Credit cards are truly one of mankind’s greatest inventions. Unfortunately it has also become one of mankind’s greatest curses.
Most credit card companies in the Philippines charge 3.5 % interest rate per month. That is about 42 % per annum. If you do the math, your present outstanding balances will double every 2 years. If you owe your credit card company P 10,000.00, in 2 years time it will become about P 20,000.00.
The best thing that you could do right now is to pay all your credit card debt immediately. That is if you have the money to do so. But what if you owe your credit card company P 100,000.00 or even P 200,000.00 what should you do ? What if you have multiple credit card debts? The following are probably the best steps that you could take in order to rid yourself of this credit card debt mess.
1.) Get a loan with a lower interest rate – Some lending institutions and even banks offer an interest rate of 0.99 to 1.5 % interest per month. This is much lower than what the credit card companies charge. If you can secure a loan with a lower interest rate, especially a diminishing one (Hard to get by these days, by the way if you don’t understand the difference between diminishing rates and straight rates or fixed rates this will be discussed in another post) use the loan to pay off your credit card debt, and resolve to never ever again use your credit card except if you can pay it within 30 days. That way you won’t be charge the monthly interest. By borrowing at a lower interest rate you will minimize your losses due to interest. If you can borrow from somebody at 0 % interest (A rich old uncle perhaps), that would be so much better. If you have several credit card debts, borrow enough to pay all of your credit card debts. This way you can focus on paying only one debt and one interest rate. In financial planning this is better known as “debt consolidation. “
2.) Secure a balance transfer – Most credit card companies have a wonderful feature called “Balance transfer.” When you transfer your balance from other credit cards they will only give you .99 percent interest per month. This is already a steal deal. Balance transfer are payable in certain terms like 12, 24 or 36 months. So let’s say you owe your PS BANK Master Card P 100,000.00. If you have another credit card with let’s say CITIBANK and your credit limit with CITIBANK is also P 100,000.00, you could transfer your balance from PSBANK to CITIBANK. Instead of 3.5 % interest per month, Citibank will only charge you 0.99 % per month (About 12 % per annum). What Citibank will do is that they will add the monthly interest and then divide that with the term that you wish to avail of. For example of you wish to pay off your debt within a year the computation would be: interest times principle + principle divided by 12. So that would be 12 % x P 100,000.00 + 100,000.00 / 12 = 9,333,33. You will only have to pay P 9,333.33 per month. If you say that you will just pay P 9,333.33 per month at 3.5 % per month anyway that is based on “diminishing interest” (This means that your interest goes down if your principal goes down)as opposed to paying a “fixed interest” you will still end up with P 14,822 in debt at the end of the year. If you pay a fixed interest of P 9,333.33 at the end of the year you will end up with zero credit card debt. (I would love to post the table I made, but unfortunately I cannot do it here so just email me if you are interested)
But if you pay only the “minimum” per month, what will happen to your credit card debt ? You will see that at the end of 12 months you still owe your credit card company P 92,585.00. (This will be discussed in a different post) That is why it is not wise to pay only the “minimum.”
There are several things to remember about “balance transfer”:
1.) Balance transfer is subject to approval by your credit card company.
2.) The maximum amount you can avail of for balance transfer is your credit limit. Let’s say you have P 100,000.00 and you used up P 50,000.00 more or less you can balance transfer about P 50,000.00. However take note, this is not guaranteed. This is still subject to approval by your credit card company.
3.) Make sure you pay the fixed monthly installment. In our illustration above, pay the P 9,333.33 religiously, otherwise it will be made subject to the 3.5 % monthly interest. Don’t be tempted to pay only the “minimum” since you will be charged with 3.5 % interest over and above the 0.99 % interest. (This is double jeopardy !)
4.) It is advisable not to use your card when you are using it for balance transfer in order to avoid confusion and to make sure that you can make a priority to pay the installment for balance transfer instead of paying other credit card debts.
5.) Resort to balance transfer only when you cannot avail of the first option. The first option (Get a loan with a lower interest rate) is still the best.
Sunday, August 16, 2009
Business Loans - Feed your business with a low cost finance
Every business has a vision and a mission to follow. But, to achieve these, entrepreneurs need to have leadership expertise and adequate capital to finance the business. You may have the vision to reach the new heights in the world of business, but lack of funds may be stopping you from using your skills. You need not feel disheartened, unsecured business loans can provide you
with the funds you need for making a mark for yourself as a "business tycoon".
Businesses vary on the basis of size. A business could be of small, medium and big size depending on the capital invested and the scale on which business operate. Businesses are also categorized on the basis of ownership or on the way they are managed such as sole proprietorship, partnership and corporations. An individual requires capital to start up or expand the business irrespective of the size of the business. Unsecured business loans can work as a great help in such cases.
Unsecured business loans are designed specifically for UK businesspersons to finance their need for capital to start up or expand a business. Unsecured business loan offers flexibility to a borrower; he can use the loan for any purpose. Purpose of borrowing an unsecured business loan may vary from person to person. The amount borrowed with an unsecured business loan
can be used for the commencement of business, expansion purpose, to finance the asset or equipment purchase and refinance or to restructure finances. Some entrepreneurs use the loan proceeds as a working capital. It allows a borrower to preserve his cash and working capital.
The best thing about an unsecured business loan is that it does not require a borrower to put a security against the loan. Thus, the borrower's property is not under any risk of repossession. Unsecured business loans are available for amounts ranging form £15,000 to £ 250,000. The repayment period of the loan vary from 1 to 20 years depending on the amount of loan a borrower wants and his or her credit history. This loan is best suited for short term and small cash needs.
A borrower by applying for an unsecured business loan gets the following benefits:
1. Retention of the Ownership - An entrepreneur can retain the current ownership in his company instead of raising funds by selling interest in his company to an outsider.
2. Cash Flow management- Unsecured business loan provides borrower an access to capital with minimal up-front payments and the flexibility to design a loan repayment schedule suitable to your finances.
3. Tax Advantage- Interest on the loan is tax deductible. Thus, can help in saving hard earned money of the borrower.
Each loan requires a borrower to pay interest on the amount borrowed. Unsecured business loan are usually provided at higher rate of interest as no collateral is put against the loan. You can either choose to pay a fixed interest rate or variable interest rate on the amount borrowed. In a fixed rate business loan, the interest rate applied to the outstanding principal remains constant or an agreed period that may be the loan term. Variable interest rate imply that rate of interest on the loan is not constant and fluctuates to common standard rate.
You need to understand the fact that the lender is entitled only to the interest on its loan. You are not liable to pay any percentage of the profits or a share in the company that an investor would expect.
A good credit history is always useful while applying for a loan. In case of an unsecured business loan, absence of collateral makes it necessary for a lender to recognize or identify the credit worthiness of the borrower to avoid any default by the borrower in the future. Higher the credit score, higher is the possibility of getting a cheap and fast loan, so work on your credit score and you will see it doing wonders for you.
Though, there are various lenders in the finance market. Online lenders can help you overcome all the shortcomings that you must have faced while borrowing from the traditional lenders. Apply for an online unsecured business loan that will save your time and money. You just need to fill up a small application form online which hardly takes few minutes and the lender will get back to you with the appropriate loan option. If you are looking for the best loan, then don't relax. Collect loan quotes from various lenders and compare them, I assure you will definitely end up with the best deal.
Profit maximization is the main objective behind every business. But, to accomplish it, requires a lot of hard work and dedication on the part of the entrepreneur matched with adequate capital investment. Unsecured business loan can provide with the funds for your business, follow your intuition and work with dedication. And one day you will be known among the top businessman of the world.
with the funds you need for making a mark for yourself as a "business tycoon".
Businesses vary on the basis of size. A business could be of small, medium and big size depending on the capital invested and the scale on which business operate. Businesses are also categorized on the basis of ownership or on the way they are managed such as sole proprietorship, partnership and corporations. An individual requires capital to start up or expand the business irrespective of the size of the business. Unsecured business loans can work as a great help in such cases.
Unsecured business loans are designed specifically for UK businesspersons to finance their need for capital to start up or expand a business. Unsecured business loan offers flexibility to a borrower; he can use the loan for any purpose. Purpose of borrowing an unsecured business loan may vary from person to person. The amount borrowed with an unsecured business loan
can be used for the commencement of business, expansion purpose, to finance the asset or equipment purchase and refinance or to restructure finances. Some entrepreneurs use the loan proceeds as a working capital. It allows a borrower to preserve his cash and working capital.
The best thing about an unsecured business loan is that it does not require a borrower to put a security against the loan. Thus, the borrower's property is not under any risk of repossession. Unsecured business loans are available for amounts ranging form £15,000 to £ 250,000. The repayment period of the loan vary from 1 to 20 years depending on the amount of loan a borrower wants and his or her credit history. This loan is best suited for short term and small cash needs.
A borrower by applying for an unsecured business loan gets the following benefits:
1. Retention of the Ownership - An entrepreneur can retain the current ownership in his company instead of raising funds by selling interest in his company to an outsider.
2. Cash Flow management- Unsecured business loan provides borrower an access to capital with minimal up-front payments and the flexibility to design a loan repayment schedule suitable to your finances.
3. Tax Advantage- Interest on the loan is tax deductible. Thus, can help in saving hard earned money of the borrower.
Each loan requires a borrower to pay interest on the amount borrowed. Unsecured business loan are usually provided at higher rate of interest as no collateral is put against the loan. You can either choose to pay a fixed interest rate or variable interest rate on the amount borrowed. In a fixed rate business loan, the interest rate applied to the outstanding principal remains constant or an agreed period that may be the loan term. Variable interest rate imply that rate of interest on the loan is not constant and fluctuates to common standard rate.
You need to understand the fact that the lender is entitled only to the interest on its loan. You are not liable to pay any percentage of the profits or a share in the company that an investor would expect.
A good credit history is always useful while applying for a loan. In case of an unsecured business loan, absence of collateral makes it necessary for a lender to recognize or identify the credit worthiness of the borrower to avoid any default by the borrower in the future. Higher the credit score, higher is the possibility of getting a cheap and fast loan, so work on your credit score and you will see it doing wonders for you.
Though, there are various lenders in the finance market. Online lenders can help you overcome all the shortcomings that you must have faced while borrowing from the traditional lenders. Apply for an online unsecured business loan that will save your time and money. You just need to fill up a small application form online which hardly takes few minutes and the lender will get back to you with the appropriate loan option. If you are looking for the best loan, then don't relax. Collect loan quotes from various lenders and compare them, I assure you will definitely end up with the best deal.
Profit maximization is the main objective behind every business. But, to accomplish it, requires a lot of hard work and dedication on the part of the entrepreneur matched with adequate capital investment. Unsecured business loan can provide with the funds for your business, follow your intuition and work with dedication. And one day you will be known among the top businessman of the world.
Finance With a Personal Loan
Obviously, the best thing to do would be to count with a savings account to cope with such situations but for the majority of people who don't, a personal loan is a much better source of finance than using a credit card.
Credit and Debt experts call running out of cash a liquidity problem. Unless of course the problem is recursive in which case, you would be facing an income problem. There are plenty of ways to solve such difficulties but each one has different costs and advisers suggest personal loans as the best solution for sudden lack of cash difficulties.
Problems With Credit Card Financing
The usual solution people find for these situations is to make use of their credit cards. With luck, the problem is solved in the short term. However, other problems will arise if you always resort to credit cards when running out of cash. Credit card debt accumulates easily and generates certain dependency that may trigger additional problems.
Since credit cards offer the option not to pay the balance in full and even pay only the minimum payment which is usually consistent only of interests, the capital keeps rising and so the interests. Besides, the interest rate charged for credit cards is rather high compared to other finance options such as personal loans.
All the above gives the user, the idea that he can keep on spending and prevents him from concentrating on the sources of his lack of cash problems. The lack of budgeting will sooner than later lead to debt problems. Many Americans are today finding out this fact the hard way. Defaults and bankruptcy are at the highest peak in decades.
What Benefits Do Personal Loans Provide?
As opposed to credit cards, the debt you incur when you apply and get approved for a personal loan is fixed. Moreover, unless you close a deal with a variable interest rate, the monthly payments are also fixed. Thus, you don't run the risk of debt accumulation as long as you meet the monthly payments on time.
This fact also contributes to making things a lot easier at the time of budgeting. The loans monthly payments can easily be included in a monthly budget as a fixed amount even if the rate is variable. Besides, all variations are highly predictable and any differences can be included by stating a possible range of the amount of the monthly installments. Also the fixed nature of this loans aids avoiding the temptation of incurring in further spending thus contributing to solve the problem that caused you to resort to financing due to a sudden lack of cash.
But most importantly, the interest rate charged for personal loans is a lot lower than the rates charged for credit card financing. The rates of unsecured personal loans are usually around two thirds to a half the rate of credit card financing and secured personal loans are even lower. Credit cards can include a financing interest rate of up to 18% or even more and secured personal loans won't exceed an 8% APR.
Credit and Debt experts call running out of cash a liquidity problem. Unless of course the problem is recursive in which case, you would be facing an income problem. There are plenty of ways to solve such difficulties but each one has different costs and advisers suggest personal loans as the best solution for sudden lack of cash difficulties.
Problems With Credit Card Financing
The usual solution people find for these situations is to make use of their credit cards. With luck, the problem is solved in the short term. However, other problems will arise if you always resort to credit cards when running out of cash. Credit card debt accumulates easily and generates certain dependency that may trigger additional problems.
Since credit cards offer the option not to pay the balance in full and even pay only the minimum payment which is usually consistent only of interests, the capital keeps rising and so the interests. Besides, the interest rate charged for credit cards is rather high compared to other finance options such as personal loans.
All the above gives the user, the idea that he can keep on spending and prevents him from concentrating on the sources of his lack of cash problems. The lack of budgeting will sooner than later lead to debt problems. Many Americans are today finding out this fact the hard way. Defaults and bankruptcy are at the highest peak in decades.
What Benefits Do Personal Loans Provide?
As opposed to credit cards, the debt you incur when you apply and get approved for a personal loan is fixed. Moreover, unless you close a deal with a variable interest rate, the monthly payments are also fixed. Thus, you don't run the risk of debt accumulation as long as you meet the monthly payments on time.
This fact also contributes to making things a lot easier at the time of budgeting. The loans monthly payments can easily be included in a monthly budget as a fixed amount even if the rate is variable. Besides, all variations are highly predictable and any differences can be included by stating a possible range of the amount of the monthly installments. Also the fixed nature of this loans aids avoiding the temptation of incurring in further spending thus contributing to solve the problem that caused you to resort to financing due to a sudden lack of cash.
But most importantly, the interest rate charged for personal loans is a lot lower than the rates charged for credit card financing. The rates of unsecured personal loans are usually around two thirds to a half the rate of credit card financing and secured personal loans are even lower. Credit cards can include a financing interest rate of up to 18% or even more and secured personal loans won't exceed an 8% APR.
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