June 09, 2007
Simplistic Explanation of Credit Card Rates
Credit card debt is soaring out of control for many Americans. It amazes me to see just how much consumers are spending each year with their credit card, it’s in the trillions of dollars!
It is predominately young families and people in their late teens and early twenties that venture on a course of the burdens of credit card debt because they do not fully understand the fees and interest rates associated with the ticking time bombs in their wallets, otherwise known as credit cards.
The Federal Reserve is at work to help the average consumer avoid the despair cause by debt by looking at ways to improve credit card company disclosures, billing and what are quite often confusing interest rates. You can read the press release here from the Federal Reserve to see what actions they are taking.
While I think it’s a very good thing that the Federal Reserve is working to make it easier for consumers to understand what they are signing on for when they apply for a credit card, ultimately your finances should really be your own responsibility.
You must educate yourself about what the lingo used in the various aspects of personal finance means.
When talking about credit cards there are several charges and fees that the card issuers make money from you.
How much are you really going to be paying in interest? To better understand credit card interest rates I am going to explain the most common areas of confusion consumers have when they are trying to compare rates.
Let’s take a look at how the banks make money from your use of credit cards. It gets confusing trying to figure out what all the different interest rates mean and what the different charges are for.
Bank Fees and Interest Rates Explained in Simple Terms
1. Annual fees
Most credit card companies charge an annual fee. This is a flat rate that you pay each and every year to be a cardholder whether you use the card or not. Make sure you read the terms and conditions when you are applying for a credit card and look for the annual fee.
Tip: When you apply ask the bank to waive the annual fee, quite often they will.
Why is there an annual fee?
First of all it mitigates the risk of people defaulting on payments. Secondly it’s a cash grab pure and simple. The credit card company wants to make a fast buck from you.
An annual fee really comes down to this: You are paying the bank to be a customer.
2. Purchase interest rate
Typically there is an interest rate assigned for purchases of merchandise from stores. This rate applies to goods and services you purchase on the credit card.
3. Balance transfer rate
You might see a balance transfer rate on the terms and conditions of the card you are applying for. This is a rate that is set to entice you to leave your current credit card company to attract you as a new customer.
Note: The balance transfer rate will only apply to the balance you transfer from your old card to the new company. Any new purchases you make with the card will accrue interest.
Why do banks offer 0 APR balance transfer offers?
Simple, they figure that since you carry a balance you are likely to increase your spending with their card and they are going to make money from interest accrued by your credit card use.
Tip: Use balance transfer rates to get out of credit card debt. Take advantage of the several zero interest introductory APR’s to get out of debt.
How?
Transfer your balance to the 0 APR card and do not use your credit card! Discipline my friends!
4. Cash advance interest rate
The rates on cash advances from ATM’s are typically double that of purchases. When you take money out of the ATM as cash it’s going to cost you a lot more than you could ever imagine!
Tip: Never withdraw cash on your credit card from an ATM! Ever!
5. Variable rate
A variable rate will usually read, Prime plus a percentage. While you will see some seemingly low rates on variable rate credit cards, the number you see is not the interest rate you will pay.
The variable rate might read 7.99%
You think you are getting a great deal!
No! That’s not the rate you will pay. The variable rate of prime + 7.99 will be more than the 7.99!
The prime rate is a base interest rate set by the banks so if prime is 4% for example, the real interest rate you will pay is 11.99%
6. Fixed rate
A fixed interest rate is just that, it’s a pre-determined interest rate which never changes on your card unless the issuer notifies you in accordance to applicable credit laws.
Tip: When the bank sends you information in the mail, read it all! It could be them announcing a rate hike!
That’s about as simple as I can state the various rates charged by credit card companies, when you have a basic understanding of how the various fees and rates work, you are armed with knowledge and I hope that knowledge will help you avoid credit card debt.
Educate yourself on the basics of how credit cards work and you will be able to avoid credit card debt or begin to shed yourself of the burdens of debt.
May 31, 2007
Avoiding High Credit Card Interest Payments
Most people are far too busy to take the time to evaluate just how much they are paying in credit card interest. There's potentially hundreds of dollars you can save each and every month if you take a couple hours to look at your credit card statement and take action to reduce your credit card interest rate.
Yes! You can reduce your credit card interest rate very easily.
The first step you should take is a phone call to your current credit card company. Simply tell the representative on the phone that you can get better rates on balance transfer cards that their competitors are offering. Mention that you can take your business elsewhere and get a 0 APR introductory rate and kindly ask them to match that rate for at least 6 months.
In most cases your current credit card company will extend this offer to you but if they don't say "good-bye" to them and promptly get a balance transfer with a 0% introductory rate for the longest period possible. This will instantly save you lots of hard earned cash on interest payments.
My favorite balance transfer card is the Blue Card from American Express because you can get up to 15 months interest free. That's right, over a year of not paying credit card interest!
Tip for eliminating credit card debt:
Take the interest you are saving and apply that directly to the balance on your credit card. Doing so will get you out of credit card debt faster than you ever thought possible!
I know you're busy, life does that but please take the time to have a look at your credit card bills and take action today
Posted by Colin at 01:14 PM | Permalink | Comments (0) | TrackBacks (0)March 16, 2007
A Way Out of Costly Credit Card Debt
Credit card debt can definitely cause a feeling of hopelessness. The seemingly insurmountable pile of credit card bills can really start adding up and it sometimes seems that even if you have stopped using your credit card that the debt owing just keeps growing due to the incredibly high cost of card interest rates.
It's time to reconsider how to pay down your card debt. Paying down your high interest rate credit card should take priority as your cards are likely your highest rate loans. So get them paid first.
Most people are advised to simply keep paying down your credit card but I just came up with an alternate solution that will help get you out of debt faster. Rather than simply paying more and more on your credit card balance you should consider taking out a secured loan at a MUCH lower interest rate to pay off your credit cards and then proceed to pay off your secured loan.
The average interest rate on credit card balances is roughly 18% and a secured loan can be acquired at about 9% - That's an amazing 50% savings in interest charges.
Apply your interest savings from your secured loan directly to the balance of the loan and you WILL save even more money in interest charges.
If you do this you will pay off your debt very quickly, faster than you ever imagined. There's hope in solving your debt problems.
Another strategy you can try is to consider credit card applications that offer a 0% introductory period for anywhere between 6 to 18 months. Then after the introductory period expires, go apply for a secured loan to drive your interest costs down even further.
I must caution you though, to carefully select the credit card you are applying for and apply only once for the card that will best fit your needs and think honestly about the offer that you are most likely to qualify for because if you "over apply" for credit it will impact your FICO score.
When the introductory rate expires on the 0% intro rate offer and you are ready to apply for a lower rate secured loan be sure to mention your strategy to the banker so they are aware of what you are doing. If you don't let them know what you are up to they might perceive you as a "credit junkie".
Make sure you come back to visit Crediteria.com for more great advice. More money saving tips coming soon!
September 16, 2006
Credit Card Offer Flood Gates Open
Does it seem to you that the credit card companies have you targeted?
They do! At least once a week you likely get a few credit card applications flooding your mail box (and email box) offering 0% APR and fabulous rewards programs with bonus "sign-up now" points.
So, what are you to do? Get lured into another credit card? Place temptation in your wallet? Go further into the debt trap?
It is hard to ignore some of the offers I have to admit but it is usually wise to shread the applications and I mean shread them. I mention this because there are people that have tested this, ripping up the application and then taping it back together. Then proceeded to fill out the application with false information just to see if they would receive the card. And...they did! Even with a false name, wrong address and telephone number (they used a relatives address to have the card sent to)
OK, getting back on track now. Take those offers and shread the living you know what out of them to protect yourself against fraud. Unless....The offer truly will benefit you and then your best move is to transfer your existing balance to the new card and cancel the old account. Just a little advice to help keep you from the debt trap you might set for yourself by having too much available credit.
For most people, ignoring these offers completely will serve you well!
Posted by Colin at 11:55 PM | Permalink | Comments (0) | TrackBacks (0)August 12, 2006
Getting out of debt - How does your lifemate see things?
When we choose to commit to a relationship, we commit emotionally, physically, spiritually, and mentally.
Many of us, however, give very little serious thought or discussion to our financial commitment.
Either we've decided in our heads how the money is going to be managed, or we just figure everything will work out.
We may even feel guilty talking about the money end of the relationship.
That would, we believe, be focusing on what's least important.
We think again.
Each of us brings our own emotional baggage about money to a relationship.
Arguments, resentments, manipulation, and deceit can all stem from misunderstandings and fears about money and equality in a relationship and can undermine the happiness of even the best of soul mates.
We take considerable time learning what our partner's "emotional currency" is.
Today, do not assume that you understand the financial relationship you have with your partner
Posted by Colin at 10:15 PM | Permalink | Comments (0) | TrackBacks (0)Seek Your Sense of Freedom
Some of us made it a policy not to borrow money.
We didn't want to feel indebted to anyone.
To us, having money meant freedom.
When circumstances—perhaps job loss, divorce, death of a spouse, retirement, medical expenses, or addiction—led us into debt, we felt we lost our freedom to do what we wanted to do, to be where we wanted to be, or to go out and have a good time.
Money, instead of being our ticket to adventure, became our prison.
Many of us will eventually escape debtor's prison.
In the meantime, we know that freedom can be a state of mind.
When we free ourselves of worry, hate, blame, expectations, and look back, we are free to just be.
Today begin to look within for a sense of freedom.
August 08, 2006
Getting Out of Debt, Stop Your Obsessions!
Most of us are likely to obsess about one thing or another for a period of time, sometimes for days, weeks, or maybe even for years.
When in debt, we may obsess about getting what we can't afford, our past spending behaviors, or what we could've had if we hadn't gone so deep into debt.
We question our values.
Obsessing about what we want or can't have means we value what money can buy—stuff—more than we value money itself.
We're really ignoring money altogether. Instead, we can concentrate on what our money can do.
We value its ability to grow, and we appreciate money more than a new computer.
We begin to see how money can work for us.
Today turn your attention from material goods toward money.
Posted by Colin at 03:22 PM | Permalink | Comments (0) | TrackBacks (0)August 05, 2006
Do You Believe in Your Goal of Debt Freedom?
We develop goals, priorities, and action steps.
We feel energized and ready to move full speed ahead.
But midway, as our momentum picks up, new thoughts enter our mind.
Do I really want this?
What if it creates new problems for me?
If I reach this goal, I'll have nothing to look forward to.
Being wishy-washy gets us nowhere.
These thoughts are the ego's way of looking for obstacles.
We acknowledge the doubts and then quickly cast them aside and move forward with complete conviction, like a warrior.
If the goal still feels right, we keep moving ahead.
We know in our hearts that doing what we believe in keeps us on the right path.
Today, believe in your goals and begin your path to debt freedom.
Posted by Colin at 11:47 PM | Permalink | Comments (0) | TrackBacks (0)August 04, 2006
The Little Things Add Up - Debt Freedom can be Achieved
One of the first and most obvious ways to pay off debt faster is to look for ways to cut excessive, wasteful, and frivolous spending and to apply that money toward our debt.
It can be hard to save hundreds of dollars in one category, but, amazingly, it's easy to save five hundred dollars or more by cutting back on smaller expenses.
Could we, for instance, replace the two-dollar cup of gourmet coffee with the stuff we get at work?
Can we buy generic brands of medicine?
Use vinegar instead of expensive cleaning solutions?
Use cheaper shampoos and lotions?
Bring our lunch to work every now and then?
Cutting back doesn't have to mean doing without. We experiment.
Maybe we get gourmet coffee once a week or once a month instead of every day.
We may find that we don't miss it as much as we thought we would and that we feel more gratified saving ten dollars a week.
We allow ourselves to be flexible. We put the money we save in an envelope or box.
We apply the savings toward our debt.
Look for small ways to save five hundred or a thousand dollars a year.
Posted by Colin at 11:52 AM | Permalink | Comments (0) | TrackBacks (0)August 01, 2006
Debt Burdens Are A Problem For High Earners Too
We have a job where we earn more money than we'd ever dreamed possible, or perhaps we inherited a large sum—or even won the lottery.
We always thought if we just made a given amount every year or won a chunk of cash, we'd be okay.
We'd be happy. But we find the more we make, the more we spend. And we're still not happy.
What happened?
When our appetite is always bigger than our bankroll, we remember to treat the true source of the problem.
When by reasonable standards we make plenty of money but our spending and income increase proportionately, we question our thoughts about money, our spending patterns, and our needs: emotional, physical, spiritual, and mental.
No matter how much you make it is possible to sink yourself in major debt.
When the money starts rolling in, stop and question each and every purchase decision.
Pay special attention to your emotional state when the temptation to take on loans kicks in.
Making more money can actually put you in a debt burden that is insurmountable, especially if that large income vanishes.
Trust me on this - I know from experience! Yes it is possible to make over $500,000/year and still be a financial wreck!
Posted by Colin at 04:15 PM | Permalink | Comments (0) | TrackBacks (0)July 22, 2006
Getting Out of Debt, The Emotional Side of Debt
Flight attendants instruct adult passengers to place the oxygen mask on themselves first, before putting it on children. Given that if we can't breathe we can't very well help our children, this makes perfect sense.
If we're not in good shape mentally, physically, spiritually, and emotionally, how can we expect to be healthy and energetic enough to be creative and responsible with our debt?
A healthy mind and body also keep us out of costly clinic or hospital visits (saving us even more money and heartache).
Depending on our situation, we look at nutrition, exercise, sleep, relationships, quiet time, and entertainment as some possible top priorities.
We make paying debt our third or fourth priority.
Ask yourself whether I've made self-care a priority.
When you take care of yourself, you debt burdens too will be taken care of.
Why? You are approaching your problems with a clear mind. Debt can burden your thoughts and errode your ability to think clearly.
Without clear thinking you are doomed to sink further into the debt trap.
Posted by Colin at 01:58 AM | Permalink | Comments (0) | TrackBacks (0)July 21, 2006
Getting Out of Debt - Attitude is Everything
With good reason, we take our debt and the circumstances surrounding it seriously.
Thoughts of our debt and what we need to do about it can become a kind of background noise.
We adapt to the point where we no longer even hear the hum; it's just a part of our days, forever dulling our senses and demeanor.
We acknowledge that our debt and the circumstances surrounding it are there regardless of whether we wear a smile or a frown.
We let ourselves enjoy what comes before us—a sunrise, dew on a flower petal, the warmth of a hug.
We forget our troubles long enough to pick some daisies.
Today, be grateful that life offers more beauty than challenges.
Changing your outlook on life is a key step to gaining control of your finances.
When you put on your "happy face" that positive energy WILL get you on the path of debt recovery
Posted by Colin at 01:53 PM | Permalink | Comments (0) | TrackBacks (0)July 18, 2006
Getting Out of Debt & The Rat Race
For those of you who have been following along and reading my blog postings you have noticed that I mention starting your own business to make some extra money is truly the best way to start digging your way out of credit card debt.
I have authored a training manual outlining what you need to do to start your own internet business. The really great thing about the business I talk about in my book is the fact that it can be done in your spare time and there's no pressure (other than the pressure of your debt collectors pounding down your door).
All you have to do to succeed is:
1. Be passionate about something (not necessary though, but makes it easier and more enjoyable).
2. Write about your passion.
3. Start selling things that you are passionate about.
OK, there are more things to know but the above three points are all you really need for success plus a little help from my book entitled "The VEO Report" ( www.veoreport.com ).
I have just raised the price on the manual as my methods are increasing my income by about $100/day every 10 days (and that pace is accelerating). I am on target with my current growth to earn $1Million in a six month period, with $1M monthly income projected to occur within 12 months.
Not bad for a guy working on his laptop computer from home!
I suggest you get a copy of The VEO Report now before another price increase (the information is far too valuable to sell and too cheap of a price point).
Posted by Colin at 01:53 PM | Permalink | Comments (0) | TrackBacks (0)Denial - Understand it to Solve Money Problems
Some of us deny that our money problems are our own.
We want to blame another, bad luck, our health, the economy, or the world.
We're the victims.
We complain to patient listeners.
We look away from the truth.
Honesty is a powerful force.
It propels people and relationships forward.
Because honesty is real, it is not mistaken for manipulation.
Honesty begets respect, self-confidence, and empowerment.
By being honest, we let the world know we aren't victims.
We acknowledge our power to change.
By being comfortable enough to expose our truest and deepest thoughts and feelings, we reveal the admirable qualities of self-confidence and self-esteem.
When we're honest, we evolve. In evolution lies the mystery and excitement of life.
Be honest with yourself and another about my relationship with money.
Posted by Colin at 12:57 PM | Permalink | Comments (0) | TrackBacks (0)July 17, 2006
Get out of Debt - Start a biz
So here I am in Starbucks (aka my office) working on my internet business.
Ah, life is good. I have mentioned this before that the best way to get out of debt is to start a home based business. In fact I have outlined everything you need to know in an e-book entitle The VEO Report. I suggest you get a copy before I raise the price at the end of this week.
Debt can really impair you ability to enjoy life. Get out of the debt cycle and start making more to get those creditors off your back!
Posted by Colin at 06:17 PM | Permalink | Comments (0) | TrackBacks (0)July 16, 2006
Getting Out of Debt - Strive for Progress not Perfection
Newsletters, books, and Internet sites are full of advice on frugality, tips many of us can benefit from. We find tips on everything from how to make homemade Play-Doh to how to pay off a mortgage in seven years. We need to be careful of how "cheap" we become. Moving from spending too much to constantly making sure we're saving every possible cent can be moving from a compulsive behavior to an obsessive one.
When considering all the cheaper options, we select what feels right to us—what works best given our lifestyle. We learn to trust ourselves enough to know what's best. Finding the most appropriate and balanced lifestyle is a matter of trial and error.
When trying to get out of debt strive for progress, not perfection. It is important to understand that as humans we are not perfect. It took us a while to dig ourselves into debt and it will take a while to dig ourselves out of debt. Don't be hard on yourself, take baby steps and learn as you go. Soon you will achieve your desired result of becoming debt free.
Posted by Colin at 10:42 AM | Permalink | Comments (0) | TrackBacks (0)July 14, 2006
Is Debt Relief a Priority For You?
Having priorities can help us make decisions. When we're not sure weather to go for
dinner with friends or to get some needed rest, we review our priorities.
If our top priority is getting enough rest, our decision is made.
If our top priority is getting out more often, we again have our answer.
When we write down our priorities (e.g., eating nutritious food, exercising, paying off credit cards, cutting costs,
learning money management, dealing with emotional pain), we experience a paradigm shift. We stop complaining and start moving forward.
We take on the challenge. We become empowered and incredibly energized by the simple act of consciously moving toward a goal or at least of
knowing what it is we really want.
If getting out of debt is truly a priority, you will write it down as such. You will have a game plan in place to start paying off debt and you will follow the plan. If debt relief is not truly a priotity getting out of debt will be very difficult. Make it your priority now and you will be amazed with the results!
Posted by Colin at 02:03 PM | Permalink | Comments (0) | TrackBacks (0)July 12, 2006
Helping You With Debt Issues
If we aren't compulsive spenders or if we're recovering compulsive spenders, we may be guilty of underspending.
Because we're in debt, we become overprotective of family finances. While our spouse is out gambling, we're shopping at garage sales and eating potatoes for lunch. Even though we truly need some new clothes for work, we leave the mall empty-handed, or with something for the kids or a gift for a friend.
When we can't spend money on ourselves, we may have crossed the line from practicality to deprivation. Depriving ourselves means we think we don't deserve to have anything nice or new.
Balance is everything. We examine our priorities. If the purchase is a necessity and a priority, we add it to our spending plan.
Posted by Colin at 07:38 PM | Permalink | Comments (0) | TrackBacks (0)July 09, 2006
Debt Reduction - Progress not Perfection is Key
Newsletters, books, and Internet sites are full of advice on frugality, tips many of us can benefit from.
We find tips on everything from how to make homemade Play-Doh to how to pay off a mortgage in seven years.
We need to be careful of how "cheap" we become. Moving from spending too much to constantly making sure we're saving every possible cent can be moving from a compulsive behavior to an obsessive one.
When considering all the cheaper options, we select what feels right to us—what works best given our lifestyle. We learn to trust ourselves enough to know what's best. Finding the most appropriate and balanced lifestyle is a matter of trial and error.
Strive for progress, not perfection.
July 08, 2006
Freedom From Debt is a Matter of Priority
Throughout the years, various concerns require a great deal of our attention.
We focus on diapers and bottles and getting the baby to sleep through the night.
We put much of our social life aside while we take evening classes to get a degree.
We challenge ourselves and train to climb a mountain.
We concentrate on paying off our debt.
What weighs most on our minds these days?
When our priorities are in line with goals, we feel good about what we're doing. We're working toward something we want, something that's important to us. We're being proactive. We're taking charge. We're taking responsibility for our well-being.
If you start focussing on ridding yourself from credit card debt and making it a priority
it WILL happen.
What we think about most tends to come true in life. If you focus on debt reduction it will become a self-fulling prophecy (the good kind).
Start today, write this down.
Today I will make my top priority finding ways to pay off my credit card debt and begin to use my credit card with caution.
Do this and repeat it to yourself throughout the day, everyday and you will start to see something amazing transfer before your eyes. Your debt will start decreasing!
Posted by Colin at 05:40 AM | Permalink | Comments (0) | TrackBacks (0)July 06, 2006
In Denial About Credit Card Debt?
It's easy to live as though our debt problems will just go away.
We say tomorrow, next month, or next year will be better. We keep some kernel of hope that things will change, even though we haven't done anything to change things. Herein lies a paradox. We need to be positive, to let go, and to live one day at a time, but we also need to be sensitive to points in our lives that require us to take action.
Before we can begin to get out of a rut of credit card debt, to make positive change, we need to acknowledge that a problem exists in the first place and that we are responsible for doing something about it. When we can pinpoint the problem, we create a new awareness. We're suddenly open to receiving information we previously blocked out. We reach a higher level of thinking regarding our situation.
May 15, 2006
Burdened by Credit Card Debt?
If you are burdened by credit card debt you must start seeking ways to pay that debt off as soon as possible. Signs of a recession are starting to appear. Last week stock markets throughout the world saw mass stock sell-offs. Investors are taking their money and running. Such a mass sell-off of stocks is an indicator of a looming recession. Not to mention a very weak US dollar which is another factor in foreign investors lacking confidence in the US economy – When confidence is gone, investment slows and ultimately this impacts profitability of US companies and in a nutshell this means jobs will be lost.
If you are not prepared this could prove to be your financial ruin – So start now, plan for the very near future. Begin looking at ways to get your credit cards paid off. Look for ways to get more money in your bank account.
To begin chipping away at your credit card debt you will need to evaluate your lifestyle and make some adjustments.
Here are some ideas that will get you started on your way to ridding yourself of your debt burden:
- Postpone vacation plans – Rather than take an expensive vacation consider “playing tourist in your town”
- Arrange carpools at work or take public transit
- Purchase generic brand groceries
- Turn a hobby into a profit center – Think about ways to take a hobby and turn it into a home-based hobby business.
- Ask family for help – Try approaching family members for interest free or low interest loans, consider offering to work for the loan.
If you start planning now you will be in an excellent position in the event of a recession and if a recession does not occur you will be glad you did it anyway!
Posted by Colin at 01:05 PM | Permalink | Comments (1) | TrackBacks (0)