Eliminate Debt Faster Using the Credit Card Snowball Effect

By Philip Crafton

Americans have on average three credit cards per household carrying a combined balance of nearly 12,000 thousand dollars and most are just paying the minimum payment due.

You are already aware that this is taking you deeper into debt and further from debt elimination. In fact, your balances are likely growing on you seemingly moment by moment. Do not give up there is a better way!

Who wouldn't want to achieve debt elimination? No one! Credit cards grow at an exponential rate. What if you could turn this credit card snowball effect to your advantage?

Snowballs start out small and unassuming by rolling them around they will grow in a hurry! Now apply this concept to paying down your balance, start with a little extra and watch it snowball until the card is clear of any balance!

A wise person once said that those who refuse to learn about compound interest are doomed to pay it. No truer words were ever spoken! Therefore, lets begin to learn and turn the credit card snowball effect in your favor and put you on the right path to debt elimination.

First, look at the common practice for paying off credit card debt. This is what conventional wisdom says is the best debt elimination practice:

Write down all your cards.

Choose the one with the highest interest rate

Add extra money each month to the card with the highest rate until it is paid off.

Repeat this process for all of your cards as you pay them off.

At first, the glance this seems like a reasonable plan for debt elimination. However, this is not always the best course of action.

All of your credit cards have different balances and interest rates. It would only seem to make sense to pay off the highest interest first. Nevertheless, consider these numbers.

To put this in terms that make sense consider the interest on your different cards and how your balance affects that number. Say, you have a credit card with a $5,000 balance at 10% interest; this means your monthly interest is fifty dollars. On the other hand, say that the other card has a $2000 balance at 20% interest rate. Your monthly interest would be forty dollars. The higher interest rate is actually cheaper per month.

As you can see in the above example this is a time that conventional wisdom does not apply. Fifty dollars a month will soon balloon the balance on that card even though it is the lowest rate in your wallet. Especially if you are making only the minimum payment.

To use the credit card snowball effect your plan might look more like this:

Make a list of all your credit cards.

Rank them according to amount of actual interest you pay each month.

Begin concentrating all the extra money you can toward that credit card.

Keep all other cards at minimum to free up cash to pay off the first card.

Repeat this process until all cards are paid off.

Sometimes a debt elimination plan means looking at things with a new perspective. This way of using the credit card snowball effect will have you free of your debt woes in no time.

About the Author:

Philip Crafton is an expert in managing your credit, he has over four years experience in the financial industry. Find reward credit cards, 0% balance transfers and even credit reports at www.Credit-In-Minutes.com. Copyright 2008 credit-in-minutes.com

Bad Credit Student Loans Really Do Exist

By Trinity Payne

If you're anything like most people, the cost of college is a little outside your price range. Paying $15,000+ each year as a 19-24 year old is definitely outside the reach for most people that don't have help from their parents. If you're struggling to meet financial obligations while attending college, having bad credit can magnify your difficulties. However, student loans for people that have bad credit are available and finding the right ones can help you to pay for school.

Student loans can be classified in two different categories; ones issued according to financial need, and ones that arent based on financial need. Many of the loan options are supported by the Federal Government.

Stafford loans are available through the government and are supplied based on need. Those with poor credit can still qualify for Stafford loans, assuming that they need is there. In other words, if you don't have the money to pay for school it's very likely that you can qualify for a Stafford loan.

Those that have little money and whose parents have little money can often qualify for special grants provided by the government. Pell grants are provided to thousands of people every year and are considered gifts. They never have to be paid back. Those that receive Pell grants can still take out Stafford loans if they are needed.

If you don't have enough need for financial aid, you won't be able to get Pell grants or subsidized Stafford loans. However, you can still get bad credit student loans that are unsubsidized. Interest will start to accrue right away, but you will be able to pay for school. This option is more expensive than most subsidized loan options.

There also isnt any grace period on the loan so once you are no longer in school; you will be expected to begin repayment immediately. Still, with this kind of loan, you will probably get a lower interest rate than another loan. So even if you have a bad credit history, or no credit history, you can still finance your college education.

About the Author:

Trinity teaches people to find different types of bad credit loans including bad credit student loans.

Lexington Law Firm - Review

By John Cooper

Lexington Law is a professional credit repair service. They are headquartered out of Salt Lake, Utah.

They have 22 lawyers and over 400 employees. They have been in business for 17 years and have served 1/2 million people. They will dispute bad credit items on your credit report.

Is credit repair legal?

Yes, it is not only legal but it is your responsibility. The Fair Credit Reporting Act gives you the right to dispute any item you feel is not accurate on your report. In addition this law says that the bureaus must remove an item that is not verified by the creditor.

How does this work?

You forward a copy of your credit reports to Lexington. You also indicate what items you want them to dispute.

Then Lexington will mail a dispute letter to each bureau. When the bureaus get this letter they will investigate the item and send you notification of the result. If the item was verified or if it was removed, you then forward update to Lexington.

How long does it take?

It depends upon the damage to your credit. However it typically ranges between 6 months to 12 months.

How much is it going to cost.

There is an initial account set up fee of $99. Then you will be charged a monthly fee of $39, $59, or $79 depending upon what level of service you choose.

Can't I do this myself?

Yes, we actually encourage you to if you have minor damage on your report. For you to dispute an item you must create a dispute letter and mail it to each credit bureau.

When the bureaus receive your letter they will investigate the item. During an investigation the creditor is contacted and asked to verify your account, the dates on the account, and the balance. If the item is not verified then the bureaus must remove it from you report.

What else can I do to improve my score?

We suggest you open a revolving line of credit. By making on time monthly payments you will create a positive payment history. This is weighted almost as much as negative items on your report when your score is calculated.

In sum you can repair a low credit score. By building a positive payment history and removing negative items you will improve your score.

About the Author:

For more about Lexington Law Firm or for an article about how to remove credit card judgements visit us.