32 Ways to Leave Your High-Interest Credit Card

credit card with high apr

Sure, there were the good times — back when you and your credit card first got together. Maybe your card was giving you a 0% introductory APR. Maybe you went everywhere together, bought everything together … but things changed. Today you feel like you’re giving a lot more than you’re getting, and now you’re wondering how you can leave your high-interest credit card behind.

While there aren’t as many options for leaving your credit card as there are ways to leave your lover (Paul Simon famously notes there must be 50 of those), it doesn’t mean you’re stuck. No, you’re probably not going to be able to slip out the back, Jack (that debt’s not going away even if you run!), but you most definitely can make a new plan, Stan. So don’t be coy, Roy, just listen to me …

1. Negotiate a Lower Rate

Most people don’t bother to ask their credit card issuer for a lower rate, but sometimes lowering your current APR can be as simple as that, so …

2. Don’t Be Afraid to Ask

Before you storm out on your credit card, try communicating. It could be worth your time to see if your card issuer will lower your interest rate, especially if your relationship is a long one. Keep in mind, they might pull your credit to see if you’re deserving of a lower APR. That’s why you’ll want to …

3. Check Your Credit Score …

You’ll want to get an idea of whether you’re likely to qualify for a lower APR, lest you incur a hard inquiry on your credit report only to get rejected. (You can view two of your free credit scores, along with some recommendations for credit cards it could help you qualify for, on Credit.com.)

4. … Fix it Up Before Inquiring

If your scores are less than stellar, you may want to try brushing them up before you call up your issuer. You can find 11 ways to improve your credit here.

5. Do Some Research

Are there other cards out there you qualify for that can offer you a better APR? If so, you can use this information to your advantage while negotiating with your current issuer.

6. Begin Negotiating With Your Oldest Card

Like we said before, your issuer might be willing to work with you, especially if you’ve been a cardholder for several years, so start negotiating with whichever card issuer you’ve been with longest to see if you can reduce your interest rate there.

7. Keep It Simple

It’s not a difficult process to ask for a decrease in your APR. In fact, it’s as simple as a call to the customer service line listed on the back of your card. Yes, they could say no, but that’s where your research will come in handy and you can …

8. Leverage Your Loyalty

If they say they can’t reduce your rate, remind them of how long you’ve been with the company, how you’ve never had a late payment or maxed out your card’s balance. Whatever positives you can cite can be helpful. If that doesn’t work, tell them what the other cards you’ve researched are offering. But most importantly …

9. Don’t Give Up Right Away

The old adage “if at first you don’t succeed, try, try again” is especially important here. Your issuer may say no, but that doesn’t mean you should give up. Call them multiple times, and ask to speak to a supervisor if their answer continues to be no. Of course, you’ll want to be polite throughout the process. If all of this doesn’t work, it’s time to …

10. Consider an Upgrade

A lot of card issuers have tiered credit card offerings, so you could potentially upgrade to a new card with the same issuer that offers a lower interest rate and transfer your current balance to that card.

11. Keep Watching Your Credit …

Just like when an issuer considers lowering your interest rate, which we mentioned above, they’ll likely check your credit as part of your application for a card upgrade. So, if you think there’s a better credit card available elsewhere, you might not want to ask them to upgrade you.

12. … & Limit Your Card Applications

In fact, every time you apply for new credit you’re going to have a hard inquiry and a ding to your credit scores. These can add up if you have too many in a short span of time and even impact your ability to qualify for a new card, so be very selective or you could end up hurting your credit. (You can read here about how often you can apply for new credit without hurting your credit scores too much.)

If you’ve tried all these steps with your current credit card issuer to no avail, it’s time to look at starting a new relationship with a new issuer.

13. Get a Balance Transfer Card

Let’s say you’ve tried everything to lower your current APR with your card issuer and they just won’t work with you. Perhaps you’ve had some late payments or you just haven’t been with them that long. Getting a balance transfer credit card could make sense for you.

14. Find an Introductory 0% APR

There are lots of options to choose from in the world of balance transfer credit cards with a low or even 0% introductory APR. Here’s how to find the right one for you …

15. Comparison Shop

You can start by checking out some of the best balance transfer credit cards and comparing what they offer.

16. Give Yourself Plenty of Time

There are balance transfer cards that offer as long as 21 months at 0% financing for balance transfers and even new purchases. If you have a lot of current credit card debt, that could be very beneficial to you, as you’ll eliminate your interest while paying down your principal.

17. Don’t Forget the Transfer Fees …

Of course, most balance transfer cards charge you a fee for transferring your balance – typically 3% to 5%, so be sure to compare those amounts as well.

18. … & the Annual Fees

Some cards also charge an annual fee, so you’ll want to consider that cost as well as you compare balance transfer offers.

19. Make Sure You Time it Right

If you’re looking at buying a new house, car or other major purchase anytime soon, you’ll want to time your credit card application with that in mind since your credit scores will be impacted by that aforementioned hard inquiry that takes place during your application process.

20. Include Your Balance Transfer Amount in Your Application

This can help ensure the transfer goes smoothly and quickly. The new issuer will reach out to your current card issuer once you’re approved and get the transfer process started right away, saving you the hassle of doing it later.

21. Pay Off Your Balance

Once you have your new balance transfer card, it’s important to focus your attention on getting that balance paid off before your introductory rate expires. Otherwise, your balance is going to revert to the standard variable rate.

22. Keep Your Old Card

No, keeping your old card isn’t exactly leaving it, but hear us out. You might be tempted to close your old card, particularly if your card issuer refused to reduce your APR when you transferred your balance, but keeping it open can be good for your credit score.

That’s because your credit scores improve the longer you have a credit account in good standing, so if you had a decent payment history, keeping that card open could really help. Moreover, your total credit line will be higher if you keep it open, also helping your scores. (You can find a full explainer on how closing a card can affect your credit here.)

Go ahead and cut it up, though, if it makes you feel better. That will also keep you from using it.

23. Keep Your New Interest Rate Low

Now that you have a card with a lower APR, even if it’s just an introductory rate, there are things you can do to keep your rate as low as possible. You’ll want to …

24. Make Your Payments On Time …

Late payments can send your APR soaring, so make all of your payments on time to avoid a penalty APR.

25. … & Keep Your Balance Low

If you can’t pay off your balance each month, at least try to make payments that keep your balance below 30% of your credit limit, though below 10% is even better if you want to do your credit scores a real favor.

26. Don’t Take Cash Advances

These usually come with a higher variable APR than purchases or balance transfers, so try to avoid them if you want to keep your rates down.

27. Try Some Other Alternatives …

If you’ve had a bad run financially and aren’t going to qualify for a credit card with a lower APR, you still have plenty of money-saving options, so don’t give up just yet. You have some alternatives …

28. Like a Personal Loan …

You may be able to pay off your credit card debt with a personal loan from your bank or credit union, but keep in mind that unless you have excellent credit, you’ll likely need some kind of collateral to secure it. Be sure to ask about the lender’s credit requirements before applying.

29. Or a Home Equity Line of Credit …

If you own a home and have some equity built up, this can be a great option for paying off debt at a lower interest rate. You can save a ton by moving your debt to a HELOC.

30. … But Don’t Spend Your Savings

Use the money you save by refinancing through a HELOC on creating an emergency fund (if you don’t already have one). Once that’s set up, you can use the money as prepayment against your home loan or to boost your retirement savings.

31. Consider a Debt Management Plan …

A debt management plan allows you to turn over all of your debt information to a credit counseling agency. You make one monthly payment to them, and they pay your credit cards and other debts for you. These plans usually last three to five years, and a lot of lenders lower your interest rates when you participate in such a plan. You’ll want to be sure to find a reputable credit counseling agency, so do your research.

32. … Or File for Bankruptcy

As a last-resort option, you can consider getting out from under your high-interest credit card debt by declaring bankruptcy. You’ll lower your debt and have many years to pay it off depending on the type of bankruptcy relief you file for. Just remember you’ll also have a major blemish on your credit reports for up to 10 years that could seriously affect your ability to get credit (in general and at n affordable rate) during that time. Still, if your debt is significant, this could be the right option for you. Talking to a credit counselor or bankruptcy attorney before deciding could help you make the right choice for your circumstances.

Have another question about credit card debt? Leave it in the comments section and one of our credit experts will try to get back to you.

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How a Balance Transfer Affects Your Credit Score

Paying no interest can save you a ton of money, but can applying for and getting a balance transfer credit card hurt your credit?

If you’re struggling with credit card debt that you just can’t seem to get out from under, one of the best ways to break free from that debt is to use a 0% balance transfer card. Doing so saves you money in the long run since you won’t be paying interest charges while you work on paying down that balance.

What You Need to Know

First, applying for a new credit card of any kind can end up dinging your credit just a little. That’s because credit card issuers do what’s known as a “hard inquiry” to determine if you qualify for their product. That check of your credit can have a small and temporary effect on your credit scores, but it’s typically more than offset when you’re approved for the new card because your credit utilization improves with the new line of credit. And as soon as you start whittling away at your outstanding debt with your new balance transfer card, your credit is likely to improve even more. (If you don’t know where your credit currently stands, you can get your two free credit scores, updated every 14 days, on Credit.com.)

The five big factors in determining your credit score include your credit utilization, payment history, types of credit, credit inquiries and the age of your accounts. Here’s an explanation of each and how they are potentially affected when you apply for and use a balance transfer credit card:

The 5 Components of Your Credit Score

1. Credit Utilization
What it Is: This is basically the amount your currently owe on your revolving credit accounts, and makes up 30% of your total score. If you keep your balances to less than a 30% of your limit, and preferably 10%, you’ll be doing your credit scores a huge favor.
How it’s Affected: Suppose you owe $10,000 on Card A, which has a limit of $12,000. You’re using 83% of your available credit. But now you open Card B and move all $10,000 onto it (it has a limit of $10,000). You are now using a total combined available credit of 45% (a combined $22,000 on both cards). The new lower credit utilization could help boost your credit score.

2. Payment History
What it Is: This is the most important part of your credit scores and counts for 35% of your total. That’s why it’s so important to make your payments on time and avoid having your accounts go into collections at all costs.
How it’s Affected: If you made regular, on-time payments on the old card, and continue to make regular, on-time payments on the new card, you shouldn’t see any change here.

3. Types of Credit
What it Is: This is worth 10% of your score and in this area, diversity is key, so having a good mix of credit cards, auto loans, mortgage loans and even personal loans will help give you a good score.
How it’s Affected: Since you probably already have a credit card if you’re looking to transfer a balance to a new card, you likely won’t see much, if any, difference here.

4. Credit Inquiries.
What it Is: This area makes up 10% of your credit scores. Too many credit inquires at the same time can drop your score.
How it’s Affected: Applying for a new card will put an inquiry on your credit. As long as you’re not applying for multiple cards, a single inquiry will have a very small effect.  Probably only dropping your score by less than 5 points.

5. Age of Credit
What it Is: The longer you have been responsibly using credit, the better your score in this area. It accounts for 15% of your total score.
How it’s Affected: Once you get your new card, hang on to your old one. Don’t cancel it. Here’s why: You want to keep your oldest cards open so that your active credit has as long a history as possible. Plus, if you close the old card, you won’t get the benefit of a score boost in your credit utilization, as explained above.

Your Credit & Balance Transfer Cards: The Bottom Line

Opening a new account and transferring the balance over should save you money in the long run, and have a positive impact on your credit score — so long as you don’t transfer your old balance and then turn right away and charge up a new one. Don’t expect a huge jump at the very beginning, but as you continue to pay down your balance by making timely payments, you should see some incremental improvement.

But is a balance transfer right for you? There’s no one-size-fits-all answer here. It depends on the size of your debt, the interest rate, your income, your current credit score, and how soon you think you can wipe out your debt.

Some of the credit cards with the longest 0% introductory APR offers on balance transfers include:

  • The Citi Diamond Preferred leads the pack with 21 months interest-free financing for balance transfers and purchases. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)
  • The Discover it card, also offers 21 months interest-free financing on balance transfers and six months for purchases
  • The Citi Double Cash card offers 18 months interest-free financing on balance transfers
  • The Chase Slate card offers 15 months interest-free financing, plus no transfer fee if you transfer your balance within 60 days of approval

One consideration is whether you can pay off your debt during the 0% introductory APR period. If you feel your debt is too big to pay off in 15, 18 or even 21 months or you’re worried about running up a balance on both cards, you could consider taking out a personal loan to pay it off. You won’t get the 0% interest offer, but you will likely get a significantly lower overall interest rate than the credit card will offer after the introductory period ends and you’ll have a set date that your debt will be paid off by. (You can learn more about getting an unsecured personal loan here.)

Whatever decision you make, you can rest assured that applying for an using a balance transfer credit card won’t severely damage your credit so long as it used it as intended. And, if used properly, there’s a very good chance your credit score will improve.

At publishing time, the Citi Diamond Preferred, Discover it, Citi Double Cash and Chase Slate credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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5 Signs You’re Not Ready to Be a Stay-at-Home Parent

It's a big decision to stay home after having a baby — but doing so isn't an option that is right for every mother.

Sometimes new mothers have a hard time deciding if they want to return to work after their baby is born, especially after bonding with their child during maternity leave. Sometimes there is no choice — like if you’re a single parent or your family can’t afford to live solely on your partner’s salary — and there’s not much left to do but head back to the office.

Women who have the option to stay home with a baby may have trouble weighing the pros and cons. As hard as it is to decide, there might be some fairly obvious signs that you’re actually not ready to be a stay-at-home mom. Of course, these tip offs apply to all those prospective stay-at-home dads, too.

Here are a few signs you’re not ready to be a stay-at-home parent.

1. You Have a Budget But Don’t Follow It 

Having a budget is one thing, but following it is something entirely different. Just because it looks like you have your finances under control on paper, if your credit card statements tell a different story, you might need to reconsider staying home, at least until you can get your spending under control. (Curious how your credit card debt is affecting your credit? You can see a free snapshot of your credit report here.)

Having a baby is bound to bring in even more expenses (according to the Department of Agriculture, the current cost of raising a child through age 17 is a whopping $233,610), so if you already have trouble following a budget — or you haven’t updated your budget yet to include everything your baby will need — you may want to consider seeing what following an updated budget would be like for at least a month before deciding if you can afford to live on one salary.

2. You Haven’t Saved for Retirement Yet/You Have No Retirement Savings Plan if You Quit

It’s no secret that Americans are worried about retirement. In fact, one recent survey found that 56% of Americans lose sleep over saving for retirement, while another found that 38% of millennials find retirement to be a significant financial stressor. Even if you have started saving but it’s been a few years since you’ve checked in on your progress, it may be time for a bump in how much you put away … something that will be much more difficult to do if you decide to leave your job.

Of course parents who decide to stay at home do have options when it comes to retirement (spousal IRAs, self-employed retirement funds and rollover accounts, to name a few). But if you don’t qualify for them, don’t care to look into them or can’t afford to put anything else away if you leave your job, it’s probably best to reconsider leaving until you can. You can read this guide to learn more about IRAs.

3. Your Partner’s Health Insurance Options for You & Your Baby Are Subpar at Best

While the future of healthcare is a little shaky right now, there’s one thing you can safely assume no matter what happens — you and your baby will need some. Newborns spend the first six months of their lives visiting a pediatrician at least once a month (often much more frequently in their first few weeks), and new moms, in particular, will have plenty of check-ups with their OB as well. These aren’t things you’ll want to do without health insurance, so if your partner’s options for you and your child don’t stack up, staying on yours until something better comes along is a good idea.

4. Your Emergency Savings Account Is Minimal

You might think having three months worth of bills covered in an emergency account is great — and it is — but it might not be enough if you’re considering leaving your job. Experts recommend having at least three to six months’ worth of bills covered in an emergency savings account, and that doesn’t really take into account all the extras that come along with having a baby. If you’ll be moving into a house from an apartment for more space, assume that you’ll have random projects pop up that will start draining that emergency fund quickly. If your partner can afford to keep funding the account to cover for any withdrawals you take or to provide you with more of a cushion that’s one thing, but if the account has been stagnant for a while and your family can’t afford to put anything else away right now, maybe a better idea is to stay at your job and slowly build up the emergency account a bit more so that when/if the time comes that you leave your job, you’ll feel more secure knowing your emergency funds are all there.

(And, if you don’t have a savings account at all, you’ll want to start socking away dollars ASAP. No need to panic, though: This piece will help you create an emergency fund in 30 days or less.)

5. You Struggle Spending All Day Alone with the Baby During Work Leave

Let’s be honest — babies are tough to take care of. So if you find it difficult to stay positive while on maternity or paternity leave, that might be a sign that you’re not quite ready stay home full time with a baby. Working is about a lot more than just a paycheck — it’s about having some time to yourself (funny how commutes suddenly become a wonderful thing) and with other adults, and it’s about having a job to do that both stimulates and fulfills you. If you don’t think staying at home with a baby will do all of those things for you, it’s probably best for you, and your family, if you head back to work.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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5 Things to Think Twice About Putting on Your Credit Card

Want to keep your credit card debt in check? Avoid charging these five things.

Credit cards are useful financial tools. They can fund large purchases, build credit and help consumers establish financial independence. But they can also get cardholders into major financial trouble when used improperly. Not all credit card purchases are created equal, and some should be completely sidestepped to avoid unmanageable credit card debt.

Not only can that debt stress you out, it can hurt your credit scores, which can limit your ability to get future credit for things like a mortgage or an auto loan. You can see how your current debt is impacting your credit using our free credit report summary. It provides you with two of your credit scores, completely free and updated every 14 days, plus a summary of how you’re managing your credit in five key areas.

Here are five ways you probably don’t want to use your credit card if you want to be better equipped to manage your credit card balance.

1. Pay Monthly Utilities

Paying monthly utility bills may be especially appealing to cardholders with rewards credit cards — after all, those bills are another way to maximize rewards. In that scenario, it could make sense to pay your bills using a credit card.

But many companies charge convenience fees to pay with a credit card, so you’ll end up paying more than necessary. If you can’t pay off the bill balance in full each month, you could end up paying a lot in interest charges. As interest accrues and your bills continue to stack up, it could become very easy to fall far behind.

If you’re having trouble paying your bills, you might be better off reducing your spending or working with your service providers to come up with an alternative payment plan.

2. Pay College Tuition

There are many ways to pay for college. Student loans, scholarships and part-time jobs can all fund your education. These options are either free or far cheaper than using a credit card. If you wince at the idea of taking out a student loan, remember that a loan will come with much lower interest than a credit card payment. What’s more, most student loans are deferred until after graduation, while you will making monthly payments on your credit card debt almost immediately.

3. Settle Tax Debt

If you find yourself with an unexpected debt to the IRS, it could be tempting simply to charge it. This is usually a bad call.

Paying the IRS with a credit card may result in a convenience fee, and unless you can pay off the balance immediately, you’ll wind up paying interest on that debt quickly. The IRS offers a number of solutions for taxpayers with substantial tax debt, including repayment programs and settlements for less than the original amount owed.

4. Take Out Cash Advances

Cash advances let you take out cash against your credit card balance, but can be far more expensive than the ATM fee you’d pay using your debit card. The cost varies, but some credit cards will charge you a one-time cash advance fee and even an ATM fee if applicable. What’s more, most cards charge a higher APR for cash advances, and you start accruing interest immediately.

The only time a cash advance may make sense is in the case of an emergency where your only alternatives are over drafting at your bank or taking out a payday loan. Even then, it’s a good idea to try to avoid all these scenarios.

5. Charge Your Business Startup Expenses

If you’re starting a new business, you may have a lot of upfront expenses. But the problem with using credit cards to fund your startup is that it could take years for your business to succeed and turn a profit. During that time, you could end up paying thousands of dollars in interest. And if your business fails you’ll still be stuck with credit card debt.

You may be better off finding alternate sources of funding, which could include small business loans or investors.

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This Trick Will Help You Finally Pay Off Your Credit Card Debt

Here's the best way to leverage those flashy 0% APR offers from credit card issuers.

In 2017, one-in-four Americans say they’re thinking about money more than just about anything else. Does that sound like you? One of the best ways to clear some of your head space may be to pay down credit card debt. Less debt means fewer minimum payments, which means an easier time managing your day-to-day cash flow.

That’s not the only benefit of paying off credit card debt early either. With annual percentage rates (APRs) in excess of 15%, credit cards can cost you a big chunk of change in interest. Plus, high credit card balances can do big damage to your credit. (You can see the effect of your current balances by viewing two of your free credit scores, updated every 14 days, on Credit.com.)

A Big Trick for Paying Off Credit Card Debt

Paying off credit cards takes planning and discipline. But you can also use a few tricks to make the process easier.

One big trick to make paying off credit card debt both easier and faster is using 0% APR balance transfer offers. It’s a simple strategy that can save you hundreds, or even thousands, in interest, not to mention allows you to potentially pay off your debt sooner.

You’ve got to leverage the offer correctly, however. Here are the basic steps to using this strategy.

  1. Apply for a card with a 0% introductory APR offer on balance transfers.
  2. Move some or all of your balance from an interest-bearing card to the card with the 0% APR. (Wondering what card to use? You can view our picks for the best balance transfer cards here.)
  3. Pay down that card as quickly as you can.
  4. If the card still has a balance when the introductory offer is up, consider applying for another 0% introductory APR card, and transfer the balance again. (More on this in a minute.)

That’s the gist of the strategy. It’s a great option for those with credit high enough to qualify for 0% introductory APR offers. Before you dive in, though, read through these additional tips and tricks.

1. Watch the Balance Transfer Fees

First off, it’s essential that you look at and understand balance transfer fees. Most balance transfer deals come with an upfront fee that gets tacked onto your balance once you make the transfer. This is how credit card companies come out on top with balance transfer deals.

Many times, transferring the balance to the 0% interest card will still save you money. But that may not be the case if you’re transferring a relatively small balance or if you’ll pay off the debt quickly either way.

To know whether or not a balance transfer will save you money, you’ll need to calculate your break-even point. First, estimate how many months it will take you to pay off the transferrable balance. Then, figure out how much interest you’d pay in that period of time if you did not transfer the balance. Finally, calculate the total fee you’d pay on the balance transfer.

If the balance transfer fee is more than the interest you’d pay in your current situation, it’s not worth your while.

2. Keep Track of Timing

Because balance transfer deals typically last between six and 18 months, you’ll need to keep careful track of when each introductory offer ends. If you’re running multiple balance transfer offers to pay off a lot of debt, keep a spreadsheet of offer end dates, current APRs, and future APRs once the offer is up.

Have a look at your spreadsheet each month. When a card’s offer period is about to end, decide whether to roll the remaining balance to a new balance transfer deal, or to leave it where it’s at.

Remember, it’s in your best interest to pay your transferred debt off in full by the time the 0% introductory offers expires. While you could potentially move the debt to another balance-transfer credit card, you’ll likely have to pay another fee. Plus, you’ll incur another hard inquiry on your credit report, which could ding your credit score. That’s why the next step is particularly important.

3. Know Your Credit Situation

This debt payoff strategy won’t work for everyone. You’ll likely only qualify for good balance transfer deals if you have good credit in the first place. And it’s difficult to say for sure how this scheme will affect your score.

On one hand, the hard inquiries generated by additional credit card applications will ding your score. But having a higher overall credit limit will improve it. These two may balance one another out over time.

The key is to keep track of your credit score throughout this process. If your score isn’t currently high enough to qualify for a 0% introductory APR deal, you may want to take time to polish up your credit before you apply.

4. Don’t Add New Debt

The number one key to making this strategy work for you is to not add any new debt. If you can’t avoid temptation to spend because you now have more available credit, you’ll just add to your mountain of credit card debt. One option is to shred your cards, even if you don’t close your accounts. This makes it harder to impulse spend on those cards that now have no balance once you’ve completed the transfer.

As long as you keep from adding new debt and follow the steps outlined here, 2017 could be a great year for getting free from debt.

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How to Handle Debt & Maintain Your Mental Health

It’s no secret that most people feel lousy when they’re in financial trouble, and one of the biggest financial stressors seems to be debt.

It’s no secret that most people feel lousy when they’re in financial trouble, and one of the biggest financial stressors seems to be debt. When you’re in debt, simple tasks like going to your mailbox, where you anticipate finding an avalanche of bills or overdue notices, can bring on stress. If you relate to this feeling, you aren’t alone. According to a Time article, there are a plethora of Americans in an excessive amount of debt. In fact, the Federal Reserve reported at the end of 2015 that, on average, an American between the ages of 18 and 64 has $4,717 in credit card debt.

So aside from being a burden on our wallets, what does this debt do to us?

“Financial issues are a common source of stress,” Dr. Jay Winner, director of the Stress Reduction Program for Sansum Clinic in Santa Barbara, California, said. “Additionally, when someone has extensive debt, there is a tendency to work excessive hours. This deviation from a healthy work-life balance leaves people less resilient to other stressors in their lives.”

How Debt Stress Impacts You

Chronic stress is linked to a wide variety of mental health ailments. Dr. Robert Williams, a psychiatrist in Phoenix, explained that long-term stress physically affects the brain through the well-known “fight or flight” mechanism, which occurs during times of perceived danger, such as those experienced when a threat to financial well-being occurs. Williams explained that when the deep limbic system, or primitive brain, is less active, there is generally a positive, more hopeful state of mind. When it is heated up, or overactive from too much stimulation in the form of perceived threats, negativity can take over.

In addition to an overactive limbic system, Williams said some people are born with a thin cerebral cortex. Emotional stability is a manifestation of the cerebral cortex, and studies suggest a relationship between depression and a thinning cerebral cortex. Dr. Williams said the combination of an overactive limbic system and a thinning cerebral cortex could lead to severe depression. Long-term stress from things like too much debt can cause anxiety, restlessness, lack of motivation or focus, feelings of being overwhelmed, irritability or anger, sadness or depression, even thoughts of suicide.

Coping With Debt Stress

If you are stressed because of a financial situation, here are some suggestions from Dr. Winner that may help you cope.

  • Be mindful. Focus on doing one thing at a time with your full attention.
  • Learn a relaxation exercise. Learning to relax for a specified period of time will help you learn to relax through the day and reduce stress.
  • Do not resist the stress. There are not much in the way of health risks from short-term stress; so if you’re too stressed now, don’t stress about being stressed. Just learn some strategies so the stress does not become excessive in the long term.
  • Learn patience. This is important because the emotion most strongly associated with heart disease is anger and hostility.
  • Decrease the frustration of failure. Instead of thinking you are worthless when things go wrong, realize progress comes from learning from our mistakes. Ask, “What can I learn from this?”
  • Keep things in perspective. One way to keep things in perspective is to think of your health, family, friends etc.
  • Take care of yourself. Eat nutritiously and mindfully, enjoying the taste and aroma of your food. Get regular exercise.
  • Have some technology-free time. If you can spend some of that time out in nature, that’s all the better.
  • Talk with someone. If you’re overwhelmed by stress and basic techniques are not helping, discuss this with a physician or mental health professional.

Paying Off Your Debts

Getting out of debt is one sure-fire way to help reduce your stress levels. Of course this is easier said than done, so consider taking small steps toward this larger goal. To start, gather all the information about your debts, including who you owe what amounts to and any interest rates or fees that are applicable to each of the debts. From there, consider what options you have. Can you consolidate your debts? Move the debt to a balance transfer credit card and eliminate interest charges for a while? You may even decide to seek the advice of a professional debt counselor to help you find the right path.

Whatever you do, take a deep breath and keep moving forward. Not only will paying off these debts help your stress, but it will help improve your credit scores. (You can see how paying down your debts are affecting your credit by checking out two of your free credit scores, updated every 14 days, on Credit.com.)

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5 Financial New Year Resolutions You Might Want to Try

Here are five financial new year's resolutions to put on your to-do list.

Every new year comes with more New Year’s resolutions. Here are five you might want to put on your list.

1. Have a Plan

Set aside some time in 2017 to go over your finances and see how you’ve been doing. Are you following a budget? Do you need to? There might be some lifestyle changes you need to make to stay on top of your bills. You might have to put together a budget for an upcoming event or start saving for your children’s education. Set aside time to figure out where you stand and how you plan to afford your expenses for the year. Consider reevaluating that plan every three months to make sure you are on the same page or make any adjustments.

2. Set Up an Emergency Fund

If you don’t have an emergency fund already, now is the time to create one. Make 2017 the year you are always prepared, even for unexpected expenses. You never know when your heat will break or you need a car repair. An emergency fund can be an easy fix for an unexpected expense and keep you out of debt at the same time. (Not sure where your finances stand? You can view two of your credit scores, updated every 14 days, for free on Credit.com.)

3. Pay Off Your Credit Card

If your credit card has a balance, now is the time to pay it off. The new year is a fresh start to your life, so why not make it a fresh start for your credit card as well? If you have multiple credit cards with a balance, then you might want to focus on paying one balance down at a time. Continue to make the monthly payments on all cards, although you might want to make biweekly payments to the credit card with the highest interest to see a decrease in your overall balance.

If you have a large amount of credit card debt and aren’t sure how to repay it, you might want to consult with a debt attorney or bankruptcy attorney to weigh your options. It can’t hurt to ask. Consider making a list of your questions before seeking help.

4. Check Your Statements Regularly

Do you check your statements every month? Are you aware of how much money is in your bank account at all times? Make it a New Year’s resolution to always check your finances. You might want to consider signing up for online banking or downloading your bank’s app to help you stay organized. If you are always in the know, then you will always have an idea of how much debt you have, how much you can spend and if there have been any irregularities in your account.

5. Save for an Event

Have anything big planned for 2017? You might want to make a list of financial goals and pick one to start with. Maybe you and your partner have always wanted to go on a tropical vacation together but never had the money. Now is the time. Put a little money aside each month and give yourself an end date. You might want to give yourself a year to save, depending on how much you’ll need. Be sure to check your budget before you save for your goal. You don’t want to fall into debt because you were putting too much money into your savings and didn’t leave enough over to live on.

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4 Ways to Get Financially Healthy in 2017

Here are four savvy financial resolutions for the new year.

Next year will be here before we know it. Now is a great time to brush up on your financial health to ensure you have a happy and financially healthy new year. Here are some tips to help you get started.

1. Check Your Credit Report

You can obtain a free copy of your credit report every 12 months from each of the three major credit reporting agencies at AnnualCreditReport.com. Consider taking a second look at some financial mistakes you might have made in the past — maybe you missed a couple of payments on your credit card or took out too many credit cards at once, causing multiple hard inquiries.

You might want to write down what you did right and what you did wrong to help you not make those same mistakes in 2017. Since you are checking your credit report, you might also want to take a look at your credit score and think about ways you can boost your score in the new year. (You can view two of your credit scores, updated every 14 days, for free on Credit.com.)

Taking a look at your credit report can also help you check for any irregularities such as fraud or identify theft. It’s a good idea to stay on top of your finances to avoid fraudulent activity.

2. Cash in Missing Money

Missing or unclaimed money could be checks that haven’t been cashed yet, dormant bank accounts, insurance refunds, etc. Now is the time to cash in your unclaimed money and put it toward any leftover debt you have so it doesn’t persist into the new year. If you paid off most of your debt, then consider putting your extra cash toward an emergency fund or savings account.

3. Tackle Your Debt

Paying down or reducing your debt in 2017 can be a great New Year’s resolution to start with. After checking your credit report, you might want to create a plan on how to pay off your debt in a timely manner. If you have a high-interest rate credit card with a high balance, then consider starting with that and going from there. (This credit card payoff calculator can help you come up with a plan.)

Consider taking a look at your bank statements from 2016. You might have been spending more on non-essential items than essential expenses. Go over the items that are most important and considered a need and not a want. If you have any outstanding debt, then you might want to skip over some of those extra indulgences until your debt is wiped clean.

4. Establish Savings Goals

Having a savings account in the new year will help you prepare for unexpected expenses and could even help you reach your financial goals (a new car, saving for a house, vacation, etc.). Take a look at your budget to help you devise a practical plan and consider having a start and end date to reach your savings goal.

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4 True Tales of Maxing Out Credit Cards

maxed-out-credit-card

Some people like to joke about taking things to the limit, but when it comes to your credit, maxing out a credit card is no laughing matter.

Maxing out a credit card means swiping until you reach the card’s credit limit, or the total amount of credit extended to you. And that’s bad news for your credit scores because your debt utilization ratio (e.g., how much debt you have versus your total available credit) is one of the key factors credit agencies use to determine your score. Bump up against that limit, and your score will take a hit.

Debt levels are another factor that go into your score. Carry too much, and you’ll send a red flag to lenders that you’re in over your head; slack off on a few bills, and they’ll begin to think you can’t manage your payments responsibly.

We spoke with a few Credit.com readers who learned the hard way about the dangers of maxing out credit cards. While they aren’t proud of what they did, they came out stronger for their experience and took steps necessary to get their finances back in order. (Note: At their request, some names and locations have been withheld to protect readers’ privacy.)

‘I Maxed Out Seven Cards’  

Between 2006 and 2008, Steven M. Hughes was saddled with a lot of debt. “I maxed out seven cards in my freshman year alone,” he said via email, “two more as a young professional.” The problem was he didn’t understand how to use them. “My parents always told me to stay away from them and didn’t teach me how to manage them properly,” he said.

“I had one credit card for emergencies that I maxed out on car repairs for a car at the time. I had department store cards that I maxed out on clothes for school and work because I worked while I was in college. I had a card I maxed out going to a family member’s wedding in New York City. I started assigning jobs to each card, but I didn’t have the income to pay them off, and paying the minimum balance wasn’t cutting it. All but one card was charged off. I managed to pay the lone card off and start a new account with the creditor.”

Today, the Columbia, South Carolina, resident teaches millennials how to manage their money through his nonprofit, Know Money, Inc. “After making all the financial mistakes, I started to learn as much as possible about personal finance,” he said.

‘I Was Into Wearing Ralph Lauren’ 

Deborah Sawyerr, a fashion and lifestyle blogger based in London, was about 32 when she visited Woodbury Common Premium Outlet, in Central Valley, New York, during a family holiday in 2005. “We bought clothes, shoes, suits, my daughter some bits, belts, jackets and some gifts,” she recalled via email. “At the time, I was into wearing Ralph Lauren clothing, so most of my spend went on this particular brand.”

Her credit card balance at the time was pretty low, but she admits she went a bit overboard that trip, racking up roughly $5,000. “As luck would have it, at the same time, my employer had just paid me in excess of £5,000, or thereabouts, as a redundancy package,” she said. “I basically — and perhaps I wasn’t so naïve — used the entire redundancy package to clear the debt in one go.” Humbled by the experience, Sawyerr said hasn’t maxed out a credit card since.

‘I Knew Very Little About Money’ 

In 1997, John Schmoll, Jr. was an undergrad with four maxed out credit cards totaling a whopping debt of $25,000. “When I went to college, I knew very little about money and was enticed to sign up for credit cards out of the promise of some sort of free swag — T-shirt, Frisbee, you name it,” he wrote in an email. “I ended up signing up for four credit cards this way, and used them to finance a lifestyle that I wanted but could not afford.”

Teetering on the verge of bankruptcy, at a roommate’s urging Schmoll decided to meet with a debt counselor, who helped him lower the rates on his cards. From there, he set up a budget, which enabled him to pay the cards off five years later. “That changed my life forever and put me on the path I am today, working toward financial independence,” he said. Today, the Omaha-based father and finance industry veteran blogs at Frugal Rates about what he’s learned.

‘0% Offers Were Appealing’ 

Years ago, Lisa, a marketing strategist, found that the 0% promotional APR offers from credit card issuers “were appealing.”

“I had six credit cards, all with a little over $3,000 on them,” Lisa said in an email. “I consolidated them into one account, maxing out that card, and I paid it off in about two years.”

So what got her there in the first place? Overspending. “I was floored to find out how liberal I’d been with spending — luxury items, travel to the Maui Writer’s Conference, etc.,” she said. “I behave very differently now.”

For starters, she said she doesn’t keep a revolving balance, and diligently pays her balances off every month. “That way, there’s no surprise debt, no interest charges, no late fees, etc.,” she said.

If you have reason to believe your spending’s out of control and it’s affecting your credit, you can read up on these tips to build credit the smart way and view your free credit report summary on Credit.com to see where you might want to improve.

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Goldman Sachs Is Offering Debt Consolidation Loans: What You Need to Know

Goldman-Sachs

There’s a new credit card debt consolidator in town — but its name is likely familiar to you.

Investment banking giant Goldman Sachs announced on Thursday that it will begin offering unsecured personal loans to people looking to pay off high-interest credit card debts. The loans will be offered through a new online platform, Marcus: By Goldman Sachs, named after Marcus Goldman, one of the firm’s founders.

Borrowers can apply for fixed-rate, no-fee personal loans of up to $30,000 for periods of two to six years, the firm said in a press release. According to Marcus’ website, applicants will be offered annual percentage rates (APRs) ranging from 5.99% to 22.99%. Late payments, partial payments, missed payments or defaults on the loan can show up on your credit report.

The platform isn’t fully open to the public just yet: Initially, applications will require a code that millions of prospective customers will receive by mail. You can request one on Marcus’ website.

“The feedback we expect to hear from the initial group of customers will help us to refine the Marcus experience,” the firm said in the release. It plans to offer the personal loans to a broader audience in coming months.

Debt Consolidation 101

Goldman — or, maybe we should say, Marcus — isn’t the only one who wants to pay off your plastic. Consolidating high-interest credit card debt with a personal loan has long served as a way for people to potentially cut down the lifetime costs of their existing debts and provide themselves with a hard date for when they can be out of the red.

But there are risks involved with this strategy: For instance, undisciplined spenders could find themselves worse off if they take out a personal loan, pay their credit card balances down and run them right up again. And when converting your revolving credit card debt to an installment loan, you’re locking yourself into a fixed monthly payment you will have to make (otherwise, your credit score could take a hit), which could be problematic if you hit financial setbacks down the line.

Plus, generally, only good credit scores qualify for a lender’s best terms and conditions, so if your credit isn’t exactly stellar — a strong possibility for folks carrying large amounts of debt — you may not be an offered an APR lower than the one you’re already paying. In any event, it’s a good idea to shop around and read the fine print of any offer you receive to be sure it’s right for you. You can learn more about the pros and cons of debt consolidation loans here.

If you decide to shop around, it can help to brush up your credit score ahead of time. (You can view two of your scores, updated every 14 days, for free on Credit.com.) If your score is currently looking shoddy, you can potentially fix it by paying down high credit card balances (we get it, that’s sometimes easier said than done), disputing errors on your credit reports and limiting new credit inquiries while your score rebounds.

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