If you are struggling to pay off multiple credit cards, consolidating your debt may allow you to reduce your interest rates and lower your monthly payment. However, a lower monthly payment can mean a longer repayment term and more interest paid over the life of the loan. Whether you should consolidate your credit card debt depends on your individual circumstances and the terms of the consolidation.
Although you may understand the concept of credit limits, few people take the time to examine their credit utilization—or the amount of debt owed vs. the total credit limit. An ideal credit score boasts a utilization ratio of 25 percent or less. If you have a $10,000 credit limit, you should never charge more than $2,500 at a time. The same goes for individual cards. For example, Margot has three credit cards with the following limits:
The Bank of America® Travel Rewards Credit Card for Students allows you to earn unlimited 1.5 points for every $1 you spend on all purchases everywhere, every time and no expiration on points. This is a simple flat-rate card that doesn’t require activation or paying on time to earn the full amount of points per dollar, like the other two cards mentioned above. If you plan to do a semester abroad or often travel outside the U.S., this card is a good choice since there is no foreign transaction fee. Students with a Bank of America® checking or savings account can experience the most benefits with this card since you receive a 10% customer points bonus when points are redeemed into a Bank of America® checking or savings account. And, Preferred Rewards clients can increase that bonus 25%-75%.Read our roundup of the best student credit cards.
Checking your credit report on a periodic basis, at least annually, is a good way to catch any instances where you might be the target of identity theft – or the credit bureau has accidentally mixed up your history with someone of a similar (it happens more than you'd think). If you are concerned about others accessing your credit report without your permission, you can freeze it, which will limit who can access the information and under what circumstances. If you think you are a victim of identity theft, contact your local law enforcement authority immediately.
Also, after the payment plan is done, a completed Chapter 13 bankruptcy can show on your credit report for up to seven years. As Albaugh noted, however, a filer will usually have already negatively impacted their credit rating through charge-offs, delinquencies and repossessions before moving on to bankruptcy. In that case, Chapter 13 can actually help the credit restoration process and limit the amount of damage their score will incur.
While credit building loans can be a key step in establishing a strong credit history, it’s imperative that you make all of your payments in full and on time. When you are committed to building a strong financial future with personal budgeting and spending discipline, successfully paying off a credit builder loan can lead to approval for good rates and terms on mortgages, auto loans and other loans in the future.
Anyone can join First Tech Federal Credit Union by becoming a member of the Financial Fitness Association for $8, or the Computer History Museum for $15. You can apply for the card without joining first. The intro 0% for 12 months and no transfer fee on balances transferred within first 90 days of account opening is for the Choice Rewards World MasterCard® from First Tech FCU. After the intro period, an APR of 11.74%-18.00% variable applies. You also Earn 20,000 Rewards Points when you spend $3,000 in your first two months.
If a collector contacts you, they could be breaking the law as they try to get you to repay debts. Rheingold said one common fraud is debt collection companies buying past-due debt for extremely low prices at “debt auctions” and then trying to collect it. Often, the debt collection company only has a little information about the debtor and no information about the actual debt. If you don’t pay, however, they may try to take you to court.
With poor credit, you may not be able to get approved for new credit products like credit cards. Although you may still be able to take out an auto loan or a mortgage, you’ll pay a much higher interest rate because of your low credit score. Compared to a borrower with good credit, someone with poor credit can pay $50,000 more in interest on a mortgage. Over an entire lifetime, you could end up paying over $200,000 more in unnecessary interest just because of bad credit.
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