As shaken from credit card debt - Seven Strategic Steps To escape the trap of debts of Credit Cards

Are you overwhelmed with credit card debt? Would you like to get back to sleep peacefully at night knowing that owes nothing to anyone?


No doubt the debt is one of the biggest devastation statement of the vast majority of families today. The common American household has an average of 10 credit cards and almost 50% of them have difficulty paying their monthly bill.


Credit cards have invaded the homes of the century. They are very easy to get and very cheap to use. There is evidence that consumers spend 12% more money to buy credit card instead of using cash.


It is very easy to fall into a habit of overspending when you only need a swipe card to cancel a purchase. Very few are aware of how expensive it costs to slip this little card.


It is something to make a few simple mathematical calculations.


For example, if the balance of a debt is U.S. $ 8,000 to 18% interest and is paying the monthly minimum, will take 25 years to pay the bill. Will pay $ 15,000 in interest, almost double the amount of debt. That gives a total debt of $ 23,000.


On the other hand, if you have a debt for which you have to pay $ 200 a month, if you took that same money and invest 12% in a mutual fund, in 25 years you could retire with more than one million dollars!


It's time to face the monster of credit card debt!


How?


The following will describe an effective strategy to get out of their credit card debt. It will require effort and will not clean up its financial situation overnight. But with effort and persistence, you can get rid of debt in a much shorter time than you think.


Step 1 Gather all credit cards you have and pick one with which he wants to stay to cancel products that you can not pay cash, for example when shopping online.


Step 2 Write down everything that you owe on each card when it expires, and what is the interest rate for each.


Step 3 Choose the one with the lowest value of debt and double the amount of the payment of that card. Then try to pay as soon as possible.


Step 4 When you have paid your first credit card, celebrate his victory and cut with scissors to never use it.


Step # 5 Then choose the next card with the lowest value and use the surplus that remains for payment of the first card to cancel the second. Repeat steps 3 and 4 with their remaining cards until you have them all paid.


You will see that there will be a snowball effect with each card that cuts, since the amount of payment of previous debts will be accumulated and be available to pay outstanding card debt.


Step # 6 Avoid impulse buying. Do not go to the supermarket without a list. Compare prices and always pay everything with cash.


Step 7 Use the card that remains carefully. Just do your shopping when you know you'll be able to pay the full amount of your purchase at the time of charging the card, which is normally the next month. Never pay in installments.

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Subprime Cards, The New Threat In Us

For the U.S. economy recover the path of growth, household consumption is the vital element that should be encouraged. But today, American families are too many concerns to think about eating. And one of the many concerns are consumer debts that are becoming difficult to remove, in a context where card usage is so intense that the plastic and seems to "glue".

One factor that helped Argentina's recovery after the 2001 crisis was the stimulus to consumption through funding. Retail stores found in the use of the cards and the "easy installments, how to revive demand. Banks also found in the segment of personal loans and credit card, the niche to exploit to return to the ring.

The generation of credit card financing is an important resource for consumption in the U.S. economy. But hopes for revival of financing through the use of plastic have clashed with the vision of the rating agency Standard & Poor's for this market where bad loans credit cards begin to multiply.

S & P has a quality rating of credit cards, which measures loans that banks do not expect to be paid. In July, the index fell 9.8% after reaching its record high of 10.4% in June. But this improvement in the S & P index did not leave much room for optimism when one considers that its explanatory factors have been the change in the behavior of consumers who have opted for a more cautious attitude, and extra dollars from the stimulus plan tax were used by families to pay off old debts.

While the U.S. economy going day to day confirming his return to slow and smooth growth path, there still remains the deterioration in the labor market that continues to drive the unemployment rate to rise.

Most job insecurity is one of the above factors when predicting the rising levels of bad debt from credit cards. The increase in unemployment in August reached 9.7% of the Economically Active Population (PEA), in the U.S., hitting their highest level in 26 years, will impact on the results of the credit card companies as generally it does in similar situations.

If the persistence of unemployment is a factor which may complicate the percentage of partly uncollectible financing, rising very definitely exacerbates the situation. And it is a rising trend in unemployment that S & P is looking ahead and will probably reach a level between 10.4% and 12.7% in the next 12 to 24 months.

Estimates on the results of this segment, making it likely that credit losses from credit cards could climb between 10.5% and 13.0%, following the evolution of unemployment. I even believe that the situation could worsen.

In this context, the credit card market is deflating, but nevertheless, it is oversized. Just as happened with subprime mortgages, we can say that credit cards are subprime because they have been granted without reliable financial information of users of credit cards which have been allowed to borrow without restrictions. These users have not hesitated to use and negative consequences in this harsh environment will continue watching.

It is true that financing with credit cards have been falling. July accumulate its sixth floor (since 1991 that was not seen anything like it) and in that month, according to Fed data, funding cards shrank 10.4% in annual terms, with a total of U.S. $ 21.500 million less funding compared to July. The magnitude of contraction is concerned because there had been a drop of that magnitude since these statistics began publication in 1943.

While the decline in credit card financing worries about their impact on prospects for economic recovery, more worrying situation of much of the debtors. U.S. officials recently acknowledged to the Center for Credit Responsibility, their concerns about the overuse of credit cards you are giving families. According to Eric Halperin, director of the CRC: "If banks allow the card holder is exceeded more than necessary, people will pay more than their personal budgets will allow."

Faced with this situation of excessive overdraft, the Federal Reserve Board of the United States is considering introducing more regulation on banks not to allow users to overdraw in excess since the risk of a collapse in this sector for funding is significant and can lead to the U.S. economy to draw the dreaded W.

With the increased risk of default on the card segment, the supply of financing probably change its position by increasing the financial costs and tightening financial conditions that will eventually restrict anchoring in consumption negatively impacting the economic outlook.

But there is more negative in this context relates to regulatory changes that will impose a cap from February in commissions and interest rates that credit card companies are charging their customers. Before entering into force of such ceilings is the latent possibility that the card issuers decide to increase such charges, particularly against this background riskier.

This situation being experienced by this segment of financing is no doubt very bad news for big companies like American Express Co (AXP), Bank of America Corp (NYSE: BAC), JPMorgan Chase & Co (NYSE: JPM) Citigroup Inc (NYSE: C), Capital One Financial Corp (NYSE: COF) and Discover Financial Services (NYSE: DFS), which make up about 80% of the industry of credit cards.

Faced with declining profitability of the cards, on Monday last week, Citigroup decided to divest three credit card portfolios valued at U.S. $ 1,300 million, as part of the bank's plan to dispose of businesses that are causing huge losses. Citi Holdings will continue to manage those units during the first half of 2010: "So that buyers assume the customer service.

The U.S. financial system has lost so far this year 89 financial institutions. Last Friday, fell five regional entities and promise not to be the last. But despite this, the situation of the whole system seems to have stabilized Will the credit card segment that will again give a setback to the U.S. financial system by putting it at risk for another episode of crisis?

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Credit card application: How many cards should I have?

How many cards is it reasonable? Of course it depends on each person, but the general advice is always take between 2 to 6 cards, including cards shops. Always use of recognized cards (VISA, MasterCard, American Express etc..,)

Your goal should always be to pay the outstanding balance on the card at the end of the month. It is something we must always bear in mind when requesting cards.

If you are the people who have a tendency to transfer balances from month to month, always look for cards with interest rates as low as possible.

Note also the points system of the card. Always try to find some cards with benefits (points, returning troops, gifts etc.).

Having multiple cards, you may have certain advantages:

- Not all establishments accept all cards. Some can accept Visa and Master Card the other, or vice versa.

- It is good to keep a credit card for Internet transactions and other operations outside the network.

- With multiple cards you can welcome a different benefit. With a card you can get cash rebates and other items available for travel by plane, or liters of gasoline.

However, the more cards you have, the harder it is to remember the end of each card and therefore will be more complicated to manage their debt. The best thing, so it is left with two cards that have very good conditions both commissions and interest and with a points system.

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How to avoid debts with credit card

If you have experience in shopping with credit card, you know well that the piece of plastic that you get is far from being an extension of your salary. For this reason, the self is one of the main factors you will not spend more than you can pay and to avoid future debt. However, there are many reasons why you can run up debt with your credit card, including:

a) forget to limit the due date to pay the balance for the liquidation of the card and it starts to run interests!

b) your ability to overestimate real money, spending in this way more than you can actually pay, which becomes a debt.

c) Do not read the "fine print" on promotions and offers with low interest rates. This neglect can not take you to settle your debt within the period of the promotion and increases interest payments are much higher.

What are the recommendations to avoid debts with credit card?

1.Intenta pay the entire balance in your account summary of each month and "no" confidence in the minimum payments, because you take more time to pay your debt and yet it is very common that you applied interests.

2.Haz planning of all your expenses and income, can determine how much you can pay with your credit card without incurring future debts (considered not only the day to day expenses, but also those who come infrequently in the year such as: insurance, taxes, holidays, etc.).

3.Controla your balance regularly and fluctuations in your account, and prevent falling into overdraft fees or charges for non-payment of your credit card.

4.Averigua interests that are regularly applied, especially if you are in a condition of default, in some cases the interest accumulate exponentially.

5.Lleva control not just your credit cards, but the extensions you have your children or people you trust, préstale much attention to their frequency and amount of purchase.

6.Y of course, the recommendation simplest but often the most efficient self If you believe your feature is not visible, do not carry your credit cards into your wallet. Many people tend to borrow just to carry around your credit cards!

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How to properly use the card points

There are several aspects that must be considered when choosing the card points:

First, you must be clear what kind of need to get points. For example, you earn points to redeem for airline tickets?, Or rather want to get vouchers for gifts that you can change any of the store feel any preference?

In addition you must clarify whether the type of benefits offered are tailored to your needs. For example you may need airline tickets, but be sure you have your flights from the airport.

Second, always read the fine print of the card. It is important to get a clear idea of the equivalence table of the points and benefits.

This equivalency table is easier to calculate whether you are interested in the items supplied or not.

Then you need to get the next question are you going to spend enough on your card so that the points of interest are offered?

If the answer is yes, then use the card as much as you can. Replaced by the cash card in any way possible. This is a limitation.

Just spend what you had planned to spend no debt, nor pass the balance from one month to another, and that interest absorbed the benefits of the points.

Finally, once made the points, not lose sight of the expiry date of items, or any other conditions set forth to achieve these points.

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The reunification of debts and credit problems

One of the major problems of society today is the excessive indebtedness of households. This is due to a huge increase in the price of flats and the interest rates to lift the quota limit to the mortgage, which means that is used on some occasions ¾ monthly salary to pay the financial obligations.

To this is added the loan of the car, card receipts, credit for the purchase of appliances, etc.. This means that families often can not reach final months of their salaries, which can ultimately lead to the seizure or the auction house.

The solution to this problem is the reunification of debts, which is to consolidate all outstanding debts into one loan rate mortgage, usually at a lower interest rate (which implies savings), resulting in a much lower monthly fee, but lengthening the term of repayment of the loan. This way families can get better off this month.

The resulting credit can exceed the amount of all debts, the customer must pay for the operation. A reunification of debts is a salvation alternativade against a lien or auction the property.

This solution must be careful because if we change our economic conditions favorably, consumerism that can take us over the years, the bank must follow the same amount of money before (a loan for a new car, home furnishing The credit for the trip to the Caribbean, etc.).

It is advisable that before embarking to sign such an operation, it should explain our problem to the bank and request an extension of mortgage, to cancel all outstanding debts. We will pay our mortgage, but usually will extend the deadline for returning it.

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