Guest Post

Every day, more than $2 million is stolen from American consumers and credit companies via fraud. Chances are you’ve either experienced it, or you know someone who has. While most cardholder agreements don’t hold you accountable for all of the loss that can occur with credit card fraud, you still need to be on your guard. Undoing fraud can be a real pain in the neck, and every incidence of fraud leads to higher rates and retail prices.

More than a third of that fraud occurs online. Scammers use a number of techniques to get your credit card number and use it for their own ill-gotten gain. So, how do you protect yourself and avoid credit card fraud online? There are three simple steps you need to follow:

Step One: Know how it happens

There are a number of techniques thieves use to commit credit card fraud. Here are a few:

• Overcharging. This is perhaps the most common scenario. It involves charging your card for an amount greater than the intended purchase.
• Scam websites. Some online stores are simply fake. They don’t sell an actual product or service; they collect credit card information and make charges on those cards.
• Skimming. This is a trend whereby a thief uses a device that will record your credit card information during a legitimate transaction. In the case of online skimming, this may happen via hacking, while in the real world it usually means a physical add-on to an ATM or even a gas station pump.

There are more, but you get the idea.

Step Two: Work to prevent it

You also need to protect yourself. You can do that in several ways:

• Be choosy. Don’t put your credit card number into a site that you don’t fully trust, and that isn’t using a secure shopping cart, which is indicated by including an ‘s’ in the ‘http’ indicating it is a secured page.
• Read your bill. Always verify that your transaction amounts are correct, each and every month.
• Protect your physical card. Letting your card out of your sight for even a few minutes (such as while the waiter takes it to pay your bill) puts you at risk. Avoid this whenever possible.

You can’t prevent every possible incident, but by being circumspect you can prevent many.

Step Three: Know how to respond

No matter how cautious you are, credit card fraud can still happen. When it does, you need to know what to do.
The first thing you’ll want to do is contact the credit card company. Notify them that there is a fraudulent transaction and have them shut down the card.

Consider having a fraud alert put on your credit report, too. This will prevent thieves from opening new credit in your name. While simple credit card fraud doesn’t usually lead to identity theft, it can, and this will protect you.

Depending on the situation, you might inform the police. If your wallet is missing and you suspect someone is physically using your cards, a police report is definitely in order. If the fraudulent transaction happened online, you should report it to the FTC right away so that they can investigate.

Credit card fraud isn’t completely avoidable. But if you know how to recognize it, do some things to prevent it, and know how to respond, you can come out on top.

David Rodwell is a seasoned writer in business and economics, taking a particular interest in credit card processing. You can find more of his articles located at CreditCardProcessing.net.

Guest Post by Bill Hazelton

You’ve heard about them before. The marketing for those 0% balance transfer credit cards is simply unavoidable with the ubiquitous TV, radio and online ads touting the “interest free” benefits of balance transfers.

Truth be told, when properly used, balance transfers can offer significant relief from the sting of high interest rates and can help consumers break the debt cycle and recalibrate for a healthier financial tomorrow.

But where does the rubber hit the road with these cards? Is there a catch? Are they really worth it?

The way they work is relatively straightforward: you open an account that allows you to transfer an existing balance from a credit card with a higher interest rate to a new card that carries an introductory promotional interest rate of 0%.

Here are 5 reasons that a balance transfer can provide a financial life raft for consumers with significant and immediate relief from the millstone of those high rate finance charges.

1. Interest savings. The marquis feature of balance transfer cards is the zero interest introductory rates offering the potential of significant savings in interest. For example, a cardholder carrying a $3,000 card balance with an average ongoing APR with an interest rate of, say, 21% would save $630 in finance charges by transferring that card balance to a 0% balance transfer offer. You do need to compare cards very carefully, though, as some offer better teaser rates than others, and the length of the teaser rate period can also vary significantly.

2. Payments on principal. Because you won’t be accruing as much in the way of interest and finance charges, you can increase the size of the payments you make to pay down your outstanding balance, helping you stop treading water and pay down your debt much, much faster. The number one reason that people stay deep in debt is that the interest charges make it nearly impossible to reduce your debt principal amount, but balance transfer cards help you break this cycle.

3. Avoidance of further debt. Many balance transfer cards have restrictions on when they can be used, and for what purposes. For example, you may have very limited or no access to cash advances, and you may not be able to use the card to make retail purchases (or face strict limits in the amount of money you can spend using the card). Others allow you to set your own limits for cash advances and retail purchases before you activate the card, helping you retain better control over your spending habits and preventing spikes in your debt load.

4. Financial stability. These cards help you plan your monthly finances with greater accuracy. Because, when properly used, they will help you reduce your debt load going forward, you can gain a more comprehensive view of your financial picture and start to build a plan to reduce other debts you may have while gaining a greater degree of financial flexibility.

5. Credit rating improvement. One of the most important factors that determine your credit score is your outstanding debt-to-credit limit ratio. In other words, credit rating agencies look at your total credit limit in relation to how much debt you’re carrying. The less debt you carry, the higher your credit score, typically. Because balance transfers can go such a long way towards helping you reduce your overall debt load, they can improve your debt-to-credit limit ratio and your credit score along with it.

Above all, it’s important to remember that balance transfer credit cards are not a silver bullet for debt problems but a financial tool that can be used effectively to manage outstanding debt. After the 0% interest introductory rate period expires, interest rates may rise to levels similar to those seen in regular credit cards, so you should be careful to use this initial period to conscientiously and consistently pay down your debt.

This is a guest contribution from the Credit Card Assist editorial team, offering tips, news and advice on all things credit card-related.

By Kevin M

I’ve written much on the subject of credit cards—mostly that they aren’t your friend, but more like having an enemy living in your own camp. I’m not backpedaling on any of it; credit cards have been the enabler that has led many to financial ruin. But are there times when you’re better off having a credit card?

Absolutely. Even a zealot like me is prepared to admit to that.

There are at least five reasons why having a credit card is a “must”—just as long as you don’t overdo it by running up your balance and applying for- and loading up on- more cards. (No, credit card rewards isn’t one of them—I’ve never bought that argument.) Used responsibly, there are situations in which a good credit card is well worth having.

1. On large purchases, where buyer protection is required

I like debit cards for routine transactions, but when it comes to major purchases—the sort involving large dollar amounts and the possibility of a dispute—credit cards are the way to buy. It’s your ultimate protection against a transaction gone wrong.

Debit cards can offer the same ease of purchase, but they don’t offer the level of protection you’ll get from a credit card. If you need to dispute a transaction on a credit card you can file a dispute claim, and if the claim is substantiated your credit card issuer can refuse to pay the purchase. And since merchants and businesses who deal with major credit cards have ongoing relationships with the card companies, a transaction can even be charged back after settlement (within certain limits of course).

I’ve been through a couple of disputes myself, and have found that in most situations the credit card issuer will side with the buyer—that’s me and you—most of the time.

We shouldn’t need to think this way on a routine basis, but for those times when you have your doubts about a merchant or a purchase, credit cards shine as a method of payment.

2. International travel and transactions

Credit cards have grown up a lot in the past few decades—and not just up, but also out—as in out across the globe. Credit cards are accepted all over the world and even in places we might not think they would be. This is a good thing because they offer a serious advantage over other forms of payment.

For one thing, as discussed above, credit cards offer buyer protection, which becomes all important when your transaction goes sour in another country where you’re the foreigner. In that situation credit cards become the equalizer. You have no idea what commercial laws are in various countries and what recourse you have against a local proprietor, but you’ll still have a leg up because all vendors are beholden to their credit card arrangements—if they want to get paid. That speaks very loudly even in places where no one speaks your language.

3. As a back-up to a well funded emergency fund

Even an emergency fund needs a back up plan. One of the limitations of emergency funds is that it’s impossible to plan completely for all that can happen—that’s why they’re called “emergencies”. We can never know exactly how severe any given emergency will be, or even if we might be hit by more than one.

Make sure your emergency fund is well stocked—credit cards should never be a substitute for emergency savings. Then have a credit card with a large unused balance, just in case your emergency fund isn’t up to the emergency (or emergencies) you’re facing.

4. To establish or maintain a respectable credit profile

I’ve written it before, and I’ll repeat it here—don’t obsess on your credits scores! There are plenty of issues in life that warrant our concern, and this isn’t one of them. That said, having decent credit is preferred to the alternative. Credit cards are one way to make that happen, especially if you don’t have a mortgage or other form of debt.

The flip side—too many credit cards, with oversized balances and a poor payment record will undo all that you’re trying to do. Limit the number of credit cards you have (one or two should be enough), pay balances off monthly and make your payments on time. Poor payment is a primary reason why credit cards are frozen or terminated by the issuer, and once this happens you’ll be left with a debt to pay and no more access to credit.

5. For certain transactions like airline tickets

There are certain transactions where using cash or checks just won’t work, and debit cards aren’t much better. One is purchasing airline tickets—credit cards just seem like the way to go here. Another is when a transaction could result in add-on fees after the fact. (In certain transactions there is fine print language that grants the vendor just such flexibility, though they won’t emphasize the point in their sales pitch.) A credit card gives you a cushion (the credit limit) that’s beyond the initial purchase amount, which is something you don’t have with a debit card.

 
Credit cards CAN be an asset—used responsibly, and under the right circumstances.

Can you think of any other situations in which having a credit card would be a distinct advantage over debit cards, checks or cash?

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By Kevin M

Everybody knows that too much debt is bad; the financial universe is filled with blogs, experts, and gurus who tell us as much and even how to get out. So why are people still unable to get out from under? Is it because debtors behave badly, that they fail to adequately confront their credit problems—or are they just plain lazy?

Maybe, possibly in some cases, but I think there’s a lot more to it, and by the time you’re finished reading this list, you may have a better understanding as to why—if you’re deep in debt—you’re having such a tough time getting out of it. Knowing what you’re up against is the first step to solving a problem, and only when you do can you make any real progress.

1. Lack of sufficient income to do so

A lot of people are making less money than they were just a few years ago. They were making more money when they incurred their debt, but now the lower income level has them in a trap where they have barely enough money to pay living expenses, let alone pay off debt.

2. A rate of inflation that’s substantially higher than what is publicly reported

Over time, expenses are growing faster than income, especially since raises are usually tied to the understated inflation rate (CPI). Does anyone really believe inflation is running at the 1-2% rate that’s claimed by the CPI? A 2% raise (again based on the CPI) will cause a drop in real wages in an economy where prices are rising by something closer to 5-7%. This is a very carefully hidden obstacle that requires either steadily lowering living expenses or being on a perpetual quest to find additional income sources. Many households are using credit to cover the difference, which is a strategy that’s destined to have an unhappy ending.

3. Conforming to a “standardized” idea of middle class life

When I was younger, if a family couldn’t afford a new car they bought a used one, and if they couldn’t afford that they bought a beater. If they couldn’t afford to keep their house, they sold it and moved to a rental or in with family. But in the past 20-30 years there’s been a kind of standardization of middle class life—how one must live and what one must own to live in it. Call it the “TV version” of middle class life. Many people can no longer afford to live this lifestyle, but they’re emotionally rooted in it and cannot abandon it. Once again, credit is often used to bridge the gap.

4. A benign view of debt

Culturally, debt is seen merely as a way to get from where you are to where you want to be. Want a house—take a mortgage. Need an education? Student loans can help. Can’t afford a car? Bring us your trade in and we’ll finance the rest. All of these require little or no money up front and make the process easy. Credit cards are just an extension of other forms of debt and a natural outgrowth. If debt is what “moves us forward” then how can it be a bad thing? Once you start thinking that way, you’re licked.

5. A culture that encourages debt at all levels

Credit is what moves the economy isn’t it? At least that’s what we’re told by those who are supposed to know. I’ve never agreed with this thinking. Money is what moves the economy–how it comes into being is the real issue. We can either earn it or save it—historically the preferred methods—or we can borrow it. The System—for lack of a better term—encourages us to borrow it since that’s the quickest way to make it happen. Once we have money—what ever the source—we can buy, buy, buy, and that’s what moves the economy. But when we use debt we’re also creating liabilities and they don’t go away once a paycheck shrinks or disappears.

6. A lack of orientation toward savings

Americans have a terrible track record when it comes to building savings, and we’re paying a huge price for it. Savings are the most fundamental antidote to debt—when we have plenty of savings we’re “self-financing” and don’t need debt. Building up savings is the first step to getting debt out of your life, and that requires a fundamental shift in financial thinking.

7. Too much structural debt

Over the past 20-30 years people have taken on too much structural debt. Mortgages and student loans are widely thought to be “good debt” but represent the foundation of even more debt. They’re long term debt, which creates the need for ever more cash later, and if it worked when you bought your house or your education it can work with anything else you buy, right? Mortgages and student loans can work if you don’t overbuy, then commit yourself to paying them off. For many people, however, mortgages and student loans set the stage for a lifetime of indebtedness.

8. An economic system that has a vested interest in keeping consumers in debt

Merchants have a symbiotic relationship to consumer debt—more credit equals more consumers, equals more sales, equals more profit. They’ll often provide the credit for you, all you need to do is come in and buy. This situation exists at nearly every level of the economy and, along with the media, it works to lower our resistance to consuming—and to going deeper into debt.

9. Habit

OK, this one is comes closest to being a pure personal fault by a debtor. Like smoking, drinking and over eating—people get into debt, learn to live with it and just continue on. If you want to break this cycle, it will require an effort comparable to a crash diet. Even though there’s long term benefit to doing it, the short term is uncomfortable and easy to avoid.

10. Debt has become a massive pyramid scheme

There was a time not long ago when lending was considered to be a fringe function in society; the old saw was “before you can get a loan you first have to prove that you don’t need it”. No longer. Credit is very easy to get and has been for a few decades. Because of that ease, lending has grown into a trillion dollar industry, with many layers. You can borrow with the swipe of a credit card, and when your revolving debt reaches the point where you can’t manage it, you can consolidate it with a home equity line of credit (HELOC). When the HELOC gets stressful, you can consolidate it with a new first mortgage on your home. See the trend? If it weren’t so legitimized in our culture and economy, we might be able to identify it as the pyramid scheme that it truly is. Nothing in that system is set up to encourage us to get out of debt, but just to roll it over to more tolerable loans.

 
As you can see, the obstacles to getting out of debt are enormous. It’s not just your bad habits and lack of discipline that are keeping you in debt, you’re getting a lot of help from a culture that’s keeping you in that ditch. This isn’t an attempt to give debtors a pass or to deflect responsibility, but rather to paint a full picture of the true obstacles.

If you have a serious amount of debt to payoff you need to…

• Understand the big picture obstacles you face in trying to get out of debt
• Make a concentrated effort to resist those obstacles by setting and living by your own standards and preferences
• Be fully prepared to lower your standard of living as low and for as long as it will take—separate wants from true needs
• Stop using credit going forward
• Be ready to increase your income—if you’re paycheck doesn’t increase to cover the true cost of living or paying off debt, then be ready to do what you need to find additional sources
• Make savings—and not borrowing—the standard of your financial success
• Once you’re out of debt, vow never to get back in.

You may not have the entire blame getting into debt, but rest assured you’re 100% responsible for getting yourself out.

What are your thoughts on why people can’t get out of debt?

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Guest Post

I could tell you that fraud only impacts about 0.05% of all credit and debit card transactions. I could explain that even though consumers are only liable for at most $50 in unauthorized purchases, all major credit and debit card issuers provide $0 liability guarantees. I could point out any other statistics as well as the long list of rare events that are more common than actually losing money because of card fraud, and it still wouldn’t matter.

Fraud is one of those things where the statistics aren’t really relevant because the only sample size that matters, it seems, is one. We’ve all heard the horror stories—which, by the way, are usually at least two parts tall tale, one part truth—and don’t want the same trouble to befall us. As a result, I continue to hear the following question on a regular basis: Which will better protect me from fraud, a credit card, a debit card or a prepaid card?

Equal protection BUT…

The short and obvious answer to this question is that all will protect you equally given their $0 liability guarantees. However, to understand which type of card makes fraud easier to deal with, I ask that you consider the following hypothetical situation and to keep in mind that prepaid cards and debit cards can be thought of as being identical when it comes to fraud prevention:

Your [credit/debit] card number somehow gets stolen—perhaps as a result of a computer virus, maybe because it fell out of your wallet—and you don’t notice for a week.

First of all, consider the fact that money is removed from your checking account as soon as a purchase is made with a debit card. That means if you don’t notice and write checks based on the funds you believe to be in this account, they might bounce and the fraud will have a ripple effect, creating hassle throughout your personal finances. What’s more, you’re liable to have a heart attack when you go to withdraw some money from an ATM or log into your account to see if your paycheck has been deposited and notice that your balance reads zero.

The same cannot be said for a credit card. Even if you don’t notice fraud right away, you have at least 21 days from the time you receive your monthly statement and notice the fraud until a payment is due. Therefore, the odds are high that you discover and sort out any fraud before it actually affects your money. After all, before you submit a payment, it’s the credit card company’s money in play, not yours.

Therefore, the answer the question posited at the beginning of this article would have to be: a credit card.

Nevertheless, fraud should not be taken lightly and no one can deny the hassle associated with it. If you therefore want to further insulate your life from financial intrusion, heed the following warnings:

• Shred important financial documents
• Use strong passwords for financial accounts and change them often
• Don’t provide personal information to people who contact you instead of the other way around, since there is no way to know who you are truly interacting with
• Don’t disseminate sensitive information via e-mail or unsecure internet connections (i.e. anything other than “https”), as they can easily be hacked
• Ensure that your PC runs an up-to-date version of a trustworthy anti-virus program
• Exercise your right to a free Experian, TransUnion and Equifax credit report every 12 months and check for errors

No one wants their hard-earned money to be in jeopardy, but you also don’t need to be living in fear. So take the simple steps laid out above, pay for the majority of your purchases with a credit card, use common sense, and you won’t have too much to worry about.

This guest article comes from the editorial team at Card Hub.

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Guest Post

Many frugal experts will shy readers away from using credit cards because it can be easy to overspend. But credit card rewards can actually help you save.

Here are ten ways to use credit card rewards to benefit you:

1) Statement credits: Some cards, like the American Express Blue Sky card, allow you to use your points as a statement credit toward qualified travel purchases, including any flights, hotels, or car rentals. If you do any traveling at all, this is a useful reward that is basically like cash toward your statement.

2) Gas rebates: A straightforward reward for something you always use, gas rebates can be an easy way to make sure you are using your points for something you will use.

3) Fund your IRA: Some cards will deposit your cash rewards directly into an investment account or 529 college fund. For example, the Fidelity Rewards American Express Card will make a $50 deposit for every $2,500 in purchases.

4) Hotel stays: If your card offers travel rewards, consider skipping the rewards tickets and using your points to pay for the hotel, instead. Hotel stays are often cheaper than flights, so can be purchased with fewer miles.

5) Travel insurance: Travel rewards cards often offer great travel protection, making their annual fee cheaper than the purchase of comparable insurance. For example, the American Express aeroplan card includes automatic coverage of up to $250,000 in travel accident insurance.

6) Cash back rewards: More than half of credit-card users choose to get their rewards as cash. Look for a card that maximizes the percent back on the items you actually buy the most. One nice straightforward option is Capital One’s No Hassle Cash Rewards Card, which pays 2% cash back on gas and groceries and 1% back on everything else.

7) Retail shopping: If you do much of your shopping in one place, you might find that the big benefits of merchant rewards pay off for you. Merchant rewards points can be worth almost twice the dollar value of travel reward points. Chase’s Amazon.com Rewards Visa offers triple points on Amazon purchases, which can add up fast, and a $40 Amazon credit for signing up.

8 ) Catalog products: Many rewards cards offer a catalog of home items and electronics. Generally, these items can be purchased much more cheaply with cash at an online retailer than with points. But, if you have points that are about to expire, these purchases can use a small number of miles and don’t require any additional expenditure.

9) Gift cards: Much like catalog products, they can be purchased with a small number of points, making them a great way to use points that would otherwise expire. And unlike catalog products, they can be used to buy a huge variety of products in the future.

10) Frequent Flyer Miles: Rewards cards are most known for their frequent flyer programs. If you tend to travel on one airline, choose a card for that airline. Otherwise, consider a flexible card like Capital One’s VentureOne Rewards Visa, which lets you spend accumulated points on travel with any airline or hotel.

When signing up for a rewards card, be careful that the annual fee doesn’t exceed the card’s benefit for you. And read the fine print for exceptions. For example, even one late payment on the American Express Blue Sky card can cost you all your rewards points for that billing cycle.

With a little caution and research, credit card rewards can be a great perk for purchases you are already making!

Image Source: CreditCards.com

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Guest Post by Mike Brains

When choosing a credit card, many people will go for the cards that offer the best rewards. One of the most common rewards offered by credit card providers is air miles. This can help you save money when booking holidays or business travel.

Ever time you make a purchase using an air miles credit card, you will accumulate points. These can be used to book flights for free. Also, many credit card providers offer a large amount of air miles for taking the card, before you even make any purchases.

Saving money with an air miles credit card

If you are a frequent flyer, miles can save you a lot of money. If you do not travel a lot, you can let the miles add up and use them to book a dream holiday. By using a credit card to collect frequent flyer miles, you can save a huge amount of money and fly to exotic destinations you may not have imagined going to before.

Most airlines provide a credit card that rewards you with air miles. To make sure you can book a flight where you want to go, you should look at where the airline flies, as well as the amount of miles they offer. For example, there is no reason for collecting frequent flyer miles with an airline that only does short haul flights if you want a cheap trip to Australia.

Instead, you should pick a card with one of the major airlines that fly all over the world. That will allow you to use your collected miles to travel further.

While air miles credit cards often charge a higher rate of interest than card that do not offer these rewards, you can save a lot by using them. The amount you save on travel using frequent flyer miles will often more offset the larger amount you will be charged through interest and other fees.

The air miles credit card payoff

If you can accumulate a sufficient number of air mile rewards, you’re buying yourself free flights, and that means more freedom to travel. You can take that trip to an exotic destination that you’ve only dreamed about in the past. And that will mean adventures and experiences that will last a lifetime. If there’s even one destination in the world you’d like to travel to, but never imagined you’d be able to afford to go, having a card that will help get you there for free will be well worth having.

But beyond the dream travel destination, there’s also the promise of more to come in the future. And after you’ve taken that “once in a lifetime” trip, you’ll be more than motivated to do it again. And again! With the right program through the right card issuer, you’ll have that chance. See it as the opportunity it truly is!

Have you had much success with air miles credit cards?

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Guest Post by Darin Sewell

When it comes to fixing a bad credit report and boosting a low FICO score the first question out of most people’s mouths is how long is this going to take. Truthfully that is a hard question to answer mainly because each individual’s credit and personal situation are different and are going to require its own approach and amount of work. But in most cases you can make some good progress inside of 3-6 months, but you have to make sure you follow along with some proven credit repair principles. Let’s take a Look at one of these principals below, debt reduction with a twist!

Before you can increase your credit score you are going to have to look at the amount of total debt that you currently have. If you have bad credit chances are that you have many accounts that are maxed out or near the account maximum so you need to find a way to get this debt paid down.

Why Too Much Debt Hurts Your Credit Score

Having a lot of accounts maxed out or near maxed out is very bad because anytime you carry more than 50% of your available debt, your scores will start to go down, and go down fast. To avert this, you need to pay down your debts as fast as you can. I know this sounds easier said than done but there are a few advanced tactics you can use to get it paid down faster.

An Advanced Tactic To Pay Your Debt Down Faster

One such tactic is called stacking. What this means is that you find savings in your monthly expenses and apply them to your debt reduction. It might be lowering your cell plan, cancelling Netflix or taking a lunch to work instead of buying it every day. You can then take the extra money you get from these savings and pay it towards your debt with the lowest balance.

To make this tactic work you will have to keep paying towards the debt until it is paid off and once it is paid off, apply the money that you used to pay towards that bill to another bill, in most cases you can often come close to doubling your payment amount and by the time you get to your last account you will have a large amount of money going towards its reduction every month.

Of course no amount of debt reduction effort is going to help you if you continue to spend and acquire more debt. So make sure to set a budget and stick to it. And do not open any new credit accounts during this time and do not close your accounts when you pay them off.

Maintain Your Credit Accounts

Keeping your existing credit accounts open is critical because along with the amount of debt you have, you are also scored by how long your accounts have been open. This means that an account that is brand new will not give you as much score boosting power as an account you have had open for a few years. Maintain these accounts even if you have late payment history on a seasoned account; do not cancel it, as most negative activity will disappear from your credit report 12 months after it appears.

How To Ensure You Never Pay Late Again

Once you get your debts paid down you will see your credit scores rapidly increasing, keep them on the upswing by not making any late payments. The best way to do this is to use only one card and set it up for automatic payments every month. While the auto payment will only make the minimum payment you can always send in more after the minimum is made. This will put your bill payment efforts on auto pilot and keep you from slipping into the same habit of late payments and too much debt!

Depending on how much debt you have to start with, this process can take a few months or a year or more, but it does get a little easier each month so stick with it because the only thing you have to lose is your low credit score.

Guest Post by Jodie McDonnell

Many people across the United Kingdom fall victim to financial strife, often due to factors that are out of their control. A loan—when taken out for the right reasons—can help individuals who are in need of money for obtaining a mortgage, car loan, or other loan among other things.

Even more important is getting the right loan, a loan that will solve your problem and not make your financial situation worse. In order to do that, you need to approach borrowing with the proper attitude and a few tools that will help you to get the best deal to work within your circumstances.

Many times the reason people get into credit difficulty happens at the very time a loan is taken. The person could have been borrowing more than he could afford to repay, or doing so with stiff repayment terms he could never meet. You’ll only have one opportunity to prevent that from happening, and that’s when you are applying for the loan. It is therefore critical that you get this right at the very beginning when it counts most, and that means getting the very best loan you can.

Finding the best range of loan options

Loans vary depending on the creditor and type of loan; the best one for you will depend on your unique situation. With some simple tools, you can find a suitable loan that is tailored to your needs. It’s often best to start by investigating websites which offer the services of competing lenders, that way you’ll have a way of comparing the loan offerings of several lenders at the same time. Loan programs are all about numbers, which is where confusion begins to enter the picture. Any way that you can simplify loan comparisons will be a step in the right direction.

Try to search loans at Money Expert, a site that offers a comprehensive search of both personal and home loans from lenders across the UK. Your lender will award a specific loan amount to you with a set repayment period.

When signing a loan agreement, you are bound by the terms and conditions of the creditor and this is incredibly important. These conditions will include the obligation you are under to pay back the original loan amount plus interest; while the interest rate on the loan will vary from creditor to creditor. Given the current state of the UK economy, it has never been more important to research your options with different lenders. It’s absolutely critical that you obtain the loan that will not only meet your financial needs, but will also fit within your budget.

It’s not your imagination—it IS harder to get a loan now than ever

It is now more difficult to find a good deal on a loan, therefore it is important that you check to be sure you are getting the best interest rate for you. It is also important to remember that before you sign up for anything, you must check what the product is offering exactly and what you are about to legally bind yourself to.

Watch out for any hidden charges, penalties or terms in the small print. Also, personal loans come in a variety of forms including unsecured or secured lending—make sure you are certain of which you are taking and exactly what collateral you’re pledging for the loan.

The loan offer will depend on a number of factors including whether the borrower has a good or bad credit history or no credit history at all. For example, for a person with a good credit rating an unsecured loan may offer lower monthly repayments compared to a person with weaker credit history. In contrast, a person with bad credit history may need to put up property as security to be granted credit; this method is usually applied when the individual is in need of a larger loan or lower rate of interest.

Despite it usually costing more in interest repayments, many homeowners choose to take an unsecured personal loan so as not to risk their property should they experience financial difficulty and are unable to repay the loan in the future.

When borrowing money responsibly, you can develop a strong credit history that is useful should you need to borrow more money further down the line. For example, obtaining a mortgage, car loan, or other loan, is easier when you have a good credit history – you will also enjoy lower interest rates as a result.

What ever type of loan you choose, be absolutely certain that it is one that will improve your financial condition, especially in the future, and not act merely as a means of getting past a difficult moment. A loan should always be a financial instrument that moves you forward, and not one that puts you in a deeper hole than the one you’re trying to dig out of.

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Guest Post by Mike Brains

OK, we agree that being in debt is not a good position to be in, and that you should do what ever you can to get out and stay out of debt. So far so good. But what if you are in debt, and not in a position to make it go away anytime soon—what options do you have?

How can credit cards help?

Using credit cards may have contributed to getting you into a tight spot in the first place—or perhaps they were just the vehicle you used to get there—but could they also prove to be a way out? Used responsibly, they can actually help.

Admittedly it isn’t very often that you hear the term ‘credit card’ and ‘save you money’ in the same sentence, but there is a way in which you can use credit cards to save you a decent amount of money in a relatively short period of time.

The method involves you applying for and being approved for at least one of the numerous 0% balance transfer credit cards currently available. Many companies in the US, UK and Canada offer these credit cards. If you can’t find any of these offers then a low APR credit card is the next best thing.

What ever interest rate your presently paying on your credit card(s), moving the balances over to a zero interest, or low interest, card can not only save you money immediately, but also give you valuable breathing room to develop and implement a strategy to ultimately pay off the balances for good. Think of it as the preverbal port in a storm.

Putting Credit Cards to Work for You, rather than Against You

So how does it work?

Let’s say you have a $2000 bank loan with an interest rate of 15% and an outstanding credit card balance of $2000 with an APR of 22%. In total you will be paying and average rate of at least 18.5% more to clear these debts than you would do if you performed a credit card balance transfer to a 0% or very low interest card…and that’s assuming you pay both balances off within a single financial year.

Of course this only works if you are awarded a starting credit limit of at least $4000 when you apply for a credit card. Saying this, even if you only get a $2000 limit you can still transfer the balance from your other credit card and save yourself the interest payments.

It would be better not to use the new credit line to pay off the bank loan in this example, since you don’t want to exchange an installment debt that will be paid off in due course with revolving debt which at least theoretically might never be paid off. The zero interest credit line should be seen as a temporary tool and not as a way to extend credit.

Using 0% credit cards responsibly

The best thing about most 0% balance transfer credit cards is that the 0% interest rate remains on the account until the balance transfer amount is completely paid off.

Unfortunately these credit cards do charge interest on new purchases and cash withdrawals though, so in order to really save money you need to refrain from using the card for anything other than the balance transfer. It is worth noting as well that some credit cards only offer the 0% interest rate for a limited period of time e.g. 12 to 18 months, and so you’ll need to shop around again at the end of the introductory offer to find another 0% card.

Again, the important thing is to use a zero interest credit card as a tool to get control of your debt and to make paying it off easier.

A radical strategy? Perhaps. But now you have an idea how a credit card can save you money and help you on the road to debt freedom. Be sure that you do a quick credit card comparison and apply for the one that suits you best.

Have you ever used a zero interest rate balance transfer credit line to payoff debt? How did it work for you? What do you see as potential pitfalls?

Related Posts:

Debt Is Different For the Self-Employed
Surviving Debt Collection Calls
How Much Student Loan Debt is Too Much?
Is Now a Good Time to Refinance?
Why Your Credit History Matters—Even If You Aren’t Applying for a Loan
Why Paying Down Your Mortgage Is More Important Than Ever