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Credit Card Consolidation

How to Use Credit Cards to Your Advantage

Credit cards are known to be risky business for some people. If you have trouble balancing your budget every month then taking on a credit card or two should be your very last resort. If on the other hand, you are able to balance your monthly budget as well as save regularly then you are probably financially savvy enough to handle the responsibility of a credit card. Learn how to use credit cards to your advantage in this article.

Credit Cards – Tips and Tricks

Credit cards do generally have high interest rates on the balance that is left over after the pay period. If you always pay off your balance at the end of every billing period then you may be able to take advantage of the credit card. This is a huge convenience if you are short on cash just before pay day or if you have a big expense that your checking account cannot cover. It might usually take time to gather up the funds for that large purchase and if you pay off the balance when it is due then you have basically gotten yourself an interest free loan. You can look at it as a free loan from the time you made the purchase up until you pay it off. If the loan period is maximised then you could, in practice, get a 55 day loan without any interest.

You can have your credit card provider take the balance due directly from your savings account each month. Bypassing the tedious chore of transferring funds each month, you have essentially created an interest free form of cash available to you at any time. Any big surprises can be handled with the swipe of your plastic but this is all assuming that you can keep enough in your savings account to handle those payments.

If you are able to keep this balancing act going for long then you can take advantage of the incentives that some credit cards have such as points or cash back programs. A credit card with a good points program usually has a yearly fee. The fee can be outweighed by the big gains that can be made if you play the points game well. Having all of your purchases funneled through a points reward credit card can quickly grow your flight credits or give you big cash back returns. Some credit cards can also offer insurance on purchases. Even though all forms of credit including credit cards have risks, with discipline, the advantages can outweigh the risks.

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Credit Card Consolidation

Avoid Holding High Interest Credit Card Debt

Surprisingly, while the national interest rate on cash has gone down in Australia the average interest rate on credit cards has risen. Now is definitely the time for Australians to consolidate their credit card debts. Credit card debt is a $50 billion burden on Australians and around $35 billion of that is getting interest added to it. The nation’s interest rate on cash for banks has sunk to 2.5 per cent but most credit cards have an interest rate of 17 to 22 with the highest rate going up to 23.5 per cent. You can avoid high-interest credit card debt with debt consolidation.

High Credit Card Debt

Credit card debt can be a vicious trap and now is one of the best times in recent history to escape that trap. Credit card consolidation can help manage a person’s mounting debt and help them dig themselves out from under those heavy interest payments. A personal loan to pay off the credit cards can have a much more competitive rate and can make the difference between hundreds or thousands of dollars in a very short amount of time.

National interest rates and credit card rates are not specifically linked together and there are some noted differences between the two. The debt on a credit card is not backed up by any collateral and is therefore a higher risk to the credit card companies than a house or a car. Based on that simple fact, the credit card companies can charge much higher rates.

As a consumer, you have the ability to shop around and find a way to consolidate that debt from different credit cards and total them all into one sum that can be charged at a lower interest rate. This is one of the easiest and most reliable ways to cut your interest payments and look to a brighter future without looming debt in your future. Credit card consolidation is the best way to battle large credit card debts and the large credit card companies that charge more and more each year.

The national cash interest rate has nearly halved in recent years but the credit card interest rate has barely budged and in some cases has even gone up. A person with multiple credit card debts has a great chance right now to trade in their credit card bills for one bill with a much lower rate by consolidating their credit card debt today.

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Debt Management

Good Debts and bad Debts

As Australians earnings and lifestyle habits are increasing, so are their debts.  In order to manage and decrease these debts, Aussies need to become educated on their debts and which debts to stay away from.

The three most popular debts Australians tend to hold are: personal loans, credit cards and mortgages.  To catergorise these, personal loans and credit cards are considered bad debts as they usually result in nothing of value to show

for having the debts (i.e. there is no investment property at the end of the tunnel).  Additionally, these debts typically have highest interest rates and are used for assets that depreciate, or lose value over time (such as a motor vehicle).

A mortgage on the other hand is considered a good debt to have, as typically the asset will appreciate in value.