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Dealing With and Repairing Bad Credit
Bad credit can be a burden for otherwise good credit. It may not seem fair at times that financial mistakes in the past can haunt you in the present, but with a little bit of work and some time bad credit can be turned around and repaired. The important ...
The Christmas Temptation - Department Store Credit Cards
Now that we are heading at breakneck speed to the peak retail season (ie Christmas), you will soon, if you are not already, be wondering what to do about all those gifts and other expenses that need to be catered for in the holiday season. November and ...
What you need to know about debt negotiation on credit cards
Debt negotiation on credit cards is often referred to as credit card debt settlement. Whenever you make a credit card payment- or even pay your utility bills- it usually gets reported to one- or all- of the three main credit agencies. This activity will ...
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First, you have to stop any new spending on your cards.
Second - you'll need to examine all of your spending. You'll need to know how much extra money you'll be able to put towards paying off your cards.
Credit card companies generally determine the minimum payment to be 2 - 2.5% of the outstanding balance. So if you owe $1,000, for example, your minimum payment will be 20 - $25 per month.
Some part of that $25 goes to the interest on the balance, some to pay off the actual balance. How much goes where depends on the interest rate. Your credit card statement will give you the exact numbers.
Let's say that $20 of the $25 goes to the actual balance. To pay off $1,000 at $20 per month will take 50 months. Just over four years. You'll also have paid $250 in interest alone.
Here's how you pay them off:
Look at the interest rates on all your credit cards. Take the one with the highest rate. That's the one you're going to work on first and we'll call it card #1.
After examining your spending you may have found some money to put towards your payments. All of this extra money to pay off your card debt goes to this one card. The idea is to pay as much extra to card #1 as you can. Until it's paid off.
Pay the minimum balances on all the other cards until card #1 is done.
Then take the card with the next highest interest rate and add to its payment the total of the payment you were making to card #1.
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