getting a budget that you can live on together that will allow you to pay off your charge card account debt.

Let’s assume that your payment is set up to pay back the very minimum balance each month. The minimum balance is around 2% each month. This means that the bulk of your payment is going towards payment on the interest. This is why it seems so long to pay off the debt. For example, if you purchased goods that originally cost $2000, at an 18% interest rate, you’ll end up paying back over $7000. That should motivate you to pay off your credit card debt!
You can jump off the merry-go-round any time you want. Don’t get any further in debt than you already are. Make an honest budget. Calculate your bring home pay and deduct your true amounts you average for bills and utilities. Then cut corners where you can.

Ways To Trim The Fat Out Of Your Budget

Take your lunch to work.

Stop watching the Home Shopping Network and most of all…….

leave all but one of your charge card accounts home.
This will eliminate spur of the moment shopping.

Staying Motivated

Then calculate how much you owe on your charge card accounts. Pay off the cards with lowest balances first and split that cash you were using to make those payments among your other cards and give the largest payments to the next lowest credit card balance. This will allow you to see results more quickly and keep you motivated in paying off your credit card account debt.

It’s not a bad idea to keep in your possession the budget that you created. This allows you to be objective about frivolous purchases you want to make. Use your savings if you can to pay down debt. The most that the average savings account pays is 3% interest on the balance. Why keep cash in that account if you’re paying on an account charging you 17-18% interest?

Another direction to take if you find you are so in debt you cannot meet your monthly obligations is finding a good credit counseling service or debt consolidation service. These services help you negotiate a debt down to a workable solution. Be careful in this area as well though, you may want to consider that the money spent here can also be spent on paying off existing debt, read the fine print to see if there are fees and if you are already past due on your credit cards, your cards will continue to be reported to the credit bureaus as “past due” until the balance is paid in full.

It’s going to take some discipline to pay off all of your credit card bills but if you work hard enough at it and have a commitment to stay with your budget, there’s light at the end of the tunnel.

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Credit card debt is a major problem in this country. While not everyone has a credit card, those that do typically carry a balance. The APR on a charge card account balance is usually between 10-30% APR. These high APRs make it difficult for consumers to pay down their debt — especially if only making the minimum payment. In fact, just making minimum payments can make even the smallest balance over a decade to pay off and thousands of dollars in finance charges. It’s no wonder getting out of debt seems so hard.

Fortunately, you can get out of debt. If you follow a few basic steps and put a plan in place, you can work to pay off your debt sooner, with less interest, and improve your credit score in the process.

1. First, list each of your charge cards. You’ll want to include the outstanding balance, APR, and minimum payment. This information can easily be found on your last monthly statement.

2. Order the cards on the list so that the charge card account with the highest interest rate is at the top, and the lowest is at the bottom.

3. Total the minimum payments.

4. The total monthly minimum is your absolute lowest monthly payment, but remember, we want to pay more than the minimum in order to repay the debt quickly. So, take a look at your budget and see how much extra you can come up with each month in addition to the minimum. Whether it’s an extra $20 a month or $100, every little bit helps.

5. As your payments come due, pay the minimum on each card except for the one at the top of your list. Remember, that one has the highest APR and it costing you the most money by maintaining a balance. So whatever additional money you budgeted in the previous step, apply that to that card.

6. Continue this process until the first card is paid off. When that card is paid off, continue with the minimum payments on the other cards, but now take the amount you were paying on the first card in addition to the minimum payment and apply it to the second card on your list.

7. Repeat this process until all cards are paid off.

Why This Works

To understand why a relatively simple process works it’s important to understand how minimum payments work. Minimum payments are calculated as a percentage of the outstanding balance. That means as your card balance slowly decreases, so does your minimum payment. This is why it can take ten years or more to pay off even a small balance if you only make the minimum payment each month.

With this system, your monthly payment is remaining constant regardless of your balance. So each month your required minimum payment may go down, but you’re ignoring that and by doing so you apply more and more cash to your principal as time goes on, thus accelerating your debt repayment.

Starting with the highest annual percentage rate ensures you’re targeting the most costly credit up front to minimize the total amount of interest you pay.

A Few More Tips

While this payment strategy will help you get out of debt, you can potentially make things go even faster with a few other tips. First, call your charge card account company and ask about getting your rate lowered. This won’t always work, but if you have been on time with your payments and a decent credit score, they may be willing to work with you. It doesn’t hurt to try and it doesn’t cost anything. The worst they can do is say no.

Don’t forget about balance transfers. Again, it isn’t always easy to get credit and the balance transfer deal may not be the best, but if you can find a way to transfer the balance from a card with a 25% APR to a card with an 18% APR, that’s still something. There may be some special 0% offers as well, but they are harder to come by these days and the hidden fees may outweigh the benefit.

Finally, keep in mind that this process still takes time. There is no magic method of paying off debt, so realize that it will still take months or even a few years to become completely debt-free. But what we’re doing is putting a process in place to make sure that you can get out of debt as soon as possible. You can speed up the process if you continue to pay even more cash towards your debt as your budget allows.

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There are many different types of debt, some good, most bad.  Credit card debt is decidedly in the “bad debt” territory, just behind payday loans and title loans.  Approximately 73% of all American households possess a credit card account, with the average credit card debt of households with at least one charge card account at the end of 2008 reaching $10,679.  What’s more, charge card account balances are rising, not declining, and our collective debt levels pose a serious threat to the economy.

Why Eliminating Credit Card Debt Should Be A Priority

The rule of thumb is that if you can’t reasonably expect to earn a higher return on your money elsewhere, you should use excess cash to pay down your debt.  Why?  Because by carrying high-interest credit card debt you are making the bank rich, not yourself.  The average interest rate is currently around 15%.  That means for every $1000 you borrow on your credit card, you will pay $150 per year for the privilege.

To put that number into perspective, if you invested that same $150 per year in a retirement account and earned a long-term average of 8% per year, you would end up with over $20,200 in 30 years and over  $47,200 in 40 years.  That is an absolutely staggering amount of cash when you think about it.  In a very real way, that $1000 purchase on your charge card account isn’t just costing you $1000 plus the $150 interest payment, it’s costing you almost $50,000 over 40 years because not only do you lose the cash paid to your charge card company as interest, you miss out on any potential interest those payments could have earned you.  Due to the miracle of compound interest, it doesn’t take long for the opportunity costs to dominate the equation.

The Basics Of Eliminating Credit Card Debt

Debt consolidation is big business, but completely unnecessary.  There’s absolutely nothing credit consolidation companies can do for you that you can’t do on your own.  Besides, do you think those consolidation companies are working for free?  I don’t think so.  Here’s all you need to know to eliminate your credit carrd debt as quickly as possible.

Pay Off Your Highest-Interest Card First – Dave Ramsey teaches his students to pay off the card with the lowest balance first in order to give them a psychological boost at having accomplished a goal, however small.  Self-esteem is all fine and dandy, but the laws of mathematics state you should pay off the highest-interest card first.  You will end up paying less in total interest as a result and will eliminate your balances more quickly.  If you want to feel good about yourself, follow Ramsey’s advice.  If eliminating charge card account debt as quickly as possible is your goal, pay down your highest-interest debt first.  Then pay down your second-highest-interest debt, etc.  Which will make you feel better in the long run, paying off that $50 sweater you bought on your Gap credit card account or being completely debt free?

Call And Ask For A Lower Rate – This is where the debt consolidation companies love to toot their own horn.  They justify their fees by saying they will negotiate with your credit card account companies on your behalf to get your interest rate reduced.  Thing is, there’s absolutely no reason you can’t do this yourself, and you are at least as likely to get a rate reduction as the debt consolidation companies are.  Just call your lender up, explain that you really want to do the right thing and pay what you owe but you’re afraid you won’t be able to keep up with the minimum payments unless your APR is reduced. Most charge card companies will jump at the chance to help out a well-meaning customer.  Losing a points in interest is better than losing everything if you declare bankruptcy or simply decide not to pay.

Ask For A Balance Reduction – Getting your balance reduced outright is much less likely than getting your APR reduced.  Still, it’s worth asking.  If you are truly in dire straights the credit card account company might decide to take what they can get.

Do A 0% Balance Transfer – This probably isn’t an option for many consumers these days without decent credit.  Still, it’s worth a shot checking out some 0% balance transfer cards.  Not having to pay any interest on a few thousand dollars will free up a lot of extra cash to put towards principal, or perhaps another high-interest balance you weren’t able to transfer.

Do NOT Use Home Equity To Pay Off Credit Cards – Credit card debt is unsecured debt.  If you simply decide to stop paying, the worst they can do is ruin your credit.  Your Home Equity Line Of Credit (HELOC), on the other hand, is secured by the value of your home.  If you default on your HELOC payments, you could very well lose your home.  It’s not worth the risk.

This article is brought to you by www.JemCreditCards.com – More than credit cards, we build financial stability. A great place to compare the best charge card offers including Discover balance transfer credit cards, Chase cards, and much much more!