Credit Card Payment

  Credit Card Payment  - Your Car Payment is Part of Your Credit Card Debt Problem  - Feb 27, 2007  

If you are in credit card debt, you probably don't want to admit that your car payment is part of the problem. But it is. You're thinking, but I need a car and my car payment isn't related to my credit card.

In some ways, that's true. But from a cash flow perspective, your car payment severely limits your ability to pay off your credit card debt.

Sell your car. Buy a cheaper one (ideally, pay cash for the new car). Use the money that you're saving (on the car, the insurance, and everything else) to pay down your debt. You'll pay off your debt faster. In a few months or years, you'll be driving a better car than the one you have right now.

You probably have some sort of attachment to your car. Get over it. The attachment to the car is keeping you in debt.

Let me tell you my story: a year ago I bought an SUV with every feature the manufacturer made. It cost me nearly $40,000. The payments were about $600 per month. The insurance was outrageous and I felt like I was always at the gas pump. Besides that, I had a pile of credit card debt.

So I sold the car and bought a used Honda Civic. I cut my payments and insurance premium in half. And I feel like I'm never at the gas station. That simple solution alone added hundreds of dollars to my monthly budget. It sure made it a lot easier to pay off my debt.

Yes, it's painful. No, my car isn't as nice as what I used to have. But having all that extra money sure is nice. Now that I'm debt free, I just want to figure out what kind of a car I buy next.

  Credit Card Payment  - 7 must know credit card bill related terms  - Apr 5, 2007  

The monthly credit card bill might be Greek to someone who is not familiar with the credit card terminology used on it. To make sure that you understand the documents properly seven important credit card terms are explained below.

1. Amount due / Due Amount

This is the minimum payment due per month and not the total amount due on the card.

2. APR (Annual Percentage Rate )

The interest charged by credit card company on your Due amount.

3. Due Date/Date Due

It is the date by which, the credit card company expects your payment. It is essential that you abide by this date. Care should be taken to ensure that the payment reach the credit card company and you don't fall into a last-minute-rush trap. If you don't send the payment the credit card companies slap a late payment penalty on you and your credit rating might suffer.

4. Grace Period

Grace period allows to purchase items or services with out paying the interest. It is in the interest of credit card holder to take the advantage of this grace period. However, he should take care that the borrowing should not exceed his repayment capacity or he will fall into a debt trap. One essential requirement of grace period is that you should pay your credit card bills by the end of every month. If there is no grace period the interest is charged on your credit card purchases from day one.

5. Cash Advance

The amount you took as cash loan with your credit card. You could have taken this amount from a Bank or credit cards ATM. Cash advance come with a cash advance fee and the rate of interest are higher than regular APR. So, you need to keep a tab on taking cash advances with your credit card.

6. Minimum Monthly Payment

It is the minimum amount which you must pay to the credit card company to remain in their good books. Paying monthly minimum is the least efficient and most expensive way to repay your credit card debt. The accrued debt could take years and years to repay if you make only the monthly minimum. It is in the best interest of the credit card companies because it gets them the maximum revenue. So, they encourage a credit card holder to pay the minimum balance and try to keep it a low amount by which, the credit card holder gets comfort. However, the credit card holder should not fall into the trap and try to get rid of the credit card debt as soon as possible.

7. Late payment penalty /Late Fee

The amount credit card company charges when they don't receive your payments by the due date.

These seven terms form the basis of any credit card offer. In one way or another you will find them listed in your credit card statement. The positives and negatives of these terms if understood carefully by a credit card borrower can help him save a lot on his credit card bills.

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