Start by setting up a budget. List your income as well as the maximum amount you pay for utilities and the minimum you need to pay for your debts. Using these numbers will allow you to determine if you can afford your current standard of living. After this, it will be possible to use any extra money to pay off debt faster, invest, or spend on non-essentials.

After balancing your basic expenses with your income, most people will have additional money left over. This money should be split into four categories; investment, short term savings, debt repayment and entertainment. Deciding how to divide money between these four categories, however, can be tricky.

Unfortunately, after putting together a basic budget some people might realize that they do not make enough to cover their minimum bills every month. Fortunately, there are several different ways to solve this problem. There are a number of credit card debt solutions that can reduce or eliminate your credit bills. In the case that these credit card debt solutions do not work for you, however, it will be necessary to re-evaluate your basic expenses. Finding a roommate, finding a cheaper apartment or taking steps to reduce utility bills can all help to bring your budget back in line.

In general, it is recommended that people use as much income as possible to pay off debt, especially debt with high interest rates. At the very least, it is a good idea to relinquish investments that do not return as much as the interest rate on any debt that you currently owe. If you have a lot of debt, try to dedicate at least half of your “extra” cash towards paying it down.

Of the remaining fifty percent, the amount that is invested, placed in short term savings, and used for entertainment will depend a lot on your current savings, age, and lifestyle. People who are within ten years of retirement will need to dedicate at least thirty percent of their extra money to long term savings, if not more.

The same people who already have significant assets, however, may not need to save as much. People with thirty or more years left until they retire may only need to put ten percent of their extra money towards investments.

Most likely everybody would benefit from putting money aside into an additional short term savings, also known as an emergency fund. Ideally, try to increase your short term savings so that you can pay your minimum expenses for at least a year. Of course, getting your savings to this level may take several years, but it is important to start putting money aside as soon as possible.

Once you get past those commonalities you will find that the differences will start mounting. Your credit score will certainly vary based on how each company rates your overall credit history and the importance they place on it. Financiers will frequently determine your risk using many of these different types of scores from companies like Experian, TransUnion, FICO, and VantageScore. You need to realize that the credit score you might think you have is not the only one assigned to you.

These scores are as far as FICO is concerned, but there are more credit scores than just the FICO score.

In order to help you wade through all of this credit score confusion there are things you should focus on to determine how strong your finances really are. There are 5 main credit scores that you need to watch with some frequency.

The FICO Score

This is the credit score that has been around the longest so it is used quite frequently by lenders. If you want to get a loan then there is a high probability that this score will be assessed by the lender. Fortunately there are easy ways for you to get a free copy of this report online.

The Vantage Score

This is one of the newer credit scores available to consumers and it is actually based on a partnership between TransUnion, Experian, and Equifax. The “Big Three” as they are known decided on this venture in an effort to provide consumers with an alternative to FICO. It gives people that have little prior credit the chance to obtain a credit score and purports to be more accurate than other scores out there. Eventually it might overtake FICO’s place as the king of credit scores.

The Credit Karma Score

This particular credit score is generated based on information gathered about you by TransUnion. The Credit Karma service actually watches for changes to your credit report and lets you know whenever something causes your score to change. It provides you with a number that will let you know how your credit is doing and it can be checked each day. Most people are usually fine with just a monthly peek. This is a great service for individuals that want a broad view of their credit well-being all in one handy location yet still have the ability to see changes as they happen.

The Credit Standard

This standard can help you determine just how good your credit score is and therefore help you get an idea of your likelihood of getting approved for loans at great rates. Currently a score of 720 is considered pretty decent but you will need a higher number in the neighborhood of 750 or more to get the best rates around. The current state of the economy has caused many lenders to be more stringent when considering who they decide to lend money to. As the economy mends itself with some help from new government regulations the credit standard will certainly fluctuate. You will have to monitor credit standards closely to be sure that you make the best financial decisions in the future.

The Insurance Score

This is the score that most people have never even heard of because it is only used by the insurance industry when pricing their premiums. It is based on credit and uses a combination of additional factors like how a person uses their credit, how much debt they have, and how often they made late payments. The insurance companies generate a score based on these factors and then use that number to determine how risky you are to insure. Their philosophy is that people with lower insurance scores are riskier and therefore should have to pay higher premiums for their insurance policies. That score has an enormous impact on how much your insurance will cost you.

The bottom line regarding credit scores is that you have to educate yourself on the many ways that your credit worthiness is being assessed. Since your credit has such a major impact on your ability to save money through better interest rates and an increased chance to obtain new credit, it needs to be understood. Once you take control of your credit you will be able to cash in on greater financial opportunities in the future.

What do the credit files of a person with a perfect FICO score look like? The FICO algorithm is a carefully guarded secret, however with enough information we can piece together the requirements to surpass an 800+ FICO score. FICO credits scores use five primary criteria to generate the number, which is detailed below.

We compared this information and information that we dug up on the Internet on what it takes to achieve a perfect score. Keeping all of this data in mind, let’s examine each of these factors and how they can help you get an amazing credit score.

History of Payments – 35%

Paying your bills on time is of the utmost importance. Most creditors don’t record a late payment until it surpasses 30 days, however there are always exceptions and even if you are only a few days past due, you could have a report filed with the credit bureau.

Generally, there are four late payment categories: 30, 60, 90 and 120+ days past due. These can follow your credit score for many years. You should always make an effort to pay at least the minimum payments each month.

• Perfect credit scores show no late payments in the last seven years, on average.
• For scores in the 800+ range, there will normally be no late payments within the last four years

Amounts Owing – 30%

Having access to debt doesn’t mean that you should use up all of your debt as fast as possible. A large portion of the FICO score is determined by the amount of money owing to your debtors, and that amount is compared to the total amount of credit available to you. It’s called ‘utilization’, and it’s a simple ration of your current debt to your credit limit. An example is a credit card with a $7500 balance and a $10,000 limit would have a utilization ratio of 75% (7500/10,000). Maxing out your credit cards would therefore lower your credit score. The best advice is to keep your utilization score at below 30%. The FICO algorithm takes into account the number of open accounts with outstanding balances, loan amounts still outstanding, and amounts owing on specific account types like revolving credit and loans that have installments.

• Perfect credit scorers usually have a utilization of under 10% for revolving type accounts like credit cards.
• Higher credit scores are found with installment loans when the borrower has paid down the original balance by at least 35%

Credit History – 15%

Wine gets better with age, and so does your credit score. Young professional have difficulty achieving an exceptionally high credit score mainly because they only recently have begun establishing a credit history and getting loans.

• Perfect FICO scorers on average opened their first accounts almost 20 years ago.
• 12 years, with 10 years of positive credit history was the average for people with scores over 800.

Fresh Credit – 10%

How many times have you been denied credit that you’ve applied for in the last 2 years? If your answer is quite a bit, then your FICO score is headed into a nosedive. Constantly applying for credit raises a red flag for lenders that you need the money quickly and are an investment risk. There are times however, like when trying to find the best credit card offer, that you would apply for multiple lines of credit.

• Perfect FICO credit scores keep inquiries to 2 every 2 years.
• Many people with perfect credit have not applied for more credit lines within the last 12 months.
• FICO credit scores take into account the various types of accounts that are open, and accounts with high credit have a demonstrated history of responsible credit use.

Credit Types – 10%

In a diversified investment portfolio, you typically see a mix of stocks, bonds, and mutual funds. This same idea can be used when thinking about your credit. Having an assortment of debt types can be seen as a responsible use of debt. Mortgages, Retail and Consumer Accounts, Credit Cards and Installment Loans are some of the types of credit accounts that a FICO score evaluates.

• Perfect credit scorers normally have at least six accounts paid as per the terms of their contracts.
• There is no limit to the number of open accounts someone can have, but too many will impact your credit score in the future.

Your score may not be where you want it to be yet, but don’t give up hope. Setting small term goals and checking your credit score often is the key to successful building. There are numerous free trial accounts that will give you your credit score without a fee. Two great sites for this are:

1. TrueCredit.com: This site provides a one week trial that reports on all three major credit agencies. After the trial, it is $14.95 per month.
2. GoFreeCredit.com: After the trial it is $19.95 per month, but the one week free trial also includes reporting from the 3 big credit bureaus.

Rebuilding your credit after bankrupcty is a challenge, but it is possible.

Bankruptcy is one of the worst things you can do to your credit, and if you’re wondering how to rebuild credit after bankruptcy, then you’ve come to the right place. Bankruptcy appears on your credit report for 7 to 10 years. Sometimes though, bankruptcy is the only avenue you have to fix your finances, so in essence, you are damaging your credit it now, in order to save it in the future.

Nothing lasts forever however, and this also applies to your credit rating. Although bankruptcy is essentially a death sentence for your credit, with patience and a lot of perseverance, rebuilding credit after bankruptcy can start immediately.

Knowing that credit can be rebuilt can make you feel better, but your words need to be backed up by action. Your first step after filing bankruptcy is to ensure that the debts that got you into this mess in the first place are taken care of. In most cases, bankruptcy discharges only part of your debt, so you still have responsibility for your bills. Set up payment plans and ensure that you are saving enough money to make every single payment. When you have a history of good payments behind you, you can take the next step and start applying for credit. There are a few avenues to help raise your credit rating.

Monitor Your Reports

It’s very important to ensure that the credit reports that creditors use to summarize your financial responsibility and acumen, is 100% true and accurate, because there are times after a bankruptcy filing that some items are not reported properly. One of the common issues that appear on a credit report post bankruptcy is the accounts that were negotiated as part of the bankruptcy process not being recorded properly. These accounts continue to report as past due and your credit rating will not rise, it will continue to fall. Ensure every account that is applicable in bankruptcy is recorded properly. This helps current accounts with positive reporting history build your credit.

It’s easy to check your credit report. Your report is available for free at annualcreditreport.com. If you want to know the credit score, visit GoFreeCredit.com, which reports credit scores from the 3 largest credit agencies, and they offer a 7 day free trial. If necessary, write down the creditors contact information and contact them to have the bankruptcy details added to the account and credit record. Check on your credit report every 6 months after that to ensure there are no more errors.

Obtain a Secured Credit Card

Secured credit cards are an excellent way to establish credit, or repair bad credit

After bankruptcy, getting an unsecured credit card will be next to impossible, so the next best thing is to seek a secured credit card. Reputable secured credit card providers will report payment histories to the 3 largest credit agencies. Some of the cards come with annual fees, but the benefits to your credit and the rebuilding process make it worth the cost. To set up a secured credit card, you will need a savings account to register with the card. The deposit amount in this account will determine the limit that is available on the secured card. Aside from the savings account aspect, the credit card has the exact same powers as an unsecured card. The difference is that if you become past due on your payment, the creditor withdraws the amount from the savings account, and your limit is lowered to the new balance until the money is restored to the savings account to increase it. There are dozens of secured credit cards but a few stand out:

At 14.99% to 19.99% APR the Orchard Bank Visa card has a first year fee of between $39 and $59, with the continuing fee for any years after that of $59. This card is actually unsecured, and is aimed at people with a poor credit score. The credit limit will increase the longer the account is in good standing, which will also increase your credit score.

The Public Savings Bank Open Sky Secured Visa comes with a very reasonable APR rate of 11%. There are no monthly or application fees, simply the $59 annual fee. This is a flexible, long term credit solution to help rebuild your credit. The only other cost is $25 each time you raise your credit limit.

Get an Installment Loan

Although a difficult path, obtaining an installment loan can help rebuild your credit, the tricky part comes into play when considering the past bankruptcy. The loan amount should only be used as an interest bearing account, even a CD so that the loan can be serviced on time. The interest that is paid on the loan is offset by the interest you earn on the CD, and the length of the loan and CD should be the same. Paying more than the minimum on the monthly payment will lower the total interest paid on the loan, and will reflect well on your credit history.

Interest rates on CD’s are currently on the low end, however the interest on the installment loan should also reflect a low interest rate. It is relatively easy to sign up for a CD, and you can visit banks like Discover Bank or Ally Bank, your long CD interest rate can be between 2 and 3 percent.

Anyone can take the steps to rebuild their credit after a bankruptcy, you just need to know what tools are available and where to find them. This article highlights a few tips on how to re-establish credit post bankruptcy. No one solution is the key to credit success, but combined over a 5 to 10 year period, and a solid payment history, your credit score and credit history will once again be normal.

There are two types of loans, subsidized and unsubsidized. Many have had to begin to rely on both in order to fully finance their education. Subsidized loans are ones where the government pays the interest on your student loan while you are in college, that way you simply owe the principle upon graduation, and interest will begin to accrue after that. With an unsubsidized loan, interest accrues the entire time you are in college, leading to a much higher debt load for students who must use these loans to make ends meet.

The education and student loan dilemma

With college being almost a requirement of obtaining a good job, more and more people are going to college. This increases the pool of qualified candidates and makes the competition for the few good jobs out there pretty stiff. The debts that many incur while in college are quite massive, and the salaries of most entry level jobs, even for those with a college education, do not provide enough to finance one’s own living expenses, as well as manage the huge monthly payment on one’s student loans.

Student loan payments tend to begin six months after graduation, putting the recent graduate under a lot of pressure to find something, anything, before that first bill comes in. Many students are shocked when they see the extent of their debts. Unsubsidized loans often really shock a student, as the amount of interest incurred on these loans during the time they were in school can be a bit shocking.

Not paying these debts can cost big time

It is easy to see how many graduates are simply unable to pay their student loan debts, and this can make them vulnerable to a lifetime of financial problems. Student loan debt is yours for life, not even bankruptcy can eliminate these debts. Those who cannot make the monthly payments are faced with a limited number of options from which to manage these debts.

Consolidating your loans seems like a good idea, as all your loans are lumped together and you are given a longer amount of time to pay your student loans. The problem with this is that you incur a lot more interest over the course of repaying this debt, and you can end up paying almost double the original loan amount in the long-run. Deferments are another option, and while you are given a grace period from payments, interest continues to accrue while you are in deferment.

Defaulting on your loans is failure to make a payment over 270 days. When you default on your loan, not only does this negatively impact your credit score in a negative way – meaning that you will have more trouble and should expect higher interest rates on any loans you many qualify for – but you are no longer under a payment schedule with the student loan issuer. This means that they can come after you for the full cost of the loan, even garnishing your wages and seizing your tax returns to recoup their costs.

While student loans seem like an evil of society, for many, they are a necessary evil that they need to make a better life for themselves and their family. Student loan debt, when carefully monitored, can be managed, and it is vital to your overall financial health that you make sure that you fully understand the terms of your student loan agreement. Knowing the terms of your loan, having an understanding of what your payments are going to be, and being prepared for repayment will put you on track for success.

How does this scam work?

The offer for debt relief via this so-called debt settlement order is sent through an unsolicited text message, most often targeted at those who are mired in a great deal of debt. These text messages claim that there is a new program that can help eliminate or erase excessive debts. You are prompted to reply to receive more information, as well as to stop receiving further text messages. Once you reply, it is then known that your number is, in fact, a live and active one. Many have reported being inundated with excessive numbers of offers from a number of highly suspect debt relief agencies, even when they simply responded with the prompt “STOP”, that is supposed to indicate that one is not interested in said debt settlement offer.

Debt settlement offers are not recognized by any governmental or financial agency and there is no oversight for this so-called debt relief system. In fact, it is actually a pretty simple scam. A mass number of text messages are sent out to many different phone numbers, some of which are actual, active phone numbers, some of which are not. When you respond, either asking for more information, or asking to stop receiving texts, your information is stored. This personal information is then sold to other financial services companies.

These companies often offer financial advice, and pie-in-the-sky promises that they fail to come through on. Many who have fallen prey to this scandal have found themselves in even more debt by falling prey to the further solicitations they receive. These companies often want an upfront fee for their services, and then when nothing happens, you are just out that much more money.

How can you protect yourself from this scam?

The best advice for how to avoid the frustrations of this scam to begin with are simply to not respond to any text message that claims that there is a new program that will eliminate your debt. If it sounds too good to be true, it more than likely is. If you do not respond, there is no way for the scammer to know if your phone number is active and valid or not, and will thus result in the cessation of calls. Report any unsolicited text messages to the Better Business Bureau.

Be wary of any debt relief company that requires upfront payments for their services. Reputable companies will only charge you a fee if they obtain a successful settlement of your debt. It is recommended that you research any debt relief company before doing business with them to ensure their legitimacy and to protect yourself from being scammed.

So regardless of credit score, it pays to do your homework when looking into getting a credit card. This will help to ensure that, not only do you get the best possible interest rate, but that you get the one that best rewards you for choosing to obtain your credit through said company. What follows are just a few examples of excellent cards for those with varying credit scores. If you are in the market for a new credit card, look into these, and the many other options out there to find the best possible card for you.

Best credit cards for those with excellent credit

It literally pays to have excellent credit, a widely known fact, and the case is still true when it comes to credit cards. Those with excellent credit will qualify for the lowest interest rates and the best rewards. Depending on your lifestyle, you can choose from incentives ranging from store rewards, cash back on purchases, airline and hotel points, exclusive offers, and low interest rates.

Chase Sapphire Preferred Card

This credit card is an excellent choice for those with very good credit who wish to reap rewards by way of airline miles. If you spend $3,000 in the first three months of having the card, you automatically receive 50,000 airline points towards two flights and hotel accommodations, which has a dollar value of around $625. This card also boasts a 7% annual points dividend, and you earn more rewards points by booking your flights and hotels through the companies rewards booking service.

American Express Preferred Rewards Gold Card

Those who prefer store rewards will love this card. When you spend $300 in the first three months of having this card, you get 10,000 Membership Rewards Points, which can be used at a wide number of retail, entertainment, and travel companies worldwide. With this card you also get exclusive access to events, and other deals or offers. There are many dining, entertainment, and travel rewards points awarded for using this card, and the theft protection is second-to-none.

Best credit cards for those with fair credit

Even if your credit is more “fair” than “excellent’, you can still qualify for a number of different cards that offer practical rewards that are highly beneficial to most card users.

Capital One No Hassle Rewards Credit Card

For those with fair credit who want to get the most out of their purchases, this Capital One card is a great option. With this card you get 2% cash back on grocery and gas purchases, and 1% cash back on all other purchases. If you shop at one of the 300+ approved retailers, you can also get up to 15% more cash back than when shopping at non-approved stores. These points do not expire and there is no limit to the number of points you can earn. Right now, Capital One is offering a 0% APR until April 2012.

First Premier Bank Classic Credit Card

This card is great for those who wish to use their credit card as an avenue to improving one’s credit score. There is a month long grace period, meaning that no interest is incurred on purchases that are paid off, in full, within 30 days of purchase. This makes for easy-to-manage credit, and in addition, your payment history is reported to the three major credit scoring agencies each month.

Best credit cards for those with poor credit

Those with poor credit are not left in the dark when it comes to getting a decent deal on a credit card. For those with poor credit, the main impetus for obtaining a credit card is to build, or rebuild one’s credit score.

Orchard Bank Classic Master Card

The interest rate on this card is variable, dependent on your credit score, but the range is within a reasonable limit. There is a low annual fee, making this card far more accessible to those with small budgets. One of the biggest advantages of this card is that your monthly payment history is reported to the three major credit scoring agencies, which speeds up the process of improving one’s credit score.

Applied Bank MasterCard or Visa

This is a secured credit card great for rebuilding credit. A secured line of credit is one in which a deposit must be made as collateral for the line of credit extended to you. These lines of credit tend to be small at first, increasing with successful payment history. This card boasts an incredibly low, 9.99$ interest rate, one of the lowest for all credit cards for those with poor credit. As with the credit card described above, Applied Bank reports your payments to the three major scoring agencies monthly.

Conclusion

Regardless of credit, there are a number of excellent credit card offers available in 2011. Whether you are looking to take advantage of your good credit, or rebuild your no-so-good credit, there are a whole bevy of excellent choices available to you. Take your time and do your homework and you will be rewarded with a card that rewards you for simply using it!

What are installment loans?

In a nutshell, installment loans are loans that are to be repaid, in equal payments, or “installments”, over an agreed-upon period of time. These can be short- or long-term loans, and two of the most commonly known installment loans are mortgages and car loans. While in some ways this is beginning to change, the prevailing logic is that installment loans are more “traditional” loans, and are a safer bet than alternative forms of loans such as payday loans, title loans, and other financial instruments known for their harsh terms and high interest rates.

Installment loans are also considered more legitimate, and a more responsible decision than taking out a line of credit by way of obtaining a credit card, or choosing one of the alternative loans mentioned above. Also referred to as “fixed loans”, these loans are advantageous for large purchases and building a solid credit foundation. Purchases that are incredibly large, or that need to be adequately budgeted for are instances in which an installment loan is often the best choice.

Who gets installment loans?

There are installment loans available for those with a range of different credit scores, including those with poor credit scores. While those with low credit scores can qualify for these types of loans, the terms that these loans are set at are often prohibitive. The more traditional installment loans is most geared towards those with fair to excellent credit scores. When obtained through a legitimate financial institution, this is a great way to make large purchases affordable and attainable. As one’s payments remain stationary throughout the terms of the loan, this makes budgeting for and managing said loan a lot easier.

For new or small businesses, an installment loan is a great way to allow for the creation of, or expansion of one’s endeavor. This is a safe, secure line of credit that doesn’t have wildly changing terms and allows for a transparent way to get a good start.

The disadvantages and more predatory versions of the installment loan

While most installment loans are considered to be safe and sound ways to borrow money, those with lower credit scores are more likely to fall prey to a loan with harsh terms. This usually means a much higher interest rate and harsher penalties for late or non-payments. So-called “payday loan” companies are now offering their own version of an installment loan to those with poor credit. These loans tend to have an interest rate of at least 30%. And it can go much higher than that. If this weren’t enough, the repayment schedule is often quite short, making it highly difficult for individuals to repay these loans without taking out new ones. It is easy to see how this can turn into a vicious cycle of debt.

Conclusion

Installment loans are not right for everyone, and not all lending institutions have the best intentions when lending. Doing your homework before taking on any loan is always recommended. For those with fair to excellent credit, installment loans are a safe, secure, and fiscally sound way to obtain a line of credit for a large purchase such as a house, business, or vehicle. While there are decent installment loans available for those with poor credit, it is advised to avoid any sort of payday loan scheme, as these tend to be recipes for financial disaster, and can, in the end, stand to worsen, not improve your credit score.

Too good to be true

You can keep looking, but it just does not exist.

The rub here is that this is not true. There are no government monies that have been earmarked for the express purpose of helping citizens pay off their debts. These ideas prey on the vulnerable, those who are stuck in debt with no end in sight, and leads them to having false hopes about their credit future. Sometimes, people find themselves even more in debt, as they pay upfront costs to agencies who claim they will help the people obtain government monies to reduce their debts.

The paradox of the minimum monthly payment

For those who can only make the minimum monthly payments on their credit card debts, getting out of that massive hole can seem impossible, and in some ways, while not impossible, it is something that one will be paying off for most of their life. And $10,000, as our example, is not an unheard of level of debt, there are many who are saddled with much more than this. Depending on your interest rate, if you were to simply pay the minimum monthly balance on your $10,000 debt, it would take somewhere between 20 and 30 years to pay off. That is like a mortgage! It is easy to see, that when faced with this debt, that many are so overwhelmed that they will even believe something that seems too good to be true.

There are government programs that aim to help those mired in debt

While many misunderstand the programs that are laid forth by the government, thinking that there are programs where the government will pay off your debt for you. Sadly, there is not. However, there are some programs that are there to assist you. Recent legislation has been passed that helps to aid in the transparency of, and reduce the predatory practices of credit card companies. There have been caps put on interest rates and fees, which would balloon a debt to massive proportions, very quickly.

There are governmental and private agencies that offer credit debt counseling services. Many of these agencies have the ability to act as a liaison between you and the credit card company, often negotiating a settlement deal or payment plan that gives you the ability to pay off your debts, while not continuing to incur more. Not only can these credit counselors assist you in negotiating with your credit companies, they can also help you create a manageable and workable financial plan that can help you get out of debt faster than you thought possible.

Watch out for scams

Unfortunately, there are many out there who will prey on vulnerable people who are saddled with debt and have no way out. These companies are generally looking for one of two things – your personal information, so they can see it to other agencies, or to get upfront fees for providing you a “service” that does nothing to reduce or help you get out of debt. A rule of thumb is, no matter what your situation, or how dire it may seem, if it sounds too good to be true, it probably is. Do not give any personal information to a company without first checking them out. Be wary of anyone who asks for upfront payment for debt relief services, reputable agencies do not do this.

Final Word

It is sad that, even in this day and age, preying on the vulnerable is still far too common. While the government does have programs and mechanisms in place to help, they do not offer monies that will pay off your credit card debts. Those who say otherwise are either scammers or misinformed. You can reduce your debts and find a workable way to manage your finances, but it does not come from a pie-in-the-sky idea of “free money” to pay off your debts. It requires you to work with your creditors and allow them to work with you; to create a financial plan that will allow you to work yourself out of your debt burden and get on the road to financial freedom.

The ins and outs of a credit card cash advance

A cash advance from your credit card can be a very valuable feature, especially when you need quick cash in the event of an emergency or other unexpected cost. If you have fair to excellent credit, the terms and fees associated with using the cash advance feature are often a lot more fair and easier to manage. The problem with the credit card cash advance comes when you are unable to pay off the cash advance quickly.

Cash advances are not free of fees and other costs. You are generally charged a base fee – a percentage of the advance you are taking – and the interest rate on a cash advance line of credit is often much higher than that of traditional credit purchases. When you take out a cash advance on your credit card, you are not often given a grace period as with other purchases, which means that interest on the cash advance begins to accrue as soon as the cash is in your hands. If you are going to use this feature, it is vital that you take into account all the fees and costs that will be associated with using this feature.

If you have the ability to quickly repay the cash advance, this is a nice alternative when you need cash fast for emergencies. However, this is not a way to make ends meet, as this is a fast track to financial disaster if you cannot repay the advances in a quick manner.

A word of warning about cash advance credit cards is that there are often stipulations in the cardholder agreement that require you to first pay off your low interest, traditional credit purchases before you can pay off the higher interest cash advance. This means that until you can pay off your balance on basic credit purchases, the total cost of your cash advance will continue to rise. This is a stipulation that not all credit card companies have, but it is recommended that you check over the fine print before using this feature. If this stipulation is in the fine print, it is recommended that you really consider your other options before using this feature, as this can quickly saddle you with a large, unexpected debt.

While this is an excellent feature if you have the money to quickly repay the cash advance, and can be very helpful in emergency situations where you need cash quick, it is advised that you make sure you understand the full cost of using your cash advance credit card before using it, so you do not find yourself in an untenable financial situation. For those with fair to excellent credit, the terms of a cash advance are usually a lot more workable. Those with poor credit are likely to get hit with an inordinate amount of fees, making it difficult for them to repay the cash advance before the debt balloons out of control. This can be a great feature, so long as you understand the full cost of using it. As with all types of credit lines, it is recommended that you read the fine print and carefully consider your options before making a move.