How can you be sure that you are getting a good deal? The federal Consumer Credit Code ensures that you get the information you need to compare different credit schemes and make an informed choice.
It does this by making credit providers give the following information in all credit contracts:
This information must be presented in the Precontractual Statement which gives details about fees and charges and the Information Statement which outlines your rights and obligations. You may find that these two statements are combined with the credit contract or are issued separately. You should take the time to read both of these statements before you sign the contract.
Your credit is one of the most important resources you will ever have when saving money. Basically, the better your credit, the lower your risk profile, and therefore the lower your interest rates will be. More importantly, good credit is of the utmost importance when buying a house or taking any kind of loan. And even more importantly, if you ever get into a bind or run into a cash liquidity problem, having good credit will vastly help you raise the funds you need at reasonable prices. If you haven't looked at your credit report in a while, you should do so soon.
Many people find themselves falling into credit card debt and facing large monthly debt bills. In fact, credit card debt negatively affects a lot of people's long-term wealth and it is very important that you get out of debt.
The real problems with credit card debt are the following:
By purchasing goods before you have earned them, you are in effect borrowing from the future to pay for the present. In essence, it's the exact opposite of saving or investing and instead of earning money you are paying interest.
Interest rates on credit cards are typically much higher than savings rates and many other types of loans.
By carrying large balances on credit cards, many people feel that it is hopeless to try to pay them off, so their balances continue to rise. Remember that every bit you pay down makes it easier to pay the rest down.
Once you get into credit card debt, you fall further and further behind, because in addition to funding current expenditures, you also need to pay for the previous expenditures that are already on your credit card.
If you are already in credit card debt, don't worry. Follow these rules to get out of debt, and be patient:
Never forget that even paying down a small portion helps. The more you pay down, the easier it is to pay the rest because there is less interest due each month.
ALWAYS pay more each month on your credit card than what you spend on your credit card. If possible, discontinue using your credit card and start paying for your purchases in cash, and only when you have the money.
Don't lose site of the big picture. It's often discouraging because it seems like it will take forever to get out of credit card debt. Don't get discouraged.
If your credit card rates are high, try calling your lender and asking them to reduce the rate .
Sometimes it pays to transfer balances on your credit cards to lower interest rate credit cards. This is usually a good idea but be careful for two reasons: 1) these low balance transfers often expire in a few months at which point the interest rate may be even higher than your previous rate, 2) new purchases made on these cards will carry the standard interest rate (which is much higher than the balance transfer rate). As you make payments, they will be applied to the low balance transfer portion first.
If you find yourself with more payments than you can handle, you may want to refinance your debt with a lower interest rate loan. Sometimes these loans can cut your interest rate in half or more, especially if they can be backed by your assets (car, home, boat, etc.).
If you have trouble getting a low interest rate loan, it may be advantageous to consolidate all of your loans into one payment or to work with a debt consolidation company to lower both your debt and your debt payments.