Monthly Archives: September 2012

Late Credit Card Payments can Hurt your Credit Score and Lead to Higher Interest Rates

With the struggling economy, many people are having trouble paying their monthly bills. If you are one of those people, being late on one payment might not seem significant; however, your creditors will not just ignore your late payment. Making late credit card payments could really damage your credit score. In fact, your credit score could be impacted for years. This is a major reason why their will always be a market for payday loans and lenders that offer short term paycheck loans, which can provide borrowers with the quick financing they may need to cover a bill in between their paychecks.

When you make late payments, you will be charged up to $35 a late fee. Each month your payment your payment is overdue, you will be charged another late fee. These fees can really add up, and your bill will just keep growing.

When you make late payments, your creditors will contact the three credit bureaus. Normally, you need to be at least 30 days late before it is reported, but it will stay on your record for seven years.

Making timely payments is one of the biggest factors when your credit score is determined. If your payment history is poor, your credit score will drastically decline. In some cases, you may have misplaced the bill or just forgotten to pay it. If you normally pay your bill on time, your creditor might forgive a one-time mistake. You should call to ask them to waive the late payment fee.

If your credit card payments are more than 60 days late, your account is considered delinquent. In this case, your creditor could increase your interest rates. Your rate might even increase to the maximum rate that is charged to cardholders. If your rate increases, other fees will also increase, and this will result in very high balances. After a few months of paying your bill on time, your creditor will probably go back to the original rate.

Being 30 to 60 days late on one credit card could have a slight impact on your score; however, the damage will be minimal. If you are 30 to 60 days late on more than one credit card, the result will be worse. If you are more than 60 days late on any credit card, the consequences to your credit score will be drastic.

It is a good idea to check your credit score regularly. Many people find mistakes on their credit score, so you need to correct any inaccuracies. In order to maintain good credit, you also want to pay off high balances and make timely payments. Credit card bills can get out of control before you realize it, so keep the balances as low as possible.

Late credit card payments will result in higher fees and higher interest rates. This will hurt your credit score, and it will hurt your chances of obtaining new credit. If you start making your payments late, you will get in the habit of doing so, and it will be hard to recover. The best option is just to pay your bill on time, and your credit score will remain acceptable.

Why Payday Loans Should Be Financing Of Last Resort

Many people run into tough financial times now and then. You need money in a hurry but where do you turn? You may decide that getting a payday loan is a good option. It’s important to know that getting a payday loan should be an act of last resort. Consumers who are desperate for an emergency loan would be better served doing an online search for an unsecured loan, or going to a local bank or credit union to inquire about a signature loan, which would offer a better rate and more payment flexability.

Payday loans are easy to get. You only need to meet a few minimum requirements and there is no credit check. But like anything else in life, just because it is easy it doesn’t mean it’s good for you. It’s easy to go through the drive-thru and get some fast food instead of cooking something healthy. It’s easy to sit in front of the TV instead of getting up and exercising. Payday loans can be just as bad for your financial heath.

A payday loan can put you in a financial hole that can be hard to climb out of. Let’s say, for whatever reason, you don’t have enough money to pay your rent this month. You get a payday loan for $500 and pay your rent. The loan will be due when you get your next paycheck (presumably in two weeks).

Think about how much of that check you will have left after you deduct $500 from it. There probably won’t be much left. Most payday loan companies will allow you to “rollover” the loan for another two weeks. All you have to do is pay the interest that is due and take out a new loan for $500. By the time you get your next check (two more weeks) your rent is going to be due again, exploring options to make good financial decisions is always advisable as opposed to rushing into a bad loan decision.

You rollover the loan once again and continue to pay just the interest. This is how some people are stuck with these loans for years. If you keep a $500 loan for 12 months you could wind up paying nearly $2,000 just in interest and you would still owe the original $500.

Because the loans are short term (usually no longer than two weeks) the annualized percentage rates can be astronomical. If you have to keep the loan for a year you may be paying 400, 500 or even 600 percent interest. Some people call payday loans “legalized loan sharking.”

Fourteen states have already outlawed payday loans because they are seen as predatory lending. They did this because so many people were not able to pay off their loans because of the high interest rates they were being charged.

There is a need for payday loans, however. There are those times in file where you have no other options.

If you decide to get a payday loan make sure you have a plan to pay it back as quickly as possible. If you are unable to pay the whole loan amount when it is due make sure you pay something on the principle, not just the interest. This will at least give you a chance to pay the loan off in a reasonable amount of time.