5 Steps on How to Manage Your Credit Card Debt!

To spend has become our habit and nature, especially when we are suddenly handed down with a bunch of cash. However, most of the time, we spend in advance even without the cash in hand. With the introduction of credit card, we all, human beings after all, crave for things to satisfy our desires and lusts. Seeing other people having them, we also want the same thing and experience.

Here's probably an experience you could relate.

Beginning of the month, one fine sunny afternoon, a truck stopped in front of your neighbor house. Of came two men, unloading a big flat box. Out of curiosity, you went out to look what's happening. Out came, your neighbor, smiling happily and greet you. Hey man, what's up? You neighbor replied, "Oh, I have just bought a new 36 inch LCD flat panel TV, come in and have a look". The two men brought in the stuff, unpacked it, and setup it on the living room. Power it up and "Wow", a sleek beauty of thinness of the screen displaying your favorite home movie. You are so intensely and engross with the picture sharpness, clarity and crispness. Best of all, it came in with full-surround mode speaker, and thrill and delighted you even more with the surround sound. You heart keep on telling, "Hey, I got to get one, I ought to have it, I am going to buy it". The next day, you went to the store where your neighbor bought the LCD TV, without even having a thought of it.

So, on the day, the same truck appears now in front of the house, and you got a nice LCD TV, setup in your living room. The picture, the sound, the experience, is indeed overwhelming and the feeling is good.

Come to the end of month, a letter is posted in your letter box. You open it up; $3,500 is printed in the credit card bill. You are shocked, and your mouth is wide open. Oh me gosh, how I am going to pay this?
You got yourself in debt! Out of your Impulse!

Did you know?
In the US, credit card debt has risen over 25% in the past decade with an average balance over US$7,000. Over half of citizens carry a balance every month one in five citizens carries a credit card balance at annualized rate of over 20%. Over 22% of the debts incurred are because of poor debt and credit card management.

Bank of England revealed that Britons owed an outstanding £1 trillion in consumer debt including credit cards and estimated that this debt was rising by £1 million every four minutes.

Here the simple math!
With and outstanding of $1,000 and with minimum monthly charge of 5%, it would take 5 years and eight months to settle the total debt and over and above that, you will be paying $382 in interest based on an annual percentage rates of 18% per annum.

If you are drowned with credit card debts, here are the simple 5 steps to manage your credit card debts!

Step 1
* Understand terms and conditions and charges. This is a very important point. You got to know how much is the Annual Percentage Rates (APRs) for the card you are holding. Some banks may have higher interest rates, or different rates for purchases, cash advances, tiered APRs, penalty and others. A single credit card may have several APRs. One APR for purchases (e.g.14%), cash advances (e.g. 18%) and balance transfers (e.g. 19%) There is also a Tiered APR, which is different rates are applied to different levels of the outstanding balance. For example, 16% on balances of $1-$500 and 17% on balances above $500. A penalty APR is the APR that may increase if you are late in making payments. For example, your card agreement says, "If your payment arrives more than ten days late two times within a six month period, the penalty rate will apply. If you carry over a part of your balance from month to month, even a small difference in the APR can make a big difference in how much you pay over a year. If unsure, ask the bank or agent for clarifications of the terms and condition of the APRs. Be alert to changes in policies and rates.

Step 2
* Prioritize your payments. If you currently have credit card debt, focus on paying off balances on cards carrying the highest interest rates. If you have a 17% APRs credit card, focus to settle the balances, as it will save you a lot of interest. Another way is to transfer the balances to a cheaper interest rate e.g. 8%, but however read the fine print before you do that. You could also negotiate with your current credit card banker to lower the interest, provided you have a good credit rating which means that no late pay notations on your credit report and a good credit score. Otherwise, if the bank do not obliged you to reduced the APRs, just transfer to the cheaper interest rate bank. Make sure you transfer to the credit card that has a low annual percentage rate and be aware of incidental fees and charges.

Step 3
* Limit the number of credit cards. Decline new credit card offers, and cut into half existing cards with paid off balances. In the competitive world, banks are trying to entice consumer with lots of goodies, e.g. free lifetime membership, free gifts upon signing up and etc. No matter what, if you already have one credit card, that is more than good enough. Keep only one, declined other rest, no matter what sort of offer the bank comes out with. Keep in mind, the more cards, the more headaches in trying to keep track of the each card account balances.

Step 4
* If you were forced to use your credit card for an emergency, do attempt to pay off the balance immediately. By paying minimums each month only leads to prolonged and growing debt. If you can't pay full, then you must make attempt to pay more than the minimum.

Step 5
Don't ever... ever... ever... spend beyond your means. Spend within your means. Buy only what you really needs, not the nice to have stuff. Buy what you could afford. Most people will shop for the latest fad cell phone that have touch-screen feature, email function, mp3 players, video player and so on and so forth. However, think about it, what is the main function of the phone: that is to make a call, and probably send some short messaging message. Do you really need all the other gadgets, and do you really need to utilize all the fancy gadgetry stuff the manufacturer pack into the phone. If you really must buy the phone, ask yourself whether you have the budget or money for it. You must also practice delay gratification. Do mind your debt. This sort of credit card debt can be avoided by following one simple rule "If you don't have the money to pay for it, then don't buy it."

Well, that is the 5 simple steps that could indeed be a great help to manage your credit card better.

Article Source: http://EzineArticles.com/?expert=Jayzee_Jon

Financial Problems - How to Repair Bad Credit History

Tips on how to repair your credit score is usually tips on how to prevent bad credit score. There is really nothing much you can do about it once you have already blundered. The most you can do is to be a good credit individual again. So here are the first principles you should remember:

Pay on time

Only a careless individual would not pay his or her bills on time even if he or she has the funds to do it. There are thousands of cases when you can have problems with your credit simply due to carelessness. People make up so many excuses such as "I woke up and totally forgot about it because I was too busy on other things" or "I misplaced the bill." Remember that there are measures to avoid these things such as keeping reminders such as post it notes, and simply being more organized. If you fail on this step, then you are most likely the type of person not responsible enough to have excellent credit in the first place.

Three things that will pull you down significantly

Try to stave off bankruptcy as long as you can afford to. The same thing goes with collections and liens for mixed tax payments (remember the first step is to pay on time in the first place). Remember that bankruptcy will stick to your credit history for up to a decade. Collections will last up to 7 years and unpaid liens will last you till you die. Remember to cross out these three things because they are the most dangerous things for your credit health. If you get one of these bad records, your score will immediately go down. This is one of the best tips on how to repair bad credit score for good reason. Though these problems are recoverable, you can't simply rebound from them right away. They will way you down for a long time and you will realize just how heavy they weigh you down through the years when you could have used a loan or good rates but could not get them due to your low FICO score.

Keeping clean with your credit cards

Do not keep too many credit cards. The temptation to use all these cards up will be simply too great. Manage your financial affairs by closing credit card accounts are not used that much or simply do not get new credit accounts in the first place. These just add up to your temptation. Then, after you close an account, report this to the three major credit reporting agencies. Aside from not getting a lot of credit cards, you should also learn to manage the credit cards you already have.

Checking your credit report

Now here is one of the best tips on how to repair bad credit score that some consider as not merely preventive. This can actually bring down up your credit (although technically, you are just correcting it). Did you know that there are many people who have mistakes in their credit score? Credit reports are done by machines. A small mistake in spelling of you name or address, un-updated personal details, just one additional zero to a transaction, each of these things can lead to mistakes that lower your score. Thus, it is advisable to get your free yearly credit report from the three major credit reporting agencies. Study them carefully and dispute the mistakes in them.

Article Source: http://EzineArticles.com/?expert=Joel_Owens