Archive for September, 2008
Collateral for Loan
An old Native American wanted a loan for $500. He approached his local banker. The banker pulled out the loan application and asked:
“What are you going to do with the money?”
“Take jewelry to city and sell it,” said the old man.
“What have you got for collateral?” queried the banker, going strictly by the book.
“Don’t know of collateral.”
“Well that’s something of value that would cover the cost of the loan. Have you got any vehicles?”
“Yes, I have a 1949 Chevy pickup.” Read the rest of this entry
How to Cut My Credit Cards : Make Boomerangs
Boomerangs are L-shaped objects that return back to the person who throw them in any direction. Credit Cards are made of rigid and virtually indestructible plastics and hence they are a good candidate for the job of making boomerangs. A quick look at this Wikipedia Article will give you a fair idea of boomerang basics.
This is much easier for all of us if we can explain the process with images. so i have put up some before and after images of a cute little boomerang made out of a stores card. It is more enjoyable when you do it with a valid card. expired credit cards are not that much fun to play with. leave them for your children to play with.
10 Things You Should Know About Your Credit Card
When it comes to credit cards, American’s are least educated people around the world. Our knowledge about them comes mostly from friends and family or credit card sales people. After a long search on forums and blog comments I have come up with the list of 10 things that most of people should know about their credit cards and they don’t. It’s my contribution to help you learn more about your own credit card rights and providing you means and methods to protect them
1) Your Credit Card is Not Valid Till You Sign it
There is a panel on the back of your card that says “Not Valid Unless Signed”. A large number of people ignore this or just write “SEE ID” or “CHECK ID”. They become very shocked when some diligent merchants refuse their card.
Let’s have a look at what VISA’s procedures says about what should happen when a customer presents an unsigned card:
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The merchant will ask for customer’s ID like Driving Licence or Passport.
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Customer will be asked to sign the card. If he signs it, the signature on the card will be compared to the signature on his ID.
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If customer refuses, the card will not be accepted.
It is a known fact that most of the merchants don’t follow this policy, but some like UPS are quite strict.
A Quick Guide to Credit Card Basics
Credit cards are a double edge sword. They can help make your life a financial heaven and hell depending upon how you use them. Following are some tips on using your credit cards wisely. The benefits of using your credit card wisely include but not limited to cash back, bonus points, airline miles and at best a great credit score. On the other hand if you decide to use them in an unwise fashion, you might end up in a mountain of debt.
Rule No. 1 is to pay off all you balance every month. You will have to pay interest on your spending if you don’t do that and that interest rate is very tricky. It takes a lot of discipline to pay back balances on time. According to a recent report by Federal Reserve, Almost 40% of all house holds in America carry a substantial amount of credit card debt.
Protect Your Credit Score
Make all your payments before the date they are due. Late fees can pile up quickly as they are around $20 - $50. If you miss more than two payments that will automatically increase your interest rate to “Default Rate” (around 24% to 30%) . Late and missed payments also lower your overall credit ratings. That can trigger interest rates on other loans to go up as well as getting soft loans in future impossible.
Get Out Of Debt Using Debt Consolidation Loan
As we get out of collage and grow older, our needs expand and time comes in life when we need a car and then a house to live in. Expenditure builds up very fast. We Apply for one Credit Card for emergency and before we know it, our pocket is full of credit cards and we have many supplementary credit cards too for our wives, girlfriends and children. We also undertake personal loans to purchase luxury items like furniture, home theater, backyard swimming pool etc. etc.
Whenever we acquire a new line of credit, we are actually reducing our future disposable income. This disposable income keep shrinking till our situation get very desperate.
If things keep going well (we don’t encounter a major problem with our health or job. And we are also lucky enough to survive the mid life crisis that is so common these days that every ones seems to have it. It’s more common than influenza.) and we do keep paying all our obligations on time i.e. Utility bills, mortgage payments, credit card bills, chances are that we do have a very sound Credit Score. Which is quite a good thing, but wait.
Let’s sit down and check each and every debt account. Let’s average our minimum monthly payments and accompanied interest rate. Mine average is quite horrible. It’s 27%. I can bet that your’s will be way more than your best guess.
“What is the problem with these credit card companies” I am now getting angry at them “They are getting money from central bank at little more than 2% and charging me upto 30%?????” Such a banking spread is really criminal. but since I can’t do anything about them, Let’s see what my options are..
After little searching on Internet, I came up with some great options to break out of current situation. Best among them is to seek a debt consolidation loan so I can all these monthly payments into a single payment and also reduce my effective interest rate to a reasonable level.
The Great thing about debt consolidation loans is that they will sum up all of my debts and one monthly repayment is much lower than the sum of all the minimum payments I currently have to make to all of these credit card companies. I have only one due date to remember and only one check to write… It is a major stress remover indeed.
I have already spoken with a few banks. They are saying that because I have a sound credit history and a good credit score they will be more than happy to consolidate all of my credit card debt into one loan. They said that main reason they are very eager to get my account is that I have proven that I can make the monthly repayments on time and therefore will manage just one monthly repayment without risk.
Even in dire situations too, where the debt collectors are up your behind you, debt consolidation loan is still a great option. Although you won’t be able to get lower interest rates but still Its good in the sense that debt collectors will be off your ass and your monthly minimum payment will be manageable too.
If you own a house and have the mortgage on it which is less than the actual value of home, you have an option of getting a home equity loan. Unlike credit card, this is a secured loan and the interest rates a bottom low on it. By taking out this loan you can consolidate all your debts into the one. You will be able to pay off all your outstanding debts immediately and will be able to save thousands of dollar is interest payments.
If you dont own a house then you will need to look for some other sort of secured loan to consolidate your debts so you can pay off all of your outstanding debts. paying off outstanding debt is important and vital. 
To secure a debt consolidation loan you will have to do some research on Financial Institutions and view their web sites to find out their eligibility criteria as well as terms and condition of the loan. It is very important to read the disclosure and Term and Conditions. If you don’t understand what a particular term means, don’t skip, Just search for it in google or look at Wikipedia.com. Overlooking an important term can haunt you for years to come, so be careful.
Most of these web sites do have a loan calculator of some sort. Normally it is very easy to use. Use it to calculate the monthly repayments, the amount of money you may borrow as well as they give you a good idea of interest rates.
Once you have all this information you should decide which banks or financial institution you will work with and start filling our the loan application. You will also have to arrange all the supporting documents as required by the lender.
Once you get consolidation loan, you must clear all outstanding credit card debt and Cut your credit cards and close all lines of credit so that you may not fall deeper into debt. The point of no return starts beyond that…
Financial planning is a vital tool, use it to stay clear of debt. Try to save yourselves from getting too down in debt. If you get there anyhow then seriously think about bankruptcy as a good option. Sooner you do it.. better off you are..
A debt consolidation loan is one monthly repayment and one lower interest rate that you can use to consolidate your debt.
What if you don’t pay your credit card bills?
These are difficult times for our economy. Each one of us is feeling the pinch due to increased cost of living. It is getting very difficult to make ends meet. In difficult times like this it is very easy to amass a huge credit card debt. It can happen to anyone. Even to people who have been financially responsible. “Can I just don’t pay my credit card bills?” is the question many individual ask themselves and friends. This option is very much there. It also will give you some extra cash for few months ahead. But following are few of major problems you can get yourself into if you stop paying your credit card’s monthly payments.
Collection Calls
This is most scary part of Credit Card Game. Credit Card Companies will constantly call you and demand their money back. Collectors may call you 5 - 7 times a day. They will call you at home, They will call you at work and they will call you on your mobile phone too. There have been some reports that collection agents have been calling bosses, co-workers, and family members (which amounts to harassment and is not legal). They go to any length to get you on phone and when they get you on phone they use a lot of psychological techniques to lure you into giving them checking account numbers and other banking information. They will use every trick to make you pay. One of the well known methods is that they intimidate and threaten you by telling you that they will take your house, car etc. Or they will bring police to your home. all this can be very stressful on some people. You will also start getting letters in the mail from them that may eventually turn more demanding.
Don’t get intimidated by them, Know your rights and report any violations to police and seek help. Most of the credit cards are unsecured so no one can take your car, house, furniture, etc. Worst thing these credit card companies can do is… they can really damage your credit score.
