The price of the T-bills

3. a. The price of the T-bills is determined by Equation (1).
P = 1,000,000(1 — (.07)(30/360))
= l,000,000(.994167)
= 994,167
The Federal Reserve Bank shows both an asset and a liability to the commercial bank. In turn, the bank records an asset with an offsetting liability to the individual.
FEDERAL RESERVE BANK COMMERCIAL BANK
T—bills T—bills
$994,167 $994,167
Liability to Bank Liability to individual
$994,167 $994,167
b. The price is calculated as before, using the appropriate face value and rate.
P = 4,000,000(1 — (.069)(30/360))
= 4,000,000(.994250)
= 3,977,000
In this case, the Federal Reserve Bank has both an asset and a liability; the commercial bank has an asset but no offsetting liability.

ANSWERS TO END-OF-CHAPTER PROBLEMS

ANSWERS TO END-OF-CHAPTER PROBLEMS
1. The price of these T-bills will be based on the average competitive bid and time to maturity. Per $100 of face value, the price is:
P = 100 - discount
= 100 — 100(k)(N/360)
= lOO[1 — (k)(N/360)]
= 100[1 — (.0775)(182/360)]
= 100{.9608l9]
= 96.0819
The total price is $960,819 [$96.08l9 x 10,000].
2. The value of the CD upon maturity is found by applying Equation 2(a).
FV91 = 1,000,000(1.085)91/365
= 1,000,000(1.02054737)
= 1,020,547.37
a. The price at which the CD can be sold when 30 days remain to maturity (price at day 61) is found by applying Equation 2(b).
P61 = 1,020,547.37/[(1 + .09)30/365]
= 1,020,547.37/1.00710824
= 1,013,344.28
b. The rate earned over this 61—day period can be computed by referring to Equation 2(c).
k = (1,013,344.28/1,000,000)365/61 — 1
= .08254945
c. The price yields the buyer a 9 percent return for the 30 days during the CD is held. (See Equation 2(c).)
k = (1,020,547.37/1,013,344.28)365/30 — 1
= .08999999

there were no foreign

11. In 1969, there were no foreign issuers of federal funds and repurchase agreements (repos), negotiable certificates of deposit (NCDs), or commercial paper in the United States. In 1991, foreign banks represented 7.5 percent of outstanding fed funds and repos and 15.9 percent of NCDs outstanding. In the same year, foreign firms represented 15.5 percent of all commercial paper outstanding.
12. a. Negotiable CDs have made it possible for banks to more actively manage their liquidity. By raising interest rates to attract funds as needed, banks can more easily fund loan demand and meet other liquidity objectives.
b. Commercial banks have not experienced an expansion of loan demand in recent years because of general recessionary conditions in the United States. Also, there has been regulatory emphasis on building capital levels relative to assets, i.e., reducing debt levels.
13. [Question 13 requires students to refer to the Wall Street Journal]

securities when issued

securities when issued and actively trade them in secondary markets. Because of this activity, the government securities market is very liquid.
7. Conunercial paper of a company that does not qualify for a top credit rating can be supported by a standby letter of credit from a commercial bank, to be drawn on only in the event of default by the commercial paper issuer. If the commercial bank has a high credit rating, the commercial paper will then receive a comparable rating.
8. a. A banker’s acceptance is a time draft (postdated instrument) payable to a seller of goods with payment guaranteed by a bank. Banker’s acceptances for U.S. imports and exports involve a U.S. firm as one of the principal parties. A third-country acceptance involves a buyer and seller of goods that are not U.S. entities, but a bank that is.
b. A majority of third-country acceptances are refinance bills. A refinance bill is created when a draft is drawn on a U.S. bank by a non— U.S. bank. Prior to this point, the non-U.S. bank has acted as the “accepting” bank in an international trade transaction between two non-U.S. entities (the original buyer and seller).
9. The Federal Reserves holds roughly 75 percent of its assets in the form of U.S. government securities. It is the fiscal agent for the Treasury Department, accepting bids and distributing government securities in auctions. The most important function of the Federal Reserve in the money markets, however, is the purchase and sale of government securities in the execution of monetary policy.
10. In a tender system, a predetermined quantity of securities is offered for sale and sold, or “tendered” to the highest bidders. In a tap system, government securities are sold only when the public requests them.

domestic banks

domestic banks issued only 80 percent of the outstanding NCDs; and by 1989, 60 percent. Foreign commercial banks, savings and loan associations, and mutual savings banks make up the rest of the market.
c. Finance companies are the primary issuers of commercial paper, with a total of approximately 70 percent of the market in 1969 and currently 60 percent. Domestic nonfinancial firms issue roughly 20 percent, foreign firms about 15 percent, and commercial bank holding companies less than 10 percent.
4. a. A repurchase agreement is an agreement between buyer and seller in the sale of securities to reverse the transaction in the future at a specified date and price. It is, in essence, a collateralized loan.
b. To ensure the integrity of the transaction, the buyer of the securities should take the following measures:
i. Execute clear and complete “master” repurchase agreements covering all terms of the transactions.
ii. Research the financial strength of the other party involved.
iii. Obtain control of the securities to be used as collateral.
iv. Evaluate the underlying securities to ascertain adequacy of the collateral.
5. a. A discount house is a financial institution
that acts as an intermediary between the government and a country’s banking system.
b. Discount houses operate in the United Kingdom
and Singapore.
c. The functions of discount houses are to
facilitate a strong market in government
securities, to help the commercial banking
system to adjust liquidity levels as needed,
and to help the monetary authorities to
implement monetary policy.
6. Government securities dealers are closely involved with the U.S. government in the issuance of Treasury securities. They purchase Treasury

ANSWERS TO END-OF-CHAPTER QUESTIONS

ANSWERS TO END-OF-CHAPTER QUESTIONS
1. Financial instruments with a maturity of one year or less are traded in money markets. Instruments with maturities greater than one year are traded in capital markets.
2. The federal funds market is a money market in which excess reserves are borrowed and loaned, often on an overnight basis. Term federal funds are traded for longer periods of time, usually no more than 90 days. Continuing contract federal funds transactions are essentially overnight transactions that are renewed each day. The excess reserves are in the form of deposits with the Federal Reserve System or interbank deposits. Transactions are recorded on a book—entry (as compared to physical— document) basis.
The call money market in Japan is similar to the U.S. federal funds market. Transactions are arranged through Tanshi companies that are licensed by Japan’s Ministry of Finance. The duration of call money transactions can be as short of half a day or as long as 7 days. Before 1985 all call money transactions were collateralized.
The interbank market in Hong Kong does not involve an intermediary. No collateral is required.
In the United Kingdom, discount houses have traditionally borrowed and loaned short—term money in transactions with the banking system. Recently, a parallel market or interbank market has developed to facilitate this type of transaction.
3. a. Twenty years ago, only domestic commercial banks were engaged in the federal funds and repurchase agreement markets. Now, however, foreign commercial banks, domestic savings and loan associations, mutual savings banks, and securities brokers and dealers together comprise as much as 40 percent of the market.
b. In the late 1960s, domestic commercial banks were the only issuers of negotiable certificates of deposit (NCD5). By 1979,

CHAPTER OUTLINE

CHAPTER OUTLINE
What is a money market?
Money market participants
The United States
The United Kingdom and Japan
Money market instruments
Treasury securities
The primary market
The bidding process, T-bill pricing and
delivery
The secondary market
The United States, the United Kingdom,
Asia
Federal funds
The market
Duration
Terms
Japan, Hong Kong, the United Kingdom
Repurchase agreements
The United States, Japan
Negotiable certificates of deposit
The birth of negotiable certificates here and
abroad, CD pricing
Commercial paper
History of issuance
Growth and marketability
Secondary markets
The United States, other countries
Bankers’ acceptances
Creating a banker’s acceptance
The market
The United States, the United Kingdom
and Japan
Recent trends
Federal funds and repos
Negotiable CDs
Commercial paper
INTERNATIONAL COMPARISONS:
Hong Kong
Japan
Singapore
United Kingdom
United States

CHAPTER OUTLINE

CHAPTER OUTLINE
What is a money market?
Money market participants
The United States
The United Kingdom and Japan
Money market instruments
Treasury securities
The primary market
The bidding process, T-bill pricing and
delivery
The secondary market
The United States, the United Kingdom,
Asia
Federal funds
The market
Duration
Terms
Japan, Hong Kong, the United Kingdom
Repurchase agreements
The United States, Japan
Negotiable certificates of deposit
The birth of negotiable certificates here and
abroad, CD pricing
Commercial paper
History of issuance
Growth and marketability
Secondary markets
The United States, other countries
Bankers’ acceptances
Creating a banker’s acceptance
The market
The United States, the United Kingdom
and Japan
Recent trends
Federal funds and repos
Negotiable CDs
Commercial paper
INTERNATIONAL COMPARISONS:
Hong Kong
Japan
Singapore
United Kingdom
United States

CHAPTER 3 MONEY MARKETS CHAPTER OVERVIEW

CHAPTER 3
MONEY MARKETS
CHAPTER OVERVIEW
This chapter:
o Defines money markets.
o Explains the roles of money market participants.
o Describes financial instruments traded in money markets and analyzes their pricing.
o Examines recent trends in U.S. money markets.
KEY TERMS
banker’s acceptance immediately available
basis point funds
bid-asked spread interbank market
bill discounting letter of credit
bill of exchange liquid assets
book—entry system money market
call money negotiable certificate of
commercial paper deposit
competitive bid noncompetitive bid
discount house opportunity cost of
discount pricing holding cash
federal funds repurchase agreement
gilt-edged market sterling money markets
government agency Tanshi company
securities tender system
government securities tiered custodial system
dealer Treasury bills

The following relations

3. The following relations applies where r is the reserve requirement.
Reserves = (r) (Deposits)
Substituting (in millions of dollars),
$72 = (r) ($600)
r = $72/$600
= .12

dollars and dollar

dollars and dollar conversions caused gold drains from the U.S. official coffers. Speculation in currency markets led to more gold drains in the late 1960s, further straining gold reserves. Thus, in 1971 gold convertibility of the dollar was suspended.
9. A liquidity infusion into the banking system, that is, an increase in bank reserves, can support more than the amount of the infusion in bank deposits. Reserves need be only r percent of deposits, where r is the reserve requirement.
Reserves = (r) (Deposits)
Reserves/r = Deposits
Thus a change in bank reserves can increase the money supply (deposits) by this multiple-- Reserves /r.
10. An inadequate money supply can inhibit economic development when productive investments are forgone. An inadequate money supply also constrains consumer spending, which is a large segment of the U.S. economy.
ANSWERS TO END-OF-CHAPTER PROBLEMS
1. The price of each commodity is determined by setting the appropriate quantities equal to each other in value. The equation is solved first for the value of one yard of material and then for the value of one bale of hay.
5 yards of material = 10 bales of hay
1 yard of material = 2 bales of hay
.5 yard of material = 1 bale of hay
2. At the time that the speculator borrowed the
dollars, each dollar could be converted into
The total proceeds after conversion are
When the pounds are converted back into
dollars, each pound is worth $1.90, for total
proceeds of $102,695 (54,O5O multiplied by 1.90
$/). The profit is $2,695.

Full-bodied money

3. Full-bodied money is a commodity that performs all the functions of money and has intrinsic value equal to its value as a unit of account.
4. The three monetary standards differ in the method and extent to which gold is exchanged for paper money. The gold coin standard involves mints that accept and manufacture coins as prescribed by law; the gold coins are legal tender. The gold bullion standard uses paper money as legal tender, but this paper money is convertible into gold bullion. The gold exchange standard also uses paper money as legal tender. In this case, the paper money is convertible into another currency of another country and the second currency is convertible into gold.
5. World War II was being waged in 1944 and the economies of several industrialized countries were devastated as a result. One impact of the war effort was that money supplies and exchange rate levels were quite volatile. The Bretton Woods conference was intended to help stabilize currency markets and to provide a mechanism for reconstruction after the war.
6. The Smithsonian Agreement in 1971 increased the degree to which the currencies of certain members of the International Monetary Fund could fluctuate relative to the U.S. dollar--plus or minus 2.25 percent of the pegged exchange rate. The EC elected a tighter band (one half the Smithsonian band) with the objective of having their currency values eventually converge.
7. When there are wild currency fluctuations, the price of imports and exports will also fluctuate. For a country with a meaningful level of foreign trade, these swings can destabilize the economy. Also fluctuating currency values and the associated uncertainty can discourage the flow of foreign capital into the country.
8. The holdings of convertible dollars outside the United States rose from $4.8 billion in 1947 to $13 billion in 1956. European banks began to trade in

The functions of money

CHAPTER OUTLINE
The functions of money
Monetary systems
Barter system
Full-bodied money
Paper money
Monetary standards
The adoption of monetary standards
Bretton Woods, 1944
The Smithsonian agreement, 1971
The Snake in the Tunnel
Expansion of the money supply by banks
Banks reserves
Money supply expansion
Defining the money supply
INTERNATIONAL COMPARISONS:
IMF members (exchange rate arrangements)
ANSWERS TO END-OF-CHAPTER QUESTIONS
1. Money serves as:
Medium of exchange. Money is universally exchanged for other commodities.
Unit of account. All other commodities are priced in terms of money.
Store of value. The value of money does not decline over time.
Standard for deferred payments. Future commitments are denominated in financial terms rather than in terms of nonmonetary commodities.
2. A modern monetary system is more efficient than a barter system because a double coincidence of want is not required for the modern system to function. That is, in a two-party transaction, it is not necessary for each party to seek the product or commodity that the other possesses. Also, pricing is less complicated in a modern monetary system. In a barter economy, the number of prices must be n(n—l)/2. In a modern monetary system, the number of necessary prices is n—i.

CHAPTER 2 MONEY CHAPTER OVERVIEW

CHAPTER 2
MONEY
CHAPTER OVERVIEW
This chapter:
o Discusses the characteristics of money.
o Traces the development of money to the present day.
o Establishes the link between the banking system and the money supply.
o Defines the current specifications of money supply and recent changes in its composition.
KEY TERMS
barter system
demand deposit
double coincidence of want
excess reserves
fractional reserves
full-bodied money
medium of exchange
monetary standard
money supply
paper money system
reserve assets
standard for deferred payments
store of value
unit of account

Financial instruments

13. Financial instruments are traded in both money and capital markets. Those traded in money markets are short—term in nature (no more than one year in remaining maturity) and are usually debt instruments. Those traded in capital markets are longer—term in nature and composed of both debt and equity instruments.
14. The New York Stock Exchange is both a primary and secondary market because both new and existing issues are traded there. It is a capital market because its activity involves primarily stocks and long—term bonds.
15. Investment companies have given small investors alternatives to bank deposits that compete by providing small investors competitive rates of return.
16. After 1945 and before 1980, annual bank failures were generally fewer than 20 per year. During the l980s, this number rose to over 200.
17. During the 1960s, loans by foreign banks operating in the United States were less than 2 percent of loans by U.S. banks. By 1989, the percentage increased to approximately 10 percent.

Insurance companies

c. Insurance companies issue insurance policies
that promise to pay the policy holder a
specific form of benefit under specified
circumstances.
d. Finance companies issue secondary securities
that are similar to the debt and equity
instruments issued by nonfinancial
corporations.
8. The financial intermediary’s spread is the
difference between the average rate paid to
investors and the average rate earned on assets
(investments).
9. All other things being equal, an increase in a bank’s deposit interest rates decrease the spread because the cost of funds increases with rio corresponding increase in the rate earned on assets.
10. If the deposit rate increase is passed on to loan customers, the spread is not affected.
11. Primary markets bring surplus savings units together with deficit savings units in the process of financing productive activities. Securities are sold for the first time in primary markets. In secondary markets, existing securities change hands; that is, securities are transferred from one surplus savings unit to another.
12. Even though a corporation receives no further funding when its securities are exchanged in secondary markets, financial managers are concerned with the activity in secondary markets because the price of the firm’s stock measures shareholder wealth, the maximization of which is the objective of financial management. Also, the conditions in the secondary market provide managers with information with respect to the conditions under which additional financing in the primary market may be obtained.

Risk intermediation

o Risk intermediation. The SSUs do not bear
risc o eau1t tjioripayment o principal or interest) by DSUs. The secondary securities issued to the SSU are backed by the financial strength of the intermediary (and, in the case of federally insured deposits, by the federal government).
o Information intermediation. The SSUs do not need to research all projects in which they ultimately invest. Investors, instead, rely on the management skill and financial position of the intermediary.
5. a. High interest rates of the late 1970s and
early l9BOs made bank loans an expensive
source of short—term financing for
nonfinancial corporations.
b. The use of commercial paper has made it
possible for large, creditworthy firms to
obtain short-term financing directly from
investors. A shift from indirect financing
(bank loans) to direct financing (commercial
paper) enables firms to realize a significant
savings——represented by the difference between
the prime rate and the commercial paper rate.
c. Investment bankers help firms to float issues
of commercial paper in primary (original
issue) markets.
6. Commercial banks, savings and loan associations,
mutual savings banks, and credit unions are all
depository institutions. Depository institutions
accept funds from the public and promise a specific
rate of return. In most cases, the deposits
themselves (secondary securities) are insured (with
some limitations) by a government—sponsored agency.
7. a. Investment companies issue shares of stock which entitle shareholders to rates of return that vary with the investment experience of the company’s asset portfolio.
b. Pension funds offer the promise of deferred income during retirement.

ANSWERS TO END-OF-CHAPTER QUESTIONS

ANSWERS TO END-OF-CHAPTER QUESTIONS
1. A surplus savings uhit (SSU) is an economic unit that has an income for a given period that exceeds its expenditures. Conversely, the expenditures of a deficit savings unit (DSU) exceed its income for the period. SSUs are an economy’s ultimate investors; DSU5 are the ultimate users of funds in financial markets.
2. Financial intermediaries reduce the search and information costs that are incurred when SSUs provide financing for projects undertaken by DSU5. A financial intermediary evaluates the projects of DSUs, accepts their promises to pay in the form of a primary security, often in the form of a promissory note, and disburses funds invested by SSU5. An intermediary also is responsible to SSUs for repayment of these funds, offering SSUs a secondary security, or promise to pay by the intermediary.
3. Funds obtained by corporate DSUs are invested in the projects of the respective firms, presumably to earn satisfactory rates of return for the shareholders of that firm. These activities constitute investment activity that may ultimately increase the size of the overall economy. On the other hand, government DSUs may use the funds for non—investment or consumption purposes. When this occurs, economic growth is not necessarily enhanced.
4. The four types of financial intermediation are:
o Denomination intermediation. A number of
relatively small investments may be pooled
together to finance projects that require
large amounts of capital.
o Maturity intermediation. Deposits and other
secondary securities may have short terms to
maturity and may, in fact, be payable to the
investor upon demand, while financing made
available to DSUs has a maturity more
appropriate for the project involved
(frequently long-term).

CHAPTER OUTLINE

CHAPTER OUTLINE
The role of financial institutions
Example of a financial transaction
Savings units
Direct financing
Financial intermediation
An expanded example
Forms of financial intermediation
Other financial intermediaries-briefly
Depository institutions, non-depository financial institutions
An analysis of financial intermediation
The balance sheet
Income and expense
Direct financing
Financial markets
Primary and secondary markets
Money and capital markets
Financial services: a changing industry
Changing market niches
A more global industry

CHAPTER 1
FINANCIAL INSTITUTIONS
4ND INTERMEDIATION
CHAPTER OVERVIEW
This chapter:
o Analyzes the role of financial institutions in society.
o Describes the process of financial intermediation.
o Differentiates direct and indirect financing.
o Outlines recent changes in the financial services industry in terms of domestic and international competition.
o Describes financial markets.
KEY TERMS
capital market
deficit savings unit
denomination intermediation
direct financing
financial institutions
financial intermediation
financial markets
indirect financing
information intermediation
maturity intermediation
money market
net interest margin
primary markets
primary security
risk intermediation
secondary markets
secondary security
surplus savings unit

Using a Home Equity Loan to Pay Off Credit Cards

The majority of Americans carry some sort of credit card debt. Unfortunately, many of us carry so much debt at such high interest rates that it becomes difficult to make a difference in the amount we owe, even when we send a payment to the credit card company each month. Falling behind just makes it worse, with late fees and finance charges added on to your next statement- and often a late payment will result in an increase in your interest rate. High interest rates quickly add up and result in our monthly credit card payments doing little or nothing to reduce the balance. It's a vicious cycle that can be difficult to get out of.

One effective solution for getting off the credit card rollercoaster if you are currently a homeowner, may be to obtain a home equity loan and use it to pay off your high interest credit card debt. Homeowners often take home equity loans to make home improvements, figuring that the improvements will increase the value of their home and therefore make the loan worth it, but why not take a home equity loan to eliminate high interest debt and make it easier to pay your monthly expenses?

The Benefits of Refinancing Credit Cards with a Home Equity Loan

There are a number of benefits of credit card refinancing, with the most obvious one being the decrease in interest rates you are paying. The other primary benefit is the fact that you aren't incurring more debt when you pay off your credit cards with a home equity loan - you're keeping the amount you owe the same and moving the debt to a more affordable repayment method. If you had previously been struggling to make several individual payments every month, using a home equity loan to pay off your credit cards will result in a consolidation of your debt, making it easier to pay.

Additional benefits of refinancing credit cards with home equity include:

eliminating variable interest rates and getting a fixed interest rate obtain a tax benefit with an interest rate tax write-off on home equity loan interest that could not be done with credit card interest consolidate a number of monthly payments into a single, often lower, payment easier record keeping, write and mail one check a month and make one transaction in the check register rather than multiple.

Disadvantages of Paying Off Credit Cards with Home Equity Loans

Like everything good in the world, there are also some disadvantages to using a home equity loan to pay off credit cards, that you'll want to consider, though. For example, once you pay off the credit cards, you suddenly have lots of room on them to charge new purchases! This can be extremely tempting, and if you're not disciplined, you could end up charging more debt and making your situation even worse (because now you have the home equity loan PLUS the additional high interest credit card debt!)

It's a good idea to either get rid of the credit cards by cutting them up, or by placing them in a fire safe box in your home so that you aren't tempted to pull them out of your wallet when you're out shopping. Refinancing the credit card debt with a home equity loan can give you the opportunity to live credit card-debt free. Most financial advisors do not recommend calling to physically cancel the accounts right away, because reducing the amount of "available credit" will often have a negative impact on your credit score.

Student Credit Cards Can Help You Establish a Credit History

Credit cards are somewhere between a luxury and a necessity. They do offer a lot of convenience since one never need carry cash when a credit card is at hand. Some credit cards come with a lot of regulations, but other companies will offer high school and college students credit cards in the interest of helping them to establish credit. These student credit cards do come with some strings attached, but are more or less interchangeable with a regular credit card.

There are a lot of student credit cards which require a co-signer, such as a parent or guardian. If the student fails to make their payments, the responsibility falls upon the co-signer. In effect, the co-signer serves as collateral for the student credit card.

A student credit card will generally have a higher rate of interest (also known as APR) than would a traditional credit card. In many cases, the spending limit will be far lower, somewhere between $250-$800 on average. The limit is low since the students have not yet established a credit history and there for don’t have a good credit rating. However, the cards still let students establish credit despite the low spending limits.

A student credit card can be a big help to a student who wants to make a large purchase. To do this, one would usually need good credit; but this is where the student credit card comes in handy. The student credit card can be used to establish and build good credit, making it much easier to get a more substantial loan when the time comes that one is needed.

Student credit cards are also a great way to teach students to handle their finances responsibly. The spending limit is less, but they are just like any other credit card in functionality. One the student can handle using and paying off a credit card, they will be capable of better managing all of their finances. These skills are something which will stay with them for a lifetime.

While student credit cards can be great and offer a lot to students, they still can be overused, just like any other credit cards. Students have to learn not to overspend – if they rack up more debt than they can pay, they will affect their credit rating and possibly that of their co-signer as well. Before using a credit card at all, students must learn to plan and stick to a budget.

Student credit cards however are for the most part a greatly beneficial thing. They teach responsibility to high school and college students and can be a lifesaver in case of emergencies. If you have a son or daughter in school, think about getting them a student credit card – it will establish credit for your child and teach them a lot about financial responsibility.

Why People Get Into Credit Card Debt

Credit card debt is a major problem in today’s society. People get roped into a credit card when the credit card companies advertise all of the good things they have to offer including free interest etc.

One of the long-time selling points for credit card Companies has been the fact that they are easily monitored, meaning it is much easier to see what you have spent and where you have spent your money with the card.

Any time a person can legally spend more money than they actually have, a problem is bound to occur!

Credit cards are accepted worldwide and are normally tied in with various reward systems such as points for travel, dining etc. All of these perks including the fact that they are extremely convenient make using them extremely simple, which can lead some people to debt, as they become unmanageable.

Credit cards differ from other payment methods in their monthly billing cycles. They are incredibly useful to those who are smart with their spending, as they can make various, instant payments, and pay it off each billing cycle.

However, with the ease of using the credit card, it can be easy to charge more than you can pay in one lump sum if you are not careful with your finances! Some people depend on there credit cards when taking off work for medical reasons etc. If you cannot pay the payment in one lump sum whenever your billing cycle is up, then it will accumulate interest and this is what “kills” most people.

The interest on credit cards is much higher than that of most other credit institutions. Some credit card interest rates can be as high as 20 to 30%. This is how credit card debt starts and this is how the Companies make their money!

Having multiple credit cards is another cause of debt. With multiple cards it makes managing your finances every month confusing, when one card should be making it less confusing. Making sure all of the cards are accounted for along with other monthly bills can be extremely time consuming and almost impossible to keep track of.

It would be ideal to use a credit card if you knew you could pay what you charged on the card every billing cycle in full, thus not getting charged any interest fees. The problem is that many people in today’s society live paycheck to paycheck and look at credit cards as an easy way to pay bills and buy things that they want.

Those who are smart about their purchases and use their cards moderately are the ones who actually benefit from them. Those who apply for every one they are offered, max them out and never pay them are the ones who should have stayed away in the first place.

When credit card debt is an issue there are places that can help. There are many credit card consolidation companies specializing in the kind debt consolidation bad credit requires. They are there to help, but of course, they come with their own fees as well. Another option is to transfer what you owe to a credit card with a lower interest rate and to be sure to pay the bill each billing cycle.

Business Credit Cards Rewards Perks and Incentives From Cash Back to Zero Percent Apr

The credit card is one of the most important tools of our personal financial lives. The same can now be said of our business finances, as credit cards companies are offering more and more features to assist the businessperson. Nearly all banks offer some type of business credit card with a range of options and advantages. Most business credit cards offer 0% introductory APR with intro periods that last for 15 months or more, with zero yearly fees. Examples of some of the other perks and features offered by business credit cards are provided below.

One of the major business credit cards offers you everything you need to keep track of your employee credit use and business expenditures. As common with most business credit cards, it offers a high spending limit and low interest rates in comparison to a personal credit card. One of the most attractive features of this card is that it offers earn cash back on all purchases. For example, for office expenses, the owner can earn up to 5% cash back, and if the business credit card is used to fill up gas in a vehicle during business travel, the owner gets 2% cash back. Expense statements and a summary of cash back amounts are available through a free online account manager program.

Another of the major business credit cards offers a unique rewards point program. The first purchase one makes using this card earns the owner 5,000 bonus reward points. When a card user spends $20,000 the card, he is rewarded with another bonus of 5,000 rewards points, and when the spending reaches $50,000, the user gets an incentive of 20,000 points. These points are redeemable for numerous business related items like office tools, entertainment events, and travel. Best of all, the rewards points do not expire.

One of the major credit card companies offers a business credit card as part of their small business program. This card is a nice option for those who want to take advantage of a zero interest APR, and it provides a variety of free resources to assist the small business owner. The card offers zero fraud liability coverage, and a signup incentive offers free travel miles for the first purchase.

Shop around and you’ll find perks such as personalized cards with your company name at the top, online expense organizers, no pre-set spending limits, free additional cards for employees with customizable spending limits, travel insurance, and savings on business purchases such as shipping and car rentals. If you’re a business owner, you’re bound to find a card that meets your needs.

To learn more about business credit cards and zero interest credit card options, visit Business Credit Card Deals.

How to Stamp Out Bad Credit Card Offers

If you're like me, your mailbox is usually stuffed with things like bills...postcards selling some turbo-charged Internet service...maybe a few magazines...and, of course, credit card offers.

It's the credit card offers that get you. They're pretty tempting, aren't they? Whether it's being pre-approved for $10,000, or the promise of earning free airline tickets, there's always something that lures us in.

While you might get a few good offers every now and then, most should be sent right to the shredder. The trick is, knowing which ones should stay and which ones should go.

Be choosy

Keep one thing in mind: if you have a couple of credit cards you're happy with, try not to apply for more cards. Each time you apply, it shows up on your credit report. And that can make you look credit hungry. It may also lower your credit score.

When you do decide you need a new credit card or you are applying for your first one ask yourself: what kind of card do you want? You can get one with reward points. Or miles. Or even a card that helps you save. With so many cards out there, you don't have to jump at the first offer you get in the mail. Shop around.

Learn the lingo

You've probably noticed that credit card offers come with what looks like a lot of legal mumbo jumbo. But these are the terms and conditions of the credit card, and they explain what fees and finance charges you could pay when you use the card. Every card has different terms and conditions. To shop for the best deal, you need to know what the main terms mean. Here are some to look out for:

Annual Percentage Rate (APR) This is the yearly percentage rate charged when a balance is held on a credit card. This rate is applied each month that you carry a balance (the lower APR, the better).

Annual Fee Yearly fee associated with having the credit card. Unless you are getting rewards or miles, or something extra, you may want to look for a card without an annual fee.

Grace Period A period of time during which you are allowed to pay your credit card bill without being charged a finance and/or late fee. This period is usually 10-28 days.

Introductory Rate (or Intro APR) A temporary, lower annual percentage rate that is raised later. Make sure you know what the rate will go up to after the intro period is over.

Other fees Also check for the amount of the late payment and cash advance fees.

Why wait? Activate

Once you receive your new card in the mail, activate it right away. Then put it in your wallet or in a safe place. Otherwise, you may set the card down, forget about it, and it could end up in the wrong hands.

As you use your card, keep an eye on your bill and the charges listed. Also, you should get your credit report on a regular basis to make sure no one else is using your account. That way, you stay in charge of your credit card.

Credit Card : Secure Your Ready Money

The power of plastic money is utilised by a large section of people today. Be it high net worth individuals or other classes of people, everyone needs to spend money and they wish to do in a smart way. Keeping and paying smart money is quite advantageous but you have to make sound choices while using a credit card. A credit card is your ready money but it must be utilised, rather than the use being maximised. Credit card is surely a smart way of spending money.

The credit card usage comes with benefits and bonuses too. When you spend with your credit card, you are bestowed upon with gifts by your financial institution. These gifts are against the points accumulated due to the purchases made and bills paid with credit card. Before going to avail a credit card facility, you have to make a comparison among the credit card services available within your geographical location. There are a lot many factors, which affects the decision related to credit card and its efficiency.

Suitability of credit card depends upon the number of merchant establishments respecting it, interests being charged, fixed charges, security policies, variety of value added services on offer etc. The credit card is only a facility of providing the user a good deal of money according to his credit score or as valued by the institution. So, if you are using a credit card then pay the credit card bills on time and increase your credit worthiness. The credit card must not be used for transactions, which can be cash paid.

The credit card institutions must be analysed before you enter into a credit card facility with them. When you give a good mind to your finances, you will never come across credit repair or improving FICO score hassles. The credit card is an efficient facility but it is about how efficiently you use it and manage your finances.

Benefits of a Prepaid Credit Card

In this day and age a good number of men and women find themselves with negative credit histories even at a young age. There in fact are people from all walks of like that has managed to rack up a negative credit history and a low credit score. Perhaps you have found yourself in such a situation and are wondering what you can do in this regard.

As a consequence, they find it nearly impossible to obtain a traditional credit card let alone any other type of financing. As a result, because they find themselves boxed in and unable to engage a credit line to demonstrate their ability to handle such an account responsibly, their credit profile languishes.

There are some alternatives for people in such a circumstance, including a prepaid credit card. A prepaid credit card is a relatively simple concept. A person places on account a certain amount of money and then is issued a credit card. The individual can then make charges like with any other credit card up to the amount of money that has been put on deposit.

This type of card allows you many of the conveniences of a more traditional credit card. Of course, you will be bound to being only to spend the amount of money that you have on deposit on your cheap credit card account.

In addition to having many of the conveniences of a more traditional or unsecured credit card, you also will be able to start improving your credit history and credit score through the use of this type of cheap credit card. In many instances, these types of credit cards do end up being reported to credit agencies like any other more traditional credit card.

After a period of time in some instances, some companies offer a person the ability to move towards obtaining a more traditional credit card. In other words, the prepaid credit card will serve as a vehicle to obtain a more normal or traditional credit card. And, again, provided that you use the credit card in a reasonable and responsible manner from there on out, you will continue to improve your credit history and your credit score. Ultimately, through the responsible usage of a prepaid or cheap credit card, a person can take steps to help establish or restore his or her credit status, record and history.

You can obtain these credit cards through banks, credit unions and through many other types of personal finance related institutions. Of course, as it is when you apply for any type of credit card, you need to make sure that you are dealing with a credible and reputable financial institution. Indeed, this particularly is the case with this type of credit card as you are asked to put money up before you can begin using the secured cheap credit card.

Many Benefits of Credit Card Debt Consolidation

If you are burdened with credit card debt then you should go in for credit card debt consolidation. If you have just received yet another credit card bill and there are already bills of other credit cards lying unpaid, then you are not alone. This scenario is played out in many American homes today and many of us are weighed down with increasing this debt. Typically, one acquires a credit card to be able to meet emergency payments, without having to carry loads of cash in their pockets and to facilitate shopping. But over a period of time, people do not realize how much they have spent using their credit card (one or more) and the actual purpose of getting the credit card in the first place is lost. Sooner than later, there are more than multiple credit cards in the wallet, and receiving outstanding bill statements becomes the norm.

What To Do

In such a situation, one should go in for consolidation of card debt. Credit card debt help is provided by agencies and firms that offer guidance on how to manage your outstanding debt and offer you a loan for consolidation of cards.

Credit card debt consolidation loan refers to the repackaging of all your outstanding credit card payments, into one single payment. Therefore, if you are receiving three card bills in a month, the debt consolidation company makes the payments of these bills on your behalf and finances you a loan, so that you have to pay to the consolidation company only.

They also offer counseling services, which is known as credit card debt counseling. It involves seeking the services of a credit card debt counselor who will work with you and get you the optimum credit card debt consolidation plan. They help you with reorganizing your debts and finances. With their help, one can have a positive outlook by developing dependable buying and consumption behavior. One of the things most credit card debt counselors advocate is, going in for an appropriate debt loan.

Why Go For Consolidation Loan?

For starters, one is saved from the hassle of making multiple payments to different credit card companies. Also, the credit card debt consolidation company speaks to the various credit card companies on your behalf and renegotiates the terms and interest rates on your outstanding payments. You can go in for an unsecured loan to refinance your credit card outstanding payments or back your loan using collaterals. Loans offered on homes are usually given on the best interest rates that are favorable for the debtor. However, going in for loans for debt consolidation also involves having to give up all your credit cards to the credit card debt consolidation company.

The Bad Credit Card That May Do Good Secured Cards

There are thousands of different credits cards in circulation. And millions of people the world over use them. Unfortunately, not everyone uses their credit card sensibly, though, as many of these same people find they have made expensive mistakes in how they handle their cards.

No doubt you can locate quite a few credit card users who are convinced that plastic money is dangerous. However most of these people have simply consistently overspent and ended in debt. Responsible use of a credit card, on the other hand, is very helpful in managing your finances throughout the month.

Credit cards are available not just for those who have a lot of money to spend. Some are developed specially for people facing challenging financial situations. These cards are known as "Bad Credit Cards."

Bad credit cards are exactly that - credit cards that have a very low or very bad credit limit.

Credit cards are normally one of two types - secured or unsecured.

An unsecured credit card is not tied to the size of a person's bank account. The limit put on the credit card is determined by the lending institution after some form of credit scoring. If the bank decides that the holder of the card should have a larger credit limit, depending on the result of the scoring, it will grant them one. Many banks then monitor the use of the credit card to adjust the credit limit higher or lower after several months. If the holder pays back the full balance on the card every month, there's a good possibility that the credit limit will be increased.

If you secure an unsecured credit card, you must bear in mind that a high credit limit might not always match your ability to pay it back. So caution is the byword!

Unsecured credit cards are the most common type. They are normally the choice of credit cards for those who card shop. Unfortunately these cards can also "assist" people to spiral deeply into debt.

If your finances are not in good shape, you should resist the temptation to obtain an unsecured credit card since using them could make your problems worse if your spending isn't tempered by self-control (and a budget).

Bad credit cards, on the other hand, are secured. Their spending limits are governed by the size of the balance available in a holder's account. For instance, if a person has $1500 in their account, this is the amount of credit they will be permitted to use. If the balance ever goes down to zero, the owner will need to top up the account to continue using it.

Secured credit cards are sometimes referred to as pre-payment cards. This is because the credit limit is placed on the card by the holder. For a person who has been in debt previously, these cards are a very good, limiting alternative to no card at all.

Banks set these limits to prevent people from overspending. The credit card activity will also be watched to help prevent any future problems with uncontrolled spending. Using this type of card can eventually help repair your financial status.

Balance Transfer Credit Cards : How to Reduce your Credit Card Debt in 3 Simple Steps

You may be surprised to learn how easy it can be to reduce your credit card debt. With the average American household carrying $8400 in credit card debt a simple reduction plan could save thousands of dollars.

Step 1: The first thing you want to do to reduce your credit card debt is find out exactly how much money you owe on your credit cards. Then find out how much you are paying in interest yearly. For example, if you a paying $50 in finance charges on one credit card each month and $40 on another you are paying $1,080 in finance charges alone each year. Learning how much money you are paying in interest is usually enough to motivate most card holders to reduce their credit card debt.

Step 2: Once you have this information you can then decide whether to consolidate your debt to your credit card with the lowest interest rate or get a new balance transfer credit card with a low APR or lower interest rate. By transferring the balance to a lower interest rate credit card you can save thousands of dollars in interest. Please keep in mind that this is only a temporary solution. If you transfer the combined balances to a low interest credit card you must destroy the old credit cards and close the accounts so that you do not use them again. This is very important. If you transfer your balances to a new low interest credit card, then run the balances up again on the old credit cards you have committed the ultimate debt sin.

Note: If you are unable to qualify for a low APR credit card or balance transfer credit card contact each of your credit card issuers and request an interest rate reduction. Explain to them that you are having trouble paying your bills and would like their assistance with finding a reasonable solution. If you are successful, simply transfer your credit card debt to the credit card with the lowest interest rate.

After you have transferred your combined balances to a single low interest rate credit card you will want to create a weekly budget. The only way to pay down your debt is to pay your bills on time, and to pay more than the minimum amount due. This can be easily done by paying your credit card bill weekly. If you create a weekly budget that includes all of your expenses such as rent, mortgages, loans, phone bills, etc. you will discover exactly how much you can pay.

Step 3: Credit card interest accrues daily not monthly. Therefore paying your bill each week will greatly reduce the amount of overall interest you will pay. Since your balance will be slightly smaller each week, you will be charged less interest on that smaller balance than if you continued to make a single monthly payment. You can figure out your weekly payment by using your monthly minimum. For example if your monthly minimum payment is $50 then you will want to pay as much as you can above $50. If you determine you can pay $60 then you simply pay a fixed $15 each week even after the balance decreases. You can pay more if you are able; however do not begin paying less when you notice a smaller minimum payment. Continue to pay this fixed amount until the debt is paid off.

You can tailor this weekly payment method to suit your needs. You can have your weekly checks all written out and simply drop them in the mail each week, or you can have the funds automatically deducted from your checking or savings account each week. Just think of the fun and excitement you will have as your credit card debt is reduced.

Are Students Good Credit Card Customers?

College is usually that time in your life that comes between childhood and adulthood. For most, it acts as a buffer zone between being under your parents’ protection and being totally on your own. Your parents may bail you out now and then, but you won’t be able to rely on them forever. The time to start taking care of yourself, physically and financially, is now, while you’re in college. Sometimes student credit cards are the first step towards learning financial responsibility.

It used to be that very few students had credit cards. It was considered a privilege and not a right. Credit cards were very hard to obtain due to the lack of credit history, income and responsibility. Now days, credit card companies are realizing that college students can be their best customers. Student credit cards can be very easily obtained and require little steady income and little or no credit history. Credit card companies target students for many reasons. First off, they know that students generally haven’t learned how to manage their finances effectively, and they’ll make a lot of money off of late fees and unpaid balances. Second, students are generally unaware of what is a good interest rate. They may not take the time to read and understand all of the fine print in the credit card agreement. They may not notice that they are being charged certain fees, such as annual fees.

Students are more easily convinced to open credit card accounts. Credit card companies will set up booths with free t-shirts and other give-aways that entice students to apply for a credit card. You may not have the self-control that it takes to only use your credit card for real emergencies once you have it in your hand. Credit card companies see you as an easy target. They know that you most likely won’t take their information and then go research other student credit card offers before applying. They also know that historically, students have used credit cards for clothing and nights out with their friends. This habit is a hard one to break and you can get yourself into debt that lasts for years beyond college. Students make loyal customers and usually keep using the same card for a very long time.

Student credit cards can be very useful and help you through tough times. They can get you out of a financial emergency when you have no other options. Most importantly, you can build a good financial history by using your student credit card wisely and responsibly. Make all of your payments on time and always pay more than the minimum. Shop around before applying for any student credit cards. Look for the lowest interest rate, consider all fees and consider the card that you choose an emergency card only. Building your credit is very important at this age, but you can also really hurt your credit and pay for it for years to come. Be smart and learn financial responsibility by being responsible. Don’t take risks with your credit and stay on top of your budget. When you graduate, you’ll remember the good things about your college years as opposed to regretting the mess that you’ve made of your credit.

Credit Cards and High School Students

The Federal law doesn’t provide any restrictions about issuing credit cards to minors. In fact, credit card companies consider teen-agers as a very profitable market. Most credit card companies often require a co-signer when a minor applies for a credit card. When a teen-ager reaches the age of 18, he has the right to sign-up for a credit card on his name even without a cosigner.

Are Student Credit Cards an Advantage?
Some parents feel that providing their kids with credit cards while they are still in high school help them learn about money early in life. With proper guidance and support, obtaining a student credit card can help young people learn about how to handle their finances properly.

A student credit card is a great way in establishing a credit history in preparation for their future. Some credit card companies refuse to grant credit card approval for those without a credit history. But with the help of a parent as a co-signer, it will be much easier to get a credit card.

Or a Disadvantage?
On the other hand, a young person with a student credit card can also get into trouble. The convenience that a student credit card can bring may lead to uncontrolled spending. With just one swipe of the card, they can purchase an item easily at any time. Eating out in restaurants with friends is also just as convenient. They can easily do so without bringing with them any cash.

The problem comes when it’s time to pay the bills. At the end of the month, their billing statement may reveal that they have spent more than their alloted monthly budget. It is also a possibility that a student who does not think about his spending for the past month has already exceeded his allotted credit limit.

The Role of Parents
With this in mind, it is very important that the students themselves realize the value of credit and how to use credit cards to their benefit. Parents play a big role in helping their kids understand that credit cards should not be used like cash. Instead, every time they use their credit card to buy something, they should already plan out on how to pay back that purchase. Students must be reminded that serious thinking must be done before they use their credit card to make a purchase.

If you own a student credit card, be aware of the dates when you should be paying off your balances. Even if your parents are helping you to pay your bills it is crucial that as early as now, you learn the responsibility of paying your debts on time. Once you finish school, you will have the sole responsibility of paying your debts. By learning how to use your credit card wisely and putting it into practice, you won’t have a hard time managing your finances later on.

Student credit cards can be an advantage or a disadvantage for students. It will all depend on whether they will use their student credit card wisely and prudently.

The Beauty of the Modern Credit Card

Credit cards are a handy method of obtaining credit and when used properly they can provide flexibility & a variety of useful benefits for the cardholder. Credit cards are, basically, unsecured loans. Credit cards are a terrific alternative for when you don't want to carry a large amount of cash. Credit cards are also useful if you are abroad, and they will let you withdraw foreign currency, for which you are usually charged a reasonable fee for the convenient service.

Credit Limits

Credit limits are established on an individual basis, and may be raised or lowered based on the performance of the credit card holder. Credit cards only charge interest when your outstanding balance has not been paid off in full at the end of the month or credit term. If you are careful with your credit card and are skilled at managing your finances, you can in fact use the credit card provider’s money for the interest free period. The way credit card owner’s pay off their balances has a large effect on their credit history and the ability to either obtain other credit cards or raise the limit on the existing credit card.

The History Of Credit Cards

The first credit cards were made of celluloid, then metal and fibre, then paper and are now mostly made from plastic. They were initially issued by large-scale merchants, much like department store credit cards of today. This made it possible for stores to let more specialized employees of their customers to use the cards, as well as corporate officers and executives, who would often hold expense accounts and corporate credit cards. The design of the credit card itself has now become a major selling point in recent years. Different cards are available with different offers including special balance transfer rates and reward points and also different and new colour coordination’s and physical design.

The Credit Balance

Balance transfers are often made to save money. Balance transfer charges are charged by credit card companies when you relocate a balance from one credit card to another. Balance transfer rates tend to be smaller than standard interest rates and apply to the balance transferred either for a limited period of time or until it is repaid in full. By moving your outstanding credit card balance to a 0% or low rate credit card you can extend your line of credit whilst not incurring excessive fees for not repaying the loan in time.

Credit cards are the most familiar type of loan card permitting you to operate a revolving balance up to a particular credit limit. Credit cards are simpler to use than applying for loans every time a small amount of finance is needed. Credit cards are also perfect for making a payment online due to the protection supplied by many credit card suppliers and you cannot pay cash across the internet. As the payments are all made electronically, the physical location between the seller and the purchaser is no restriction. Credit card payments are slowly becoming more popular than cash payments as they provide extra security features whilst being convient and widely accepted.

Tips to Minimize Credit Card Debt

Credit card debt is the Number One of debt issues that is not just affecting American households but worldwide in general. Many people are drowning into credit card debt and find themselves hard to get rid of it. If you are in the same situation, praying and hoping for helps from money falling from sky will not save you from continue drowning in the sea of debt. You action to start a debt elimination plan in place is your only way to save yourself from your debt issue. Here are 2 tips to minimum your credit debt that you should consider in your effort of get rid of debt.

1. Don't Add New Debt While Clearing Your Old Debt

Every one likes to use credit card for purchases because it's convenient and easy, until you forget about how much money you have in you account and overspend your money. When credit card bills come, only you realize that you have not enough money to pay the amount stated in your credit card statement, you have no choice but paying minimum due to fulfill the credit card agreement requirement. Later, you go out from shopping, again you forget about your financial status and spend again with your credit card.

If you continue this spending behavior, your credit card debt will continue to go up instead of reducing the amount. There is no way to get rid of you debt if you don't get rid of you credit card first. Hence, if you find that keeping away your credit cards are too hard, take a dramatic action by terminating all your credit cards and exchange them with debit cards so that you only can spend up to the limit where your checking account allowed. Before you call up the banks to cancel your credit cards, read the fine print of your credit card agreement first because some banks will increase your credit card interest rate if you cancel their cards with balances.

The first action to get rid of your credit card debt is to get rid of your credit cards so that you can avoid from adding new debt into your existing debt amount.

2. Minimize The Interest Rate & Avoid The Finance Charges

Credit cards carry different interest rates. If you pay your credit cards' balances in full each month, then, you don't really need to care about the interest rate. But, now you are in debt, every extra of interest rate will make you pay more. Hence, list down all your credit card debts and their balances. There are a few options that you can use to minimum the interest charged to your debt. Credit card debt consolidation into few cards with lower interest rate is one the options. Another way is getting a debt consolidation loan which has lower interest rate to pay off your high interest credit card debt. After the credit card debt consolidation, your credit cards now have a full credit limit again. Don't let yourself be trapped into new debt with these credit cards again.

By combining all your debts into single debt under debt consolidation process, you will have a better focus to pay of your credit card debt and transferring from high interest debt to lower interest debt will save you a good amount of interest. With debt consolidation, your overdue debt will reset back to current and help you to avoid paying the overdue or delay finance charges.

Summary

Credit card debt can be built up really fast, but it won't go away that quick and it won't go away if you have done nothing to resolve it. The first step of get rid of your credit card debt is reducing it by avoiding new debt added to it and minimum the interest from rolling up your debt.

Choosing the Right UK Credit Card

In the UK finance markets there are literally hundreds of credit cards available. While a credit card can be useful if used correctly choosing the wrong type of card can be a costly mistake. There are many sites online that help you to compare credit cards but your first port of call should be to research and educate yourself on the options available. In this article we will look at the different types of credit cards on offer and how their suitability differs depending on your personal circumstances.

If you are in the fortunate position of being able to clear your credit card bill every month then there are several options open to you. The most important thing to check is that the credit card offers an interest free period, most cards offer an interest free period of around 45 days, although the period will differ slightly for each credit card company. If your card offers this interest free period and you can afford to clear your balance every month the interest rate of your card is largely irrelevant as no interest will accrue. In this case you should look at credit cards that offer cashback or a loyalty points scheme to actually get some benefit from using your card.

If your credit card is used regularly but you sometimes carry your balance over from previous months your best option is to go for credit cards with lower standard rate. As you will be aiming to clear the majority of your balance on a regular basis the interest will not build up too much. You should also look into the possibility of obtaining cashback or loyalty points but the low standard rate is the priority, any interest free period on purchases is also a benefit. If you fall into this category be wary of letting too much debt build up, dedication to clearing your balance as regularly as possible is essential.

If you are unable to clear your credit card balance on a regular basis then interest on your debts is going to build up. In this scenario a card with a low standard rate is important to prevent interest building up too quickly. If you are changing your credit card you should use a web comparison and seek out a card that offers an interest free period for new purchases and balance transfers. Many cards offer interest free periods of between 6 and 12 months. Although a fee of around 2.5% may be payable to transfer a balance you will still be saving money in the long term. If you fall into this category avoid making only the minimum repayment each month as this will nullify the benefit you receive in your interest free period

If you have debts on credit cards you are trying to pay off you should look to move your balance to a new credit card with a long interest free period on balance transfer, preferably 9-12 months. If you can combine this with making your monthly repayments as large as possible you can start to chip away at your debt without additional interest building up in the introductory period. While going down this route it is vital to avoid putting more debt on the card if possible. If this is not possible you should look for a card with an interest free introductory offer on purchases as well as balance transfers

If your personal circumstances have resulted in a poor credit rating which you want to rebuild you can look to acquire a bad credit credit card. These tend to have higher interest rate 29.9% is not uncommon. Taking out one of these cards can be the first step to rebuilding your credit history but using the card responsible is paramount. Your credit limit will usually be quite low, no more than £500 in most cases. By clearing your balance each month you can start to rebuild your reputation with the banks.

As this guide has shown there are many credit cards out there and some will suit you more than others. When you are looking to compare UK credit cards make sure you do your research to avoid making a big mistake.

Why Do Credit Card Companies Target College Students?

Many credit card companies see the marketing potential in college students. Credit card companies use promotional offers and free gifts like t-shirts, coffee mugs, or CDs to entice students on signing up for their company.

Have you ever asked why? Loyalty is a good reason. Credit card companies are competing to be the first credit card that the student will own. By being their first credit card, it is very likely that even when they graduate from college and enter the corporate world, students will be upgrading their credit cards with the same credit card company.

Students are Big Spenders
Aside from this, college students are great spenders. Let’s face it, credit card companies love customers who spend much using their credit cards. The more a person uses his credit card, the better it is for the business. And students are usually prone to over spending or using their credit cards excessively not just for their school necessities but on luxuries as well.

Despite the fact that college students are still in school and most do not have stable jobs to finance them, credit card companies are still doing everything to encourage these students on obtaining a student credit card. Furthermore, credit card companies are encouraging students to use their credit cards as often as they can.

Regardless of whether a student can afford to pay it or not, credit cards are willing to take the risk. Why? Because they can simply charge additional costs on the customer’s account if they fail to make their payments on time. For instance, credit card companies profit from charging interest rates and penalty fees on their customers. Obviously, customers who fail to pay their balances promptly pay more even if it takes them some time to repay their bill. In the end, the credit card company is still the one who benefits.

Students Need Credit
It is also interesting to know that students will do everything in order to repay their credit card debts. Although, students may fall behind on their payments, they will still find some way to pay off their debts especially as they are about to graduate and find employment. Students may get a part-time job, get a student loan, or borrow from their parents or relatives the money to get off their credit card debts.

Students need to clean up their credit report from any unimpressive records. They need to boost their credit rating so that future employers and creditors can find them worthy of their approval. Thus, credit card companies know that whatever happens, students will find a way to settle their credit card debts sooner or later.

In view of this, it is up to the students on how they will use their student credit cards to their advantage. Credit card companies do not have to be the only ones to profit. A student credit card can provide great help and support during a student’s college years as long as the student knows how to manage his finances responsibly.

Why Should You Bother With The Best Secured Credit Card Deal

You can't stop noticing the number of advertisements for credit card offers these days. It can be enticing to sign up as they offer attractive rates and appealing incentives. So, why should you bother with a secured credit card deal?

In some cases, secured credit card may be useful. If the finance companies often reject your application, then you lose the prospect of getting one. Without credit report, you obviously find it almost impossible to secure a card. If the court declares you as an insolvent, what are your chances of getting one? As you can see, it boils down to your personal financial situation. Nevertheless, don't let it refrain from obtaining a credit card. You can opt for secured credit cards in such circumstances.

So, how does it work? The financial providers will require you to pledge your saving account with at least 500 dollars as collateral. Some of them may require higher deposits. Your credit limit depends on the sum of saving you have. This means that the card issuers will give a full credit line according to your account balance. Should you default your payment, you will lose your saving. Therefore, to obtain a credit card, you must have a saving account or a certificate of deposit with a minimum of 500 dollars. You will feel more comfortable having a credit card this way without worrying about over spending.

Usually the finance companies don't accept standard card application if you have bad credit. So the other option is to apply for secured credit cards. They assess your application only based on your savings and not your credit history.

Being a college student, you know that obtaining a credit card is challenging because you need to establish your credit. You can't get a regular one if you cannot present your credit history report. Therefore, most college students normally choose secured credit cards that demand no credit report.

Bankruptcy can prevent you from getting a normal card. The ideal way is to apply for a secured credit card. It is easier to obtain approval compared to other kinds of cards.

To determine the best deals, you check the offers from Visa, MasterCard, American Express, and Discover on the Internet. Doing online research can give you with valuable information about their offers. However, not all the offers are the same. So, you need to evaluate their offers first before you submit your application. Here is a potential list of items you should consider.

1. What are their interest rates?
2. Do they charge any extra fees such as an application fee?
3. Do they report to the three credit reporting bureaus about your application?

The best secured credit card should meet all your needs. Ideally, choose those that come with low interest rates and without application fees. Make sure that the card issuers report to the credit reporting bureaus. This will upgrade your credit score in the future provided you pay on time. This will further help you with your application for regular cards.

You need time and effort in diligently investigating and comparing different types of secured credit card deals. Whether you are a bankrupt, a student or a poor credit paymaster, secured credit cards are better choices even though you have a limit on how you spend your money. Best of all, you have a better money management because of the restriction.

How you Walk Right Into Credit Card Debt

Most of the time people are blissfully unaware that their spending habits that rely on credit cards are leading them straight into debt, until it is too late. Many people just don't understand where their money goes. They have a reasonably good income, but they find that their expenditure is always more than their income. You may feel lucky that you own a few credit cards that can help you to fill the gap between your income and your expenditure. If this is your practice, you are risking yourself to be trapped into a credit card debt.

Most of debtors that caught into serious finance issue are related to credit card. Statistic shows that American households are holding an average of $10,000 credit card debts. Credit cards are no longer a status symbol as it was a few years back. Everyone, and we mean everyone, can flash one around these days. Credit card provides easy and convenient payment in any of your purchases and you do not need to carry too much cash around while bringing your girl friend or family to dinner at a nice restaurant. Until, you forgot that credit card may be the evil that can lead you to serious debt trap. Here is one of examples on how you walk right into credit card debt.

Charge It To My Credit Card

Today, almost everything can be purchased with credit card. Most merchants understand that you won't feel the pinch when you do not have to pay in cash and you can make your buying decision faster and easier if it do not involve "Cash" money. Hence, many merchants are working with the credit card companies to come out with various "0% interest Payment Schema" to purchase their products with credit card and payment can be made with 12 to 24 months with zero interest.

Now, a $4000 home theatre set can be purchased easily with only $166.70 per month pay in 24 months. What you need to do is charge it to your credit card. It's easy right? So, you do it again and again to buy anything you liked, nothing could stop you from buying it. You don't feel the pinch because you do not have to pay for it in cash. And the easy payment schema offer by merchant that charge your purchases on to your credit card and spread your payments across 12 to 24 months let you feel that the items you buy are within your affordability.

The situation goes even worse when you just pay the minimum payment on your credit card balances. The frequency of late payment increase because your find it hard to meet the payment schedule and minimum payment requirement. Debts are snowballing with the compound interest and late payment charges. You are walking your way into debt trap. Situation will getting worse if you do not know how to manage it and work the way out of it.

In Summary

In many cases, unmanaged and uncontrolled uses of credit cards are the root cause that leads you to a credit card debt. Hence, before you signup any of the easy payment schemas to buy the items that you like, take a moment to reconsider them and take the purchase prices not the credit card monthly payments in counting your affordability to buy these items. If you do not have discipline to use and clear your credit card balance, the best thing is not to use it.

Credit Card Debt Settlement. Improving your Finances

Having bad credit can impact many opportunities in life, from your purchase capacity on assets such as a home or an automobile to renting movies. These days, American people are getting more and more in debt than ever and the majority do not know how to manage these situations in order to maintain their financial report. Credit card debt settlement is the mechanism that can and will help people with these types of problems.

- Credit card debt settlement repairs financial difficulties -

Most of the financial problems of Americans can be assigned to credit card bills, most American families are getting dragged deeper into debt because they do not know how to control their spending habits and have no idea of credit card debt settlement practices.

Credit cards are to be used whenever you are short on cash or for an emergency, such as medical bills or the utility bills of the month. But nowadays most of the credit card holders are using them to pay things like food, groceries, clothing and some others, all of which are provoking that people accumulate large amounts of credit card debt, which is one of the problems that credit card debt settlement systems attack.

Credit card debt is one, if not the worst, form of credit because it accumulates high interest rates constantly. Whenever you make the decision to pay your credit card debt, before making any sudden decision investigate through internet about credit card debt settlement, considered the most effective mechanism that can help you lighten your situation and in time will improve it once and for all.

There is no doubt that being in a financial hole leads to an incredible stress on the individual. Applying for credit card debt settlement will help to alleviate some of this stress, as the individual debtor will realize that a plan is in place to improve his or her life. A Credit card debt settlement program will mean that the monthly payments on an individual debt is lowered, and that in most cases interest rates are as well. As payments are made, the collection agencies will begin to call less, which will also help to reduce the stress.

- Credit card debt settlement benefits -

- The client can save more than $900 versus any other credit card debt settlement method
- The client can get out of credit debt in less than 24 months
- The client keeps control over the process and can see the progress for himself
- The client maintains personal privacy.
- Credit card debt settlement represents an honest and ethical alternative to that extreme solution, that is bankruptcy.

It is very important to remember that although a plan is in place, it is up to the client to follow through with it and control his spending so that the debt is paid off. Credit card debt settlement programs can help by managing your debt in a way that does not seem impossible for you, and will also help with self-control issues by pointing out ways in which an individual can better manage his or her finances. The plan that is put in place is one that suits the needs of the individual.

All creditors are paid out according to priority after all unsecured debt is consolidated, including medical bills, credit card debt, and personal loans. All of these loans are now paid out of one place. Credit card debt settlement plans are sponsored by creditors themselves, as they feel that although they could make more money with the higher interest rates, there is the risk that they will receive nothing at all, and it is more expensive to collect those debts than to settle with people.

We have different articles on interesting topics and current and former clients’ experiences with our programs. Take a look at the different situations on Credit Card Debt Settlement and related topics that people can fall into and how to keep yourself a debt free person.