The Different Loan Types

Filed under: Loans, Personal Finance Add Comment
When looking for financing for any purpose, understanding the types of loans available on the market is an important part of ensuring the correct loan is used. Trying to take out the wrong type of loan can result in paying higher than necessary in interest and closing cost fees. It can also end up with a denial for funds. Fortunately, understanding the types of loans available can prevent complications.

Secured Loans

Secured loans have a wide range of subcategories, but the type of loan covers anything that uses a piece of property as collateral against the loan. These loans are typically a much lower rate than others due to the property used to provide collateral against the loan.

The secured loans include car loans, mortgages, home equity loans or loans to buy a boat. The property being purchased with the funds provides the security against repayment. The borrower is promising that they will follow the terms and conditions set forth in the loan agreement or contract. If they fail to pay according to the contract, the lender is then able to confiscate the property until the payments are made or until they can sell it to pay the cost of the loan.

Secured loans might have a fixed or variable interest rate depending on the particular contract and the terms. The fixed interest rate means that the amount of money paid each month will not change because the amount of interest charged over the course of the year remains the same.Fixed interest rate loans will not go up or down to match market rates, so if the market rate for interest dramatically decreases, the borrower would need to refinance their loan.

The variable interest options for secured loans can fluctuate in payment amount based on the changes in the market. This means that instead of having a set monthly payment, if the interest goes up will result in a higher payment. If it goes down instead, the payment will decrease. Depending on the loan and terms, the changes to interest might be calculated once a year or it might use a quarterly system.

Unsecured Loans

The other type of loans available are unsecured. Loans fall under either secured or unsecured, regardless of the purpose. An unsecured loan is the opposite of the secured loan. It does not require putting any property down for collateral. Instead, the lender uses credit scores and historical data to determine fair interest rates.

In most cases, unsecured loans are higher in interest due to the lack of property to secure the funds. Common debts that are unsecured include credit cards, lines of credit, student loans or personal loans.

Loans will always fall under one of two types: secured or unsecured. Depending on the particular loan, interest rates can have fixed amounts or variations based on current market conditions. Regardless of the type, using caution and understanding the particular terms of the loan is important to ensuring that it has the preferred terms, conditions and details.

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Debt management plan: Does it affect your credit score?

Filed under: Credit Tips for Parents Add Comment

Millions of consumers are crushed under the burden of debt after the colossal financial collapse in the US. So many of them have incurred insurmountable amount of debt and are struggling to pay back the owed amount. At this juncture, you are advised to take the help of a professional debt arbitrator who can help you manage your debts effortlessly. You can also hire the services of a debt management company as it might have financial experts to guide you pay off the debts with low interest rates. When you enroll in a debt management program, initially your credit score might drop, however, eventually, it will increase once you pay off the owed amount. Remember that enrolling in a debt management program shall not adversely affect your credit report as you might have poor credit record because of your delinquent accounts.

Know the process of debt management program:

The credit counseling companies often provide a debt management plan to their debt stricken clients to eliminate their financial woes. The certified counselor negotiates with the creditors to lower the interest rate on the principal balance to make it affordable to pay off. The counselor negotiates with each of the creditors to lower the interest rate on the outstanding balance. The agencies consolidate the debts into a single monthly payment and the money is disbursed among the creditors.

What are the advantages of debt management plan?

Debt management plan can help you attain financial liberty and help you get a debt free life. Debt management is a process where you can manage your debt through an affordable repayment plan in accordance with your budget. When the debtors enroll in a debt management program then he/she can avoid the harassing collection calls of the creditors. The delinquent accounts will be made current and you’ll be effortlessly coming out from the vicious cycle of debt.

How it affects your credit score:

The debt stricken consumers are under notion that taking help of a debt management plan will lower their credit score. The creditors might notify the delinquent accounts included in a debt management plan to the credit bureau. Remember that your delinquent accounts have already ruined your credit report so debt management plan will not severely affect your credit report. Once your pay off the owed amount through a debt management plan, then it will help to reestablish your credit score.

 

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Student Card Incentives

Filed under: Credit Tips for Parents, Credit Tips for Students

Student credit cards are designed for college students who are over the age of 18. It is a good idea for students to obtain a credit card so that they can get started building a credit rating. This way they will have already built substantial credit by the time they graduate. A good credit rating is important for things such as purchasing cars and renting and buying a home. Having a credit card helps pay for everyday grocery items and emergency bills that might arise. Credit card companies are eager to get students to sign up with them because students are expected to live for many years and can be potentially lucrative for the credit company.

It is important to pay off credit card bills on a regular basis without missing payments. Missed payments are not good for building up a solid credit rating and should be avoided at all costs. There are many cards to choose from and they all offer something for the student. The important thing to keep in mind is not so much what the cards offer but that a good credit score is being built up while using these cards responsibly.

Some student credit cards offer cash back rewards when purchases are made at certain shops or restaurants. There are even cards that offer incentives when students obtain good grades. These rewards are only offered when payments are made on time every month. There are cards that offer cash back rewards of up to 5% off the purchase price. Some student credit cards offer 0% financing for a set period of time. This rate then switches to a regular rate. It is a good idea to check how much the usual interest rate is before signing up with a card company. A variation of a few percent can make a big difference in interest charged on credit card balances.

Some cards allow the student to earn up to five points for every dollar when a purchase is made. These points accrue but are only good if regular payments are made on the card. Some cards feature 2% cash back on rotating categories every month. This means that different stores and restaurants are used every month to earn this money back. All other purchases stay at 1% with these cards.

Rewards are given for good grades and are used as another incentive. It is possible to earn 2,000 points every six months if a certain grade average is maintained. These points can quickly add up over the course of a college degree. Certain student cards give a 0% interest rate for the first seven months as long as payments are regularly kept up. Student cards are a good way for students to learn to use their credit card wisely. If payments are not met every month all the perks will be taken away until the regular payment commences. These cards should not be used to make large purchases or fund an education. It is best to use them for small items and everyday requirements. Students will find that when it comes time to get a Mortgage the way for a good credit score will already have been paved.

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Should You Cosign a Student Credit Card?

Filed under: Credit Tips for Parents

Should You Cosign A Student Credit Card for Your Child?

Sending a child off to college presents a lot of financial challenges for many parents, including how best to handle funding his or her education, emergencies (and there will be emergencies…count on it), and other unplanned expenses when your child is away at college. 

One way to handle the need for emergency access to funds, be it car repairs, unexpected book/lab fees, or something completely unexpected is to send your child off with his or her first credit card.  Of course, with the recent changes in credit card law, your signature as cosigner is now required for that first credit card…the question is, should you cosign?

As parents, one of the most important financial lessons that you can teach your college student is the importance of building and maintaining a good credit rating.  And, enabling your child to build and maintain a credit rating through the responsible use of credit will undoubtedly work to his or her benefit once the college days are over, and he or she enters the job market, buys that first car, rents an apartment, or buys a home.

However, before you sign on the dotted line, there are a few things that you want to make sure that your college student understands about credit and credit cards:

Your Role as Cosigner – Make absolutely certain that your child understands that as a cosigner on his (her) account, his actions will affect not only his credit rating but yours, as well.  Therefore, if he’s late on his payment, or fails to make the payments, you are not only responsible but your credit rating will suffer.  (Many parents, in this instance, insist on having access to the student’s online account so that the credit card balance and payment history can be monitored.)

Cost of Using Credit Cards – Sit down with your student, and compare the terms and conditions of any cards that you are considering before signing a card agreement.  The interest rate that he (she) will pay on outstanding balances is the most costly term to consider, and obviously, the lower the APR, the better.

Establish Ground Rules – Make sure that you establish some ground rules with your student for the responsible use of the card.  For example, will the card be strictly for emergency use, or discretionary?  Will he (she) need to pay the balance off in full on a monthly basis, or if not, what’s an acceptable balance to carry?  What should he (she) be expected to pay on a monthly basis towards any carried balance? 

All of these items should be covered, and agreed upon, before you cosign on your college student’s first credit card…and if your child has demonstrated a lack of sound financial judgement in the past, additional ground rules may be necessary, or you may decide to wait until your child gains a more practical understanding of his (her) finances before cosigning.  The choice as a parent is yours.

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Credit Card Debt and College Students Go Hand In Hand

Filed under: Credit Tips for Students

If you are a student, the school costs including tuition fees, transportation cost, book’s price, must be making a dent in your limited allowance. Besides that, the demands of a hot and happening social life like branded clothes, expensive outings and hangouts can also weighs on you pretty heavily. The inadequate allowance from your parents invariably fall short to cover these expenses and you are left with one last resort, yes you guessed it right credit card.  However, the freedom of using plastic and the delay in paying the bills make it easy to overspend on credit cards, especially for full-time students who have a limited income or no income at all. Soon this unwise spending habit leads them into huge credit card debts. If you don’t want to graduate with high credit card debts alongside your student loan debt, look for some other alternatives to get a debt relief. Read on to know more explicitly in this regard.

Credit Card Companies
Credit card companies have long targeted college and even some high school students and are well aware of this trend of college students to quickly build up high balances. In fact a New federal legislation came into effect in 2010 to restrict credit card companies from issuing cards to students under age 21 without an adult co-signer or proof of income. However for grown up students, financially independent students and those whose parents trust them enough to co-sign, credit cards are still a common source of overspending.

Reasons
The low introductory interest rates of credit cards often rise over time and make it harder to pay down the loan balance. Sometime, if the students default on their payments due to towering interest rates, the late penalty fees add up the total amount of money owed. Colleges and universities often arrange for financial counseling services for their students but students never pay any heed to such attempt and fail to learn about responsible spending.

Alternatives
College students can certainly evade this problem that come from credit card usage by looking for other ways to mitigate their educational and discretionary expenses. Students can take a part-time job which won’t hamper their studies in any way. You can earn a few extra bucks by working as a summer intern or local restaurant steward. If you want to make money online, you can work as a freelance writer or affiliate marketer as well. You must cut up your credit cards and start using checking account and debit card instead. Finally, you can use student loan funds, which are restricted by the lender, to pay for essential expenses like books, course fees, and accommodations. You can take help of student credit cards as well, which require a parent or guardian to serve as a co-signer, and generally offer low credit limits but it can help you to meet your immediate cash need and build your credit in the long run.
For students already in credit card debt, transferring the balance to a credit card with a lower interest rate or following Dave Ramsey’s snow ball strategy might help. You can consult a credit counselor for expert help and advise in this regard.

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Student Credit Cards – Great or Awful Idea?

Filed under: Credit Tips for Students

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Does a college student need a credit card? Better yet, should a college student apply for a credit card?

We all know that new credit card laws have made it more difficult for college students to obtain a student credit card. Now college students (and anyone that signs for them) need to think twice before getting that first credit.

There are many responsible credit card usage tips that college students can follow. On the flip side, there are also many college students that will fall victim to the credit card debt trap at an early age.

The question that I often receive in some shape or form is- should a college student have a credit card?

My answer is simple- all college students should have a credit card.

Before a mob of parents runs after me with blazing torches, allow me to explain myself.

Benefits of a Credit Card For College Students:

1. Build your credit rating.
When you make your first major purchase, whether it be a car or home, you will realize that one thing is very important- your credit score. This number makes a world of a difference. Before you do anything else you need to read about the importance of a credit rating.

The earlier you get a credit card the early you can build your credit rating. Yes I do realize the flip side here but please bare with me and continue reading for now.

Your credit rating becomes very important as you graduate from college and progress through your 20s. If you begin building up your credit at an early age you’ll notice some big wins.

2. Reap the benefits of a high credit score in your adult years.
A high credit score can save you a boatload of money over the period of a loan. A high credit score means that you have good credit. Good credit means that lenders feel it’s less of a risk to loan you money. Since it’s less risky to loan you money, you can receive a lower rate on major purchases when they happen, and believe me they will happen.

A lower rate may not seem like a big deal now, but trust me it will be one day. Unless you buy your first new car or first home with 100% cash, you’re likely going to have to apply for a loan. You don’t want to be in your 30s kicking yourself in the butt for messing up your credit or for having no credit.

3. Get used to a credit card.
Chances are very high that you’re going to have to deal with a credit card for the rest of your life. There are adults that refuse to possess a credit card or are vehemently against credit cards (see: Adam Baker or Matt Jabs), but it’s fairly rare to not have a credit card.

Cutting up your credit cards is too simple and it won’t solve the problem. You should get into the habit of using a credit card and paying it off monthly ASAP.

Okay now let’s go a bit further- what if you think the reasons for having a credit card are decent but you’re still not fully convinced on student credit cards? A college student should only have a credit card under the following conditions:

Student Credit Card Conditions:

1. It’s a student credit card with a minuscule limit.
A couple of hundred bucks to $500 max! Until you’ve mastered your financial situation completely you shouldn’t accept anything over $500. A high amount of credit available to you can be very beneficial, but it can also ruin you financially if you don’t control yourself. All college students should start off with the lowest limit possible and not increase it until income grows. On top of that, it’s also becoming more difficult for college students to get more than $500 worth of credit.

2. The student credit card is used for reoccurring monthly expenses.
I’ve automated my credit card to pay for my gym membership, cell phone bill, and a few online subscriptions (I swear it’s not porn!). A simple way to build your credit without buying useless junk is to automate reoccurring monthly expenses to your credit card. We all have monthly expenses. So why not simplify your financial situation and automate your monthly expenses with your credit card?

3. The credit card is only used in emergencies.
Yes I know that some will view an “emergency” as seeing a pair of jeans on sale at Banana Republic. This is where the $500 limit comes into play. Even if you lose control and splurge, you won’t go bankrupt because of it. You’ll probably have to suck it up and get an extra job to pay the credit card off, but you won’t destroy your finances.

A credit card is also extremely critical in real emergencies. Shit will happen in life. There will be times when you need money to pay your way out of trouble. Whether it be paying for a tow truck while stuck on the side of the road in the winter to having your flight delayed. Hopefully this sort of thing doesn’t happen to you. But if it does you can use your credit card and then pay it off with your emergency fund money when you get home

Article Source: http://www.articlesbase.com/credit-articles/student-credit-cards-great-or-awful-idea-2804505.html

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An Overview of Student Visa Cards

Filed under: Credit Tips for Students

You carry a full load just like your classmates. Unlike your classmates, however, you do not party the night away or sleep off the little migraines caused by exams. No matter how tired or weary you are, you have to trudge to a convenience store two blocks away, and clock in at least six hours of work. It doesn’t seem to matter how hard you work, though. You can still barely pay for school, and you are still saddled with student loans that only seem to balloon with every passing term.

Obviously, whoever said there are many more important things than money has never tried being a poor student, juggling work and classes and barely making ends meet. If you’re one, and you have to keep worrying about where money for emergencies will come from, why not get a student Visa credit card? Since their creation in 1950, credit cards have made purchasing and payment more convenient for the public. Student Visa credit cards give you the same power even if you’re a struggling student on a budget.

Introduction to Credit Before you get a student Visa credit card, you should know the basics about credit itself. You need good credit when you get loans for homes or vehicles, look for a job, or more importantly, apply for a credit card. Your credit record is like your shadow: it follows you wherever you go. Before getting a student Visa credit card, be sure to take these steps, to help ensure you can maintain a clean credit record.

1. Study the credit card agreement. There won’t be a quiz afterwards. Still, you should learn the key facts that are listed in the agreement. These include annual charges, finance charges, the grace period, and the APR, or annual percentage rate. It is advisable that you find a card with a lower APR, if you intend to maintain a balance on your credit card account.

2. Pay off your balance before the grace period ends. Do this to avoid finance charges. Think of the grace period as a loan for a month. If you pay off the loan within a month, you won’t be charged interest.

3. Memorize your credit limit. There is no excuse for not knowing your credit limit. If you exceed the credit limit and are unable to pay for it, you could face stiff penalties, fees, and the possibility of having your card frozen or your account canceled.

Choosing a Card for Credit University Choosing a student Visa credit card is like choosing a college course. You should first gather information and then determine which one is best for you. Here are some popular cards that you could choose from.

Bank of America Student Visa Platinum: Benefits include no annual fee and no co-signer required.

Chase Platinum Student Visa Card with Flexible Rewards: Benefits include no annual fee, and 0% introductory APR.

Citi Driver’s Edge Visa Card: Benefits include no annual fee; rebate on purchases at gas stations, grocery stores and drugstores; and 1% rebate on everything else you purchase.

Wells Fargo College Visa Card: Benefits include no annual fee, low APR percentages, 24-hour customer service, and extra cards at no charge.

A student Visa credit card is not just a safety net in case of emergency. It is also an opportunity to prepare for future financial independence.

About the Author:  David Shelton invites you to visit the Health And Nutrition Tips website to learn about fluid and electrolytes, freckle surgery and other information.

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Responsible Credit Card Use

Filed under: Credit Tips for Students

Applying for your first credit card?  Maybe you’ve had a credit card or two in the past, and didn’t use it responsibly, and it took forever to pay off, so you’ve held off using credit cards for a while? 

Whether it’s your first credit card or you’ve already got several, your attitude and spending habits determine whether you’re a responsible credit card user or whether you’ll get carried away and run up a bill that you’ll have a hard time paying off. 

One of the most important things to consider with credit cards is what you’ll use the card for – ideally, using the card for emergencies or major purchases only is best, but there are instances where using your credit card is advantageous to using cash, even when you have the cash.  An example would be that you have a credit card that offers extra warranty protection, above and beyond the manufacturer’s warranty.  In this case, using your credit card to make a purchase makes sense. (And there are many cards that do offer this extra warranty, so pay attention to the terms and conditions on your credit card!)

Secondly, track your purchases on the card.  Calculate in advance how long it will take you to pay off a major purchase, and what the interest will be, before you actually make the purchase. Just knowing what you’ll ultimately pay for something is a strong deterrent to impulse buying.

Third, if at all possible, pay the card off every month.  When you do this, you avoid interest charges, and it keeps your debt level low (and more manageable).

And, finally, make sure that you review the terms and conditions for both credit cards you are interested in applying for as well as your current credit cards, to make sure you’re getting the best interest rate, the lowest annual fee (or none at all), and what rewards you are entitled to.  If your card is not competitive, then consider switching to a different credit card that offers more.

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College Campuses and Credit Cards

Filed under: Credit Tips for Students

If you currently attend a college or university, you probably have noticed credit card companies that will attend your campus handing out free items such as t-shirts, mugs, etc. What makes these set-ups so popular is that most college students love free things and will sign up for just about anything for a free item they will never use.

What students don’t realize is that they are most likely signing up for their first credit card. When signing up for your first credit card, it’s important that you research what you’re getting yourself into. Even though a credit card requires no money to sign up, it can cause you a world of hurt in the future if you don’t use them properly.

Like any purchase you make in your life, it always involves comparison shopping. It shouldn’t make a difference with credit cards. Every credit card is unique in a way ranging from its interest rate to reward points. This is something you should really research before signing your name on the dot for a t-shirt that’s too large.

Now we’re not saying that the companies setting up these kiosks at your school are bad, in fact they are usually from major companies such as VISA and MasterCard. All of these companies are legit and offer great credit cards. The fact we are trying to push is that they may be pushing a card to you that you might not benefit from.

There are a lot of different types of student credit cards. Everything from gas rewards to cash rewards, they have something for you. It’s pointless nowadays to apply for a credit card that offers no rewards at all. The only time you may find that a credit card offers no rewards is if you’re applying for a bad credit credit card.

The best way to usually look for a credit card for you is to either do your research online or ask around. If your friends already have a credit card, ask them a few questions about it and ask them what it has to offer. You won’t get all the answers you’re looking for but you’ll get a decent idea. The best way besides asking around is browsing around on the internet. Many websites such as this one have a very informative website that tells you exactly what the card has to offer and what benefits you’re going to have when you receive your card in the mail.

The next time you see a tent at your school; don’t be afraid to stop by. In fact, it might be best to stop by and ask the people behind the booth a few questions. If you don’t like what you hear from them, walk away. It’s not going to hurt anything. If you really want that free item, you can get it in many other ways. It’s best that your first credit card is built for you. You shouldn’t let a free item influence your decision toward a credit card that may not benefit you.

About the Author:  Frederic Pittman invites you to visit his site about why do dogs shake and pancreatic cancer in dogs at the Caring For Dogs site.

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What Students Gain From Having a Credit Card

Filed under: Credit Tips for Students

If you are going off to college, no doubt you are beginning a new phase of your life. You are probably leaving home for a college campus and everything is going to be a bit different than before. More than likely you are going to have a lot more freedom; however, with that freedom, comes responsibility as well.

One of the most important things you need to learn early in life is how to take care of your finances and be responsible with your money, and a student credit card may be just the thing to help. There are many credit companies that offer student credit cards to students, and there are a variety of great benefits to obtaining one of these credit cards for students.

  1. You Can Start to Establish Your Credit – One of the best benefits to obtaining a student credit card is that you have the ability to begin establishing your credit while you are in college. Believe it or not, your credit is extremely important in life; in fact, it can influence the job you get, getting a home, or even getting an apartment. So, establishing good credit is a great idea, and getting a credit card for students is a great way to get started on the way to great credit. However, you will need to make sure that you never go over the credit limit and you will always need to pay the bill on time to ensure that you build a good credit history.
  2. You’ll Learn About Being Responsible – Keeping track of a credit card takes responsibility, and having a student credit card can help to teach you how to be financially responsible. You will need to learn about keeping up with the bills, paying on time, and even budgeting the amount of money you need each month to pay the credit card bill. Learning to be financially responsible now can keep you from bad financial problems in the future.
  3. You Will Learn to Keep a Budget – If you want to keep your finances in order throughout your life, it is important that you start learning now to keep a budget. Having a student credit card will help you learn how to keep a budget now, while you are young. Then, once you get out of college and you step out into the real world, you’ll be ready for all the financial responsibilities that will come your way, since you’ll already know how to keep a good budget.
  4. You’ll Have a Credit Card in Case of an Emergency – At some point in your college life, there is a chance that you may have some type of an emergency when you need money. Having a student credit card is a great idea, since you will have the security of having it if an emergency does occur. However, a student credit card should be saved for emergencies and not used just for frivolous purchases that you really cannot afford.

As you can see, there are a variety of great benefits to obtaining a student credit card. There are many credit cards for students available and they are fairly easy to obtain. So, considering getting one of these cards, so you can work on building your financial future in a positive way.

About the Author:  Lindsay Blanchard.  Visit the Health And Nutrition Tips website to learn about feeling numb, increase melanin and other information.
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