by guestcontributor on May 15, 2012
Getting a credit card is a gamble for a person’s merit, and more and more card holders are now getting more finicky on their credit crunch, as a result, only few of them get those bets. Secured credit cards offer better convenience, flexibility, and of course lower the risk of rejection in banks, lenders, and insurance companies, as it provide better financial planning, budgeting, debt consolidation, and other convenient features such as fixing common credit issues. With such security features, card holders have all the capacity to save themselves from debt, as it helps control the use of credit card.
It’s really easy to get tempted and overspend when you have a credit card with you, and we all know where this thing usually leads – a long history of paying debt and interest.
Secured CCs is like a regular bank account, like an actual money deposit with a limit. You can still shop and purchase items online. However, with secured credit card, the amount of secured money gives optimum financial security for card holders. This gives consumers just a small sum of credit limit to work with, help them recover from poor credit history, and financial management in the future. CCs with better security system however, have slightly higher interest rates; this is to discourage consumers from using their cards incessantly. Secured CCs also include similar fees like standard CCs.
Using secured credit cards is the most common way to rebuild bad credit ratings, allowing people to better their credit history and avail needed loans from other banks, insurance system, and lenders.
by admin on February 3, 2012
With the economy slipping into yet another financial fiasco, the debt problems are gradually deteriorating in the US. However with these raising debt issues, the demand and popularity of debt relief programs like debt settlement or debt consolidation are also soaring high. Now, if you are a debt stricken American, who can not decide between debt settlement and debt consolidation, these following points can help you out. If you are confused whether you will club your multiple debts or reduce your outstanding balance, considering the advantages and disadvantages of debt settlement and consolidation will certainly make things easier for you. Read on to have a closer approach to debt consolidation vs debt settlement and find out how they differ and which option suits your finances the most.
Eligibility criteria
No matter what you choose settlement or consolidation, you need to make a few preparations first. Prepare a list of your unsecured debts and make sure you only approach a BBB accredited debt relief company for help. To qualify for a debt consolidation plan, one must have a minimum credit score and a steady flow of income which can help him cover the minimum payments. If you like to take advantage of a debt consolidation loan, you have be a homeowner, with sufficient equity in your home. However, if you like to opt for a settlement plan there is no such eligibility criteria. As long as the debtor carries at least $7,500 of debt, he is eligible to file a settlement.
Benefits
Debt consolidation comes with a lot of perks. With consolidation you can pay your multiple debts through a single payment gateway at a lower interest rate. Consolidation not only lowers the overall interest rate, but also eases the monthly payment burden to a great extent. In addition to this, lower interest rate paves the path towards long term savings. It takes almost three to five years to repay the consolidated amount. Lastly, after consolidation the debts will be recorded paid in full in your credit report and therefore will help you rebuild your credit score. Whereas during settlement, you interact directly with the creditors and can reduce the outstanding balance to almost 60%. This reduced balance could be paid within a short span of two to three years.
Pitfalls
Both settlement and consolidation have some flipsides as well. Consolidating through a home equity loan always poses an abnormally high risk of foreclosure. In addition to this consolidation of several accounts affect ones credit rating adversely. On the other hand debt settlement can also damage ones fico score for seven long years. In fact even after a settlement, lenders can file a lawsuit against you for unpaid debts and collection agencies can keep on chasing you. Most importantly, after settlement, you might have to pay a portion of the forgiven debts as the potential tax “income”.
To conclude, if you are still confused between settlement and consolidation, it’s highly recommended to seek help and guidance of a reputed credit counseling agency in this regard. Keep the aforementioned points in mind and choose the best possible option for yourself.