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Archive for August 18th, 2009

Home Improvement Store Credit Cards Are Still More Attractive Than Ever

Aug 18

Posted by Jay Miller in Credit Cards | No Comments

by Jay Miller

Almost any home remodeling project ends up being much more expensive than you think it will be. The cost of materials, labor and permits all add up to large sums of money by the time everything is said and done. It’s not cheap to work on your home.

You could borrow cash from a bank to help pay for all the work, but banks always expect you to pay back not only the loan, but also the interest. A $10,000 bathroom remodel may actually end up costing you $20,000 by the time you’ve paid back all the interest. Instead of going for a bank loan, why not look into some of those credit cards offered by the larger home improvement store chains? As long as you have decent credit and a plan to pay them back, it’s usually an option worth considering. Those credit cards have several unique advantages:

Zero Interest for a Limited Time: Many of those hardware store credit cards give you a period of 6 to 12 months with zero interest charges as long as you use the credit card in their store. Some home improvement credit cards offer no interest as soon as you open them. A year without interest accruing could save you thousands of dollars in payments depending on the size of your project!

Big Store Discounts: Home improvement store credit cards often give you sale prices on items you buy or services you contract through the store. You might save 3% – 10% on the total cost of the project, which could be a pretty good chunk of change by the time you’ve added it all up.

Convenience of Shopping For Everything At Once: These large home improvement stores now offer just about everything you could need to improve your home and most offer lots of contractor services to actually do the work for you. Instead of visiting a dozen stores to find a kitchen faucet you can go to one store and buy a faucet, a sink, a refrigerator, all the cabinets and even hire and schedule the installers all at one time. With one store credit card you can purchase the materials you need as well as hire someone to do all the work for you!

These hardware credit cards can end up being a win-win for both the customer and the store. The store sells more inventory and makes more profit while the customer is able to “borrow” more money to make home improvements without having to pay any interest for a limited time! A limited time of no interest payments, possible discounts and the ease of ordering everything in one store makes those large hardware store credit cards a pretty good idea in many cases!

About the Author:
Need to repair your home but have a low credit score? You should find out more about low credit score house improvement loans and see how you can still get the money you need.

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Your Good Credit Report is Your Life Line

Aug 18

Posted by John Slidenger in Credit | No Comments

by John Slidenger

Great credit is key to getting good loans. In this market where lending is tight and money isn’t freely flowing, the only way to get someone to lend you money is with good credit. Here are a few ways to achieve this.

Credit monitoring services like ones from myFICO is very good because it automatically keeps track of your credit report and alerts you whenever there are any changes. You can of course choose to do it yourself but that’s 1000x harder.

Every year, you can get one credit report from each agency (there are three total). If you spread it out and get one from each company every couple of months, you can theoretically keep track of your scores and stay on top of it without much time in between.

You need to make sure you don’t use up all your credit all the time. This is because part of your credit score is dependent on your utilization rate, a measure of how much credit you have available versus how much you use.

Every time you apply for credit, they will ding your credit report. If there are too many within a short period of time, the score will be affected because no one with a good financial picture will keep apply for credit. If it’s not absolutely necessary, space out your applications so it doesn’t look suspicious!

Don’t let any credit card be inactive because credit card companies are starting to cancel them now. If your card is canceled, the utilization rate will automatically go down because your available credit will go down. Therefore, you should use your cards every once in a while even if you don’t need it.

Having more than one credit card will actually help your credit. Lenders will sometimes look at your credit report and deny you because you don’t have enough different forms of borrowing. They see a lack of information as a negative so even though you may have a ton of cash somewhere to pay off any loan, the absence of proof is a big drawback.

Having multiple types of debt (car, mortgage, credit card, student loans) among others is good because it shows that you are able to handle bills that come due every month. It also works the same as having multiple credit cards.

About the Author:
myFICO is the best service for making sure your credit is up to date. Most people don’t know but myFICO promo code are available all over the place so you just have to take advantage.

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Why Higher Card Rates Make Credit Card Debt Reduction a Priority

Aug 18

Posted by Chris Blanchet in Credit | No Comments

by Chris Blanchet

Over the past few months, credit card debt reduction has become a lot more prevalent to today’s consumer. Why? Not only has government made this a priority, but with rates increasing steadily month-to-month, borrowers recognize that there are some heightened risks to carrying debt this way. In this brief article, we will look at three of those risks, which should help us better understanding why credit card debt reduction needs to be a top priority.

The Costs Of Higher Rates Hurt

When we pay more for credit, we have less left over at the end of the month. Whether this amount directly impacts the minimum payment required or ends up eating up any principal payment, we end up “paying” for it all the same. Higher interest costs, especially when compounded or added up over more than a couple of months, reduces our ability to save for a rainy day and weather periods of reduced income or job loss. For this reason alone, credit card debt reduction is something we should all focus on.

Higher Rates Hurt Credit Scores

When the card lenders increase rates, they essentially reduce the borrower’s ability to repay the debt quickly. Why is this so important? Because the higher your balances, the lower your credit score. This is reflected in the Utilization aspect of the FICO score, which accounts for nearly 30% of the score. By making credit card debt reduction a priority, borrowers should aim to at least reduce their utilization to 75% or less.

Higher Rates Can Result In Higher Delinquency

As the unemployment rate remains higher and job losses are anticipated to continue, many people already have a tough-enough time making payments on their cards, let alone considering a credit card debt reduction strategy. Increasing card rates can nudge borderline borrowers into delinquency and thereby result in heightened stress at home and the potential for other long-term problems, many of which are not even financial-related.

Without question, credit card debt reduction has not only gotten the attention of individuals, but the government as well. The risks to higher rates are fairly evident and including reduced cash flow for the borrower, possible damage to credit scores, and higher probability of default.

Borrowers who make credit card debt reduction a priority are positioning themselves to withstand additional turbulence in card rates. This is quite likely a very safe and wise approach since average rates can easily reach 17% (from today’s average of 14.94%) by year end.

About the Author:
With more than 16 years of experience in the financial services industry, Chris has helped thousands of people with debt management strategies. He maintains a regularly updated blog at How To Repay Debt.com.

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