Don’t Pay Only the Monthly Minimum on Your Credit Card-Part Two

Don’t Pay Only the Monthly Minimum on Your Credit Card-Part Two

You may think that when you pay on time the minimum amount due on your credit card at the end of each month, you’re being financially responsible. Think again.

In our first episode we talked about how does the long repayment works.

This episode will go in depth regarding how paying only the minimum monthly payment can cost you a huge and unnecessary amount of interest in addition to repaying the original sum.

Skyrocketing Interest

Say you’ve got an outstanding balance of $2,000 on your card. Your minimum payment would initially be $40 (2% of $2,000).

If you make only the minimum monthly payment of $40, it would take you 30 years and 10 months to pay off your balance and you would end up paying $4,931 in interest!

You would be much better off financially if you could increase your monthly payment to $100. So then, you would need only two years to pay off the balance in full and you would pay only $395 in interest!

That’s a saving of $4,535 !

So, upping your monthly payment by even a small amount can save you a whopping amount of interest.

In our final episode of this series we’ll discuss how the minimum payment is applied.

For more valuable financial advice, please visit us at prudentfinancialservices.net

Cosigning a Loan or Asking Someone to?

Arm yourself with knowledge before hindsight leads you into saying could a, should a, would a, but didn’t. Statistically, there is a 50% to 75% chance you will be repaying the loan you cosigned yourself. Trust, understanding all the variables accompanied by clear communication is a great way to start off your new relationship as consignee and cosigner of the loan.

Asking Someone to Cosign a Loan? Keep these points in mind when you do.

Understand that you have a history with your credit that indicates that you require more support from someone who has a better credit report to add as insurance so your loan is approved. For our purpose today let’s call your perspective cosigner Bob.

Before asking your Bob to sign on the dotted line, be prepared first.

• Volunteer to show Bob your credit report, income statements & expenses or the fact that you have no credit at all.

• Have a game plan to show Bob how you will make your payments, then how you will start to pay him back after the loan is paid off.

• Know if you can re-negotiate the term of your lease to see if Bob can be taken off as your cosigner. Know if that is possible and how long it will take.

• Create an action plan for yourself. It should also indicate a form of increased earnings for your self.

Have as much information as possible for Bob since it’s your job to make him trust you with his credit. Explain to him that your credit rating is also at risk and is in his hands as well, since you both will suffer should either of you default or miss payments.

Considering Cosigning a Loan? Here are a few things to keep in mind.

Know what you are getting yourself into and explore all of the options available. Since you trust this person with your credit rating and financial future, make sure if they default you can cover the loan in full. Let’s use the name Sally for the person requesting you to be the cosigner.

There are a few questions to qualify Sally. Read them and make sure you Understand what you are entering into.

• Is Sally just starting out and needs help establishing credit? If so, are there other options such as a pre-paid credit card? This is the best scenario for you as the cosigner to entre into and studies have shown your risks are minimal.

• If Sally’s income requires you to sign due to insufficient cash flow, you should be careful. This is a bigger consideration to keep in mind. Is her debt to income ratio too high to support her request for a loan on her own earnings? Does Sally have a plan to increase her income in the future?

• Ask to have your responsibility limited to the value of the loan itself. Save yourself the collection fees and late charges if you can.

Understand what you are signing and know your options. Go into the agreement with the worst case scenario as a possibility; assume Sally defaults.

• Don’t jeopardize yourself, your credit and financial security if the worst-case scenario plays out and you end up paying the entire loan. Can you handle paying its entirety on your own?

• Debt collectors will be calling you in 3 months if Sally defaults. Be proactive and make sure you are notified in writing with every missing payment. In 3 months your loan has probably incurred fees for NSF checks, compound interest and more.

• If Sally is asking you to cosign for a large purchase such as a car, will she agree to put the title in your name until you are no longer a cosigner. Are you prepared to sue Sally? Is your relationship going to change?

• Get copies of all paperwork and ask every possible question, before you proceed. Leave no rock unturned.

Treat this like a marriage where full disclosure is a must on both sides. Go through all possibilities to make sure you both understand things clearly and the pros and cons of trust in cosigning the loan. Communication is the best form of making sure both parties know the covenant they are entering into.

For more valuable information, visit www.prudentcreditrepair.ca

Are You Protecting Yourself From Identity Theft?

Prior to the dawn of the Internet the term identity theft would conjure up images of pick pockets and dumpster diving. With the advent of the information age, Identity fraud or impersonation has steadily become a much more prevalent crime in our society. In Canada 20% of us have been victims of identity theft. Who wants a collection call regarding an overdue amount on a card you never knew you had? Educating yourself is the best deterrent.

What’s in your trash? Identity thieves obtain your information from the items you put at your curb on trash day, and even from the receipts you throw out in a public garbage can. Even an out of date Mortgage statement or a tax statement has enough information on it to get them started in duplicating your identity. The solution is simple, shred or destroy anything that has your name on it prior to throwing it out. Digital information stored on your computer or CD’s is a little harder to re-cycle. If you are selling your old computer or donating it, often wiping, deleting or reformatting will not be enough. Depending on your computer, research what software you need to wipe your hard drive clean for good.

Good Old Fashion Mail. Do you make sure you get all your statements from whom you should monthly? Make it a priority of opening and reading every bill and statement you get monthly. What if one went missing would you ever know it? Identity thieves often pray on pre approved credit cards and will often commit mail fraud to do it. Make sure you know if anything goes missing so you are one step ahead and can call your bank and change your information before they use it.

Paying Bills On Line. It’s difficult not to use the Internet for some kind of transactions, weather it’s making sure a phone bill is correct or banking in general. The key is to make sure you are using a secured page to do so. Look for a lock in the browser bar or “https” that means your data will be sent encrypted. Beware of “Free Trials”. They may be a net set up to catch your personal information to use it to further re-create your identity or to obtain your credit card info.

Why Obtain Your Own Credit Report Annually. If you don’t know what yours looks like how do you know you are not already a victim of identity theft? Usually most people find out when it’s too late and they are in need of credit. Stay ahead of the criminals and protect yourself.

Create A Secure Password. Your password should be made up of upper and lower case letters and numbers. This makes for a stronger encryption. One tip is to use numbers that look like letters. Substitute 5 for an S for example.

Social Security Number? Memorize It? Keep your S.I.N. out of your wallet! It is the one number associated with you that, in the wrong hands could lead to years of bad credit.

Remember you are your own first line of defense in protecting yourself from the unforeseen.

For more valuable information please visit www.prudentfinancial.net

What Information Appears On The Credit Report?

Your credit report contains lots of information about you. It contains your name, date of birth, address, employer, where you have applied for credit and who you have credit with. Your credit report indicates your past and current payment habits and how you manage accounts with your creditors.

Those who have had problems with credit in the past can have a difficult time getting re-established. When looking to re-establish credit, it’s important to only obtain credit from places that report to the credit report.

Believe it or not payments made on time to utility providers like your phone and cable don’t report to your credit, nor do accounts with gyms and other service providers. The only time these accounts can impact your credit, is if you don’t pay them and then they send it to a collection agency. There is a special place on the credit report where collection agencies can report money that they are collecting on behalf of a private third party company, creditor or service provider.

Payday loans and pre-paid master cards also do not report to the credit report. Many consumers fall into the payday loan trap thinking that they are re-establishing credit. This can be an expensive lesson.

Secured credit cards, secured and unsecured loans do report to your credit report. Companies like Capital One and Home Trust offer secured credit cards. Companies like Prudent Financial Services offer personal loans to consumers who have filed for bankruptcy, have completed consumer proposals or who have past, paid off bad credit.

When new loans and credit cards begin to report to your credit report, it will immediately begin to improve your credit score with each on-time payment. Remember to pace yourself. Start with one credit product, manage it for 6 months and then try a second one. Too many inquiries or applications for credit will hurt the credit score that you are working so hard to build.

For more valuable information and tips, visit us at www.prudentcreditrepair.ca

The importance of fixing credit

Credit is basically borrowed money that you use to purchase products or services and pay for them at a later date. We use credit to buy homes, cars and even businesses. It also allows businesses to grow and expand. All jobs that are created and almost all buildings that are built are built on credit. Credit keeps our economy spinning so credit is a great thing however we need to be careful with our credit. Using credit makes spending money really easy and it’s all too common to lose control and wind up in debt that you can no longer pay. Access to credit does come with a price and the price is high interest rates which will only continually increase the balance of your debt. Once you’re in this position, your credit is tarnished.

Your credit can open up many possibilities for you. It will determine you’re worthiness through the banks, certain employers and to landlords. Having bad credit will only reduce these opportunities so it’s extremely important that you repair your credit.

Rebuilding your credit is a process. Bad credit may have left you with no credit cards and paying high interest rates on loans. The last thing you want is to take out a loan through any payday loan store as they will only charge you obscene amounts of interest rates. Also, if you’re making your payments on time, payday loan stores WILL NOT report your payments to the credit bureau to boost your credit score. They WILL however report your defaulted payments to credit agencies only tarnishing your credit even further so stay clear of all payday loans.

Fortunately you still have options! Prudent Financial Services doesn’t just provide loans to people with bad credit histories , they’ll go several steps further than their competition to help you repair your credit by reporting regularly to Equifax and you’ll earn the highest credit rating which when you pay on time.

Practice makes perfect so get your good credit habits into practice. Your credit will only improve once you show your creditors that you have what it takes to build a good credit score.

Good luck on your goal to good financial health. For more valuable information, visit http://www.prudentcreditrepair.ca/