Credit Card ’s Talk

I HARDLY EVER RECOMMEND THIS TYPE OF PROGRAM. However, some of you have asked me to explain a little bit about Credit Counseling as a way to get out of debt and how it works.

Credit Counseling was actually created and is funded by your credit card companies. Initially, it was a way for them to recover money from people who were not making payments. Instead of losing that money or spending more money (through collections and lawyers) to try and recover it, they created a ?safe? place for a consumer to go so they still get something. Actually, they get all of the balance owed and interest. It has now evolved into a billion dollar industry.

Normally, a credit counseling company will negotiate a reduced interest rate on your credit cards (your creditors would have to accept this proposal and may not reduce the interest rate at all, it all depends on your financial situation and the credit counseling company?s relationship with your creditors). Most often than not, most credit counseling companies usually have a pre-arrangement with the creditors. They know how much the creditor will reduce the interest rate by, how much they will get at their ?fair share? of the monies collected, etc.

On average, you can expect to pay back your entire balance at 6-12% interest. Again, this is not a promise but a general guideline. When speaking with a credit counseling company, they should give you the exact terms and conditions before you retain them. They will also try to have late payment and over-the-limit fees forgiven. This generally takes place once you’ve established a six month track record of good payments.

Credit Counseling companies make their money several ways. First, don’t be fooled about non-profit status. All that means is that at the end of the year, the company shows no profit. They still get healthy salaries; spend advertising dollars to get clients (just like for-profit companies do). Also, non-profit status does not indicate honesty, integrity or even reliability.

Credit counseling agencies normally charge a set up fee and monthly fee (they will describe this as a ?contribution?). They also receive what is referred to as a ?fair share?. When they set you up on monthly payments (remember, you are paying the balance and interest) to that creditor, they will receive a percentage of what they recover from you.

In order for credit counseling to work, you must have sufficient income to pay your basic bills. Once enrolled, make sure that your payment arrives in time for your funds to be disbursed to your creditors. Otherwise, you may be charged additional late fees and other charges, in addition to adversely affecting your credit profile.

You must stay in this type of program until all of your bills have been paid in full, plus interest.

Depending on the amount of debt you have, paying off your bills by using a credit counseling company will take anywhere from 2 ? 8 years to accomplish. You still have to pay back the entire balance plus interest, but if you are looking for a place to make one payment and don’t mind paying all that money back to your creditors, this type of program is for you.

Understand that at least 60% of all people who enroll in a credit counseling type program fail to complete it. Your credit report will also be affected. Once your credit card company reports to the Bureaus that you are participating in a credit counseling program, you may have a difficult time obtaining credit. Most credit card companies treat credit counseling on the same level as a bankruptcy.

On the subject of Bankruptcy, part of new ?means test? for someone having to seek relief under Chapter 7 - where debts can be wiped out entirely — except under special circumstances, are required to first seek credit counseling services and receive a certificate of insolvency.

Don?t be confused or intimidated by this new law. Don?t let anyone tell you that it is more difficult or impossible to file for relief under Bankruptcy. Always explore all of your options. The National Association of Consumer Bankruptcy Attorneys released a study that concluded that forcing consumers into credit counseling ? a key provision of the reform Act, was a waste of money and did little to weed out the deadbeats trying to use bankruptcy to avoid paying their debts.

There were six major credit counseling firms surveyed that dealt with 61,335 pre-bankruptcy filers. Out of those 63,335 people, only 3.3 percent of people in the study were eligible for a debt management plan and could not file for relief under Chapter 7.

Additionally, 79 percent of those surveyed were seeking bankruptcy due to circumstances beyond their control, defined as emergency medical expenses, loss of employment, higher minimum payments on credit cards, change in marital status or other unexpected events. The lawyers’ group said the other 21 percent of filers included people who did not deliberately seek to accumulate excessive debt but fell prey to finance charges and their own lack of financial sophistication over time.

Be aware that the credit counseling company that you go to for this consultation will charge you $50 - $100.

Before you enroll in this type of program make sure it’s right for you. And then make sure your consumer credit counseling agency offers the services that are important to you, such as educational programs to help you avoid repeating the mistakes of the past. Make sure that the company is in good standing with the Better Business Bureau. With this as with all of your options, please talk to several companies before you make a decision. You are most likely going to be working with the company you choose for the next several years, so choose wisely.

In all honesty though, if you find yourself in a financial pickle, look at debt settlement as your first option. From there, if you don?t qualify you can look at either qualifying for credit counseling or dropping $100 at their door on the way to your Bankruptcy attorneys office.

To learn about your financial options and managing you debt, log onto www.debtreliefoptions.com.

Jon Noble
Staff writer
Debt Relief Options
asktheexperts@debtreliefoptions.com

Many credit card companies have begun offering business credit cards to their customers. On the surface, they may seem similar to personal credit cards. However, upon further analysis, you may notice quite some benefits to using business credit cards in certain circumstances.

Flexible credit limits

For one thing, business credit cards offer flexible credit limits to business users. This attribute helps business owners to manage their cash flow especially when they utilize their cards for operations expenses. The extra credit provided to business owners will only need to be repaid at the end of the billing cycle, allowing business owners more time for cash consolidation and ultimately business sustainability.

Business relevant rewards

As business credit cards target business users, the corresponding reward programs work the same way too. This means that rewards come in the form of frequent flyer airline miles, cash back incentives or free hotel accommodation, which are all very relevant to business users. Of course, other benefits such as the 0% APR introductory period, no annual fees, lower APR rates and purchase discounts also apply to these cards.

Expense reports

Perhaps one of the attributes that most differentiates business credit cards from the norm are the expense reports generated. With these reports, business owners will have a clear record of their expenses, in addition to helping them separate personal and business expenditure. Moreover, with spending records of business credit cards provided to employers, companies are able to use these records to track employee spending too. Additionally, certain corporations are even entitled to group rate discounts on their business credit cards, which can be passed down to employees as an employment benefit.

Overspending and Building your Credit Profile

It is easy for anyone, even diligent business owners to overspend on their credit cards. This may be detrimental to the business as it would result in a mountain of debt and ultimately the folding of the business. With this, business credit card users should ensure that outstanding payments are made promptly in order to build a good credit record. In fact, this will work to help build a favorable credit profile for the company, thus opening the doors for larger credit limits in the future.

Convenience for business travel

Business credit cards are great for business travel especially in a foreign company, as users will no longer need to bring huge wads of cash to pay for hotel bills or other traveling expenses. This also works especially well for dining or entertainment activities as it provides a hassle-free way for business owners to pay for such expenses.

Alan Bernstein recommends Find Credit Cards to apply for a business credit card today.

Almost everyone gets the offers in the mail for credit cards that claim to provide 0 percent interest. These offers are incredibly tempting, and on the surface they look like a good idea. You could transfer your outstanding balances, buy that big-ticket item you?ve had your eye on, and get free interest for up to a year. Sounds great, right? Well, beware because there are some hidden pitfalls with these cards that could spell disaster to your pocketbook and your credit rating.

?0% APR is good for a limited time. Most of these credit card offers last for six to nine months, although some are good for up to a year. This means that you can transfer your balances and make purchases for one year with no interest added to your billing statement. However, at the end of this period, you will be charged interest that is calculated on your credit score and history, so don?t get lazy and forget to check the calendar. If you buy a big-ticket item near the end of your free interest period, you may end up paying more interest on your credit card than you would have with in-store financing.

?0% APR could be null and void if you make a mistake. There are stiff penalties on most of these credit cards that hold you to very high standards. For example, with some cards, if you are late even one day with your payment, you lose the 0% APR and are immediately moved to a penalty interest rate that can be as high as 24%.

?0% APR could lead you to outrageously high interest. When the introductory period of free interest is over, you will begin to pay regular interest on your purchases and any outstanding balances. Be aware, however, that this rate may be much higher than you would get with another standard credit card. The average rates after the introductory free interest period is nineteen to twenty-one percent. So if you plan to transfer balances and pay them all off within a year, then go for it. But remember that if you have a job loss or medical emergency that keeps you from making a payment, you will be paying outrageously high interest from that point on.

Rebecca Spitzer recommends Find Credit Cards for finding a 0% APR card.

For many consumers, not having any credit history can be just as bad as having bad credit. If you have no credit history you may be in credit limbo, with potential creditors turning you down for credit because they don?t have any way of knowing your level of credit risk.

Luckily, if you find yourself stuck between a ?rock and a hard place? in regards to your credit, there are many things you can do to build a solid credit record. Many of these things are similar to what you could do if you had bad credit.

If you have lived in the same home for at least a year and held a job for the same period of time, you may qualify for small lines of credit with department stores and other businesses within your local community. Make sure these businesses report your account information with the three national credit bureaus or you will be wasting your time using their cards to build your credit.

The interest rates on many store cards may be higher than a typical credit card, so make sure to keep only a small balance on any of these cards you may have. It?s often a good idea to avoid paying off your entire balance so you can build a repayment history for your fledgling credit report. As long as you don?t max out your cards and make your required minimum monthly payments you?ll be fine.

Another way to build credit is to take out a small loan from a local credit union or bank where you are a member. If you can avoid it, don?t use the proceeds of the loan except to repay the debt. You will pay a small fee in interest but that?s often a small price to pay for building your credit.

Once you?ve established a credit record and creditors can see you have no problems paying off your debt you may start receiving offers from major credit card companies. You could start getting all sorts of mail from Discover, Visa, MasterCard and even American Express.

Be careful about applying for too many lines of credit. Most lenders will check your credit history when you apply for credit and each inquiry is noted on your credit report for at least six months. Too many inquiries are a red flag to creditors that you may be financially unstable. Your best bet would be to apply for no more than one line of credit every six months.

If you are still being denied credit after applying with local businesses or you can?t get a loan you may not meet minimum salary requirements some creditors may use to gauge your ability to repay your debts. If this happens you may be approved for credit if you can find a friend or relative with good credit to co-sign for a line of credit in your name. This could be a risky proposition for the co-signer, however, as they?ll be stuck with the bill if you can?t make your payments.

If you are a woman who is divorced or widowed and had all your credit accounts under your husband?s name, you may find yourself without any real credit to call your own. This usually can be easily fixed. The Equal Credit Opportunity Act makes it law that creditors can be required to list both names attached to a credit account if you shared a joint account in your husband?s name.

If you need to build your credit the most important thing to remember is to be patient. Building credit takes time and you have to begin somewhere. Why not get started now?

cashbuzz.com

John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

Cash back credit cards are becoming more common as more and more merchants and retailers accept credit cards as a form of payment. Although cash back cards might seem like an altruistic move by card issuers, the reality is that these cards generate significant profits for them. But the truth is that these cards also provide the significant opportunity for cash back rewards and rebates, offering potentially equal benefits for all parties involved.

Thanks to the growing resurgence in online business (and thus the growing resurgence in online credit card transactions), the market is seeing a variety of new, individualized credit cards unprecedented in history. And, in keeping with the online retailing trend, one of the most prevalent of the new credit cards is the cash back credit card. Cash back credit cards work on a very simple principle: when you shop–using your cash back credit card–at certain targeted retailers or stores, a portion of the money you spend comes back to you, either in the form of a credit to your account or a check (or in some cases a gift certificate to a particular retailer.) Although the rewards are fairly small, the money you get at the end of the year amounts in some ways to a free gift from the credit card company: a way of saying thanks. How generous the card issuer is, right–altruistic, even?

It’s a bit more complex than that. Cash back credit cards can only function as a promotional mechanism for the card issuer and can only offer them as an incentive for increased purchase activity. You might think that the company just doles out these rewards from the money that cardholders inject into the company in the form of monthly interest, annual fees, and such, or simply from the credit card company’s cash reserves. But that’s not usually the case. The money that returns to you when you use a cash back credit card at a retailer wasn’t originally your money, or the credit card company’s money. It comes out of the retailers and merchants pocket where your transactions occur.

If you’ve ever had a credit card turned down at a restaurant or retailer because they don’t take your particular credit card, here’s why: in order to process credit card transactions, retailers pay a small percentage of the purchase amount as a fee that is payable to the credit card company. These fees are a significant profit center for the card issuers who have figured out how to co-op increased purchase activity be sharing a percentage of the merchants transaction costs with the cardholders. Ingenious, isn?t it?

If a credit card company has a cash back credit card that offers 5% of your money back on all gas purchases, you have a real incentive to buy gas from your local station more often and to buy it on credit. This means that the credit card company benefits, first because you’re using their services more often (and thus accruing higher balances), and second because every time you use your card at a gas station, the station pays right along side you.

However, this is not a bad deal for the gas station, either, since more cardholders are frequenting their station and buying more gas, only a percentage of the price of which goes to the credit card companies. This means that they’re more likely to deal with that particular credit card company, since doing so is now a powerful source of revenue for them (as well as a slightly more powerful source of expense.) And finally, once cardholders get their cash back, guess where they’ll probably take at least a portion of it, using the freshly-added credit on their cash back cards?

It’s a clever, yet symbiotic relationship. But everyone in the cash back credit card circle seems to benefit. The credit card company and the gas station generate more business, and the individual cardholder gets essentially a discount on purchases in the form of cash rebates or rewards. While the cost of these programs for card issuers will likely increase as more cardholders begin to understand and utilize these card products more effectively for their personal gain, the popularity of cash back credit cards with consumers is not likely to wane anytime soon. While not entirely altruistic, for everyone in the cash back benefit loop, cash back cards still make sense.

Robert Alan highly recommends that you visit CreditCardAssist.com for more on cash back credit cards.

Only two out of three credit card customers pay their balances off every month, paying more than they should (and could). If you?re one of them, do not despair; with a credit card balance transfer you could easily do a balance transfer and save! If you recently made a big purchase but you can?t possibly make your payment on time, try using a balance transfer credit card that would allow you to you could save a lot of money transferring your balance to other balance transfer credit cards that will allow a very low or even a 0% APR on balance transfers.

Sounds confusing? Not at all! Here?s how this can be done. You fill out an application for a new balance transfer credit card; enter your other credit card accounts and the amount you want transferred from the old account to the new one. Your balance switches accounts, and your interest costs plummet. Generally, you will have up to a year to pay this balance off with a zero percent (or very low) interest rate.

Some other ?traditional? credit cards will even offer a low interest rate over the lifetime of the balance until it?s paid off. If you are not sure if you could pay the whole balance in the prearranged zero-interest time-frame, this may seem to be a better option for you. But, using balance transfer credit cards would never be a risk if you plan effectively in advance for balance transfers and, in turn, will help you to save a lot more!

A balance transfer credit card would prove to be a great advantage if you have several cards with outstanding balances. Balance transfer credit cards permit you to do credit card balance transfers all into one account, and pay zero interest for the introductory months. Here are some things you should know, however, before you take the leap.

1. You should end up with a smaller payment amount.

Balance transfers would allow you to bring your interest costs way down, allowing you to make monthly payments, eliminating your debt gradually over the zero interest period.

2. A balance transfer does not mean debt elimination?

NEVER regard balance transfer credit cards to be the answer to all your prayers; it is NOT a way to run away from debts! If you are not able to pay off your balance in full during the introductory period, you may be charged interest on the entire amount of the consolidation, which would prove to be much, much more.

Be sure you check the terms and conditions of the card you apply for. Also, some customers see the new credit cards (or the newly paid-off old cards) as free money, and they continue to spend on them, with the result that they will have just as much debt as they did when they started ? plus the balance on their new balance transfer credit cards. Yikes!

3. Transfer at the right time

If you transfer a balance from a card right before the finance charge is accrued and calculated for that month, you will get almost a month?s free of interest expense. If the balance transfer is done before the interest and finance fees get placed on your statement, you should not have to pay those costs!

4. Cutting back = GOOD; Overspending = BAD

Some credit card companies will charge substantial over limit fees if you go over your assigned credit limit. A balance transfer credit card can give you some wiggle room if you have emergency expenses. Transferring high balances to new accounts can avoid these fees.

5. How do credit card balance transfers really work?

A credit card balance transfer is just like making any charge on your other credit card accounts. The difference is that the debt obligation moves from one credit card issuer to another, rather than from your credit card to a retailer. When one credit card is debited, the other is credited. Make sure you research your options, so that you know the balance transfer steps for the cards that you are using. It may be good to contact your existing creditors to find out if there are specific requirements on their cards regarding balance transfers. Sometimes companies make this a difficult process to navigate so make sure that you are absolutely clear about how the process works for each specific balance transfer offer.

As long as you use your balance transfers in the right way, it can be an excellent tool for financial management in difficult times.

For more on how a balance transfer credit card can save you money, Robert Alan recommends that you visit CreditCardAssist.com

The Sony Visa Card is the ideal type of credit card for those that have very good credit. If this is you, you will find several benefits to using this credit line. From affordable rates and the reward program, it can offer some of the choice choices for those that are interested.

The Sony Visa Card offers ideal rates. They provide for a 0% introductory rate for the first 12 months that you have the account open on purchases as well as balance transfers made in that time. When this introductory phase is over, you can take advantage of a variable APR at 13.99% on purchases and 22.74 on cash advances. A down side is the two cycles average daily balance method of calculating finance charges as this can pose to be more expensive if the individual carries a balance from month to month. There is no annual fee. You minimum credit limit will be $5000 and the maximum can be as high as $100,000 if you qualify.

The nice part of this credit card besides the rates is the rewards program. You will earn one point per one dollar spent. In addition, since it is a Sony Credit Card, you will earn three points per dollar spent on Sony products. Even better is that you will earn 8 points per dollar spent when you make purchases with the card at www.sony.com/mysony. When you accumulate these points you can then redeem them for Sony CD?s, DVD?s, movie tickets, electronics and other Sony related products. The points will expire in five years and you are limited to 250,000 points. With your first purchase you will receive 1500 points.

Those that make purchases of Sony will appreciate this reward program. In addition, the low interest rates and the more than generous lines of credit allow for an ideal purchasing level. The credit card is offered to you by Chase. If you love Sony and want a unique reward program for your excellent credit, this is the credit card for your needs.

For more information or to obtain the Sony Visa Card application, Joshua Shapiro recommends Find Credit Cards.

We all know that our financial transactions are reported to credit agencies that track how well and how quickly we pay our debts and that when we apply for a loan for one reason or another, those agencies report our credit history to prospective lenders. However, most of us don?t know a great deal about how that actually happens and how our credit is rated.

The fact is that credit reporting has evolved to an industry all of its own. Just a few short years ago, when someone applied for a loan, he or she put down credit references ? retail stores, banks, or other people or places with whom they had done business in the past. As a matter of course, the lender checked the references and decided whether or not to grant a loan based on an amalgamation of the responses from them. That really isn?t the case any more.

Instead, there are three major agencies that track everyone?s credit and provide a credit rating when contacted by a potential lender. The three agencies are Equifax, located in Georgia; Experian, located in Texas; and Trans Union, located in Pennsylvania. When someone applies for a loan, the lender generally contacts one of these three agencies and obtains a credit score and the score helps the lender decide whether or not to make a loan.

Credit Scores

How is a credit score calculated? Until recently, that was one of life?s great mysteries, but over the past few years new rules and regulations have made the information more readily available. Your credit score is a number that ranges from 300 to 900, although the exact formula for determining that number is proprietary and is not released. This is how it works in general.

?35% of the score is based on the history of how you have (or have not) paid your bills. The agencies track how many of your bills have been paid on time and how many haven?t, as well as whether or not any of them have been referred for collection. The more recently you have had a collection or failed to pay something on time, the worse your score will be.

?30% of the score is based on the debts you have at the time of the rating. It is includes car and home loans, credit card debt, retail store debt and the like. If you have several credit cards and they are all limited out, your credit score is lower.

?15% of the total score is based on how long you have had credit. If you have never had credit or have only had credit for a short time, the lower your score will be.

?10% of the score is based on the number of inquiries that have been received about your report, particularly if there are several in the past year.

?10% of the score is based on your current credit and the types of credit you have. The number of credit cards and loans you have, as well as the available credit you have on your credit cards and considered.

Because your credit score is based on these factors and they are constantly changing, your credit score changes along with them. Therefore, there are things you can do to change your credit rating and bring it up.

Changing your Credit Rating

The first thing to do is get a copy of your credit report and make sure there aren?t any mistakes on it. If there are, take steps to get them corrected. Errors in reporting do occur, although the credit bureaus would like for you to think they are foolproof. Here are a few more tips to improving your credit rating.

?Don?t pay off the entire balance on your credit card. Keep about 75% of it paid and keep a 25% balance. This applies to multiple credit cards as well.

?Don?t get rid of your older accounts. Keep them open. The credit reporters look at the age of your accounts and the longer you have had a particular account in good standing, the better.

?Pay your bills on time. Experts say that this is probably the most important factor of all.

?Prevent inquiries to your credit report whenever possible. Your score drops with the number of inquiries.

The real key, however, is to only get credit when you need it and when you do get it, use it wisely. You can damage your credit rating with just a few late pays or collections and it may take up to a year of paying everything on time to build up a better rating.

About The Author
Ethan Hunter is the author of many credit related articles. If you are looking for help with Payday loan or any type of faxless loans please visit us at http://www.PaydayLoanChoice.com.

Big and small loans have become quite a commonplace these days. Borrowing money has also become quite frequent with the advent of credit cards. As more and more people are banking on loans and other money borrowing techniques to accomplish their tasks, in order to save themselves from deceit banks and other money lending organizations have started enquiring about the individual?s history first.

The information so sought by banks and such organizations is in the form of a credit report. For any lender/s a credit report is the ideal way to determine a person?s creditworthiness. A credit report is a document that lists the concerned person?s credit history, employment and residence history. The personal details so mentioned in the report are the details filled by the person in his credit application. The report is created and updated using information from banks, traders and other creditors. Credit report also lists any judgments, tax liens, bankruptcies or similar matters of public record entered against the individual. In simple terms the report also records the number of times your credit report has been sought whether by a lender, service provider, landlord or employer which remains for up to two years.

Reflecting on a person?s past credit structure, a credit report thus enables a creditor to assess the ability of a person to repay the loan or make timely payments. This makes it easy for him to decide whether the loan is to be sanctioned in favor of the person or not.

But the fact is that a credit report can never be made available to any organization without the consent of the person being reported on. Moreover there are times when reporting agencies refuse to provide credit reports or investigate credit disputes, saying that they cannot identify the consumers. They ask the consumer to mail the copies of ID and utility bills or any other important documentation. Also for men and women in military it is even more difficult to get their own credit reports and many a times when you are overseas, it is just impossible to get that.

Lately it has been seen that access to credit information is proving to be a bone of contention for the businesses and consumers. Some big fish in this market such as Equifax, Experian and Trans Union are planning to introduce their own multi-agency credit score to outwit each other.

Every such company aims to make profits by providing accurate and instant credit information to the consumers. But unfortunately most often the results are disastrous in the form of inaccurate credit reports, identity theft and huge fees for credit monitoring after the consumer?s identity has been made available to thieves.

However a lot of nuances can be prevented if the consumer is cautious. After an individual gets his report, he should study it thoroughly. Anything negative on the report should be corrected right away, like the unpaid bills. Once you have paid the dues, let the concerned business notify the credit-reporting agency of it.

The accuracy of the report i.e. opening of any new account, charges you did not make or negligence or crime you are not responsible for etc. should also be carefully checked. If there is any fault, immediately report the concerned credit report agency about it.

Mansi aggarwal recommends that you visit Credit Reports for more information.

The minimum payment on next month?s credit card bill could be almost double what you were required to pay this month due to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. How will higher credit card minimum payments affect your family?s finances, and can your mortgage advisor help you avoid financial hardship or even bankruptcy through cash out refinancing, a second mortgage, or a home equity line of credit?

Credit Cards can be powerful financial tools when used properly. However, if you?re like 35% of our fellow Americans, you are only paying the minimum payment each month, at least according to the Federal Government Office of the Comptroller of the Currency. Federal regulators are currently pressuring major banks, including major issuers such as Citibank and MBNA as well as the Bank of America, to increase their minimum payments so that consumers have a fighting chance of paying off their high interest credit card debts.

Today, your credit card minimum payment is usually between 2% to 2.5% of the total debt on your credit card. If you were to pay the minimum payment every month today on $10,000.00 of credit card debt at 18% APR, it would take you more than 50 years, 601 payments in total, to pay off your debt, and you would pay an extra $29,000.00 in interest charges to the bank for the privilege of using their money.

By the end of March 2006, major card issuers nationwide will be increasing their minimum payments to effectively 4% of the total debt each month, which for the estimated 50 million Americans who are paying the minimum payment each month may mean that their credit card minimum payment will double. Regulators argue that by paying 4% credit card minimum payments versus 2% credit card minimum payments, you the consumer will be able to pay off your debts more quickly, if you can come up with the extra money each month! Taking the above example of $10,000.00 at 18% APR, you would be able to pay off your credit card debt with a 4% minimum payment in as little as 15 years, and you would pay less than $6,000.00 in interest fees to the bank. That?s a savings of over $23,000.00 versus a 2% minimum payment.

Sounds great right? Higher credit card minimum payments can help you get out of debt faster than lower minimum payments, but there is one catch. You need to pay twice as much every month. So if your minimum payment is currently $400.00, you?ll need to find another $400.00 per month just to keep up with the new minimums. Even if your bank does not increase your rates this coming month, it?s only a matter of time before they are drawn into compliance with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and your credit card minimum payments rise.

As you can see from the above examples, the government is onto something, paying off credit cards more quickly saves consumers a ton of money, but it actually increases their minimum payments, making it unaffordable for the Americans who need this sort of protection the most. In fact, many of the people whom we?ve spoken to in the writing of this article would likely face bankruptcy after their savings were depleted with these higher payments.

But is there a better way? For homeowners there are some very attractive options available. A Cash Out Refinance, a Fixed Rate Second Mortgage or Home Equity Loan, or a Home Equity Line of credit from your mortgage broker is one of the most effective ways to stop paying high interest on credit card debt and to actually reduce your total monthly payments. For the average customer carrying $10,000.00 dollars of credit card debt at an APR of 18% their new higher minimum payment will be 400 dollars, and if they are like most customers they also have a car loan of $20,000.00 at 9.5% and pay about $450.00 per month, the typical savings realized by consolidating those debts with their mortgage or taking a second mortgage to pay them off can be 60-70% on their current unsecured or revolving debts, and even more savings come tax time through interest deductions available for mortgages.

Speak to a mortgage broker and you?ll find that you can borrow $35,000.00 per month by refinancing with cash out, getting a home equity loan or second mortgage, or opening a home equity line of credit for as little as 200 dollars per month, or even less. Refinancing with cash out not only pays off your credit card debt and your car loan at the high interest rates associated with credit cards and auto loans, but also saves you over $650.00 per month in this scenario by lowering your total monthly payments. Yes, your mortgage payment will increase, but your total monthly payments will actually decrease, putting $650.00 in your pocket each month. Use some of that savings to make at least one extra mortgage payment per year and you?ll pay off that mortgage even faster than you could the credit card debt at minimum payment levels. And you should speak to a tax professional as well, because while you cannot deduct credit card or car loan interest from your taxable income, in most cases you can deduct the interest paid on your mortgage from your taxes, which has the potential to save you thousands more over the life of the loan. This method is not for everyone, but if you are a homeowner facing financial constraints and the thought of your credit card minimum payments going up by up to double makes you shiver, it may make sense to speak with a mortgage broker and with your accountant about a debt consolidation refinance or a debt consolidation loan.

About The Author
Kyle R. Allen is a seasoned financial professional with a wealth of experience in the mortgage industry. Whether you need advice about refinancing mortgages, debt consolidation loans, real estate investment properties or even if you are a first time buyer looking for your first home loan, Kyle and the whole RefinanceOne team ( http://www.RefinanceOne.net/ ) can help you make one of the biggest investments in your life a wise, sound, and profitable one with their full range of fixed rate and adjustable rate mortgages.