Is it true that while maintaining a savings card account you spend as much as 50% of your credit card account’s credit limit, and your credit has no expiration period? Does your creditworthiness hinge upon this line of credit? To answer these questions you can look no farther than your credit card statement. This collection of statement is one of the most useful type of information in deciding whether to sign up for a credit card. You can view and compare their contents through the power of three ratio. If you have a credit card with bad or excellent credit history, you can easily see how late you will hit that mark. If you don’t pay your balance in full each time you sign-up, the negative marks quickly make your credit card statement filled with cash. How does this happen? A common trick is to offer your lender a credit card guarantee. This involves you depositing the money on deposit account and making a minimum deposit, then the whole deposit is converted into the credit card bill. Next, you transfer the money to other account and pay you bill over several months, thus establishing a credit card history. The lender then deductes the money from your account on both counts, and you start paying off the money from your account. In doing so, you build the credit card balance with each new transaction instead of accumulating a pile of debt. This can be a boon for you if you borrow – that is, at the rate of credit available, you can pay back only a small portion of the available credit – since you’re paying 0% interest when the balance is paid on time.
Let’s say you’re convinced you should try it. On your first bill, you promise to improve your credit with a 0% interest introductory rate. In the final bill, you show your lender you have the money to pay it back in a long term manner. Each one of your payments toward a credit card statement will have a very significant and potentially significant and even negative marks on your credit report.
Even a small credit card balance can quickly land you in the $20,000 hole in a hurry. When you make a credit card purchase by phone or online, you owe your lender a refund of your balance, as well as interest for about 15 months on the finance charges. That’s over a year’s worth of finance charges and fees to begin charging, including late fees and penalty fees. Once you’ve paid such a late fee and fees, you’ll end up paying over $2,400 in interest from credit card interest to add up your debt.
The idea is basic: to ease the burden on lenders and eventually improve their odds of approving a loan for you. The numbers on this strategy have advanced the status-quo and made its critics cry. More and more, credit card companies are raising the cost of such small payments to entice more solicitors and customers (myself included) eager for the same thing: more credit cards. A good percentage of their credit card debt doesn’t go to pay their balance, and most rarely do they do so in an attempt to build a good credit history.
The Bottom Line: Credit card debt is a growing problem in America. Yet a simple strategy to sustain your financial health successfully using credit cards makes sense.
1. Pay the entire card balance every few months.
2. Limit your payments by transferring balances from card checking or cash advances to a secured credit card.
3. Raise your monthly payment to allow easier payment by paying by check rather than cash.
4. Remember to pay the balance on your card every month.
5. Avoid paying interest charges in full for several months.
6. Avoid using credit cards to finance purchases.
7. Use the internet to negotiate for lower interest rates and no annual fees.
Tips for Improving Your Credit Card Balances
1. Transfer balances from other cards to credit cards that offer rewards and better interest rates.
2. Pay off other balances every few months.
3. Avoid spending cash on the card.
4. Always pay off card balances by the due date.
5. Use the internet to pay your card balance by phone instead of a cashier.
6. Never try to pay a credit card balance with a debit card.
7. Use the internet to pay your credit card balance with a credit check instead of cash.
What To Do?
1. If applying to consolidate credit card debt, carefully research credit card debt consolidation options.
2. Read the fine print carefully. Many companies offer a 0% APR or introductory rate on balance transfers only. How does this offer any guarantees?