VISA credit cards
Visa offers through its issuing members the following types of cards:
- visa debit cards (pay from a checking / savings account)
- visa credit (credit) cards (pay monthly payments with interest)
- visa prepaid cards (pay from a cash account that has no checkwriting priviledges)
visa operates the PLUS ATM network and the Interlink EFTPOS network, which facilitate the "debit" protocol used with all debit cards and prepaid cards.
Even though the service is offered by thousands of banks, the end result is standardized for consumers by the Visa International Association. Banks can use independent methods to actually recover the money paid for purchases, regardless of whether Visa Debit or Visa Credit cards are used.
For anyone who has never before owned any sort of visa credit card and has never been loaned money, there will probably be very little information (neither good nor bad) on their credit report. Without a credit history, it's difficult for credit card companies to determine whether or not to offer a line of credit to a person. In this situation, the credit card companies tend to err on the side of caution and not offer a card.
However, if there is one credit card company out there willing to offer a credit card with a very small line of credit to someone with no credit history, that card should be immediately obtained. It should be used very wisely to purchase a few low-priced items, and the monthly payments for that credit card should be made on time every month.
As time goes on, this sort of spending and monthly payment behavior will allow a credit report to grow with nothing but good marks. A person's credit score can continue to grow higher and higher when they can show the ability to handle and pay for their credit card purchases.
Over time, a person's positive credit report will allow him or her to obtain either additional credit cards or credit cards which offer great interest rates and other types of benefits.
The main alternative to capital and interest mortgage is an interest only mortgage, where the capital is not repaid throughout the term. This type of mortgage is common in the UK, especially when associated with a regular investment plan. With this arrangement regular contributions are made to a separate investment plan designed to build up a lump sum to repay the mortgage at maturity. This type of arrangement is called an investment-backed mortgage or is often related to the type of plan used: endowment mortgage if an endowment policy is used, similarly a Personal Equity Plan (PEP) mortgage, Individual Savings Account (ISA) mortgage or pension mortgage. Historically, investment-backed mortgages offered various tax advantages over repayment mortgages, although this is no longer the case in the UK. Investment-backed mortgages are seen as higher risk as they are dependent on the investment making sufficient return to clear the debt.
It is not uncommon for interest only mortgages to be arranged without a repayment vehicle, with the borrower gambling that the property market will rise sufficiently for the loan to be repaid by trading down at retirement (or for other less well thought-out reasons.)
There are many types of mortgage loans. The two basic types of amortized loans are the fixed rate mortgage (FRM) and adjustable rate mortgage (ARM).
Federal student loans in the United States are authorized under Title IV of the Higher Education Act as amended.
The first type are loans made directly to the student. These loans are available to college and university students and are used to supplement personal and family resources, scholarships, grants and work-study. They may be subsidized by the U.S. Government, or may be unsubsidized depending on the student's financial need.
Both subsidized and unsubsidized loans are guaranteed by the U.S. Department of Education either directly or through guarantee agencies. Nearly all students are eligible to receive them (regardless of credit score or other financial issues). Both types offer a grace period of 6 months, which means that no payments are due until 6 months after graduation, or 3 months after the borrower becomes a less-than-full-time student without graduating. Both types have a fairly modest annual limit regardless of the student's actual cost of education. The present limit in January 2006 is $2,800 per year for freshman undergraduate students and increases each year to $5,500 per year for junior and senior undergraduate students.
Getting out of debt in the US
Genus is a national, nonprofit organization offering debt management and educational programs that help financially distressed families and individuals effectively manage their money. Credit counseling agencies, such as Genus, act as intermediaries, negotiating reduced interest rates and waived late fees for participants in their program. Swanson spoke to one of Genus' debt counselors over the phone, completed their application and mailed it in with a calculated monthly payment amount to enroll in their program.
Another reputable nonprofit credit counseling agency is Solutions, a company based out of Seattle and affiliated with Consumer Credit Counseling Services. According to Vice President of Marketing Michael Ertl, Solutions offers clients relief before their debt situation reaches astronomical proportions. "We help folks with the $1,000, one-creditor challenge as well as assisting those that have 15 - 20 creditors. Amounts range anywhere from $1,000 all the way up to $100,000. Typically, they're in the $15,000 to $25,000 range." Solutions also offers money management workshops to program members, the community and schools throughout the greater Seattle and Portland areas.
If your debt situation feels unmanageable, and you'd like to find a reputable credit counseling office in your region, visit the National Foundation for Credit Counseling. Or contact Genus or Solutions.
Addressing Moderate Debt
According to author Mary Hunt in her book, "Debt-Proof Living," it's not how much money we make, but what we do with it that matters. Hunt explains in plain terms the difference between "intelligent borrowing" (such as for a home that will increase in value) and "stupid debt" (such as a couple of movie tickets and dinner in a fancy restaurant). Hunt offers a Rapid Debt-Repayment Plan that teaches readers how to debt-proof their lives. "Without a plan," she says, "you're dreaming."
Purchasing manager Michelle Hanson's proactive response to $10,000 of accumulated debt would have made the pragmatic Hunt proud. "Once I made the decision to get out of debt, I made sure I didn't charge anything more. I had multiple cards, so I kept one for emergencies and cancelled the rest. I didn't consult any professional agency, but I did consult my father who helped me create a budget for myself ‹ something I'd never been able to accomplish on my own. Every time I got a bonus or extra money I would put it towards the outstanding balance I carried … Now I am out of debt, except for my low interest mortgage and home equity loan."
A demo version of Hunt's Rapid Debt-Repayment Plan is offered on the online version of her phenomenally popular newsletter, "The Cheapskate Monthly."
Get out of debt and stay out of debt
- Buy what you can afford. Put on a credit card only what can be paid off on the next bill
- Pay cash whenever possible.
- Don't impulse buy.
- Read and evaluate best buys and products that will last.
- Eat out seldom in order to afford regular vacations.
- Save for a rainy day.
- Always celebrate birthdays, Christmas and other holidays. But, during leaner years, set a lower gift-giving budget to avoid paying off debt for 11 months.
When a purchase is made, the credit card user agrees to pay the card issuer. Originally the user would indicate his/her consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid, but many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet.
Electronic verification systems allow merchants (using a strip of magnetized material on the card holding information in a similar manner to magnetic tape or a floppy disk) to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. Other variations of verification systems are used by eCommerce merchants to determine if the user's account is valid and able to accept the charge.
Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, and the total amount owed. The cardholder must then pay a minimum proportion of the bill by a due date, and may choose to pay the entire amount owed or more. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's accounts.
Advice on Debt Consolidation
Next to winning the lottery, a debt consolidation loan is a debtor’s dream. With one monthly payment and a fixed monthly payment schedule, you can actually see an end to those monthly payments.
In reality, consolidating debt isn’t always easy. If you have a lot of debt, it can be hard to find a consolidation loan at a lower interest rate. And if you’re not careful, you can end up deeper in debt than when you started.
Your goal in consolidating your debt should be to lower your overall costs. To accomplish this there are two things to keep in mind:
- Get the lowest interest rate possible.
- Have a plan to pay off your debts in 3 – 5 years.
The best ways to consolidate debt
Debt consolidation Using Credit Cards
The good news about this method is that with a good credit rating, you may get a much lower rate than other forms of debt consolidation loans. And since credit card issuers don’t require collateral, your home is not at risk.
Call your current issuer to ask what interest rates they will offer you if you transfer balances from other cards over to theirs. Go for a fixed rate if you can get it, and ask them to waive any transfer fees. If you can’t negotiate a low rate with your current issuer, try shopping for a new card at a site such as Moneyextra. But be careful! Too many applications for credit in a short period of time can hurt your credit rating.
Once you do debt consolidate this way, be sure to set up an optimal payment plan so you can be debt-free in 3 – 5 years.
Debt consolidation Using Home Equity Loans
With a home equity loan, you borrow against the value of your home, minus any other mortgages. This is often wrongly called a 're-mortage'. The two major kinds are: 1. A Home Equity Loan – a fixed amount of money for a fixed period of time (sometimes at a fixed rate) and 2. A “Home Equity Line of Credit” where you borrow up to a pre-approved credit limit (interest rates usually variable) and can borrow again if you still have money available.
These loans can offer attractive rates, low payments, and the interest is usually tax-deductible if you itemize. Many issuers offer no or low closing costs for these loans. Interest rates are often variable, however, and there’s always the risk that you can lose your home if you can’t pay.
Debt consolidation Using Cash Out Refinance
Refinancing your home and taking out money to pay off debts and bills (called “cash-out refinance”) is yet another way to tap the equity in your home. If you can refinance at a substantially lower interest rate, you’ll eliminate the high interest costs of the debts you pay off, and you could even come out with a lower debt payment than you have right now since rates are so low. This is a true 're-mortgage'
One option to consider: an interest-only loan. By lowering your monthly payment, you can free up money to use toward paying down other high-rate debt or building a retirement fund.
Make sure you understand the total cost of debt refinancing. Take any money you’ve freed up by paying off other bills and use that to create an emergency savings fund.
Traditional Debt Consolidation Loans
A debt consolidation loan is an unsecured personal loan, and the only collateral you are offering for the lender’s security is you. Because lenders consider them risky loans, they’re usually more expensive and not always easy to get if you have a lot of debt.
If the interest rate is too high to make it worth it and the repayment term is ten or fifteen years, you should probably consider another method of debt consolidation. However, if the term and interest rate are right, this can be a great way to actually save money in the end. Remember, to calculate the total cost of the loan from start to pay-off. Credit Counseling
If you can live with a really bad credit rating
Debt settlement is another option that’s become increasingly popular with consumers who have a lot of debt and can’t, or won’t, file bankruptcy. You stop paying your bills and instead make a regular monthly payment to the settlement company. Your creditors contact them, and not you, about your overdue bills. As your accounts fall further behind, the negotiation company will settle your balances – usually for 50% of the balance or less (including fees) depending on the debt. Most people can be out of debt in less than two years or less using these programs.
Insurance is more expensive in Northern Ireland than in other parts of the UK.
Motorists in the UK are required to display a Vehicle excise duty disc in their car when it is kept or driven on public roads. This helps to ensure that most people have adequate insurance on their vehicles because you are required to produce an insurance certificate when you purchase the disc. However it is a known practice for some people to purchase insurance to gain the certificate and then to cancel the insurance and gain a full refund within the statutory 14 day cooling off period.
Personal debt has become an increasingly large problem in recent years. For instance, it is estimated that the average US household has $19,000 in non-mortgage debt. With such large debt loads, many individuals have difficulty making repayments on debts and are in need of help.