We have helpful finance management advice on debt, loans and credit cards

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In this high-tech era of computers and machines, the purchasing power of people is mostly based on credit. Nowadays, credit cards are almost indispensable in almost any business transaction. For one, nobody can purchase anything online without a credit card.

People who have a poor credit history though, will have a hard time getting or renewing their credit cards. This is where prepaid credit becomes useful.

There are lenders that offer prepaid MasterCards and/or prepaid Visa Cards. Both these cards can be used like a regular credit card. It is even hard to distinguish which card is prepaid or not, by simply looking at it or even using it.

This is basically how prepaid credit cards work. When an account is opened, the card should be pre-loaded with cash up-front. This is like paying for a pre-paid calling card.
Prepaid MasterCards or Visas can be used anywhere as long as these cards are accepted.

The prepaid credit card advantage:

1. Prepaid credit card can be easily obtained. It can be purchased online or in local retail stores. It does not require any credit check or proof of income.

The only thing to do is to fill out an application, pay a small fee for setting-up the account and load the card with cash. The amount of cash loaded will be the credit limit

2. No interest charges.

When a prepaid MasterCard or prepaid Visa is used, there is no interest charge unlike the regular credit card. The reason for this is that the money used is the owners actual money therefore no interest is needed.

3. Prepaid credit cards are free from financial or credit problems.

4. Prepaid cards can be used almost anywhere. Prepaid MasterCards and Visa cards are almost accepted anywhere in the world.

Disadvantages of Prepaid Credit Cards:

1. Usually a set-up fee of 5 to 50 dollars is needed when an account is opened. Then another fee of $5 or more is paid every time more money is loaded onto the card.

Regular credit cards usually do not charge a set-up fee or annual fees.

2. Cash up front is needed before any purchase could be made with the prepaid card.
This could be an advantage since compulsive spending can be avoided.

3. There are some prepaid credit cards that cannot be used to pay regular payments such as monthly electric consumption or online services.

The Conclusion:

The prepaid credit card is a definite help for people who have past credit problems. It is just a matter of choosing the right prepaid credit card that suits ones needs.

5 Steps To Credit Card Debt Reduction And Money Saving With A DIY System

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Have you succumbed to the lure of credit cards and found yourself in a bit of a pickle because of it?

Pull up a chair and have a seat – Welcome to the ever growing club of consumer debt. Your biggest challenge now is to dig yourself out of this situation and avoid having to pay anyone to help you do it.

The options at this stage are usually as follow (depending on the level of credit card debt):

Consolidate into a loan.
Debt Management.
Bankruptcy.
Do Nothing.
Just pay off the cards over as long as it takes.
Make the minimum payments and keep spending.
Make an effective DIY plan.

The more popular solutions – such as consolidation loans and debt management -we see being touted everywhere are the ones that put your money in other peoples pocket. I dont know about you but for me becoming free from debt should not involve spending more money, or *borrowing your way out of debt*.

So how does a DIY system work?

To break it down into 5 steps it looks something like this:

1. Address your spending habits and why you are in this situation.

To ever win with money and have a comfortable financial future you have to control your money not the other way round. Take complete control and set yourself some realistic yet desirable goals for the future.

2. Know your options, the ins and outs of how they work and why they are not for you.

Along the way you will be tempted by quick fix make it all better solutions like consolidation loans and debt management. As mentioned already there is a multibillion dollar industry making a very healthy profit from consumer debt. Your DIY plan does not involve *paying to get out of debt*.

3. Know your situation.

Any debt relief system requires a bit of budgeting. As long youve followed the rest of the plan so far, have desirable goals and no intention of taking an easy -and expensive way out you wont have trouble budgeting.

The other thing to know is your credit score. There are a staggering amount of mistakes found on credit scores that result in people paying more interest than they should. If you are eligible for lower rates and 0% APR cards to move expensive balances on to you need to know about it.

4. Minimise outgoings, Maximise income and leverage your cash flow.

If you could be paying less for utilities and day to day expenses you should. There is a very fine art of money saving that you will become very good at if youre going to be successful at this.

Home economics, consumer education and bargain hunting can save you incredible amounts of cash that can go toward paying off your debt quicker.

If youre really serious you can take it a step further and create a secondary source of income. Be it a second job, or using a natural skill/strength you have that can earn you money in your spare time.

With the opportunities available online its never been easier to find those who are seeking out some knowledge, experience and skills that you have and that they would pay you money for.

5. Form your system and put it into action.

Having followed the first 4 steps and laid some sturdy foundations you are now in a position to develop a quite powerful snowball plan. That is a system that gains momentum as you execute it.

This step is completely dependant on the first 4 steps and generating an extra figure that you can assign to snowballing your credit card debt. As the debts get paid off the figure grows and subsequently clears the rest of the debts a lot quicker saving you a tidy amount of interest in the process.

It is very possible use a DIY plan and enjoy great success from it, yes it takes a bit of hard work and discipline on your part but the alternatives just cost you more and keep you in debt for longer.

Its your money, its your life if you want to truly own them both then you have to take control not give it over to someone else. Control or be controlled, the choice is yours.

4 Principles to Follow to Avoid Credit Card Debt During the Holiday Seasons

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Business people usually cash in on the holiday seasons to maximize their sales and profits. It will be high season for them. They will stock up, price up and smile all the way to the bank. They know that people will be less restrained in their suspending than at any other time. It possible that you may be among the many who have suffered post-holiday season financial stress, and want to make sure it does not happen again. Your success in this will be determined by how well you control three critical factors: your increased rate of spending, the manner in which you finance that spending, and the heavy financial demands that follow in the subsequent month.

Financing Using Plastic

With holidays like Christmas or the New Year seeming to come round too quickly, people often find they have not saved up enough for their celebrations. Moreover, budgeting is an alien concept during this and spending can spiral out of control. To cover the inevitable shortfall in resources, the credit card is an obvious attraction. There are advantages to using the card to finance your expenditure:

i) It gives you free access to about a months credit.

ii) It gives you the temporary ability to spend beyond your current means.

iii) It allows you to track your expenditure.

iv) You do not have to carry lots of cash around with you.

Use of credit card, how ever, does carry with it significant dangers if it is not carefully controlled. Research indicates that spending could increase by up to 35% when using a credit card compared with using cash. Here are some key principles to help you guard against running into credit card debt trouble.

1. Spending Plan

If your spending is going to exceed your income for the festive month, consider cutting intended festive expenses, or other expenses, to stay within your income. I am assuming you have drawn up your spending plan for that period. Thats where a credit card comes to the rescue. Though not readily apparent, the use of your credit card can create distortions in the management of your finances. Unless you are monitoring your spending in both cash and credit, there is a danger that you will be uncertain whether or not you are living within your means. It would therefore be unwise to begin using a credit card if you are not in control of your finances, that means using a spending plan.

2. Debt to Income Ratio

Do not forget that use of your credit card adds to your indebtness. In managing your financial affairs, one of the key indicators to watch is your debt-income ratio. This is monthly debt repayment as a percentage of your monthly after-tax income, and raises a red flag when you tinker with too much debt. A ratio of over 20% is becoming unhealthy. If you already have credit card debt that is overdue, do not add to it.

3. Bridging Finance

Use of a credit card is ideally a means of short- term financing of your operations. That means settling any debt incurred using your card within days. Paying the minimum balance will not do. If you are not confident that you can pay it off in full, you wound do yourself a huge favor by not using a credit card. Should you decide to go ahead and use a card, you need to be prepared for extra costs in interest and penalties associated with extended credit. This adds to your expenses, and you need to be ready to be ready to reduce other regular expense to accommodate this, otherwise you run the risk of creating ongoing hard-core debt

4. Net Worth

Credit card debt incurred during the festive season is usually for consumer spending- paying for your holiday, buying gifts, entertainment, traveling expenses, etc and creates what is known as consumer debt. This kind of debt adds to your liabilities, but contributes nothing to your assets. Your net worth is reduced to the extent of consumer debt incurred. Shrinking net worth is not good for your financial health. So do have yourself a happy holiday. But as you go about it, finance it in a way that gives you the comfort that you won’t be debt-laden the following month.