One of the worst features of credit cards is what is known as negative payment hierarchy. An example of this if the borrower undertakes a balance transfer to a zero balance account, the interest on the balance transfer is zero, whilst if the borrower uses the same card to make a new purchase, that purchase will attract interest.
Negative payment hierarchy is when credit card companies use any payment made to pay off debt which is accruing at low or zero interest, whilst the debt which carries higher interest continues to accrue charges at the higher rate.
Personal loans can be amongst the cheapest way to borrow, but we can’t help but stress how important what the reason you are borrowing the money for.
If you are looking to finance a new flat screen television or go on holiday, or any other luxury, a personal loan is not your best option. Fortunately the financial crisis has made most people more aware of their finances and changed the way they think about borrowing.
Trying to pay off debt that has piled up can make borrowers feel very scared and vulnerable. Often those who find themselves struggling to pay off a mountain of debt end up fearful over what the future may hold, don’t know whom to turn to or what to do.That kind of insecurity is usually a result of inability to decide what to do and what the consequence of a particular course of action are.
Many people confuse fact with fiction when trying to decide how to solve their problems so in this post, we try separate truth from fiction.
No matter how responsible you are when it comes to credit cards, they still come with a number of pitfalls. As soon as you navigate your way past one, yet another emerges. Here are 9 credit card pitfalls.
The Debt That Never Ends. The minimum payment on many credit cards barely meet the interest being incurred on your debt, which means if you only ever make the minimum, you’re debt will never reduce and seem to be endless. Occasionally a card will be offered with such a low minimum monthly payment, that your debt ends up actually growing.
In the first part of this series we looked at nine credit card pitfalls. As we said previously, even for the most responsible users credit cards represent a minefield so here are nine more pitfalls you should be aware of.
Insurance offers that credit cards tend to present are horribly over-priced. You should avoid signing up to these and instead look on the internet for a better deal.
Many of us who use current accounts for our primary bank account make a number of common mistakes, thinking that it is nothing more than a place to stash one’s cash. Used in the correct manner, the humble current account can be so much more than that. Used in the wrong way it can prove very costly, resulting in having to hand over lots of cash to your bank for no reason.
Here are four current account mistakes to avoid.
If you were to approach the manager of your local branch and ask him or her how to get free credit, the chances are not very high that they will fork over the information so easily.
Of course it is completely possible to borrow money interest free, and we will explain three methods of doing so.
Fact: Only 4% of Australian families who have dependent children have adequate life insurance
Whilst most Australians who work have some kind of life insurance included as part of their superannuation, more often than not, this may be inadequate to cover those that depend on them, in the event the worst happens.
When used properly, personal loans are a great way to meet any funding shortfall that you may have. That is to say, forget about using them to pay for holidays or whatnot.
Funding luxuries are not the best way to use a personal loan. But if you have a genuine need to borrow $10,000, or an amount that a credit card is just not going to cover, then a personal loan is the product for you.
Here are three tips when shopping for a personal loan
So why so much online angst over credit cards? Well the very real overwhelming fear that most people have of being in over their head in debt. Others worry that having a credit card, whilst not resulting in too much debt, may lead them to spend more money than they ordinarily would.
A lot of people who don’t have credit cards, just don’t see the point or any benefit from owning one. So the purpose of this piece is really to show how credit cards, if used correctly can be really beneficial.