We have all been there. At some time in our life we have had to borrow money from some sort of lender. Whether it be for a home, educational purposes, credit cards or cars, it is inevitable that we will run into debt and the problems that come with it. These problems are often linked to having too much debt. Some indicators of too much debt include: “having trouble paying bills on more than one occasion, receiving continuous notices from creditors, and having one’s accounts being turned over to debt collectors”1. These events are stressful, but it important to remember that you are not alone. Many Americans all over the country, especially in the current economic climate, are in the same situation as you. This article will provide some helpful tips to handle the problems you may face from the crippling problems that come with debt. These tips for dealing with debt problems are provided by the Federal Trade Commission and will help prevent debt and the problems associated with debt. Continue reading
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Consolidation Loan
A consolidation loan is a single loan used to pay off multiple loans. Using debt consolidation is advantageous for many reasons. First, using a consolidation loan makes it easier to pay off debt, because it is just one loan instead of several smaller loans. This makes it easier to focus on your debt, intuitively, because everything is located in one place. Another advantage of debt consolidation is that it can lower your overall interest rate. Your interest rate with several loans may be slightly higher than your interest rate with one consolidated loan. In some circumstances, debt consolidation can even secure a fixed interest rate, an advantage rarely offered with smaller individual loans. Continue reading
Advantages and Drawbacks of Annual Percentage Rates
The Annual Percentage Rate, or APR for short, is a tool used to compare the cost of loans. Costs like interest rates, transaction fees, late penalties, and other costs, vary by loan. What APR allows you to do to is to have a standardized value to compare the rates of competing lenders1. This article will detail how to use APR to your advantage. It is not a perfect standard, and admittedly has limitations; however this tool has some value and may be helpful when choosing a lender. Continue reading
What is a PLUS Score?
A PLUS score is a type of credit score that was created by the credit reporting company Experian. You may be familiar with the more commonly used FICO score. The FICO score is the score that most lenders use. FICO is an acronym for Fair Issac Corporation. The FICO score uses several mathematical models and a number of factors to determine the credit risk of consumers. Some of these factors include payment history, current amount of debt, types of credit being used, length of credit history, and new credit. Continue reading
What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance, or PMI as it is commonly abbreviated, is additional insurance required for most homeowners. Its main function is to protect lenders against loss in the event that borrower’s default on a loan. Therefore under most circumstances you will be required to pay private mortgage insurance. The general rule is if you obtain a loan from a lender that is more than 80 percent of your new home’s value, you will most likely be required to pay Private Mortgage Insurance. In other words, PMI is usually only required if the buyer’s down payment is less than a 20 percent. Continue reading
What is an over the limit fee?
An over the limit fee is a fee that you will be charged if you exceed your limit on your credit card or bank account1. You should be aware of this particular fee, because it is known to get many consumers into trouble. The reason why, is that these fees can creep up on you without your knowledge. Your bank or credit card issuer may let you overspend without telling you that you have exceeded your limit1. They accomplish this, often times credit card companies approve your purchases for the sake of “convenience”1. Once the purchase is approved you are slammed with a huge fee, sometimes reaching “$39 at several major banks”, for every purchase made over your limit1. If you do the math, it is clear, that these fees can do some damage to your budget. Luckily, there are some strategies you can use as a consumer to avoid these debilitating fees. Continue reading
What is the credit limit?
A Credit Limit, as defined by investorwords.com, is “the maximum amount of credit that a bank or other lender will extend to a customer, or the maximum that a credit card company will allow a card holder to borrow on a single card”1. Continue reading
How is average daily balance calculated?
The Average Daily Balance, is the average amount that exists in an account over a period of time, the period of time is typically a billing cycle. The average daily balance is calculated by adding the daily balances over a period of time and dividing by the total number of days in that period. This calculation method is used to calculate interest. Continue reading
What is incremental budgeting?
Truthfully, sticking to a “set in stone” budget is no easy feat. What you may have to turn to is a personal incremental budget. Incremental Budgeting implies using a previous budget or your actual spending habits as a basis for your current budget1. Your past spending serves as a tool for the new budget, and you use this information to add incremental amounts as you go along. This type of budget forces you to look at how you are really spending your money, what you are spending your money on, and how to change how you budget in general. There are many advantages to using approach but there are also some drawbacks. Continue reading
What is debt consolidation?
Debt consolidation is a process in which one loan is used to pay off many loans. Generally, several loans are combined into one loan. This strategy is advantageous for many reasons. First, it is easy to pay off because it is just one loan instead of several smaller loans. This makes it easier to focus on your debt, intuitively, because everything is located in one place. Another advantage of debt consolidation is that it can lower your overall interest rate. Your interest rate with several loans may be slightly higher than your interest rate with one consolidated loan. In some circumstances, debt consolidation can even secure a fixed interest rate, an advantage rarely offered with smaller individual loans. Continue reading
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