CREDIT CARD BLUESWritten by Neil Goldberg
For average American family, debt, and especially credit card debt is spiraling out of control at a record pace. The average household credit card debt has risen dramatically from $3000 in 1990 to over $8000 today. Personal bankruptcies are also at an all time high, prompting Congress to consider a radical bankruptcy law overhaul, designed to weed out those who are merely taking advantage of system loopholes while directing many to more palliative alternatives such as a debt management program.
Of course some debts are considered necessary and indeed wise choices. For instance, few if any could afford a house if we had to wait until we could buy it outright. Generally speaking, a home is an asset that, over time, appreciates in value. Another debt that “makes sense” is a student loan. All data points to a direct correlation between income and educational level. However, what about that big screen TV you really didn’t need, or that new car when a used one would have served same purpose and not have created a financial nightmare. We need to start telling ourselves NO!
According to experts at The Credit Counseling Foundation, Inc. (www.GoDebtFree.com), statistics show that about 60% of all credit card holders do not pay off their entire balance each month. With average interest rates still hovering around 15%, this increases cost of everything you buy by at least 15%. And if you are only making minimum payment, you could be looking at 20-30 years to pay off that balance depending on your interest rate. Minimum payments are designed to cover mostly interest, thereby keeping holder chained to their credit card debt. One may ask with interest rates at 30 year lows why are credit card interest rates still so high? Simply put, there are no regulations on credit card interest rates requiring that they mirror prevailing interest rate indexes. Along with late fees, user fees and penalties, these interest rates, which can be greatly increased due to just one single late payment, are all implemented to generate tremendous revenues for issuers, while at same time creating a situation of unwanted indentured servitude for debtor.
When faced with this overwhelming problem, what is one to do? Well first line of attack is to cut up all credit cards. Only buy what you can afford to pay for in full. If you decide to keep a credit card, pay it off every month. This may sound like basic, common sense advice, but what about average Joe who has already accumulated too much debt and cannot pay it off? If you are extremely disciplined and have extra cash, you may want to formulate a plan to pay off higher interest cards first. For most us who neither have cash flow nor self-discipline to adhere to such a plan, or don’t want to lose built up equity in our home by taking out a line of credit or re-financing which, by way, could put family home at risk should future financial setbacks occur, a good alternative would be to use a non-profit 501 (C) (3) credit counseling service. These companies can afford their clients many benefits that they could not ordinarily accomplish on their own. Interest rates can be reduced, accounts can be brought back to current status through re-aging, and maybe best of all, can stop those annoying and embarrassing creditor calls. It can get you a workable monthly payment while shortening payoff term to typically 4-6 years. This can save thousands in interest costs! Another overlooked benefit is that all credit cards put into a debt management program are closed, thus eliminating all temptation no matter how hard you find it to say NO! All this without trauma and stigma caused by bankruptcy or settlement.
New Home Loan - Understand The Various Types Of Mortgage LendersWritten by Carrie Reeder
So, you’ve decided to buy a house, and you’re ready for that all important next step—applying for a mortgage loan. But where should you go? After all, mortgage business is complex, and you’ve realized quickly that your choices for lenders are immense. Here’s a quick guide to help you understand all of your choices for lenders.
By using a mortgage banker, you will deal with same person from beginning to end of loan process. The mortgage banker makes his money from fees that you will pay for loan, such as points and closing fees. After you’ve closed on loan, you may continue your relationship with same company, or they may sell your loan to a secondary person.
If you don’t have time to loan shop on your own, or have a not-so-perfect credit history, a mortgage broker may be way to go for you. A mortgage broker acts as a middleman between a borrower and a mortgage banker, and generally knows where best deals are, or which mortgage bankers are more apt to grant loans to riskier borrowers.
If you belong to a credit union that should be first place you check for your mortgage loan because they generally offer lower interest rates. Many associations, unions or even workplaces have their own credit unions.