Counter Assertion

According to cardweb.com, the average American family owes over $8,000 in credit card debt. This can lead to thousands of dollars in interest paid each year to credit card companies.

One strategy for lowering interest payments is to transferring credit card balances to a lower interest rate. If you had $8,000 in credit card debt, and you made a minimum monthly payment of 2% with an 18% APR, it would take you 647 months to pay it off, and you would have paid $22,931 in interest. If you lower the rate to 10% APR on that same balance of $8,000, and make the minimum monthly payment of 2%, you would pay the balance off in 302 months, with total interest paid being $5,506.63, and a total savings of over $17,000. But, if you were to transfer that $8,000 balance to a 0% APR, you would have the balance paid off in only 188 months, and save yourself $22,931! You’d be saving enough for a new car!

Here are a few things to consider when transferring your balances:

* Credit card companies usually offer that introductory 0% APR for a limited time. You’ll need to find out for how long, and what the terms are.

* It may be benefical to call your current credit card company, and try to negotiate a lower rate. Credit card companies are very competitive, and will want to keep your business.

* Sometimes there are balance transfer fees. These fees are often between 1 and 2%.

* After you’ve transferred balances on those cards, you’ll want to close those accounts. You don’t want to accumulate a balance with a high interest rate again.

Department store credit cards need to be considered, too. It may be enticing to get that extra discount on your purchase for starting an account with the store, but you may be in for a rude awakening when you get your bill! Chances are you’re paying 18 and 22% on those balances. Some can even be as high as 30%! If you have department store credit cards, you’ll want to pay these off as quickly as possible, or transfer those balances to a major charge card with a lower rate. And, don’t forget, you’ll want to close out those accounts, too.

Checking your credit report yearly is a good idea, as well. Inaccurate information about your credit history can make or break your financial future. It’s your report, and you should know what lenders know about your financial history. You’ll want to examine your report for accounts that aren’t yours, or old accounts that have not been in use, and need to be closed. If you’re not paying attention, who will?

Credit card companies are extremely competitive. With little effort on your part, you can reduce or even eliminate your interest payments. The money you’re going to save may even be enough to purchase a new car, or your dream vacation. Or, you may consider adding to a savings account with your new found wealth.

Copyright 2006 Andrew Saari

Andrew Saari is a website owner specializing in saving consumers money. For more articles on credit cards, credit card debt, and some of the best credit card offers available on the internet today, visit
http://www.ascreditonline.com.

The average household now carries an average of between $6,000 and $10,000 in consumer credit card debt. But there an unfortunate number of people who have more than $100,000 in debt from using multiple credit cards. Consumers rely on credit cards more than ever before and may pay interest rates of more than twenty percent. Added to annual renewal fees, membership fees, and other expenses, the cost of using a credit card, not to mention making minimum monthly payments on the balance, can take a sizable bite from most people’s budgets.

If you are having trouble using credit responsibly and would like to stop using credit cards as much as you currently do, or perhaps for good, start by following a few basic steps to stop being so dependent on plastic money.

1. Cut up all credit cards but one. If you can’t use it, you can’t run up more debt. Some consumers keep a single card for emergency purchases only, and they store the card in the bag of ice that stays in the freezer so that the card must first be defrosted, thus heading off impulse shopping. If your budget will let you use cash only, cut up the last card, too, and don’t open any new accounts.

2. Make out a monthly household budget and follow it. Include mortgage and utility costs, medical deductibles or insurance premiums, food and gasoline, car payments and credit card accounts, clothes, pets, haircuts, auxiliary expenses like the newspaper subscription, entertainment, and anything else that your family uses on a regular basis. Don’t forget about car insurance and car maintenance, even if you don’t pay these each month but use a six-month or annual payment plan, instead. It’s also a good idea to open a savings account for emergencies, even if you can afford to deposit just $25 or so each month.

3. Use an envelope system. A popular plan that many people use is to put cash in monthly envelopes marked for specific purposes, although some bill payments may automatically be deducted from the paycheck first. For example, put $300 in an envelope for groceries, $50 for medical deductibles, and perhaps $100 for clothes. Whatever you don’t use in a given month can be added to the next month’s amount and used for larger purchases.

4. Don’t even open credit offers that come in the mail or email. Discard or delete them immediately so you won’t be tempted.

5. Carry just enough cash to cover planned purchases. Bringing more may tempt you to spend for things that aren’t in the budget. But if you carry too little, you may end up getting tempted to open a charge account at one of the stores where you shop.

6. Get an accountability partner. Ask someone you trust, like a spouse or close friend, to hold you accountable for credit management. Perhaps you can become that person’s confidante for an area of special need in his or her life. Make a weekly or monthly report to let your adviser know how you’re doing. Just knowing that someone is watching may help you stay on track.

Pay off small balances first, and then add those payment amounts to larger credit card payments to eliminate those, too. Before long, you will be debt free and enjoying your newfound sense of self-control and economic freedom.

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There are three major consumer reporting agencies (CRAs), or credit bureaus, that mortgage companies use to assess a buyer’s credit rating: Experian, Equifax and Trans Union. Credit scores typically range from 300 to 850. For home loan purposes, a score of 650 or higher indicates a good credit history and will make it easy for you to secure a mortgage. If your score falls between 620 and 650, your borrowing capability will be examined more closely. And if you rate below 620, you may have a credit crisis.

When you’re in the market to buy a home and discover that you have bad credit and your score is low, don’t despair. Although it may delay the purchase of your home, there are ways to repair your bad credit rating so that you can still qualify for a home mortgage with a decent interest rate.

To evaluate your credit rating you’ll need to obtain copies of your credit reports from the various agencies. Examine them carefully to see what transactions are lowering your score.

A special note about bankruptcies: A bankruptcy can lower your credit score by 200 points or more. Repairing bad credit following a bankruptcy is beyond the scope of this article.

Charge-Offs: Charge-offs appear on your credit report if a creditor has given up trying to collect from you and ends up writing off the amount you owe as a bad debt. Charge-offs are one of the main reasons why loan applicants are denied credit.

How to Repair It: If you have any charge-offs, contact those creditors immediately and make arrangements to pay off the old debt. After a few months of regular payments, or if you repay a charge-off debt in full, submit a written request to that creditor to change the status on your credit reports.

Late Payments: Late payments are handled slightly different depending on whether they are isolated incidents or recurring problems.

How to Repair It: If you have a single late payment here or there listed on your credit report, the best thing to do is contact your creditors by phone to discuss the situation. Follow the conversation with a written request to have the isolated late payments removed from your reports. If you’re consistently late with payments, however, repairing the problem is a little more involved. You’ll need to begin by setting a pattern of paying on time over several months. Once this positive pattern is established, call your creditors (and follow-up in writing) and let them know that you’re back on track. With persistence and patience, you may be able to delete these score-lowering marks.

Reporting Mistakes: Sometimes, creditors just make mistakes when reporting to the bureaus. Other mistakes might include charge disputes that resulted in an initial late payment that was eventually reversed. Unfortunately, it’s the individual’s responsibility to spot - and repair - reporting mistakes that lead to bad credit.

How to Repair It: Once again, contact your creditor by phone and follow up with a written request that the mistake be corrected. Because the Fair Credit Reporting Act (FCRA) requires that credit agencies and their information providers investigate reports of inaccuracies, you’ll also want to contact the CRA directly to report the discrepancy.

As you work on repairing your credit rating, there are other things you can do to improve your score:

• Make sure that you pay all of your monthly bills on time
• Avoid opening new credit card accounts, including department store cards
• Work toward paying down your unsecured debt, but keep accounts open even if you pay them off
• Pay cash for the things you need instead of charging them

If, after all your work, you still score below the 620 mark, it doesn’t mean that you won’t qualify for a home loan. It may mean, however, that your mortgage will take longer to process and the terms and interest rate may not be as good as you were hoping for. Talk to your real estate agent about referrals to high-risk lenders.

Repairing bad credit can take many months to a year or more. But when you’re ready to buy a home, you’ll be glad you took the time to improve your score - and your mortgage payment will be lower because of your efforts.