Archive August 2019

Should I take out a payday loan to cancel the credit card?

Applying for a loan to settle the debt owed to the issuer of the credit card is an option to catch up with the payment, when you do not have the money to pay the total consumption. However, it is not always the best solution. The aspects you have to consider.

The credit card is one of the most commonly used financial tools to make payments when it comes to high amounts of money or cash availability is not available at the moment. But just as it often works as a “lifeguard,” it can also play against us.

Its excessive or inappropriate use can cause us significant debts to the point that we end up paying only the minimum payment (the smallest amount requested by the entity and not the total monthly payment), being caught in constant indebtedness. It is common for the high default interest charged by card issuers to make the debt an unpayable snowball, making the situation regularize, on many occasions, after years.

Although we never recommend reaching this instance

Although we never recommend reaching this instance

there are different alternatives to address this problem. What can you do about it in case you find yourself in this situation?

A possible solution is to make the minimum payment of the credit card until you can pay off the total debt, knowing that, over time, the amount to be paid will increase due to the interest incurred. Another option is to request a payday loan to get money and thus cancel the total balance of the card at one time. The goal is to replace this debt with a cheaper one.

When should it be done?

When should it be done?

The minimum payment is an irresistible temptation that can be very expensive. Therefore, we recommend that before incurring new expenses, analyze the possibility of taking a loan. When applying for a payday loan to cancel the debt you have with the credit card, it must be clear that the purpose of this operation is to cancel the amount owed in a single payment, assuming a new debt, but cheaper.

In this way, it is possible to access loans with lower rates and longer terms to minimize the percentage of the monthly personal budget that should be used to pay the last debt, compared to the one originally had.

Likewise, before making the decision to apply for a loan, we suggest you read the “fine print” carefully to make sure this tool is really a solution, and not a problem. For that, you have to pay attention to the Total Financial Cost (CFT), which represents the real cost of your loan. This is the final percentage you will pay as a refund of the credit you requested.

What loan options does the market offer?

bank

There are different types of credits that you can use in this situation. We tell you what they are, how they work, their pros and cons, and what you can do about it:

1. Apply for a loan specially designed for debt cancellation. It is an interesting alternative if you have more than one debt with several financial institutions at the same time. Through this loan, the client accesses quality financing to cancel other debts. For example, the debt consolidation loans of Good Financial have optimal conditions as they provide the benefit of paying lower interest over longer term.

2. Request a credit from the bank that issued the card with which you borrowed. The same entity sometimes offers payday loans that you can ask for in order to pay the debt. The issuer of the credit card will be interested in finding a solution to the problem, so he will try to facilitate the process for you to access the requested loan with low monthly installments for a longer term. However, this option may not be entirely convenient, since increasing the period of time to pay off the credit, your debt may increase and you end up paying more money in the long run.

3. Opt for a traditional payday loan. Banks provide conventional lines of credit with terms of up to 5 years. The counterpoint is that the requirements requested are usually more difficult to meet, with strict evaluations. Unlike the previous options, there is a greater chance of your request being rejected.

4. Apply for a loan quickly and easily online. We know that having a card debt is an urgent problem that requires an imminent solution. Fintech offers online credits that process applications quickly, facilitating approval and disbursement of money in a short time. However, it is necessary to clarify that many of them have rates above 400% so they end up being inconvenient.

Faced with this, Good Financial secured loans with rates from 24% in UVA are positioned as the healthiest option for those who do not want to incur an unpayable debt. Its technological solutions optimize loan application management processes, in order to provide better credit conditions to users who can access the service from their cell phones or computers.

It is important that you know that these alternatives are always subject to approval by financial institutions. This means that you should check with each one your particular situation to determine if the loan is suitable or not for you and under what conditions you should take it.

Credit Card Usage Errors That May Damage Your Credit Rating

Credit cards can be both your friend and your enemy, but it will be exactly what will depend on your credit card usage and your overall financial situation. Using all the credit card discounts and benefits is one thing, but always make the most of your credit card credit limit and without paying more than the minimum amount of repayment on time, you can quickly ruin your previously accumulated good credit rating. For anyone who plans to borrow money in the near future or in the future to buy a car, apartment or house, or to consolidate debt, it is important to maintain and maintain a positive credit rating. However, life can pile up at any moment and we can’t always get 100% ready in advance. In order to make sure that you are prepared for such unexpected events, where you will need to borrow additional funds from TOP creditors of Latvian creditors, it is useful to take various measures now in order to maintain a positive credit rating and avoid frequent credit card mistakes.

Listed below are the most popular ways that people can lose their good credit rating by using credit cards in their daily routine. Pick up or characterize any of these habits and explore – how you could change it in order not to cause irreversible harm to your credit rating.

 

To repay your credit card overdue too quickly

To repay your credit card overdue too quickly

It is absolutely true that the efficient use of credit cards can help create a positive credit rating. However, if you have been successfully out of debt and are worried about premature returning to the same situation, if you actively use a credit card, then it may be very tempting to repay its balance as soon as it is used. From a cash management point of view, this is a very good practice, but it will not help to create a positive credit rating. Your credit card should ideally reflect activity and a small overdraft, even if it is very small, because the credit card issuer reports its usage information to credit bureaus. Information about this month’s payments is reported next month and you start accumulating a positive, non-existent or negative credit rating. If you are using the money available on your credit card and are paying off the balance right away, it will not appear in the monthly reports as a credit card asset. Therefore, while it is always profitable to repay your credit card balance by the due date for that month, you should not, however, have to make regular repayments before the due date.

 

To repay your credit card overdue too slowly

To repay your credit card overdue too slowly

Some people tend to joke that they have the best customers in their bank because of all the interest paid and penalties imposed. Regardless of what you often hear, lenders are only pleased that you are such a “great customer” who pays the highest interest, the unpaid balance that lasts for years is bad for your credit rating. If you have a debt that is never fully repaid, it can be a testimony to the lender that you have more debts than you can afford to pay. When this happens, lenders become very careful about you as a customer and assume that you could also conceal other debt that you have committed to solid lenders. Credit card debt overdue repayment or its full non-payment in the long run can significantly reduce your positive credit rating.

 

Holding a credit card for use in emergency situations only

Holding a credit card for use in emergency situations only

Many people have heard that credit cards, which they do not actually use on a daily basis, keep them as an airbag for unexpected situations. With the idea that if something happens, they will be able to pay for it with a previously unused credit card. When you rely on a credit card to save you only in these rare situations, and it is a card you do not use at all on a daily basis, you may actually not be available suddenly when you need it most. Why? Because unused accounts are liabilities to both the cardholder and the credit card company. If someone with bad intentions suddenly gets to the unused credit card account number and other details, then they would have every chance to have fun with your credit card before you notice it several months later when you decide to use it and, for example, connect do it online. Unused cards usually do not hurt you every month, so you should not pay attention to the review of their activities. It may take several months before you notice any fraudulent activity. And if you are applying for a credit card, with the idea that you will use it only in an emergency and have not activated it after receipt, the credit card issuer will most likely close your dormant account after some time without notice. Activation proves that you have received a card, so deactivating the card makes it a big unknown and easy risk object. A more sensible strategy is to work on setting up your emergency fund and increasing your savings outside the credit card context. In this way, you will have the necessary money at your fingertips to use it in emergency situations. If you want to keep your credit card separate for your peace of mind, then you should use it at least once a month, for example, to pay for a particular product or service each month, so that it can display regular activities that will activate your credit rating in a positive direction.

 

Closing a credit card account when it still has a balance

credit application

If you try to repay your credit card debt every month, but still feel tempted to use it on a regular basis, you may find that closing a credit card account is your best option to refrain from such a temptation. Although globally this is really a good way to take control of impulse-driven spending in your budget, however, if you talk about your credit rating, then it is not the smartest idea. The lower your debt on your credit card in terms of its limits, the better it is for your credit rating. If your credit card account is open, you have a limit and your balance is below that limit. However, when you close an account (or, if closed), the limit is reduced to zero, so any amount you pay is higher than the approved account limit. If you exceed the limit, you lose your credit rating. If you want to avoid impulse-driven spending with your credit card in your life, deliberately damage your card so you can no longer use it and store it in a drawer. When you have repaid the overdue limit, and if you want to use your credit card later, call your bank and ask for a replacement of the damaged card.

 

If your goal is to direct your credit rating on the right track

credit application

it may take some time for you, but remember that all the small things you will do for it will have a positive impact. Unfortunately, there is still no quick program to ‘repair’ your negative credit rating, you need to count the time reserve. But if you practice good money management in your daily practice and improve your financial skills regularly, you will expect a more positive result sooner.