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The Essentials for Your First Credit Card

1/15/2015

 
There's nothing quite like holding your very first credit card. Within this small piece of plastic an entire world of financial possibilities is revealed. While credit cards offer a host of benefits and advantages, the moment you begin your search you must be dedicated to not only selecting the best card, but using this card wisely. Remember, in the world of credit, decisions you make today will haunt you for years to come. Therefore, move forward with this financial milestone with careful considerations.

Review Interest Rates

When reviewing credit card offers, it's essential you choose one with the lowest interest rate possible. Instead of filling out online applications, take a moment to visit your bank or credit union. If you've dealt with the same financial institution for at least a year, with no issues relating to your account, you may be able to garner a much lower interest rate when compared to blind credit card shopping. Remember, whenever you apply for a credit card your credit score takes a hit. Therefore, keep your applications below three - ideally, you'll only need to apply for one credit card according to Your 650 Score.

As a general rule of thumb, try to find a credit card with an interest rate below 20-percent. Doing so will ensure your monthly payments are reasonable while simultaneously eliminating the amount of money you spend on interest instead of on your principal balance.

Reward Programs

While this may not be the first qualification on your checklist, rewards programs can be quite lucrative. Try to locate a credit card that offers statement credits, which in a way translates into free money. With every purchase, you should earn a certain number of points, which may be added to your account as a form of "payment." While you should never expect to pay your entire bill with these rewards, you might as well get more for your money than a monthly bill.

Once You've Been Approved

While some may think the act of finding a credit card is the hard part, the true challenge comes after you've been approved. With the ease of shopping and spending money, it's no surprise new cardholders are vulnerable to high interest rates and monthly payments. Keep your minimum payments at the minimum while protecting your credit score by only charging up to 30-percent of your total credit limit. At the end of the month, pay off this balance. This activity is regarded as acceptable spending behavior, and while your credit history may be minimal, sticking to this spending/paying formula garners the highest monthly credit ratings.
 

Can I be Sued for Credit Card Debt?

12/16/2014

 
While defaulting on credit card accounts will cause your credit score to drop, there are far more severe consequences from avoiding debt payments than a reduction of the mysterious three-digit FICO score. In some cases, if you've failed to make any form of payments, credit card companies are legally protected to file a lawsuit. While this may seem like a serious consequence, more and more credit card companies are turning to the courts to obtain owed money.

How Can I Be Sued?

The reason why a credit card company can legally sue debtors for unpaid balances is because of the contractual agreement established between company and consumer. When a consumer stops making payment on their balances, they are in breach of the contract agreements. Within the agreement you signed, it clearly states failure to make payments on outstanding balances gives the credit card company the right to file a lawsuit.

What About Collections?

Typically, when you've avoided payment on credit card balances, the creditor will sell your account to a collection agency. If this agency is unable to obtain payment, then your account is sold again. Eventually, after your account is sold several times, it will end up in an attorney's office for a collection agency. When this happens, the collection agencies attorney's office will likely file suit against you in your state courthouse.

Credit Card Lawsuit Process

When your account is given to an attorney's office, you're typically given an additional chance to establish a payment plan or settle the debt in-full. If these chances are unsuccessful, the attorney will then file a lawsuit. The lawsuit is always filed in the state where the credit card was opened. Within the complaint are details such as how much money you owe as well as who you owe the money to and why the credit card company believes you owe this debt (www.your650score.com)

Upon reviewing this information, you have two options: respond to the lawsuit or do nothing. In the answer you must either accept or deny the complaint. If you accept, then you'll be responsible for full repayment of the debt amount. If you deny, you must inform the courts why you wish to dispute this debt. Lastly, if you choose not to respond at all, you're basically telling the courts, "Yes, this information is correct." In doing so, you'll be fully responsible for full repayment of the entire debt amount. While you may not be able to dispute the complaint, always communicate with the court system if your debt reaches this level.
 

    Author

    After a horrible experience of identity theft through poor use of credit cards, i hope to educate readers on proper use.

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