Sifting Through A Slew of Credit and Debt Management Advice
The advance of technology has positioned information within easy reach. Our questions can be answered by simply typing some words and hitting the “Search” button. However, beware! Not all that is dished out as information is necessarily right, true or sensible. This includes some awful credit and debt management advice. Let us take a look at what some experts consider as not-so-wise ‘words of wisdom’.
Earn Some Hundred Dollars From Credit Card Arbitrage
You may have heard this from money websites and blogs. The idea is to obtain a 0% or low interest loan from a credit card company. Then you deposit it in a savings account that pays high interest. You diligently pay for the minimum dues. You gain from the remainder between the savings account interest and the credit card minimum payments. This may be possible, however, this strategy is not for everyone. First of all, your credit score must be decent. You must also realize that it requires absolute discipline and some amount of diligent work. Slip ups may incur you interest or may even cost you your credit rating. Advocates of this strategy use detailed formulas and spreadsheet to facilitate computations. But for people not keen on doing this, the hundreds or few thousand bucks earned per year may not be worth the effort. If I were you, consider other simpler methods.
Apply For Store or Gas Cards To Take Advantage of Discounts
If you have done this and are the type to pay only the minimum monthly due, you have signed up for the wrong reasons. If you are not used to paying your balance in full, you are paying for finance charges. Chances are, the sum of these amounts are far greater than the discount you get upon registering.
Do Not Borrow At All
With so many people entangled in debt troubles, it is understandable that some people may have developed sort of a phobia to borrowing money. However, taking it to the extreme by totally avoiding debt and credit will deprive you of the benefits of using “other people’s money”. What if you do not have enough funds to buy a house or car? If you have loads of cash, using a credit card secures you from theft and robbery and allows you the convenience of automatically debiting your credit card for the payment of your insurance and other bills or for your online transactions. You may need an active credit record to show how responsible you are in handling your finances.
Charge Everything To Your 0% APR Credit Card
Some people sign up for a credit card which charges 0% interest rate on purchases. Then they swipe it on all purchases including those of friends and collect from them the amount in cash. The money is then deposited in a bank account that yields high interest. When the 0% rate expires, they settle the balance. The technique is somewhat similar to credit card arbitrage and also requires great discipline. One mistake may also cost you interest and possibly your credit score. If you get tempted and not systematically set aside the money to pay for the debt, you may end up with a huge financial obligation, but no money to settle it.