Don't Confuse Debt Settlement and Debt Consolidation
By Christina Costa
There is a very simple philosophy behind debt settlement. If
you are able to lower the amount you owe, you will be able to
pay off that balance even faster.This is a process you can do on
your own, but think about it do you really want to try and
negotiate with all of your creditors?
A reputable debt settlement company can work on your behalf.
Wouldn't you rather sit back and let the professionals take
over? I would. Especially with something as important as your
finances, credit and overall future! This is a tough time for
many Americans right now and more and more are falling deeper
into debt. There has to be a breaking point, where its time to
get out of debt and find some relief.
So let's take a look at debt settlement and then why it gets
confused with debt consolidation. Yes, they both can provide you
with debt relief but not in the same way. Debt settlement or
negotiation is the process of talking to your creditors in hopes
they will settle to a lower balance than what you owe.
This can happen by removing some of your late fees or lowering
(or possibly removing) your interest rate.
Most creditors will agree to this idea if you show signs of
struggle when it comes to paying them monthly. If they are not
getting anything from you, or hardly anything and its late they
might fear that you will run towards bankruptcy with open arms.
If that happens or they have to take you to court, the odds of
them getting their full balance is shot anyway.
So what are the benefits to choosing a debt settlement company?
First of all, debt settlement is going to be your least
expensive choice when looking for debt relief. Some feel that
bankruptcy is the cheapest alternative, yet remember the damage
you will be doing to your credit for the next seven to ten
years. I think debt settlement should be your last resort before
filing for bankruptcy.
Debt settlement is often confused with debt consolidation or
thought to be one in the same. That is definitely not true.
These are two different forms of debt relief. Debt consolidation
is when you take out one loan and use that to pay off multiple
other accounts.
Take into consideration if you are already having trouble
paying bills your credit has taken a hit. This would result in a
debt consolidation loan with a high interest rate. This type of
debt relief is usually only a good idea for those who are in
good to excellent credit standing.
Debt settlement on the other hand is working with your
creditors to reduce the balances you owe. This is a quicker
method to getting you out of debt, because you are not taking
out an extra loan to do it. A good debt settlement program can
take anywhere from two to four years to complete. This depends
on the individual and how much extra you can pay each month
towards the monthly payment.
Here is where most people learn how important it is to pay your
bills on time and what they can do to prevent falling back into
this situation. Once you are in a debt settlement program with a
reputable company, then you will make just one payment towards
all of your reduced debts. I think that is where the confusion
comes between debt settlement and consolidation. You eventually
will make one payment; it’s the process that gets you there that
is completely different.
One reason debt settlement programs do not work is usually
dependent on the client. If you sign up with a reputable company
then you should have minimal work to do. It's important to note
that once you enroll in this type of program, your credit might
get worse before better. Yet, if you weigh the pros and cons of
filing for bankruptcy, this is a much safer choice. Ask if your
prospective company offers credit repair services, most will
once the debt settlement is finished.
Debt consolidation is still a way to get some debt relief, but
I think that debt settlement is the wisest choice you can make.
Especially if you are tired of fighting an uphill battle towards
your late fees and interest. Isn't it time that you start
winning the war with your finances?
About the Author: Christina Costa, a freelance writer,
recommends http://eQuoteGrabber.com for debt relief where you
can receive help with all of your credit repair needs in
seconds! Visit http://www.eQuoteGrabber.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=323633&ca=Finances
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Best credit card deals
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Best credit card deals- Tips For Uncovering True Value
By [http://ezinearticles.com/?expert=Morgan_Hamilton]Morgan Hamilton
In the modern world, credit cards have become such an integral financial means that it is no wonder the financial market is overflowing with a vast array of these products. But with so many types and companies to choose from, it is quite easy to get lost and confused.
Not to mention the fact that many companies concoct different schemes to lure and attract customers to apply with them. So how does one succeed in finding the est credit card deals? Here are the factors that you have to know about to help you uncover the true value of the deals offered to you.
APR or Annual Percentage Rate
An APR refers to the measure of the cost of credit expressed as an annual percentage rate. The lower this rate is the less money you need to pay when you have a balance. Most cards come with an introductory offer of a 0% or low APR. While this sounds like a great deal, it is important to know how long this teaser rate will last and how much the real rate is when it expires.
Moreover, you also need to consider whether this rate is fixed or variable. A large percentage of companies today have variable rates that fluctuate with an index. And if you are not watchful, you can be surprised one day when you find out how much the rate has increased.
A fixed rate on the other hand will not fluctuate monthly or quarterly. However, it can still change after some time. The company, which issued you the card, should notify you at least 15 days before putting any changes into effect.
Annual Fee
This fee is flat, yearly fee that typically amounts around $25 to $50. It is a good idea to avoid cards that require such charges. Although there are some companies, which charge annual fees and offer prestige rewards and services in exchange. Consider carefully if these perks are worth paying for.
Transaction Fees and Finance Charge
Transaction fees are the amount charged to you for any cash advance, late payment, for going over the credit limit or for not using the card for a month. A finance charge on the other hand includes all interest costs and charges, and is what you have to pay for in order to use credit. When searching for the [http://www.bestcreditquote.com/index.html ]est credit card deals be sure to study all about these costs before you consider applying for any card.
Grace Period
Also known as the free period, this is the number of the days that the company gives you before they start charging you with interest rates. This time-frame is usually around 20 to 25 days. Avoid credit cards that do not provide grace periods.
More Tips
1. Be sure to shop around. Stopping at the first company you see even if you think it would give you an excellent cash back credit card application is not a wise move. There may be even better options out there.
2. Take into account how finance charges are calculated so you can get an accurate cost of your credit.
3. Always be on the look for low interest rates.
4. Be wise in choosing your credit limit. Be sure that you spend only what you can afford to pay.
5. If you are in a hurry, consider best instant approval credit deals.
Finding the best credit card deals is not going to be that difficult anymore now that you know what the things to watch out for are.
Morgan Hamilton is a financial adviser that specializes in the credit markets and how they affect the personal finance of individual consumers. Visit [http://www.bestcreditquote.com/]www.BestCreditQuote.com to compare, review and apply for the Best credit card deals currently available on the market.
In the modern world, credit cards have become such an integral financial means that it is no wonder the financial market is overflowing with a vast array of these products. But with so many types and companies to choose from, it is quite easy to get lost and confused.
Article Source: http://EzineArticles.com/?expert=Morgan_Hamilton http://EzineArticles.com/?Best-Credit-Card-Deals---Tips-For-Uncovering-True-Value&id=1562172
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Borrowing on a Credit Card
One of the easiest ways to borrow money of a financial institute is to use a Credit Card, available from all banks, building societies, and other financial organisations. The choices available are enormous, with a wide variety of interest charges, annual charges, loyalty schemes, and bonus points available. However there are two broad areas that you should look at:
Annual Interest Rate
Firstly if you do not intend to pay off your Credit Card bill at the end of each month, then you should look at the Annual Interest Rate (APR), this rate is typically between 13-17% at the moment, and you should be looking for a card that offers as low an interest rate as possible. You should also bear in mind that you are charged much higher rates of interest than other forms of borrowing money, so if you do not intend to pay of your bills for a long period of time, then you should seriously consider a different form of loan that is less expensive.
Extra Benefits
On the other hand if you do intend to pay off you credit card bill at the end of each month, then you should be more interested in the loyalty schemes that are on offer. These vary from being awarded points every time you purchase something (these points can than me used to purchased gifts or air miles etc), to simply being given ‘Cashback’ on everything you buy (typically 0.5%-1% of your purchase). You should also look at the level of service that your card company offers. They are obliged under law to offer certain protection to the consumer, but often they will increase this protection with other guarantees. Some offer extended warranties on electrical goods, extra travel insurance when you are on holiday, accidental damage insurance for any goods you buy, and even free commission on cash withdrawals when abroad.
Also some companies charge an annual fee for using their card (especially business credit card accounts), so these fees should be weighed up against the cards benefits.
Even if you usually do pay off your credit card bills at the end of each month, when you open a account you may be offered 6 months interest free credit. This is often an excellent way of saving money as you are basically given an interest free loan for 6 months. It is even more useful if you are allowed to transfer some credit card debt from a different company into the interest free offer. However there is a danger of becoming trapped in a bad debit cycle here, transferring your debt from card to card until it is completely unmanageable. The best advice is to make sure you always have enough money in the bank, or in a savings account, to pay off your debt when you are taking advantage of the interest free credit period. That way you benefit from earning interest on your savings in your bank, but as soon as the interest free credit period has expired, you can pay the entire bill off without being stung for high interest charges.
So to summarize
If you are not paying off your monthly credit card bills, look for a card that offers a low interest rate
If you are paying off your monthly credit card bills, looking for additional card benefits
Interest free credit periods are good news for saving money, but beware of being caught in a debt spiral
Credit Cards are an expensive way of obtaining a loan or borrowing money, and you should investigate other cheaper forms if you intend to borrow money in the medium to long term
by: Alastair Taylor
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