Posts Tagged ‘Credit Card’
I was having this conversation with a business coach colleague yesterday. She deals with a lot of business owners, especially those starting out and those experiencing rapid growth. She’d been doing some research and one article she read suggested that a major reason that businesses fail is because of a lack of capital. This got me thinking about how people fund their ventures and whether they need a lot of capital to start their own business.
To be honest this really depends. If you are a product based business obviously you will need capital to invest in product but, if you were to start a service based business, you can often times get your business started with little or no investment plus time. You will need some capital though and there are some options available to you:
Friends and Family- Many people look to family and friends to fund their business ventures, especially if the funding required is small. Family and friends will generally offer you generous repayment terms on your business loan but make sure everything is done professionally. You don’t want to ruin relationships with friends and family for the sake of a few dollars. Also, if you get money from family and friends, make sure you allow them to share in your business successes.
Business Credit Cards- Business credit cards are another popular option that people look at when they aim to grow their business. Business credit cards can help with cash flow and, if you pick the right card, you can sign up to a rewards program and get points that can be redeemed for flights, accommodation or a variety of other rewards that may be useful to you. These rewards can be a pleasant little bonus for all of your hard work.
Investors- If your business idea is groundbreaking, or if your business plan is solid, you may be able to pitch to investors and get some investment in your company. If you expect rapid growth or you have a ground breaking product, then this may be the option for you. The problem with investors is that you may lose some of your decision making power as you give away part of your business to an investor.
At the end of the day, the most important factors for business success are clearly defined goals, the dedication to achieve them and then a marketing plan that will get your business in front of people. If you do need business finance there are options available to you. I have outlined three of these above.
Whether as a business user or a consumer, choosing the right credit card can be extremely confusing. There are so many options out there and it may be hard to work out which one is best for you. I’m a firm believer in people getting a credit card as soon as they can, as long as it is used properly. If they are regularly paid off, it can do wonders for your credit rating, making it easier to get a home loan or car loan.
The purpose of this article is to help you wade through the confusion and find out which card is best for you if you are only going to use it minimally and in emergencies.
Those credit cards with the best reward offers- If you are only a small user, and you will pay your credit card off each month, then the interest rate on the card you choose should not be too much of a concern. You should look at what other opportunities and offers you can receive for signing up to a credit card- this could be that they have the best rewards program for your life or it could be that a particular credit card offers you discounts or special offers at stores where you often purchase goods. This would be more useful to you.
Those cards with a small limit- You don’t need a big limit on your card if you are only a small user, otherwise the temptation may become too high and you may decide to live beyond your means and purchase things that you do not need. There is nothing wrong with running up the entire limit each month as long as you pay it off at the end of the month. Don’t get a big credit limit unless there is a reason for it and you can afford to easily pay it off each month.
Those cards with the longest repayment period- Male sure you pick a credit card with a long interest free period and leave paying the bill until the last minute. Why pay things back early if you can keep your money in your own pocket? If it is at all possible you want to avoid paying any interest payments.
There are hundreds of options for you when it comes to picking the right card for your personal circumstances. Following the tips that I have mentioned above may enable you to make better choices more easily.
If you read the newspaper or watch TV, you can’t help but feel that everyone in the US is in debt up to their ears. With the economy still struggling to recover, we hear of more and more people becoming mired in more and more debt.
I have heard from many people who are just paying the monthly minimum, but keep on using the card. The result is that the debt just keeps growing and growing and every payday a larger part of their salary is being used to service their debt. These people want a path toward financial freedom, a place where they control their finances, instead of their finances controlling them.
The problem so many of these people have is that they want very badly to gain control of their finances, but they lack the motivation to keep on track, to keep taking the steps they need to take to make that dream happen.
For those people I offer in this article, five steps to financial freedom, steps by which you can seize control of your finances. These steps are based upon the model for self motivation. They serve the dual purpose of not only helping you get back on track, but also keeping you motivated to stay on track.
Step 1: The first thing you need to do is to understand why you want to seize control of your finances. The more valuable a goal is, the more likely you are to achieve it. So write down all the positive reasons for why you want to regain control of your finances. What will you gain? reduced stress? the ability to buy things you need? a feeling of pride at how responsible you are? Also write down what will happen if you fail to make this change. Will you have to file bankruptcy? Will you lose your house? Will you be miserable and depressed and disappointed in yourself?
Step 2: Determine exactly what regaining control of your finances means in your situation. Clarity is motivating, so the clearer you are on exactly what you are moving toward, the more likely you are to get there. Here are some issues you need to get clarity on. How will you know when you have regained control of your finances? Does it mean reducing your debt? Does it mean living below your means so you can be paying off your debt? Write down what will be occurring in your life when you have succeeded. Every success you have will motivate you even more to achieve another success.
Step 3: Write down a clear description of how you are going to make this change happen. Make a plan. Write down all the steps you can think of that will help you make this change. Will you cut up your credit cards? Will you track your spending for a certain period of time? How long? Will you make a budget? Will you set aside a set percent of each pay check to use toward your debt? Will you need to take an additional, part time job for a while to catch up on your debt? Will you contact your creditors to try to work out a payment plan? Step Three provides two very important motivational impacts. Clarity, as we saw in Step Two, is motivating. But also, a big goal, like gaining control of your finances, is less scary when it is broken down into its component tasks. The less scary something is, the more confident you will be that you can succeed. Nothing is more motivating than confidence in your competence. That’s why it’s factor number two in the model for self motivation.
Step 4: Be in charge. Suze Orman says in The 9 Steps to Financial Freedom, “True financial freedom is not only having money, but having power over that money as well.” Make a conscious decision that you control your financial life. You are the boss! Power is motivating. Acting intentionally is motivating. Being a helpless victim of the economy is NOT motivating. Take charge and you will stay in charge.
And last, but by no means least:
Step 5: Find resources that will help you make this change. The worse the economy gets, it seems, the more resources there are for those who need help getting back on their feet.
Credit cards for bad credit are one of the best methods available to overcome your financial black marks. Having a poor score for whatever reasons can be a serious problem for individuals trying to re-gain financial stability and secure loans for mortgages or other long term financial investments. Hundreds of thousands of people in the UK suffer from negative credit ratings with 6% of the population having to make rent or mortgage payments using these cards in 2010 alone. The average UK adult has over 30 thousand pounds of unpaid debt and more than four million people missed a monthly card payment in 2010. With such dramatic figures it is not surprising that more than 10% of the adult UK population has some form of bad credit rating in their financial history. The good news is that there are credit cards for that are specifically designed to help those with poor credit ratings get back financial stability.
A poor credit history is likely to prevent individuals from getting most unsecured loans, credit cards and also will often prevent an individual from successfully applying for a mortgage. Due to the recession increasing the cost of living, prepay cards for bad credit are becoming increasingly prevalent as a means to repair ratings as they offer a number of advantages in building credit history.
Credit cards for poor scores are the best way to repair credit ratings, provided you keep up with the payments, as they show that individuals have regained control of their finances and are exercising good financial monitoring on a regular basis. There are of course downsides to using cards for bad credit which will become apparent as we discuss the pros and cons of these cards.
The advantages of credit cards for bad credit
The key advantage of cards that aim to improve your rating is that you can show a financial stability history to future creditors. This allows you to slowly improve your reputation over the course of months, or years, if you have a particularly bad credit rating to begin with. Gaining a good repayment reputation will encourage creditors to trust you with in the future and therefore you are much more likely to receive mortgages and other unsecured loans.
Other advantages of cards aimed at those with poor credit history are that they are essentially the same as those for normal cards. You get the freedom to make payments immediately for purchases and bills, and get to spend money you otherwise wouldn’t have. In this respect cards for bad credit work in much the same way to normal credit cards.
The disadvantages of credit cards for poor credit history
Cards for poor credit obviously come with severe disadvantages as the companies providing them must secure debt against the risks of non-payment that bad credit entails. For this reason cards for lower scoring citizens will typically have a very high APR (Annual Percentage Rate). The average rate is typically over 20% so if for any reason you fail to make a payment you need to be prepared for a large additional fee. The other disadvantages are that you typically do not receive any of the benefits that other cards offer which takes away some of the advantages of having a credit card.
So should I use credit cards for bad credit?
Cards for bad credit are one of the easiest ways to absolve yourself of bad credit so should consider applying for one if you are secure in your current finances and will predominantly be using it as a means to improve your credit rating; rather than as a means to support yourself or cover unpaid bills.
Let’s face it, in today’s society everyone wants everything and they want it fast. We are a materialistic culture. The truth is majority of people in this country live way above their means, driving cars they can barely afford just so they can look good to others I suppose. What is the true reason behind wanting more material things? Does it really make you feel like a better person at the root of it all, is it a form of self fulfillment or an endless need for a more self gratifying urgency? Credit cards make it affordable to buy things that we normally would not be able to buy. I personally do not have any credit cards, but I have on occasion taken out a payday loan to help me with a large purchase, which leads me to another subject entirely.
I have been reamed on several occasions for using a payday advance, yes I know it certainly doesn’t sound like the classiest thing, I am not bragging about my use of payday loans, but I’m always hearing or reading bad reviews about how expensive the fees and interest are. But how is it any different than getting a credit card really? Do you consider yourself to be a more sophisticated individual because you have a credit card, when in reality it really is no different than a pay day loan. If someone is going to badger me about taking out a payday loan, consider this, if you have a credit card with a limit of $5000 with an interest rate of 29% (which is very common) you will pay around $1500 of interest in a year. So please people stop your judgments on people who chose to borrow from a payday loan company, which is essentially no different than a credit card company. I have no credit cards and have personally taken out quite a few payday loans, and am in a better financial position than most of my friends who have high limit credit cards. I know it sounds ridiculous, but most people are living way above their means with limits of $15,000 dollars when all they can afford is $1000 dollars a month or less.
Like I said I am not bragging about my pay day loan use, but I have all my loans paid off now, and have actually built up my credit doing so. I know I am the exception to the rule, but if you can be responsible about borrowing money, you can actually improve your credit status. So think carefully when borrowing money, and please please please don’t think you are better than me just because you carry around a ton of credit card in your back pocket! Posers!
Credit cards, cash advances, pay day loans, etc… there are all essentially the same. Manage your money and keep track of your finances and you will be fine. If you are looking at using a check advance or a cash advance take your time and do your research, compare your findings and chose what is best for you.