Do you remember the first time you received the credit card? Yes, I am talking about that five hundred limit credit card which gave you so much more happiness than a fifty thousand dollars card now. How many of your stories revolve around “Oh my god, I do not know how to pay my credit cardsâ€,†I am leaving this country so I am going to accumulate as much as credit and run awayâ€? Well, I have seen these people myself and more or less I have myself gone through that phase.
Most of the students who come to US first time from Nepal do not have as much as credit awareness. Our, Nepalese, society is not built up in credit and credit history. I know there were lenders in villages, who used to take 36% interest rates. I remember people calling them oppressors well if you are not smart enough you will end up in the oppressors hand here in the first world .Credit card debt is one of the major problem with people coming to US as students. The endless battle with the creditors, running away from debt collector and avoiding phone calls might become daily routine that started with T-shirt gift you received in front of your college gates for applying for one.
You know you are in Debt:
Swiping plastic and buying that expensive leather coat or purse from Macy’s might not be as much fun in the beginning if you had known that you would be paying almost double the amount. And I am sure at the time for paying for that same coat the sound of your breaking heart and wallet would not be as fun. If you are one of those impulsive buyers then beware! That money is not free, and you know very well. If you are spending around 33% of your income on credit cards then most likely you will end up in big debt.
Overcoming Debt:
Negotiate! Negotiate! Negotiate! You will be amazed by the power of negotiation in USA. He who can negotiate ultimately becomes the winner. Remember, there is always room to negotiate. If you are in debt and you need to over come, then pick of that phone and talk to the credit card company, negotiate your debt or interest rate. The interest rate for a defector goes up to 33-36% plus fine. If you are in that stage, try using free debt consolidation. They will negotiate with credit card companies for you for free. Yes, it is free for you and that is also in US. Well, not exactly they will receive money from the other ends or some other NGOs, where your tax paid dollars are worked.
Now if you are not in that deep water, still you have chances of survival then consolidate your debts for low interest rate. Now. The biggest mistake people make, they are smart and survived the high interest rate but now people seeing the other empty CCs start swiping again or start swiping the new CC with no interest rate for year. Well, you know very well were you going to end up again, back to square one.
Building your Good Credit Report:
-There is a myth “if you do not leave balance in CCs you won’t have best possible score†that is wrong .This tells Creditors that you have enough income to pay off.
-If you have to leave balances in your credit cards, do not make it more than 33% of your credit limit.
-Always pay more than minimum amount every month and ON TIME.
-If you have more than one credit card, then try to distribute your expenses equally in all credit cards. This is hassle for you but this actually helps getting you new creditors and building trust on you.
-Do not carry more CCs then needed .Usually 3 should be more than enough.
-Keep track of your CCs; be extra careful of credit cards thefts. Though majority of credit cards often do not hold your responsible .It is best to keep track of your credit card activities.
Selecting a Credit Card
-Select no annual fee- this fee is ridiculous .Most credit card should and would waive it if you make at least a purchase a year.
-negotiate with the interest rate .Remember your normal interest rate can range from 6.99%-23.5%
-Get credit card that pay- when I say that I mean actually cash bonus. Most of the cards offer cash back from 0.25%-2%. Or at least some rewards.
Spinning your brain: well there is nothing for me to spin, just don’t let CCs companies spin you; spin the CCs in your wallet for your advantage.
Wouldn’t it be wonderful you get your money back, without paying interest for the money you spent just by using that plastic!!! :)
Disclaimer: This is intended for sole purpose of education for people who wanted to know about credit cards. This is summary of my experience and relentless effort of reading MSN money 2 hour every morning with my coffee at work. ïŠ
Hope it helped somebody!!
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