By: James Dimmitt
Debt Consolidation And Credit
Were you lucky enough to get a pay raise recently? If so, what are you planning to do with it? Here are 4 tips on how to make your raise pay real dividends for you now and into the future:
A consumer with excellent credit ( 850) would pay about 7.8% interest rate for a home equity loan, while a consumer with marginal credit ( 659) would pay 9.2% and one with poor credit ( 559) would pay a 12.1% rate.9 The rate swings for a new car loan are even greater, with good credit risks paying a 5.2% paying 11.4% and poor risks paying 17.2%.
Check Credit Rating 1) Open a savings account
Credit Cards You can save as much as a thousand dollars or more each year in lower credit card interest charges by paying off your entire bill each month. If you are unable to pay off a large balance, pay as much as you can and switch to a credit card with a low annual percentage rate (APR). For a modest fee, RAM Research Corp. ( 7714) rate cards. rate cards by accessing "www.ramresearch.com.cardtrack" on the Internet.
Improve Credit Rating Baby boomers can probably remember parents or grandparents making regular deposits to a savings account at the local bank. Our current savings rate is a measly 2.5 percent - down significantly from the 7 percent average 30 years ago.
Check the fine print in your credit card terms and conditions. Many credit card companies reserve the right to raise your interest rate if you make a late payment to other creditors, not just to them. The theory is that if you're late on other payments, you're a higher credit risk. The truth is that this is just another revenue stream for credit card issuers. The solution Pay all your bills on time.
Credit Online Rating Report For example: If you saved an $80.00/month raise, at the end of one year you'd have $960.00. It's not a huge amount for some, but it's a start. And thanks to the wonders of compound interest you can watch it grow into a nice nest egg over time, especially if you continue to add new raises to your savings.
The interest rates are often available upfront. Credit cards issued from banks offer revolving lines of credit, which 2% of the interest is levied, while the outstanding balance is repaid monthly. The actual rates of interest paid yearly can be right around 24%. if you roll over payments on credit cards, you may pay interest rates of up to 25% and more on a yearly basis.
Credit Score Rating Scale Savings account interest rates are on the rise. The online bank, ING Direct is currently offering 2.35% APY (annual percentage yield), with no minimum deposit, no fees, and your account is FDIC insured. Visit www.ingdirect.com to learn more about their saving account plans.
Unfortunately, a low credit score virtually guarantees that you will pay higher interest rates on home and auto loans, credit cards or other forms of credit. How much more will you pay Experts say that a person with a low credit score, say, below 600, will likely receive mortgage interests rates that are nearly 3% higher than someone with a score above 700. In a worst case, you may be denied credit altogether.
Bad Card Credit Credit People 2) Pay down credit card debt
Free Credit Rating Report The average American carries $2,627 in credit card debt, up 14.5 percent from a year ago, according to Myvesta, a nonprofit consumer education group in Rockville, Md.
Credit Rating Scale Fifty-three percent of credit card companies require only a 2% minimum monthly payment, up from 43% of companies in 2003, according to the consumer advocacy group, Consumer Action.
Bad Credit Rating Paying the 2% minimum due each month on a balance of $2,600.00 at 18.0% interest, it would take you MORE THAN 35 YEARS to pay it off, not to mention the $6,730.00 spent in interest charges! Instead, add your $80.00 a month raise to the minimum monthly payment and you would be paid off in 2 YEARS and pay just over $500.00 in interest charges, a huge difference!
Credit Rating Agency Applying your raise toward your credit card debt will lower your debt to income ratio, improve your credit score, and help you escape from the nasty web of outrageous credit card debt.
Credit Rating Canada 3) Open or contribute to an Individual Retirement Account (IRA)
Bad Credit Mortgage Rating If you haven't started contributing to a personal retirement account, you should, and what better time to start than with your new raise? This is exactly what I did three years ago, although I wish I would have started sooner.
Good Credit Rating If you're counting on Social Security to take care of you in your retirement years, you'd better do some rethinking. Regardless of changes to the Social Security system, we tend to overestimate how much we'll receive in benefits and underestimate how long we'll live. The only way to fill that gap is to have income from your own retirement plan to enjoy in your "golden years".
Credit Score Rating Chart An additional benefit of opening an IRA is that many companies will match your personal contributions at a specific rate. Check with your human resources department to see what plans are available and whether or not your employer will match your contributions.
Credit Mortgage Rating Poor 4) Invest in Stocks, Bonds, and Mutual Funds
Good Credit Rating Score You don't need thousands of dollars or a degree in business in order to invest. Nor do you have to hire a broker or financial advisor to own stocks, bonds, or mutual funds.
Poor Credit Rating Loan In fact, a company called ShareBuilder is making it easy for anyone who can afford to make regular automatic investments "to build wealth through long-term investing." Visit www.sharebuilder.com to learn more about their simple, affordable, and flexible plans to fit your budget.
Bank Credit Rating 5) BONUS TIP
Credit Card For Poor Credit Another option, and the one that too many of us choose, is to do nothing other than spending our annual raises. Unless you had some unforeseen emergency or are living paycheck to paycheck, is there any reason to think you can't get by this year on the same salary as last year?
Business Credit Rating The Federal Reserve estimates that over 40% of U.S. families spend more than they earn and as many as 25% of households aren't saving enough for the future
Moodys Credit Rating Your raise presents a unique opportunity for you to invest in the well being of your finances with results that can continue to "pay" you now and well into the future.
Credit Card With Bad Credit
Personal Credit Rating © 2005, http://www.yourfreecreditreportnow.com Author: James H. Dimmitt - James is editor of "TO YOUR CREDIT", a free weekly newsletter with tips to help you manage your personal finances. Subscribe today and receive his e-book "IDENTITY THEFT- How To Avoid Becoming the Next Victim!" and other free bonuses by visiting http://www.yourfreecreditreportnow.com
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