A line of credit can be the perfect boost that a fledgling business needs to get off the ground, while credit cards, or more informally, plastic, has become a way of life for many. But just as credit has the potential ability to help us get ahead in life, it also has the dangerous ability to do just the opposite and drown one in a sea of debt. Left unchecked, debt, and in particular credit card debt can lead to financial ruin. The largest and most popular credit card companies routinely find ways to collect interest at rates of 30% APR and up from those who can least afford it -- you might call it a form of legalized theft.
A few helpful tips to keep in mind:
Obtain your free annual credit report to help stop identity theft and know your financial situation as your creditors see it.
If you're looking for a loan or line of credit, be sure to shop around and ask questions:
How do interest rates compare?
Is the interest rate fixed or variable?
Are there any prepayment penalties?
What about origination fees or annual fees?
Is there a promotional rate or offer? If so, how long does it last? What are the terms after the promotion expires?
Use common sense. Can you truly afford the loan, or will it drag you down financially long into the future? Is the loan offer too good to be true?
As a general rule of thumb, stay away from "interest payment only" loans. If you cannot afford to make payments towards the principle amount of a loan, you cannot afford the loan.
Beware of predatory lending - where a lender gives the borrower a loan for the sole purpose of taking advantage of the borrower (e.g. a lender that won't give you a $1,000 personal line of credit, but is all to eager to sell you a $40,000 consolidation loan secured by your house as collateral).
Easy Steps to Improve Your Credit Score (The Bradford Era) - (ARA) - Your credit score affects what type of interest rates you get on credit cards or for buying a house or car, as well as your approvals for employment or apartment rental. It's important that you understand not only what your score means, but how to repair it.
Credit plan no help for today (Denver Post) - Lawmakers and regulators said Saturday that an ambitious plan by the Treasury Department to revamp the decades-old financial regulatory structure could require congressional action over several years and would not help the economy out of its current credit crisis.
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A line of credit can be the perfect boost that a fledgling business needs to get off the ground, while credit cards, or more informally, plastic, has become a way of life for many. But just as credit has the potential ability to help us get ahead in life, it also has the dangerous ability to do just the opposite and drown one in a sea of debt. Left unchecked, debt, and in particular credit card debt can lead to financial ruin. The largest and most popular credit card companies routinely find ways to collect interest at rates of 30% APR and up from those who can least afford it -- you might call it a form of legalized theft.
