Should I cut up my credit cards?

The temptation is immediate, as soon as we find ourselves in a difficult predicament, we want to remove ourselves from the situation as quick as possible - we want to find a quick remedy. When it comes to credit card debt, many people may be experiencing this for the first time and might not think through their actions before doing them. A classic example would be for someone upon finding themselves in a financial predicament, to cut up all credit cards so that they cannot use them anymore. Whilst this might be an okay short-term solution, it can sometimes have the wrong desired psychological effect. You may have removed the credit cards from your wallet and cut them up, but this does not mean that the dependency on borrowing money that you don't have has been removed with the shredding of said credit cards.

To me cutting up credit cards, is a knee-jerk reaction, whilst it may remove your short-term dependency on the pieces of plastic it does not mean your spending patterns and attitude towards money has changed. So the next time, you take immediate action and make a quick response to predicament you find yourself in, be it financial or otherwise, make sure you've carefully considered if you've eradicated the problem or just buried it slightly only for it to resurface later.

Consolidating debt could save you $$s, but there are risks.

For many people struggling with various kinds of debt,be it store cards, credit cards, personal loans, etc, then consolidating onto a mortgage could save them a fortune. However, like anything else it's always worth a closer examination of the associated risks. The advantages of switching from high interest rates on store cards (as much as 30%), and rates on personal loans (av. about 10%) to a mortgage rate of say 7% seem quite apparent. Research has also shown that nowadays, people are more intent on reducing, and eliminating their debt, rather than say in the past where they may have borrowed more. The financial crises probably has a lot to do with this new attitude, of people wanting to make a fresh start and handle their finances more carefully. This is backed up by credit information agency's Veda Advantage's latest Galaxy survey which shows 64 per cent of people plan to reduce credit card debt in the coming six months, with almost half planning to pay the full amount.

However, the risks of attaching all your debt onto your home mortgage repayments is that if you default on the payments you can run the risk of losing your home. Also another thing to look at with consolidating all your debt onto your mortgage, is that whilst in the short term it may look more attractive as invariable you'll be paying a much lower interest rates - these repayments will go on a lot longer and therefore cost you more in the long run. Also if you're going to enlist the services of a debt consolidation company, be sure not to be misled by their unclear marketing. A lot of companies in australia, instead of offering consolidation loans will in fact actually only negotiate a Part IX debt agreement, which is an alternative to bankruptcy where you pay your creditors a smaller amount each month. This then stays on your credit record for seven years, and obviously affects your chances of applying for credit in the future. So be sure you understand fully what the company is offering, and how it will affect your circumstances.

HSBC Credit Card For Chinese New Year

So we've all had the chance to break our new year's resolutions by now, but with Chinese New Year well underway it's provided some of the asian based banks to provide new credit card solutions to their customers. HSBC (in my experience the world's not so local bank) is offering a new credit card:

http://www.creditcardfinder.com.au/hsbc-credit-card-for-the-chinese-new-year.html

It doesnt sound to bad, $50 cashback for every $500 spent for the first 3 months. Not a bad start to the year of the tiger for many. But, make sure you read closely the terms and condition before switching over.

Happy Chinese New Year to all the readers! May it bring you wealth, prosperity and happiness.

Legal Test Cases In the UK

At the end of Q4 there were some important changes and cases occuring in the UK in regards to credit card debt. At the end of November, there were 12 separate ongoing cases in the High Court of Manchester referring to the Consumer Credit Card Act, and the manner in which credit card companies have tried to reclaim the debt from borrowers:
http://news.bbc.co.uk/2/hi/business/8365018.stm

However, it seems the banks and lenders, whenever such cases arise are in no hurry to push for the cases to be closed and precedents to be set. The banks are perfectly content with drawing out such cases to their full extent, so that no changes are made to the current CCCAs, and that consumers still remain in the weaker position.
However, there have been some major changes in the legislation which gives borrowers more rights, and protection from lendors who put the pressure on. With the changing legislation, this year it's going to be crucial to stay abreast of all the changes and check your current credit card companies' t&c's.

Happy 2010 - To your Financial Woes Ending

Would like to say thanks to all two readers, who have followed this blog throughout 2009. hehe. But on a serious not, I appreciate the comments people have posted and hope that in some shape or form people have found the blog useful and informative. If you have any ideas on how it can improve moving forwards in 2010, then please drop me a line.

Hope you all have a great 2010, and look forward to posting more articles on how to eliminate credit card debt.

Best wishes

Dom

Run Up to the holidays

Okay, so I'm gonna be ultra busy in the run up to christmas and the period after, so probably won't be able to update the blog as often as I have been doing.
But I'd just like to wish everyone a happy holidays and seasons greetings, and hope the forthcoming 2010 is a financial prosperous one for you all!

Thanks very much for following the blog up until now, and I promise in 2010 I'll have lots more helpful hints and advice for ways on reducing credit card. Till then, god bless and seasons greetings.

Using the web to find the best ways of reducing credit card debt

There are many sites where you can perform price comparisons, and it's no different with credit cards. One option that many people consider is consolidating their credit card debt, especially if they feel their interest rate on their credit card(s) are too high. You can usually do balance transfers to other credit card companies with lower interest rates. Some even offer a 0% interest rate for up to 16 months. And if you're were paying a 17.69% APR on one credit card, the savings can be significant. You can easily find information on some of the best APR rates of credit cards, from sites like moneysavingexpert.com. And there are plenty of interest rate comparison engines on all the leading credit cards. Of course you will have to go through the usual card application process, so it's worth checking on your credit score before you do to see if it's acceptable for applying for a balance transfer.