Personal Loans for Credit Card Debt Consolidation

Many people may face extreme monthly payments with credit card debt that has grown beyond the limit of their income. Lower monthly payments with a personal loan for credit card debt consolidation may help to temporarily alleviate the problem. Personal loans can protect emergency credit cards by moving the balances from the accounts. The new loan should have much lower monthly payments. The interest rates on the credit cards may be higher or lower than the interest rate on the consolidation loan. The terms for the loan should include a longer period of time to pay off a similar amount from the credit card accounts.

Budgets are crucial because they can offer details about the monthly expenses. The information should enable anyone to identify the larger expenses. People which spend more than they earn each month are living beyond their income. Financial catastrophes can happen with unemployment or an unexpected natural disaster. Even if the monthly payments are reduced with an extended personal loan, the borrower will continue to have an exorbitant amount of debt. If the person was almost able to make the larger former payments, then they should be able to pay more per month than the amount of the required payments for the personal loan. The best option for handling the lower payments is to strive to quickly pay off the new loan.

This will only be a temporary correction for the problem if the volume of monthly spending is not reduced. Courses for budgets, debt management, and languages may help many people to understand some methods which can control their spending habits. The expenses for each month should be listed with the amount of the payment. Each amount should be added to create a final total amount. Totals for a budget should be less than the monthly income. Each item should be evaluated regarding the essential nature of the amount. Credit cards could be used to pay for monthly computer services such as broadband. That may be a very necessary cost which could be reduced with a less expensive plan and more WiFi. Personal loans will only cover the current credit card debt and not any new charges for luxuries. The payments will be distributed over more time.

The initial problem is to reduce the amount of the monthly payments. Budgets should include the monthly expenses for every member of the household. Dance lessons, automobile insurance, and college expenses can be devastating for a person with a new career. Perhaps the dance lessons could be taken every other month. The ability to trim the expenses may be enough to stabilize the situation. More money should be saved each month to prevent any further problems. The personal loan may include total monthly payments and an interest expense which will be for a larger amount than the credit card debt. The final amount should be less if the voluntary monthly payments from the borrower are greater than the required monthly payments for the credit card debt consolidation loan.

Credit cards: the basics

Are you looking for credit cards? If so, you may wish to do some research instead of signing up to the first deal that you receive a flyer for.

Different types

Once you get into the subject, you may find that there are more types of credit cards than you ever imagined. For example, you may wish to choose between:

• reward cards (where the credit card holder “earns” rewards in the form of vouchers with every pound that he or she spends on the card);
• cash back cards (where the card holder gets cash back at a certain percentage of the amount that they spend);
• balance transfer deals (where balances transferred onto the cards are only charged a limited interest rate for a certain period);
• premium cards (which offer enhanced services, typically in return for a certain monthly fee); and
• charity cards (where the charity of your choice receives a donation equivalent to a certain percentage of your balance.

What to take into account

When you are choosing which card to get, you may wish to take into account how much the borrowing will cost you. This may not be as simple as comparing interest rates, as some card providers may offer discounted rates for an introductory period, only to find that they revert to a higher rate when that period is up.

Likewise, some cards may have low interest rates, but less attractive transfer fees or monthly management fees.

When you read about the extra benefits a card can give you (like high street vouchers or money off your food shopping), you may wish to weigh up whether the benefits you receive from these outweigh the benefits of switching to a card with a lower rate of interest.

Who can get one?

Like any form of borrowing, credit cards are available only subject to status. This may involve the card company looking both at your level of income, your existing commitments and your credit history. If the card company does grant you a card, those factors may be taken into account when they decide what interest rate to charge.

Many financial institutions offer credit cards, so you should be able to find something that meets your own particular needs whether you want a balance transfer, reward or some other type of credit card.

The huge choice of credit cards

No sooner do you think you’re getting to grips with understanding the various types of credit cards, than a new one arrives in the marketplace and changes everything!

It is a very rapidly changing marketplace and no single article can possibly describe all your options.

What is listed here is a general description of the more common types of credit cards that you’ll see on offer.

The standard credit card

Typically branded with either the MasterCard, Visa or Amex logo, they may be supplied by just about any commercial organisation.

The basic card works simply:

• the provider issues you the card together with a credit limit that’s based upon your declared regular earnings and outgoings;
• you can use the card to buy things up to the total of your credit limit;
• each month you pay off your balance, in which case you typically won’t be liable for interest charges;
• if you cannot pay off the balance in full, the provider will specify a minimum monthly amount you must repay and they will charge interest on the outstanding balance.

If you are unemployed or have a poor credit history, you may find it difficult to obtain a standard credit card.

There is typically a wide variation between the interest rates of the various providers and shopping around may be highly advisable.

Reward and cashback cards

There are a numbers of cards available where you receive various forms of reward or financial payments based upon the amount you spend.

In principle, the more you use your card, the more rewards you can claim or the more cash back you’ll receive.

These may be attractive in some cases but the offers need to be examined critically alongside the interest rate charges on unpaid debt balances.

Charity cards

A variation on the above theme, this form of card essentially pays an amount of money to a specified charity or charities, for every pound that you spend on your credit card.

If you are interested in giving to charity, it might be interesting to compare the amount the provider pays to charity against what you yourself would pay through the cash back options on a cash back card.

A large choice

If you’re looking for a credit card, are in employment and have a reasonable credit history, the one thing you won’t be short of is choice!

That’s good because shopping around for credit cards may help you secure a suitable and attractive deal.

Looking for a credit card, apply and get one!

A credit card may be considered an essential part of life for many. Yet sometimes the application process may seem a little confusing. The goods news is that it typically always isn’t, so if you have found what you feel is the most suitable credit card, apply now - but get your information ready first.

A permanent loan

Having a credit card is something like having a permanently available loan in your purse or wallet.

In spite of some recent negative publicity about the dangers of debt, many millions of people use their credit cards responsibly and without any problem.

There are two things to consider as part of your application though:

• remember only to use your credit card to the extent you can comfortably afford to repay;
• the credit card issuer will typically want to ensure that you’re both a responsible individual and able to meet the potential credit cards repayments if and when you use it.

To get a credit card, apply with the right information

A credit card provider will typically want to know certain key information about you.

This may include (evidence may be required):

• your age;
• your current employment details (it may be harder to obtain a credit card if you work only part-time or work in some forms of self-employment);
• your earnings level;
• a permanent UK address and contact details (you do not necessarily need to own your own home);
• details of your other financial outgoings and commitments;*
• an insight into your credit history.*

*These items are typically checked partly based upon your declarations but also based upon external credit reference agencies.

Not intrusion – just common sense

The credit card provider needs this information to form their view as to whether or not you will be able to meet the commitments that may come with a new line of credit.

They will also use this information to decide exactly what a suitable level of credit (the credit limit) is for your card if they decide to issue you with one.

Applying

If you have serious credit history problems or are already in significant debt, it may be highly advisable, for several reasons, to avoid making an application prior to taking professional advice and guidance.

If that’s not the case, find a suitable credit card, apply and see what happens!

The basics of credit cards

Credit cards are a common way of borrowing money although in recent years they have become a little controversial due to debt concerns.

The credit card – how it works

The first credit card appeared in the UK in the 1960s.

The principles of their operation have not changed much since though some of the technology features have:

• you apply for a credit card and if approved, your card will be issued and it will contain a credit limit;
• your credit limit is the maximum amount of debt (in a sense loan) that you can have outstanding at any one time – it is set based upon a number of factors when you apply including your income, outgoings and credit history;
• each month you pay off either the entire outstanding balance or a lesser amount which must not be lower than the specified monthly minimum repayment amount;
• any balance outstanding at the end of the month will typically incur interest charges at a published rate unless you have a special 0% interest deal).

Controlling debt

The ease of using a credit card and some providers’ historic tendencies to advance what may be perceived as larger credit limits, has led to some expressions of concern that they encourage imprudent spending and slipping into debt.

However, many millions of people globally find credit cards to be an invaluable and flexible tool and manage their use without problem.

Bank cards explained

If you say you are looking for bank cards, did you know that this could mean two completely different things?

Bank cards are usually associated with bank accounts. These will be the cards that perhaps you may use alongside any cheques you write or when you pay using the ‘Chip and PIN’ system, or when buying stuff online.

However, bank cards could also mean for some people, credit cards.

So what are the differences?

Before we start, it should be noted that there are many different variants of bank or credit cards and to look at all the options would take up more than one article! Here we discuss the main differences.

Bank cards
These are the cards that you typically get as part of your bank account:

• When you use these cards, the money comes straight out of your bank account;
• You can withdraw cash (up to a set limit) from your bank account using this card and in most cases (as long as you are in credit), you will not incur a fee.

Credit cards
These are the cards that are not linked to your bank account. You may have a credit card with your bank, but the two accounts are usually separate:

• When you use these cards, the money builds up on your credit card account. Once a month you will receive a statement detailing how much you have spent on your credit card and you can either clear that balance in full or pay the minimum amount (which will usually incur an interest fee);
• You can withdraw cash (up to a set limit) from your credit card account using this card but in most cases you will incur a fee (normally a percentage of the amount taken out);
• Purchases made on a credit card may often give you more protection. Say for example, you bought something online on your credit card and it never arrived but you did not get a refund, your credit card provider may refund you the money themselves and pursue the seller themselves.

So, these are some of the key differences explained between bank cards and credit cards. When applying for any sort of financial product, whether a bank card, bank account or credit card, do ensure that you fully understand what you are signing up for to ensure that it will meet your needs.

Bank credit cards

What are bank credit cards? These are typically credit cards associated with a bank. If you are existing customer with a bank, you may find that you are offered a bank credit card as part of the package. However, while this may seem the easiest thing to do, by applying for bank credit cards, it may make sense to shop around first to see what other credit cards are offering.

But first of all, why may you want a credit card? Many people find having a credit card useful. This is because:

• It can potentially allow you to purchase something and have up to 56 days’ to pay the money back, interest-free;
• If you buy something with a credit card, you may be better protected if something goes wrong with the transaction. For example, you buy tickets for an event and the company does a runner with your money; or where you are trying to get a refund for something you have bought on your card and the seller refuses to pay up. In cases like these, the credit card provider will often step in and try and resolve the situation, so you will often get your money back;
• It may be easier to carry around a credit card rather than wodges of cash!

These things aside, there are some credit cards that offer incentives if you take out a card with them. As an example, these may include:

• Cashback offers where you get a percentage of your spend back;
• 0% interest on purchases and / or balance transfers for a set period of time;
• Charity cards where a donation is made to your chosen charity when you sign up for a credit card and / or every time you make a purchase;
• Member benefits such as free travel insurance with your card (which will normally be subject to you purchasing your holiday with your card) or discounts on products such as wine or money off at selected retailers etc.

With all these different incentives and product features and benefits available, you can see that potentially you have a choice of credit cards available., So, if you are offered bank credit cards, do make sure you have researched all your options before signing up to one of them.

Looking into credit cards? Your eight top tips

Some mornings you may have more offers for credit cards dropping through your letterbox than anything else. It may seem that providers are offering new deals left right and centre. So what may you wish to consider when getting a new card? Here are some top tips.

1. Find a card that meets your needs. There are so many cards on the market that it would be easy to just stick a pin in a list and hope for the best. However, you may wish to remember that a credit card is a financial product like any other, and needs to be chosen with your individual requirements in mind.
2. Look at the interest rates charged. Or more accurately, look at the APR (annual percentage rate), which takes into account the interest rate and the other costs of the borrowing (but not always all the other fees that are charged, such as for late or missed payments).
3. Consider cards with an introductory rate. Some credit cards may offer an introductory rate which seems outstandingly low. However, you may wish to bear in mind how long the introductory period is, and what the rate will be when that period has ended.
4. What benefits are offered? Does your card provider offer any additional benefits like cash back or reward points? If these issues are important to you, the rewards on offer may help you make your decision.
5. Consider whether you can use the card abroad. Some cards can be used in foreign countries without having to make any special arrangements.
6. Consider how widely the card is accepted. Some cards are accepted almost universally, whereas others may not be so widely accepted.
7. Look for balance transfer deals. Do you have a large balance that is costing you dearly on interest on another card? If so, you may wish to look for balance transfer deals. Some may offer to accept balances for as little as 0%, although do check the rates they offer for purchases and cash advances. And do note that most balance transfers will incur a fee of some sort and transfers may have to be made within a certain time frame.
8. Exercise some discipline. Finally, perhaps the top tip of all about credit cards is that they need to be under your control, rather than the other way around. Accordingly, you may wish to make sure that you can afford to repay your balance within a reasonable time.

Choosing credit cards — how to pick the right one for you

A lot of people are surprised at how many credit cards there are to choose from. These products aren’t just given out by financial institutions now and you can get credit cards from supermarkets, department stores and even from your favourite football club or charity! Having a lot of choice is always a good thing but this choice may come with some problems — choosing the right card for your needs may be harder than you think.

There is one vital thing to remember before you start your selection process. Unless you pay off what you spend on any credit card when your next statement comes in then you will be charged interest. The money you are spending here is a loan and, like any other loan, it can cost you money. So, you may want to take some time to research your options. The lower the interest rates you are charged, the less money you’ll have to pay in interest.

But, choosing the right card isn’t always just a question of looking for the lowest interest rates. There are many different kinds of card deals that you might want to take advantage of that may have an influence on your decision. Let’s take a look at some of the options on offer at the moment.

• Balance Transfers: Some credit cards may offer you the chance to get a balance transfer deal when you apply. Here, you transfer the money that you owe on a different card (or cards) to your new one. Many people will do this because the balance transfer deal comes with preferential interest rates or even 0% interest. You may find that the term of the deal will vary here — some cards, for example, might offer you a lifetime balance transfer rate whilst others will have a deal for a set period only.
• Purchasing Discounts: Some card suppliers will offer new customers a period of time where they are given 0% or discounted interest rates on new spending. This may be given as part of a balance transfer deal or as a stand-alone offer.
• Discounted Interest Rates: In some cases you might prefer to take out a card that comes with lower interest rates than the norm. These deals may be set to last for a few months or may be offered as a lifetime deal.
• Cashback/Rewards: You may be offered special cashback or rewards schemes with a card. A cashback scheme will simply give you a specific amount of cash back usually based on a percentage of your spending. Rewards cards work in much the same way but here you may well be given loyalty points for schemes such as AirMiles or store loyalty programs as a percentage of your spending.
• Charity/Affinity: Some cards are branded with a charity or with another institution such as a football club. Here the company will give a percentage of your spending to your chosen charity/affiliate company.

If you are in the process of comparing credit cards then you may well find it useful to consider these options. You may still want to give special thought to the interest rates you’ll be charged — higher interest rates may not be a big deal to someone who pays their card off every month but they may be more important to those who regularly carry over a balance.

A guide to 0% balance transfer cards

Nowadays a lot more of us are taking out credit cards that come with balance transfer deals. The deals you may be given here will vary from card provider to provider — one of the most popular options is that given by 0% balance transfer cards. Let’s take a look at how this might work for you.

A credit card that has any kind of balance transfer offer comes with a basic deal. This is designed to encourage new customers to sign up for a card. So, if you transfer across your balance from one or more existing credit cards to a new one then the card provider will offer you a kind of discount as a reward. This discount takes the form of a reduced interest rate or, as we’re looking at here, zero interest.

So, with 0% balance transfer cards you may well find that the balance that you transfer to your new credit card company does away with your interest charges for a time. Your previous card supplier may have been charging you high rates of interest on the money you owe. Your new supplier may be offering you a better solution.

The way this works is simple. Your new card supplier will offer you a deal that gives you a period of time where the balance you transfer across has no interest at all charged on it. This is not likely to last forever — deals may be set up to last anything from a few months to over a year. And, once the deal is over, interest will be charged on any of the balance that you still owe at the rate agreed when you signed up for the card.

You might find that some 0% balance transfer cards come with additional offers to make them look more attractive. Some, for example, may come with 0% interest deals on new purchases. So, for example, you might be offered a deal where you get 0% charged on your transferred balance and on anything you spend on the card. In some cases the two deals may be offered for the same period of time. In others the new purchases deal may only be offered for a shorter period.

One thing that you may want to think about here when you are comparing cards is the standard interest rate on offer. This is the rate of interest that will be used when your deal is finished and it may also be the rate that you have to pay on new spending. In some cases the rate here may be quite high so you may want to shop around to find the best deal.

0% balance transfer cards may well, however, be a suitable solution for some consumers who want to try and repay their credit card borrowings. Many people find that they get some breathing space here where they don’t have to worry about having interest added on to their debts and can make a real effort to pay them off once and for all.

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