When you sit down and review your credit card bills each month, do you know how much interest you have paid to the credit card company? Most Americans do not know what they are paying in interest. When they take the time to find out what they are paying they generally get very angry. The credit card company told them what the interest rate would be so they should be angry with themselves if they are not happy with the interest rate. This because they did not read the fine print when they signed up for that credit card. 

Here is a tip for you, take the time to find out what interest rate you are paying on each of your credit cards. Pull the last credit card statement for each of your credit cards. On those statements will be the amount of interest (Percent) you are being charged and the amount of interest you paid. This is important for most people to know what they are paying in interest and at what rate the interest is being charged on the amount that they borrowed. 

Start by making a list starting with credit card you pay the most interest on, then second most, etc… This will give you a list of credit cards and how much interest you are being charged. With this list you can now determine if you should be trying to reduce the interest you are being charged. 

If you have been paying your credit card on time and making at least the minimum payment on time, you can negotiate with the credit card company to reduce your interest percentage. Any credit card that is charging you more than 11% interest is up for some negotiation. Now that does mean every credit card company is going to give you 11% interest but you have some room to discuss what they can do for you. 

If you have been paying on time and taking care of your credit, then talking with the credit card company may help you to save thousands and possibly get out of debt much more quickly. Credit card companies often discuss reducing interest rates because it saves them money. It costs them between $50-$200 to try and replace you if you choose to leave them. Letting your credit card company know that you have another credit card company offering you a better interest rate, and then you have some leverage to get your credit card company to reduce your interest rate.

Take the time to help yourself and your family. Save some money and reduce your debt (which is a very good thing). By getting your interest rates reduced you can benefit. Remember this only will work if you have been paying your credit cards on time. Any late payments will cause the credit card companies to not want to discuss interest rate reduction.

Many times you will sit down and start paying some bills and you notice that you seem to be sending all of your money off to the Credit Card Companies. Do you have too much credit? That is a good question and one that if you are asking, you already know the answer. Having credit is a good thing but overusing the credit is the thing that can (and generally does) hurt you. 

First, determine how much available credit you have. Once you have that figure, compare that to your income. If you have more available credit than your yearly income, you have too much credit. Many banks take your yearly income and divide that up into parts. If you have more available credit than 50% of your yearly income you probably have too much credit. But the amount of your available credit is not really the important part of the equation. How much of your available credit are you using is the important question. If you are using only 30% of your available credit then you are probably in a pretty good situation. If you are using more than 30% then you need to reduce what you are using, then consider reducing your available credit. 

Proper money management is critical to good credit and basic financial success. Watch your available credit limits and never use more than 30% of your available credit unless it is necessary. Necessary does not mean that you need that 50” Plasma TV but if you need to take care of your car because it broke down. But using it means that you have to pay it back. Quickly is the attitude that you need to adopt when it comes to reducing your debt. Keeping your credit balance below 30% of your available credit is extremely important when it comes to improving your credit score. Always pay on time and in full (if possible). This is a good credit habit to get into and teach to your children.

You have the right to refuse a credit limit increase but I personally would not refuse a limit increase. I simply would not use it. This increases your available credit without increasing your credit balance. This is an instant upgrade on your credit score. The older your account, the larger the available balance and keeping your credit balance below 30% is key to improving your credit score. This will help you gain a Good Credit score.

Friends and Family often find themselves in need of a loan, but without a co-signer they just can’t get the loan. Now you get the call and have to make a decision. Probably a difficult decision at best but a decision that you now have to make.  

If you do the co-signing you are now putting yourself in a position of having to repay the loan if your friend or family can’t make the payments. But if you don’t sign then you are taking the chance of upsetting your friend or family. If you upset the friend then you may lose your friend and if you upset the family member you may be not only upsetting that family member but you may be upsetting even more members of the family.  

Here are a few tips to help you make this decision: 

1. Make your decision based on business. Never make the decision based on your heart. Keep everything professional. Including involving that person in the decision by showing them why you made the decision one-way or the other.
2. If the person has bad credit because of bad money management then you can base the decision on that. But if the person has fairly good credit but had a life-changing event such as medical bills, job loss, etc… Then you take that information into account when making the final decision.
3. Get everything in writing. Never enter into a business transaction without having everything in writing. Many times these kind of deals end up tearing up a family or losing a dear friend because there is a misunderstanding on a Co-Signed loan. Even though there is a business contract that you are going to have to sign, still write up a separate document for you and the other party.
4. Don’t take anything for granted. This is where it comes to hurt you if you don’t ask. Your credit history is also at stake. If your friend does not make the payment and the payment goes late, it will show up on your credit history. This is a fact so make sure you have yourself protected.
5. If you do co-sign then in your agreement documentation find out if you can get a copy of the statement so that you can keep track of the date due and balance. This means that you can follow up on prompt payment and keep your credit clean.
6. Always ask for proof, such as a cancelled check, receipt or any other document that will show your agreement is on track. I have even seen friends get together and make the payment together. Then go have a “drink” together to celebrate one more payment. Sounds a little corny but this light-heartedness sometimes keeps things happy between you under a stressful situation. They even have had celebrations on anniversary dates such as dinner.
7. Be aware that you may need to make a payment (or more) to keep things on track. This is critical that you make some provisions on what will happen if the loan can’t be repaid. Maybe that if the loan cannot be repaid what you plan to do to protect yourself. Such as a repossession and possible selling of the item to recover losses.

By keeping the deal businesslike then you are protecting yourself and the other party from possible losses. It is important that you know how this can affect you if something goes wrong. It is important that you know you could become completely responsible for the debt in the event the loan cannot be repaid. This is the part that some people don’t think about when doing a deal like this. They think that my friend (or family member) won’t hurt me and won’t let me get into trouble. Then the friend (or family member) can’t make the payment and become embarrassed to tell you they can’t make the payment. Suddenly, your credit gets hit with one or more late payments or even worse no payments are being made and then you get a letter about being in collections. This is when it will become Bad Credit for you.

Protect yourself and make a good business decision. Ask for advice if you feel that you can’t make a good decision. Your credit is too important these days to be left in the hands of someone else.