If you are in the process of repairing your credit, then getting a secured credit card is an excellent option.

In the past, secured credit cards were viewed warily by lenders; they were a mark of mis-managing your debt. Today though, secured credit cards do not really have the same stigma attached to them, and in some cases they can be a very positive sign that you are taking steps to re-build your credit after a disaster.

You are an excellent candidate for a secured credit card if you have ever been through any of the following:

• Bankruptcy
• Judgments
• Credit Card, Loan, or Debt Charge-offs
• Frequent Late Credit Card or Loan Payments
• Unpaid Medical Bills

There are more reasons than ever before to take secured credit cards seriously. Here are just a few of the many reasons you will want to start with a secured credit card while you re-build your credit:

Secured Credit Cards have lower interest rates than bad credit, unsecured credit cards:

Yes, you can probably still qualify for an unsecured credit card of some sort, even with a bankruptcy. However, most cards that cater to people with low credit scores have high fees. It is not unusual to see a $250 application fee, and a $100 yearly fee coupled with a 20% (or higher!) interest rate on an unsecured, bad-credit credit card.

Secured credit cards, on the other hand, require $200 - $300 dollars to open, and you will eventually get that money back. They also usually have interest rates under 10%, and low, or no yearly fees.

Many secured credit cards do not report as “secured credit cards” on your monthly credit bureau reports. This means, that to a lender, those secured credit cards are exactly the same as having unsecured credit cards.

With a secured credit card, you can raise the credit limit any time you want to by depositing more money:

Now, this is huge. With most credit cards (especially if you have bad credit) getting a credit limit increase is like pulling teeth.

Thirty percent of your credit score depends on your debt-to-credit ratio. This means that if you ever charge more than 25% - 30% of your total available balance, your credit score will drop.

So, what happens if you want to put your monthly bills on your credit card to make things easier? Well, with an unsecured credit card, you would be out of luck. With a secured credit card however, you can total up the amount you want to charge each month, and figure out how much you need to increase your limit so that you stay under that 25% rule.

Secured Credit Cards act as a failsafe:

If you lose your job, or have trouble paying your bills, and cannot pay down your credit card, then you can use the money you have in your secured savings account to pay the balance on the card.

You will never again have to worry about defaulting on a credit card because the amount you borrow has been previously set aside. That is real peace of mind – especially if you have defaulted on a credit card before and experienced a number of collection calls.

Banks that issue secured credit cards are more likely to issue you unsecured limit increases, or an unsecured credit card after a couple of years:

If you have an excellent payment history with your issuing bank, wait a year or two, and see if they will issue you an unsecured credit card in place of your old secured one. You will then get your deposit back, and depending on the issuing bank, you may even be paid a small amount of interest on your original deposit.

All in all, secured credit cards are one of the best deals out there for people who are working to re-build their credit. With so many things in their favor, they really are the best place to start out.

Secured credit cards are also an excellent tool for people with no established credit history, or anyone who needs to be able to regularly increase the limit on their credit cards.

To find out more about which secured credit cards are available, and what their terms and interest rates are, please visit our secured credit card pages.

Have a question for us? Leave a comment below!

Get our future articles on rebuilding your credit for free - click here.

Keep Reading:

• How to Tell if a Credit Counseling Service is Legit
• What to Do When Your Credit Card Debt Has Been Charged Off
• Can You Keep Your Credit Cards When You Declare Bankruptcy?

Photo Credit: eHow.com

One of our readers, Ashok, sent us this question:

Sir, I am a credit card defaulter. I changed my address and likelihood of bank finding me is almost zero. But I feel guilty to do this and want to settle my account with bank, However, i am not in a condition to pay the full amount, but would like to get my name written off from bank’s defaulter list. How do I settle my account with bank? What kind of rebate i can expect? Is there any agency to help me out in this?

Thanks for your question Ashok!

You are wise to want to settle the account out for several reasons:

1. Credit card companies employ entire departments of people they call “skip trace”. Which basically means when someone skips out, they harass everyone you know until they find you.
2. The credit card company will keep reporting the debt to all three credit bureaus until they write it off. When they write it off, they will sell your debt to a new collection company, who will also report your debt to all three credit bureaus. When they give up on trying to find you, they will simply sell your debt to another company.
3. If anyone ever does catch up to you, you can expect them to sue you, and garnish your wages.

Now, assuming that they do not ever find you, you will still have to deal with the damage that delinquent account is doing to your credit score. So, you are exactly right to want to make good on the debt. It will begin the process of repairing your credit.

There is one thing you need to be aware of before you begin. Now, I do not know how old your debt is, but I can tell you that if your credit card company has written off your debt already, calling them will “re-open” it, and they will begin collections all over again. This could actually cause you to have multiple negative accounts on your credit report over the same debt - so do a couple of things first.

If you want to make good on your debt what you have to do is pull all three of your credit reports, and find out who currently owns your debt. From that point, you have two options:

1. Call the collection company who owns your debt now, and offer a settlement for a reduced amount.
2. Send a certified letter to the collection company that currently owns the debt telling them that you refuse to deal with anyone but the original owner of the account (the bank that issued the card.) This is your right by law.

There are pros and cons to both of these:

Collection companies are used to making settlements, and they will likely settle for less than your original bank will. However, they may have tacked on quite a few additional fees to your account that would not be charged to you if you deal directly with the bank that gave you the card.

The best way to know if fees have been added is to look at your credit report. Look at the amount your bank charged off, and then compare it to the amount the new collection company says you owe.

Settling the debt with the original bank will look better on your credit score because it will show a paid charge off. If you pay your original bank you can wait a few months, and challenge any negative information on your reports that resulted from the collection companies (not the original bank.)

As far as what kind of a settlement you can expect: it depends on how much you are willing to negotiate. In situations like yours, you should easily be able to cut the total by 50% if you are dealing with a collection company. If you deal with the original bank, upwards of 30% is a reasonable expectation.

As far as organizations that can help, yes, you will get the help you need from a credit counseling agency. Just be careful which one you choose, because not all of them do a good job. They will negotiate with your creditors on your behalf, and get the account settled for you.

For more information on how to choose a credit counseling agency, you can check out these articles:

• How to Tell if a Credit Counseling Service is Legit
• Due Diligence When Choosing a Consumer Credit Counseling Service

Have a question for us? Leave a comment below!



Keep Reading:

• Does Having A Checking or Savings Account Affect Your Credit Score?
• How Does Paying Off A Credit Card Affect Your Credit Score?
• Can You Raise Your Credit Score 100 Points in 6 Months?

One of our readers, NoJobNow, sent us this question:

I was recently laid off and have paid off all my credit cards & collection accounts to clean my credit.
The only open accounts I have are 06′ Visa $1000 limit that is with my credit union, 07′ Target w/$200 limit (both w/no annual/monthly fees & low interest rates), and a 07′ $21K auto loan.

I closed an 06′ Merrick Bank acct that had $1150 limit w/$4 monthly fee, 06′ HSBC w/$300 limit and 02′ Capital One w/$600 limit-Low limits but high rates!

Now I’m seeing all these articles about closing accts will drop my score and am afraid because I was trying to get my credit right and not be in serious debt w/o a job!

I’m planning on a career change and will be applying for a student loan soon. Should I go back and re-open these accts or am I screwed in attaining a decent credit score and/or interest rate on my student loan? Please advice! Your help is greatly appreciated. Thank you in advance.

Thanks for your question!

The truth is, since you have already closed out your accounts the damage is done, and your score has dropped some. Re-opening the accounts is probably not a good strategy either. I say this because:

• Most credit card companies will want you to fill out a new application rather than re-opening your old account. This will result in an inquiry on your credit report which will lower your score.
• If you end up opening a new account rather than re-opening your old account then the average age of your accounts will drop even further – lowering your score.

It never hurts to ask your credit card company about it though. Just because most of them do not re-open accounts does not mean that every company operates that way. The only one of your old accounts that would really be worth trying to re-open would be your old Merrick credit card because it had the highest limit.

The best thing that you can do for your credit score right now is to not carry a balance on any of your cards. Go ahead and pull your credit score before you apply for your student loan – that way you know where you stand going into the borrowing process.

After you get your student loan you may want to wait several months and run your credit score again. If your score is high enough for you to get a decent offer of credit (low interest rate, low yearly fee, etc.) then go ahead and open up one more credit account . Do not use it though, just stick it back for emergencies. Having three good accounts with no revolving balances will repair your credit pretty quickly.

When you go to apply for that third card, keep this in mind:

• Do not get a card with no pre-set limit – They will often report the amount you charge each month as the limit on the card, so that does not help your debt – to – credit ratio at all.
• Get a card with a major lender (not your credit union) – Try HSBC Bank, Citi, or Chase. This will give you a better mix of credit and will boost your score a little.

Hope this helps! Thanks again for your question.

When you declare bankruptcy you are expected to turn in a list of all your debt - credit cards, medical bills, mortgage, everything. But what happens if you want to hang on to a credit card and use it after you declare bankruptcy? Is it legal?

Technically you can hang onto a credit card or two when you file bankruptcy, but you have to handle it carefully.

The correct way to keep a credit card through bankruptcy:

• 6 to 12 months before you plan to declare bankruptcy, you have to pay the balance off on the card. Zero balance - no money owed.
• You will have to keep the card at zero balance throughout your bankruptcy proceedings. Keep a zero balance on your credit card until your bankruptcy is discharged.
• When you make up the list of everything you owe, do not list the card. Bankruptcy gets rid of your debt, and you will not have any debt on that card.

Now, the main reason for keeping a credit card active is simple. You will not be able to get anything but a secured card (or a card with $250 in up front fees) right after you declare bankruptcy. Being able to keep a card with a decent interest rate through your bankruptcy will help you repair your credit that much faster.

The risks:

• If you pay down that credit card less than 6 months in advance it could cause your other creditors to challenge the legitimacy of your bankruptcy. After all, you had they money to pay down that debt, why couldn’t you pay theirs? That could actually cause your bankruptcy to fall through. If that happens you will be out the money for your lawyer, and still owe on all the debt you were trying to wipe out.
• Even if you don’t list the credit card when you declare bankruptcy, the bank that issued your card could still cancel it when your bankruptcy goes through. If that happens, you have wasted the money you used to pay down the debt you had on that credit card.

If you can’t pay down your credit card balance at least six months prior to your bankruptcy, there is still one way you might be able to keep your credit account.

You can do what is called “re-affirming the debt.” This basically means that you call your credit card company, explain that you are filing bankruptcy, and that you would like to keep your card. It’s sketchy territory.

Your lender will want you to keep the debt and pay them back, but you are going to have to convince them that you really can do it. Otherwise they will close out your account. If that happens you will be stuck with the debt after your bankruptcy, and you still won’t have an open credit account.

Is there a better option?

There might be. Look at it this way: If you owe $12,000 on a card - even if it has an excellent interest rate, you are going to run into a lot of problems trying to keep it open throughout the bankruptcy proceedings. Financially, it makes more sense to include the card in your bankruptcy. Take the $1200 (or $600 or $300) you would have used to pay down that card and put it into a secured card after your bankruptcy is discharged.

Cards like the Orchard Bank Secured Credit Card have very low interest rates, are easy to get, and you even earn a tiny rate of interest on the money in your savings account. This acts as a failsafe too. If something bad happened and you got behind on that card after bankruptcy, then at least you know the savings account will cover your balance in the event of a default.

Have a question for us? Leave a comment below!

Keep Reading:

• How to Tell if a Credit Counseling Service is Legit
• How Does Paying Off A Credit Card Affect Your Credit Score?
• Steps to Reduce Credit Card Spending

One of our readers, Steve Crowder, sent us this question:

I work in the credit card business and I have read your information on how the FICO score is computed. Good information but too bad that more people don’t get it. There are many credit counselors out there telling people to close out most, if not all, of their credit cards to protect their credit? I am seeing people closing out multiple accounts with wonderful credit histories that go back several years. It would seem that most of these so called credit experts are actually handing out advice that is directly counter to your information and can harm their believers. Is there any entity that monitors or certifies these credit counseling services?

Thanks for your question Steve! As it turns out, yes there are.

Here’s the lowdown:

There are a several organizations that require credit counseling services to go through an independent certification in order to join. The two main ones are the National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA).

The National Foundation for Credit Counseling requires that all prospective credit counseling agencies follow all the laws in the area they work in, conform to the NFCC’s own member quality standards, and then they have to be certified by the Council on Accreditation, an independent organization.

The Association of Independent Consumer Credit Counseling Agencies (AICCCA) also requires independent accreditation, and they too, have their own set of guidelines.

So, if you are trying find out if a credit counseling service is legitimate, then look for these clues:

They should be non-profit and they should belong to either the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA).

They should also be independently verified by at least one of the following two agencies, if not both:

The Council on Accreditation (COA), or the International Standards Organization (ISO).

You can search for agencies listed with the NFCC here, and agencies listed with the AICCCA here. You should also do a thorough check with the Better Business Bureau before you make your final decision.

If you would like to find out more about how to choose a credit counseling service, you can keep on reading right here.

Have a question for us? Leave a comment below!

The funny thing about bad credit is that it’s a slippery slope: the more trouble you get into, the more expensive everything gets, and the harder it is to manage it all. One of the ways the credit industry balances itself out is by charging higher fees and interest rates to people with lower credit scores.

So what do you do when you’re on the bottom looking up? When we hit bottom I knew that we had to do something to re-establish our credit rating. We were driving a car that was falling apart, renting our home, and had no real assets to speak of. So how did we come back from the abyss?

First, I sat down and took a long hard look at my finances. Then, I choked and accepted one simple truth: It was going to be expensive to raise my credit score back up. That’s where the finances vs. credit battle began.

The only way to raise your credit score is by getting and using credit properly. The only companies that were willing to lend me money all wanted to charge upwards of $250 worth of fees just to give me the privilege of paying better than 19% interest. So, I plucked up my courage and launched a multi-part attack on my bad credit score.

1) I invested a small amount of money into an Orchard Bank secured credit card. I started with $200. They paid a pitiful rate of interest (.02% If I remember correctly) on my savings account. But they did report monthly to all three credit bureaus. The other main benefit to getting that card was that I could simply make an extra deposit into savings any time I wanted, and it would raise my credit score. The icing on the cake was a very reasonable 9% interest rate.
When you have bad credit, an interest rate that low is unheard of.

2) I went ahead and applied for a high fee-unsecured credit card. I chose the Rewards 660 Visa largely because they report to the credit bureaus and they automatically raise your credit limit $75 each time you make three on time payments in a row and don’t go over the limit. The problem is, they had $250 worth of initial fees, and then an annual fee well over $100. As well as a 19% interest rate. I no longer carry a revolving balance on either of my cards though, so I was not really as worried about that.

3) I started monitoring my credit scores, and my credit reports. This cost an average of $30 a month.

4) I challenged incorrect items on my credit report. That was free and it did raise my score.

5) I sent $100 a month extra to my secured credit card to raise my limit. I did it for 5 months in a row.

6) I paid off my credit cards every month, on time, without fail.

So, all in all I figure raising my credit score from the mid 500’s into the high 600’s cost me around $1200 when I counted all the card fees and the credit monitoring service.

At first glance, that appears to be a terrible financial decision, I know. But the truth is, raising my score more than 100 points was worth every penny. And, as long as I keep managing my credit well, that improved credit score will continue to save me thousands of dollars on our home (by being able to periodically refinance), on our next car if we have to finance it, and on every better credit offer that comes along.

In other words, it was a temporary financial sacrifice for my greater financial good. And the most valuable thing I took away from the whole experiences was that I really and truly learned the ins and outs of my credit score and reports. I learned to manage my money. However much that lesson cost me, the rest of my life will be better because of it.

What do you think? If you were in my position would you be willing to pay all of these fees just to raise your credit score? Would you forgo repairing your credit altogether? Would you have explored other options and tried different methods of raising your score? Leave me a comment below, I’d love to have your opinions!

What is a FICO® score?

A FICO® score is a credit score that was developed by Fair Isaac and Company. Lenders use this number in part to decide whether or not to give you a loan. Most lenders offer different interest rates to you depending on how high or low your score is.

Your FICO® score:

All FICO® scores range from 300-850. The higher your score is, the more likely you are to get a loan. The lower your score is, the less likely you are to get a loan.

If you have a low FICO® score and you do manage to get approved for credit then your interest rate will be much higher than someone who had a good FICO® score and borrowed money. So, basically, having a high FICO® score can save you hundreds, if not thousands of dollars over the life of your mortgage, auto loan, or credit card.

What is considered a good (or bad) FICO® score?

• Scores between 720 and 850 are considered a good credit risk. They normally qualify for the best interest rates on a loan , and can receive instant credit approval nearly anywhere. This is the ideal range for your credit score to be in.
• Scores between 600 and 720 are considered a moderate credit risk. People who’s scores fall into this category will not normally have trouble getting a loan, but they will pay more in interest than people who have score above 720.
• Scores between 500 and 600 are considered poor credit. If you fall into this category, you will have difficulty getting a loan. If you do manage to get a loan you can expect to pay double digit interest until you manage to raise your score and refinance.
• Scores below 500 are considered a terrible credit risk. If you fall into this range you will most likely not be able to get a loan of any type, although you may qualify for a secured credit card.

How is my FICO® Score Computed?

Your FICO® Score is computed using all of the following things:

(Photo from www.MyFICO.com)
For more information on exactly how your FICO® score is calculated you can visit MyFICO.com

How can I check my FICO® score?

You can check your FICO® score by paying to see it at any of the three credit bureaus, or you can check your FICO® score for all three bureaus at once by going here.

If you are planning to apply for a credit card, or especially a mortgage or auto loan then it is vital that you know your score before applying. Every time you request a loan it can lower your FICO® score, so you need to know where you are starting from before you apply for credit.

How can I raise my FICO® score?

There are several simple ways to raise your FICO® score:

Pay all of your bills on time, every time. This includes your utility bills, mortgage and auto payments, and all of your revolving lines of credit like credit cards.

Check your credit report at least once a year – You can find out how to get your free credit reports here. You can find out how to challenge bad information on your credit report here.

Do not charge more than 30% of the available balance on any of your credit cards. Banks like to see a nice record of on-time payments, and several credit cards that are not maxed-out. If you are carrying high balances on your credit cards, then make paying them down under 30% a priority.

Do use your credit cards – Many people who make mistakes with their credit believe that the best way to fix things is to never use credit again. If you are afraid that you cannot handle your credit cards correctly then the best policy is probably this one: Run only your utility bills on your credit cards each month, and then pay the balance in full by the due date. This ensures that your utility bills get paid on time automatically, and as long as you keep the habit of paying off your credit card balance each month your score will continue to go up. Leave the credit cards locked in a safe or drawer at home.

Keep your accounts open as long as possible – Even if you are no longer charging on the card. The best policy is to keep those unused accounts open, blow the dust off your card every few months to make a small purchase, then pay it off. How long each of your accounts have been active is a major factor in your credit score.

Remember that it will take time – Following the above steps consistently over a long period of time will repair your FICO® score and allow you to qualify for better loans and interest rates. Repairing your FICO® score does not happen overnight though, so if you do these things for a few months and do not see a large increase in your score, do not give up. They are all habits that you will want to maintain throughout your life to be sure that you keep your finances and lines of credit under control.

Have a question for us? Leave a comment below!

One of our readers sent us this question:

Hi, just came across this site, am from the UK and its really informative, unfortunately alot of the laws you state are, obviously, only applicable to the USA - therefore, do you have any letters or know of UK laws that state the same thing - about refusing to have any communication with credit card issuers? Your help would be great - thanks swinny

Thanks for your question Swinny. I’ve done some digging for you, and here’s what I uncovered:

The Administration of Justice Act 1970 gives you the following rights:

• Creditors cannot alarm, distress or humiliate you or your family members.
• They cannot falsely represent themselves or the debt you owe.

Additionally, the Office of Fair Trading enforces several guidelines that collection officers must follow:

• They cannot contact you too frequently, or at unreasonable times.
• They cannot ignore a dispute about whether or not you owe the money.
• They cannot pretend to be a legal or government body.
• They cannot discuss your debt with anyone but you unless you authorize them to.

I’m going to give you a quick series of links that will give you all the information you need to know about how protect yourself from harassing creditors in the UK:

The National Debtline Creditor Harassment Fact Sheet for England and Wales - This site outlines many of your rights where collections agencies are concerned. It even tells you which agencies to complain to when you are being harassed by creditors.

The Office of Fair Trading Debt Collection Guidelines - This is a PDF that clearly states what collections officers are not allowed to do.

An excellent (but long) You Tube audio on how to handle collection agencies in the UK.

And finally, go back to the National Debtline for a full list of sample letters to send to your creditors. This includes everything from asking them to write off your debt to asking them to freeze the interest rate on your account.

Unfortunately, I was not able to find any information that supported a “cease and desist” practice (stop all communication) like we have here in the US. However, the links above should give you the power you need to deal with debt collectors and make the harassing behavior stop according to your rights under UK law.

Have a question for us? Leave a comment below!

Collection calls can be some of the most distressing, evil things on the planet. The only thing worse than having a creditor hound you repeatedly is having them contact your friends, family, and employer on your behalf.

If you are receiving collection calls at home or at work and want them to stop, then there are two things you can do.

1) Make a payment arrangement and stick to it. If your account goes past 30 days overdue, then it will be assigned to the collections department, and they will begin to call you. The best way to handle things is to set up a concrete repayment plan and stick to it. Try to avoid losing your temper. The people on the other end of the phone have likely been yelled at several times already that day - before they ever even called you.

The good news is, they have a lot of power to help you if you will let them. Instead of avoiding the calls, ask the collection representative what they can do for you. Collection officers are usually authorized to:

If you have no money and can’t make a payment for a month, tell them that. Ask them what kind of repayment plan they can put you on. Being proactive when the collection calls happen will actually keep them from calling you back. Avoiding the calls will only cause them to be more resourceful. Instead of simply calling your house or cell phone, they will begin to track you down at work, and any other number they can get their hands on.

Whatever you do, stick to any agreement you make with them. If you default on a second repayment plan, you are going to be right back where you started.

But what if you are already waaaay past that point? If you are in serious financial trouble and you have creditors calling everyone you know (and believe me it happens to people more often than you might think) then you need to know your rights.

2) Avoiding your creditors is never going to be a sound financial decision. However if that is the path you need to take then be aware of your laws within section 805 of the Fair Debt Collection Practices Act (FDCPA):

Unless you consent or a court order allows it, debt collectors may not call to collect a debt from you:

• At any time or place which is unusual or inconvenient to you.
• If they know you are represented by a lawyer.
• At work if your employer does not allow it.

Collection officers are also not allowed to call your friends and family if they already know your location. That is why it is so vital that you pick up the phone and talk to them, even if you can’t pay them anything. It will prevent all the other legal forms of harassment

So, to make it short and sweet, if you want them to stop calling you at work, tell them your boss does not allow it. If you want them to stop calling your family and friends, talk to them and confirm the number where they can reach you.

If things get really ugly, there is one more thing you can do. You can send a registered letter that refuses to pay the debt and instructs them to cease all communication with you. By law, once they receive that letter they must stop attempting to contact you, and that will keep them from harassing you at work, or calling your friends and family. Be aware though, that this is a refusal to pay the debt, and that is likely just a one way ticket to a court date or a wage garnishment.

For a sample cease and desist letter click here.

This is a question I got from a reader : “Mr Credit Card, I have about $23,000 in credit card debt. How can I reduce my credit card debt? What are the steps that I have to take?“.

Well, the reader did not state how many credit cards he had and what rate he is paying on them, and what is the minimum payment on each card. But here is my general guideline on how to reduce credit card debt.

Write down exactly what you are spending on

Sounds elementary, but you first have to know why you have so much credit card debt. Are you spending too much on drinks in the evening? Are you making too many impulse purchases? Are you dining out too often? Know what you are spending…then

Cut out unnecessary spending

Once you have identified where you are overspending, the next step would be to cut back on these expenses and stop piling on new debt. The only way you can reduce debt is to stop adding on to your debt burden.

List your credit card debt by debt amount and also by APR

The next step is to know exactly how much you owe on each credit card and what the APR is on each card. Conventional wisdom says you should attempt to pay off the card with the highest APR. However, you may also choose to start by paying the card with the smallest balance to give you a psychological boost from seeing one credit card debt eliminated faster. The choice is yours, but develop a plan of attack.

Tighten your budget and find spare change to pay off your credit card debt

OK - you have now identified what you are spending and why you have got into credit card debt. The next step is to sacrifice some discretionary spending and get some extra cash to pay off your credit card debt. Once you have eliminated one credit card debt, use the extra cash you have to pay off the next card. Wash, rince and repeat until you have completely eliminated your credit card debt.

Extra Tips - Get a 0% APR Balance Transfer Credit Card

To aid in your debt reduction effort, you may want to consider checking out credit card balance transfer offers for debt reduction. There are cards that give you 0% offers for even as long as 12 to 15 months. Just make sure you get cards that do not charge any balance transfer fees. If your credit is not so good, there are also bad credit balance transfer credit cards.

Should you consider credit card consolidation loans?

If you can afford to budget in cash to pay off your credit card debt bit by bit, I would suggest against getting a credit card consolidation loan to pay off your debt. These loans are typically home equity loans with much lower rates. However, if you default on these loans, then you will lose your home. If you default on your credit card, you are not going to lose your home!

Stop using your credit card if necessary

Some might find that cutting up their credit cards will help reduce their spending on “stuff”. If you find that it helps, then there is no harm simply paying cash for everything and suffering a slight inconvenience.