credit card debt Archives - Page 14 of 24

More than Thirty Percent of Homeowners Paying for Home Renovations with Credit

Posted on October 30, 2018by Admin

Despite the fact that American homeowners hold more equity in their homes than ever before, a growing number are using credit cards for major renovations. This trend has financial experts scratching their heads as to why these homeowners are choosing to use credit cards in lieu of less risky options to pay for major home expenses.

According to a recent study done by home improvement website Houzz and Synchrony Financial, of the home renovations completed in 2017, over 36 percent of them were funded by credit cards. This figure has jumped over 25 percent from 2011 where 29.5 percent of home renovations were paid with a credit card. It appears as if this number is steadily increasing over the years.

In the survey, 85 percent of those who responded said that they utilized cash or savings to pay for their renovations, which is the ideal situation. However, 33 percent of them said they used credit cards to pay for the renovations, while only 15 percent of them used a home equity loan.

This new trend seems to be led by the millennial generation. These younger homeowners prefer to use credit in lieu of a long-term loan to pay for major expenses. Of the homeowners surveyed between the ages of 25 and 34 years old, 41 percent of them paid for home renovations with credit cards. Of the older demographic, specifically homeowners over the age of 55 years old, only 30 percent of them used credit cards for major renovations.

This younger generation of homeowners is more likely to pay off these expenses over the course of time. According to the survey, over 60 percent of those individuals intend to pay those credit card balances over the course of time. In fact, many of these homeowners make these large expenses by using a promotional card, many of which offer low or no interest for a specific period. If the homeowner can pay off the expenses within that period, they will not have to pay on any interest. The problem arises when the homeowner is not able to pay the balance before the promotional period expires. If that happens, he or she will be paying a large interest rate on the remaining balance. This possibility of incurring interest is additionally why many older homeowners prefer to pay for renovations with a home equity loan.

Another reason these younger homeowners are using a credit card for payment is the quick access they have to the funds. Applying for and being approved for a home equity loan can be a much longer process, and if the homeowner needs the money quickly, a credit card may seem like the better option. However, the consequences of using a credit must be weighed against the benefits before determining which option is best for you.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

How to Lower Credit Card Debt and Improve your Credit Score

Posted on October 24, 2018by Admin

Having a good credit score can make many things in life easier, especially when it comes to purchasing a new home or vehicle. However, it can be easy to get off track. Credit card debt with a high interest rate is one way to lower your credit score, but for many Americans, that is exactly what has happened to their financial situations.

The problem of credit card debt may be more widespread than we think. According to Experian, the average American consumer owes more than $6,000 in credit card debt. This figure has gone up three percent in just one year. This amount of debt can be very difficult to get out of, even for someone earning a decent annual income.

Retail credit cards can be particularly tempting, especially when offered a great deal at the cash register, but these cards come with high interest rates and can be easy to rack up debt. Unless you are able to pay the retail card off in full after making the purchase, it is not recommended that you sign up for these department store cards.

Many consumers believe that not having a credit card is best when it comes to staying out of debt, but it is important to at least establish a credit score. Having one card, using it for minimal expenses and making payments on the balance in full on a regular basis every month can be an excellent way to establish that strong credit score. In fact, by having a high credit score, you have a better chance of getting a card with a low interest rate when opening the account.

What happens if you do have credit card debt that has gotten out of hand? If possible, it is best to make a larger payment than the minimum payment amount. If any extra money is available in the person’s budget, it is best to put that extra money towards paying the debt. In addition, it can help to focus efforts on one card at a time, usually the card with the highest interest rate first. Once that card is paid, focus all the money that was going towards the first card on the next one and so on until the accounts are paid in full.

If you are not able to keep up on payments, contact the credit card company to negotiate a lower payment. If you fall behind on payments, it may be wise to contact a credit counselor to discuss repayment plans or negotiate the debt amount. If you are not able to make either of these options work, it may be time to talk to a bankruptcy attorney to discuss the options available to help eliminate the debt.

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Credit, Credit Card Debt, Debt Relief

How Your Grace Period Can Save You from Credit Card Debt

Posted on October 14, 2018by Admin

Using a credit card for certain purchases doesn’t have to be a bad thing, but problems arise when these purchases pile up and the account holder is not able to pay off the statement balance every month. Successfully utilizing the credit card’s grace period, can help avoid this.

What Is a Grace Period?

The grace period is the time an account holder’s credit card billing period ends and when the payment is due, as indicated on the statement. It is during this period that the account holder will not be charged interest on any purchases made during the billing cycle so long as he or she pays the balance in full by the due date.

Benefits of Grace Periods

A card’s grace period can allow for the cardholder to make a large purchase interest free. If the consumer makes the purchase right after the closing date of a current billing cycle, he or she can leverage the grace period to avoid interest charges.

Word of Caution

One word of caution should be issued when it comes to grace periods. Not all credit cards offer them. It is important the cardholder review the fine print for the account to make sure that the grace period exists and for how long.

Can a Grace Period Be Lost?

If the account holder is not careful, he or she could lose a grace period. One misconception is if the person carries even a small balance from one billing cycle to the next cycle, the cardholder will lose the grace period. However, many cards offer initial terms that include zero percent APRs on purchases so long as they make these purchases within the period offered, which is normally 12 to 18 months. Even if the cardholder loses the grace period, many cards will reinstate it if the cardholder pays the card’s outstanding balance in full for two straight months.

Can a Grace Period Be Extended?

Sometimes it is possible to extend a grace period. Many companies will change the card’s due date if requested and push the due date back can allow the cardholder extra time. Not all cardholders will allow for it, but it does not hurt to ask if this is a possibility.

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Bankruptcy Law, Credit Card Debt, Debt Relief

Study shows women struggle more with credit card debt than men

Posted on October 11, 2018by Admin

Credit card debt is a problem for many Americans but according to a recent study by WalletHub, it appears to be more prominent among women.

Credit card spending is at an all-time high. Last quarter, consumers ran up nearly $30 billion in credit card debt, the highest seen since the 2008 financial crisis.

In this study, women cardholders reported that they were struggling with their card payments, on top of other monthly expenses. In fact, one in four female cardholders reported that they did not feel confident at all in their ability to pay their bills in full monthly. This figure is double the percentage of men reporting the same sentiments.

Approximately 31 percent of women surveyed reported that they were able to pay their credit card monthly statement balances completely in full once or less in the past six months.

What does this mean for female cardholders? According to these figures, if we had two groups of individuals, one group female and one group male, each carrying $5,700 of credit card debt, paying this balance off in full will end up eating up much more of the total annual income for the women than the men.

Federal reserve figures report that the average female salary is $41,554 annually while their male counterparts earn on average $51,640 annually. Paying just shy of $6,000 in credit card debt ends up taking a much larger percentage of their annual income, making it much harder to keep up with other monthly expenses.

Single mothers are a subgroup that is suffering particularly hard. Many of these women are already on tight budgets, and when a major expense hits, it can be hard for them to keep up with monthly bills, let alone pay a credit card off in full. Some even rely on credit cards to cover daily expenses.

Did you know that one of the leading causes of bankruptcy in America is divorce? Many people say issues regarding money cause divorce, but money problems after divorce can also be equally troubling. In many instances, single mothers become the sole financial providers for themselves and their children.

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Bankruptcy Law, Credit, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Tips to Improve Your Credit Score

Posted on September 26, 2018by Admin

A consumer’s credit score can mean so much when it comes to buying a home or car, but once your credit score takes a serious hit, whether it be due to a default or a bankruptcy, you can start to rebuild your score immediately. One of the biggest misconceptions about filing for bankruptcy is that it will ruin your credit score and your financial future. To the contrary, after filing for bankruptcy you can begin restoring your credit right away.

Here are some tips to improve your overall credit score.

Understand How Credit Scores Are Calculated

It helps to first understand how credit scores are calculated. These reports are issued by the three major credit reporting companies, including TransUnion, Equifax, and Experian. The scores range between 350 to 800. The higher the score, the better. A credit score is calculated using that person’s payment history, the amounts owed on each account reported, how long that person has had a credit history, and how much credit activity is on their account.

Make a Goal

If you want to improve your credit score, it is important to set goals. Set the number you would like to see your credit score within a certain period of time. For example, you may choose to set a goal of increasing your credit score by 50 points within the next four months.

Keep an Eye on Your Credit Report

The best way to know where your credit score falls on the spectrum is to keep an eye on your credit report. Free credit reports can be requested annually online or by mailing a request to Annual Credit Report Request Service at P.O. Box 105281, Atlanta, GA 30348. After receiving the report, it is recommended that you carefully review all accounts listed. If you see any accounts that you know you did not open and could have been created due to identity theft, this information should be reported immediately. If an account is listed that should be closed, you can contact the company directly to update that information. The same would go for if any incorrect information is found on the report, such as a late payment incorrectly put on the account. Correcting this information can result in your credit score going up a few points. Keeping a close eye on your credit report can also allow you to track progress if you are working hard to improve the score.

Pay Your Bills on Time

The best way to keep your credit score looking good is to pay your bills on time. Credit builds up over time, and this is done through consistent and positive financial behavior. One way to ensure this happens is to sign up for automatic or online payments so that these expenses are paid automatically and require no action by the account holder. If you are not able to pay a bill on time, it is best to keep late payments to no more than 30 days. The reason for this is most creditors will not report late payments until they are 60 days late.

Focus on the Bad Debt

Paying down your debt is an excellent way to improve your credit score, and it helps to start with what is considered “bad” debt first. If you have multiple credit cards, choose the one with the highest balance and/or the highest interest rate. Focus your efforts on that one card, and once that card is paid, take the card that has the second highest rate. Many times, this “bad” card is the one that is the oldest and has the highest outstanding balance.

Use the debt avalanche method to attack the debt. What this entails is the person chooses the card with the highest interest rate, and he or she uses all extra money that he or she has available at paying off that card. After that card is paid off, the money that was used to pay that card goes to the next one, and so on. The idea is the money that goes towards the card snowballs in size, helping to pay each one down quicker than the person would be able to do with just meeting monthly minimum payments.

Do Not Open New Credit Accounts

While you are paying down debt, it is best to not open any new credit accounts during this time. Opening new accounts will only make the goal of trying to pay off open cards even harder. It can be tempting, especially if you are offered a deal at a department store to save on a purchase, but do not fall to temptation and open that new card.

Keep the Balances Low

Getting debt under control can be very difficult if the balances owed are particularly high. Credit cards that have high balances and high interest rates can be difficult to get under control. The higher the balance, the more interest is paid every month instead of money towards the principal. A good rule of thumb is to keep credit card balances capped at 30 percent of the card’s available credit. Always make sure when making payments that more money is being paid towards the card than the minimum payment. On cards with high balances, this minimum payment is normally only paying interest, which can make the cardholder feel like he or she is never going to pay the card off in full.

Set up an Emergency Fund

Experts recommend that everyone have a “rainy-day” fund of at least six months of that person’s annual income. This money should be set aside in the event of a health crisis or job loss and can help you avoid the need to use credit to keep up with daily expenses.

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Bankruptcy Law, Credit, Credit Card Debt, Debt Relief

Credit Card Debt Increasing at An Alarming Rate for the Floridians

Posted on September 5, 2018by Admin

Credit card debt is a problem for many Americans across the country, but for Floridians, this problem is growing at what experts say is an alarming rate. According to recent figures released by the credit reporting agency, Experian, Floridians are using their credit cards more than ever, increasing their debt at the nation’s second fastest rate.

The State of Nevada tops the list of states with the highest credit card rate, but Florida is a close second. In fact, credit card balances have increased 8.59 percent as compared to the same time last year. Currently, the national average is at 6.58 percent, and Florida’s rate is well above this national average.

According to Experian, credit card debt nationally is at an all-time high, reaching $786 billion by the end of 2017. It is up 6.7 percent from 2016. The average American holds a credit card balance of $6,354. The use of store credit cards, mortgage debt and debt overall also increased approximately three percent.

Credit card debt can be a slippery slope and is one of the most common problems facing those with serious financial issues. With exorbitant interest rates, fees and penalties, making only the minimum payment does not even begin to make a dent in the total balance.

Credit card companies design fee and repayment structures to keep you from ever getting out of debt. An unexpected job loss or serious medical diagnosis, even a trip to the emergency room can put significant financial strain on individuals and families who are already facing mounting credit card debt.

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Credit, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

The Truth About Credit Card Debt Forgiveness

Posted on August 31, 2018by Admin

The thought of having your credit card debt completely forgiven can seem too good to be true. However, like so many things in life, if it sounds too good to be true, it probably is. The truth is, debt settlement comes with its own set of unintended consequences.

If a consumer is not able to pay off a credit card balance and has missed a number of payments, that person may choose to either work directly with the credit card company- or if the debt is sold, a third-party debt collector to settle payment. Credit card companies want to receive payment at the end of the day, and they are willing to accept less than what is owed in lieu of not receiving payment at all if the debtor chooses to file for bankruptcy and have the debt discharged.

The problem with debt settlement involves the consequences that come along with settling your credit card debt. For one, even if the balance is settled, it can still have a negative impact on a consumer’s credit score. In addition, if the amount that originally was owed is a lot more than the amount that ended up being paid, the difference is still considered taxable income by the IRS and state government, which means the consumer will have to pay taxes on the forgiven debt.

If you are successful in negotiating the amount with the creditor, make sure these agreements are in writing and be wary of any plans that seem too good to be true. If you are receiving collection calls, unable to make payments, facing wage garnishment or have a lawsuit pending with a creditor, it is important to at least sit down with an experienced bankruptcy attorney, who can advise you of all your options.

Consumers should avoid working with debt settlement companies. The cons often outweigh the pros, as many of these companies engage in unfair practices, require their clients pay large upfront fees and result in a consumer’s credit being irreparably damaged, and still left with debt.

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Bankruptcy Law, Credit, Credit Card Debt, Debt Relief

The Dangers of Subprime Credit Cards

Posted on August 1, 2018by Admin

When someone has less than perfect credit and is looking to improve his or her credit score, it can be tempting to look to a subprime credit card. In fact, many consumers looking to start from scratch in rebuilding a low FICO score choose subprime credit cards as their preferred method of rebuilding credit. These credit cards, while they work for some, come with their own set of hidden dangers that should be understood before signing on the dotted line.

A subprime credit card is a credit card issued to individuals who carry a lower, substandard credit score or who have a very limited credit history. Normally, these cards have a higher interest rate than other types of credit cards granted to prime borrowers. In addition to the higher rates, these cards also come with extra fees, as well as lower credit limits.

It is estimated that approximately 40 percent of millennials have what is known as subprime credit, according to credit reporting agency, TransUnion. Of the over 16 million Americans who have credit scores lower than 600 have at least one credit card. Many of them have more than one card, each card holding a significant balance.

Many people are under the misconception that to rebuild credit, an individual needs to get a card and maintain a balance, while paying the minimum payments. When the advertisements pop up on these individual’s computer screens, promising a way to build credit through a subprime credit card, it can be very tempting to click on the ad and sign up right then. However, many of these individuals do not understand what the cons are to sign up for a subprime credit card, and they do not do their homework in researching the negative aspects before signing up for the card.

Hidden credit card fees are oftentimes where people get hit the hardest. Fees can even get as high as being 25 percent of what the available credit balance is on the very first day the card is used. At that rate, it can be nearly impossible for the consumer to catch up.

Subprime credit cards also tend to carry nonrefundable yearly costs. Of the unsecured subprime credit cards surveyed, all nine of them had some type of nonrefundable annual cost. On average, this cost is just a little over $150 on the first year the card is used. The annual percentage rate (APR) for these cards can range as high as 30 percent, which keeps the balance high, no matter how hard the cardholder tries at paying down the balance.

TransUnion reported that the average American who has a low credit score carries 2.5 credit cards. Of these individuals who were surveyed, approximately $300 of their income annually goes towards paying the high credit card fees that went along with those cards, not including the monthly interest that they pay on the balance held on each card.

Occasionally, a subprime credit card will have an annual fee that must be paid from the start. These credit card annual fees will appear on the card statements and can take up 25 percent of the cardholder’s credit line. Ideally, the credit utilization ration will be 10 percent, but for individuals with subprime credit, this number is impracticable.

It is for this reason that many credit advisors recommend that a secured credit card be used by someone just coming out of a bankruptcy or in a bad financial situation to rebuild credit. Unlike a subprime card, a secured card holds lower fees and less risk. Many secured cards offer a graduation program, meaning if the cardholder can establish a good payment history, eventually that person will move up to an unsecured credit card with a good rate. Examples of secured credit card programs include the Capital One Secured Mastercard and the Discover it Secured Card. Secured cards often require the cardholder pay an initial deposit through a connected bank account, or, if someone does not have a bank account, programs exist that allow for a secured card to be issued through an approval process and low annual fee.

It is important that the credit card not carry too high of a balance, and that the cardholder pay the minimum balance every month on time. Only use the card for small, manageable purchases, and keep an eye on the cardholder’s FICO score to monitor any changes in a positive or negative direction.

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Credit, Credit Card Debt, Debt Relief, Student Loans, Timothy Kingcade Posts

More Millennials Carry Credit Card Debt than Student Loan Debt

Posted on July 23, 2018by Admin

Student loan debt has said to have been the biggest financial burden the Millennial generation will face, but more and more individuals in this generation say they are in fact, struggling with credit card debt. In fact, credit card debt – as opposed to student loan debt – is the most prevalent type of debt among the group. According to a recent NBC News/GenForward survey, 46 percent of U.S. adults between the ages of 18 and 34 carry credit card debt. Approximately 36 percent of them carry student loan debt. The survey reported that around three out of four Millennials carried some type of debt. More than 75 percent of those surveyed said they carried at least one type of debt, including credit cards, student loans and car loans. Only one in five Millennials reported having a mortgage debt.

One-fourth of these Millennials who carry credit card debt have balances of more than $30,000. One-fourth say that their balances are below $10,000. Around 11 percent of those in this age group surveyed have over $100,000 in debt with 22 percent of them being debt free.

The survey found that Millennials with college degrees were more likely to have credit card debt with 56 percent reported graduating with credit card debt. Forty percent who held credit card debt did not have a college degree.

When it comes to having a personal savings, 62 percent of Millennials owed more in debt than they had in a savings account. Only less than one-fourth had more in their savings account than owed in debt. Approximately one in three Millennials have less than $1,000 in savings. One-fourth of Millennials have no savings at all.

Entering the workforce with such a large amount of debt pushes young individuals to hold off on saving for the future, which leaves many of them unprepared in the event of an emergency. It also puts them at a slower start in preparing for retirement.

When asked if they would have trouble paying on an unexpected financial expense of $1,000 or more, two-thirds of them stated they would have a hard time meeting that obligation. Out of the group surveyed, those who were African-American or Latino would have the hardest time paying these obligations, although the difficulty was not exclusive to just these two groups.

If the Millennials were parents, around 48 percent of them reported that they would have a great deal of trouble in the event a financial crisis; for example, a job loss or medical emergency. Of the Millennials who did not have children, 39 percent of them reported this fact.

Credit card debt and student loan debt have caused a number of Millennials to postpone major life events like starting a family, purchasing a home and saving for retirement.

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Bankruptcy Law, Credit, Credit Card Debt, Debt Relief

Tips for Eliminating Credit Card Debt

Posted on July 16, 2018by Admin

Credit card debt is a problem for many people today. While having a credit card is not necessarily a bad thing, if you are unable to pay off the entire balance each month, the interest, fees and finance charges can accumulate quickly. This can eventually cause your credit card balance to spiral out of control. It helps to know what steps to take to eliminate credit card debt before it becomes too big of a problem.

Use all your resources.

One tip that helps in attacking credit card debt is to maximize all the resources available to you. It can take a lot of time and dedication, but it does get the job done. To be successful with the method of throwing all your resources at your debt, you need to do the following:

Rely on cash-only to pay for expenses. Make sure these expenses are essential in nature and not frivolous, causing you to waste more money rather than make progress.
Put together a list of all credit card debt, detailing the interest rate for each card and the minimum payment on each card.
Use the debt avalanche method to attack the debt. What this entails is the person chooses the card with the highest interest rate, and he or she uses all extra money that he or she has available at paying off that card. After that card is paid off, the money that was used to pay that card goes to the next one, and so on. The idea is the money that goes towards the card snowballs in size, helping to pay each one down quicker than the person would be able to do with just meeting monthly minimum payments.
Find extra money to pay towards credit cards by creating a realistic budget and sticking to it.

Consider a Balance-Transfer Credit Card.

If the person has a good credit rating, it is possible that he or she could open a new credit card with a lower interest rate for the sole purpose of transferring the balance from a current card with a higher interest rate. Many cards offer promotions for zero-percent annual percentage rates (APRs) with no balance transfer fees during that limited time period. This idea may seem like a bad one since it encourages the person to rely on a credit card to pay off another credit card. However, it can be a good idea if the person has good credit and is dedicated to paying off the balance on the new card, once the old balance is transferred. It is also important that the card holder take advantage of the introductory period to make sure the interest rate stays low while the amount is paid off. Once the period is over, the interest rate could jump up, thus bringing the cardholder to square one.

Credit Consolidation Loan

Another method that is possible to pay off credit card debt is through a credit card consolidation loan. These loans are also referred to as debt consolidation or personal loans. Many of them are unsecured, meaning the person does not need to have assets or collateral to cover the obligation. The interest rates on these loans are usually lower than what the credit card interest rates would be, which makes it a little easier for the borrower to pay back the loan and make progress rather than pay the minimum payment owed on the credit card. Another benefit is the loan allows the person to only make one monthly payment rather than several different minimum payments on various credit cards. It is possible the borrower will need a cosigner, depending on his or her credit score, to back up the loan.

Debt Management Plan

Another option that is available to individuals struggling to pay off credit card debt is a debt management plan. Debt management plans line the debtor up with a credit counselor who works with that person to create a budget and a plan to pay back the debt. The counselor will also speak with the person’s creditors on behalf of that individual and can often negotiate down the debt amount or terms of repayment. It is important to find a quality company when choosing a debt management company. Do research before jumping into the first choice and ensure that the company is legitimate and not a scam. An average debt management plan can take anywhere from four to five years for a person to successfully clear his or her debt.

File for Bankruptcy

If none of these options work or if the debt is simply too much, bankruptcy may be the best option. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills and personal loans. There are certain qualifications a consumer must meet in regards to income, assets and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.

Related Resources:

https://www.usatoday.com/story/money/personalfinance/2018/06/26/credit-card-debt-5-cost-effective-ways-you-can-erase/714014002/