Dollar Stretcher Guest Blogger

March 2011 - Posts

• Debt Rescheduling: What it means and why it works so well

  Debts can get out of hand. Most people in trouble with their loans find themselves confronted with some very unpalatable situations. The problem is usually that they’ve waited too long to deal with the issues created by loans getting out of control. The result is they undergo the debt collection process, and it can sometimes be a pretty grim experience. It’s possible to avoid these nasty situations by debt rescheduling, which is basically a reorganization of the loan. Ironically, it’s also the preferred first option for debt recovery agencies, which are employed to recover money for lenders. Rescheduling is one of the best ways of doing that. Rescheduling, The Basic Process Rescheduling is pretty much what it sounds like. It's a rearrangement of the loan. These are the fundamental points about rescheduling and how it works: The borrower asks the lender for an appointment to reschedule the loan. The lender agrees to talk about rescheduling. (Note: In cases of major loan problems, this can be a sensitive issue with lenders. See below, "Managing loan rescheduling- When you know you’ve got a problem".) The loan repayments are changed to an agreed amount. The term of the loan is in some cases extended, to make allowances for the lower repayments. If the borrower has only taken out some of the whole loan, meaning only actually accessed a portion of the loan, the loan amount may be reduced, and some or all of the remaining funds returned. In some cases, a "break even" scenario, cancellation of the loan and simply repaying the outstanding monies, can be arranged. Note: These changes involve alterations to the loan agreement, and it’s also possible that some charges may be incurred. The charges can be either paid directly or included in the revised repayments. The Effects of Rescheduling A rescheduled loan usually involves the borrower making lower repayments over a longer period of time. This produces several effects: The borrower paying more interest on the loan because of the extended time frame and lower repayments. The borrower’s budget being under less strain from repayment amounts. Protecting the borrower’s credit rating. Improving the borrower’s position with the lender. Rescheduling is the right thing to do from the lender’s perspective, too. Managing Loan Rescheduling - When You Know You’ve Got a Problem The real "trick" with loan rescheduling is knowing when to do it, and doing it ASAP, before you’re in real trouble, and looking at the debt recovery cycle. These are the classic symptoms of a loan that need rescheduling: Constant budget issues caused by lack of free cash. Regular bill problems. Not much spare cash for any unexpected costs. Running on empty between paydays. Suddenly being very conscious of shopping budgets. Constant stress through cycles of money problems. If the loan is in this condition, it can literally become a personal problem. Recent studies show that financial problems are often the cause of marriage and relationship breakups. Rescheduling is the best, quickest, and safest option. The relief will be instantaneous. The best solutions are often the simplest. If you’re looking for a way out of a loan situation, start with rescheduling. Tim Millett is an Australian freelance writer and journalist. He writes extensively in Australia, Canada, Europe, and the US. He’s published more than 500 articles about various topics, including Debt Collection and Debt Recovery. Posted Mar 30 2011, 01:46 PM by PamH with no comments Filed under: Debt Relief, Debt Rescheduling, Loan Repayment

• Credit Cards for College Students

  by Ryan Smith No area of life affects the college students more than credit. In America, which is unanimously acknowledged as the nation of spenders, it has been studied that most college students are juggling with so many credit cards that remembering the due dates and keeping a track on the payments seem to be as frustrating as completing a nagging homework assignment. Despite the immense money pressure created during college, most students are of the opinion that they can’t dream of spending their graduation life without using the plastics. College kids in credit crunch is seen everywhere around the US. However, there is a big change that has been adopted in the college campuses in the year 2010. Previously, you might have seen student unions featuring logos of banks and financial institutions that would tempt the gullible freshers into fake exciting offers of accepting credit cards in lieu of T-shirts and gifts. Soon after President Barack Obama signed the Credit Card Act into a law, there have been new concerns about anyone under the age of 21 using a credit card on his own. If they don’t have an independent source of income, they require their parents co-signing their credit card application. Though college life is the time when students learn about effective personal finance management, yet they must look for adopting some solid steps that will help them stay miles away from credit card debt so that their future career plans are not dampened. Some shocking statistics of student credit card debt in the US The following shocking statistics comes from Sallie Mae, which is one of the nation’s largest student loan providers. The average undergraduate student in the US owes $2200 on their credit cards. The same figure leaps to an amount of $5900 when it comes to the graduate students of the US. Here are some more results of the reports provided by Sallie Mae. 85% of the college students in America have a credit card. The average number of cards held by the students in the US amounts to 4.5. More than half of the students holding 4-5 cards in the US. 19% of the college seniors owe more than $7500 on their credit cards. 21% of students owe an amount that ranges from $3000 to $7000. 10% of all the college students in the US have $0 balance on their credit cards. 70% of the college students used their credit cards in spite of knowing that they didn’t have the cash to pay the bill on time. The aforementioned statistics show that the students in the US are not only using their plastics to pay for their educational expenses, but they’re also using credit to pay for food, clothes and even cosmetics. Student credit card tips – Use them wisely to avoid the credit card debt disaster Maintaining a good credit history is imperative for a college student, especially when they’re deciding to stay on their own. Whether or not you have a good credit score depends on the way you handle your credit cards while you’re in college. Here are some expert tips on smart handling of credit cards that may help the college students avoid the debt disaster. Choose your card; don’t let the card choose you: Financial ignorance is something that can get you into serious monetary mess. Unless you’re sure about a particular credit card, don’t sign up with that company just for the sake of your favorite T-shirt or a coffee mug. Try to comprehend the terms and agreement of the credit card company. Check the interest rates and fees and compare them with the other credit card offers that you’ve received. Choose the best card that is tailored to meet your financial needs. Change the habit of getting multiple credit cards: As a financially responsible citizen, it is crucial for you to understand that getting one credit card is enough. Succumb to the temptation of applying for each and every credit card that comes your way. You must remember that every application drops your credit score and the higher is the number of credit cards that you’re using, the higher are the chances of drowning in an ocean of credit card debt. Watch those rates; don’t let the lenders fool you: There are many student credit card companies that offer cards with high rates. Though you’re a student, you must keep the recent industry updates at the tip of your fingers so that you can avoid being duped by the lenders. Go for the cards offered by the credit unions as they have the most consumer-friendly terms. According to a survey, 7 out of 8 cards offered by credit unions carry APR (Annual Percentage Rate) below 15% and charge late fees lesser than their commercial counterparts. Pay your entire balance every month, avoid carrying forward: If you can inculcate the habit of paying off the entire balance as soon as you get the bill, you will learn to avoid carrying credit card debt. This way you can also pay for what you purchased and not the extra fees that the credit card lenders will charge you for making late payments. Building credit for college students – Why is it important? The college years are just the right time to focus on building good credit history. Your credit report is just the snapshot of your financial life that provides the employers, lenders and businesses, an insight into whether or not you’re financially accountable. With your permission, your employers may check your credit score when you apply for a job in order to determine the amount of trust they can build on you. A landlord may even want to know your score to prove your creditworthiness. You can certainly lay the groundwork for building good credit by following the aforementioned credit card tips. Students alone cannot be blamed for developing bad spending habits. There is a wide array of credit card companies that aid them into developing such scary financial habits. College kids, who have no visible monetary support, must remain watchful while taking out a credit card so that they do not get trapped in the vicious cycle of debt. You can even get prepaid cards that come with spending limits to avoid further debt. Apart from the alarming statistics mentioned earlier, you may be surprised to know that 40% of American students don’t speak to their parents about their credit card problems. Thus, even if it’s not from a parent, credit education is a prerequisite for everyone who uses a credit card. Ryan Smith is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. He holds his expertise in the Debt industry and has made significant contribution through his various articles. Posted Mar 16 2011, 01:18 PM by PamH with 1 comment(s) Filed under: College Students, Student Credit Card Debt, Credit Card Debt, Credit Card Act, Building Good Credit