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Improve Your Credit Rating

With new reforms law being implemented in the finance industry left and right, it is almost inevitable for consumers to feel certain repercussions. The government, the banking industry, and the consumers are all adjusting to the new economic reality. There is a shake-up in almost everything from credit card practices, mortgage loan applications, and credit score. Our previous posts for this week dealt mostly about credit card practices. Now, we will look deeper into the expected changes on your credit report.

Justine @ Credit Karma talked about how your credit report can hurt your chances of landing a job. According to the Society of Human Resource Management, as much as 50 percent of companies look at the credit history of prospective hires. A lot of employers believe that an applicant’s credit report says much about his character, work attitude, and future job performance. For the 14.5 million individuals who had just lost their job, turning to their credit card can actually be damaging to their future employment. Be sure to have a repayment plan in place whenever you take on debt.

Sharon @ Mint listed the 10 Commandments when it comes to maintaining a good credit score. As you probably already know, the credit score can make or break your finances. In fact, it will even affect your chances of getting a job. Among the commands found on the post include not limiting loan types, not missing payments and not closing unused credit card accounts among others.

Tracy @ the Card Offers Blog offers advice to new credit card users with her post titled “What Does a New Credit Card User Need to Know?”. Basically, she cautions users against abusing their credit privileges. Less banks are issuing credit cards these days and they only do so when they have a reasonable expectation that the user can and will pay it back. If you make a lot of missteps on your first card, it might take years before additional credit is extended to you by any company.

Credit Card Reform – New Law Effective Tomorrow

It seems that Americans who worked hard to maintain good credit will be the first hit when the Credit Card Act of 2009 becomes effective tomorrow. Already, lenders are increasing interest rates across the board. The lowest available rate is now currently pegged at 11.25 percent which is significantly higher from 8.85 percent just this January. Meanwhile, customers with less-than-stellar rating have to pay 15.75 percent, up from 13.75 last January.

According to experts, banks are setting the rates this high so they can go down from there depending on market situations in the future. Fortunately, these rates increases would no longer come as a shock to consumers. Congress has given them a leeway of 45 days to reject rate increases. Americans have the choice of paying outstanding balances at current rates in a five-year timeframe. In addition, banks need to mail credit card bills 21 days before it is due.

Various parts of the credit card law are already implemented. For example, fourteen banks have dropped double-cycle billing, where finance charges are calculated on more than a single billing cycle. Meanwhile, eleven major banks have stopped the “universal default” practice wherein rates are rates because of missed payments even with another company.

What is the Catch?

The catch of the Credit Card Law is quite apparent: increased interest rates. Eleni Constantine, the director of Pew Charitable Trusts said that it has in fact increased by 20 percent from December. While increase might seem reasonable, the level at which it was increased certainly isn’t. The borrowing costs for banks are decreasing because of market condition. By raising the rates on consumers simultaneously, they are actually deriving more profits due to larger marginal lending rates.

Overall, the gains in the new Credit Card law are certainly welcome despite certain complications. However, it is important to keep in mind that it has been designed to help consumers with high balances. People with relatively good credit should be aware of these changes and decide whether they still want to use their credit cards or pay in cash instead.

Business Credit Card Debt – A Few Tips

Credit card debt is not only a problem  for individual consumers, but for small businesses as well. A study conducted by the Ewing Marion Kauffman Foundation revealed that having credit card debts reduce a new business’s capability to survive over the short term. Research indicates that during the first years of operation, these new businesses experience an increase in their debt before it stabilizes.

But why would new businesses use credit cards to finance business expenses? According to Robert Litan, the vice president for research and policy at the research firm, “Small businesses’ access to formal credit market historically has been limited, a situation that has been exacerbated with the recent contraction of credit markets”.

Over a half of new companies now rely on unsecured debt for their needs because of its ready access. It is also a lot easier to get than traditional business loans. Common sense tells us that the high interests charged by the bank makes it difficult for a start-up to repay significant debt loads in a short timeframe. That’s the reason why programs like business loans, auto loans, and other traditional loans exist in the market. They have lower interest rates suitable for the intended purpose.

Before you give up on your new venture or unmanageable credit card debts, here are some tips that can help you:

Improve Your Cash Flow – cash flow is a problem most new businesses face due to insufficient capital, slow-paying clients, and improper money management. Address by loophole that is holding up collection to get cash for repayment purposes.

Aim to Pay More than Just the Minimum – paying just the minimum required is ill-advised. Unless there is no other option, consider paying above the minimum each month to lessen your debt.

Avoid Credit Card Debts – this is the most practical advice this blog has probably given. To avoid the credit card trap, be sure to avoid additional debt if you know you can’t repay it on time.

Top Money Saving Tips for 2009

Though a lot of economic indicators reveal that the US economy might be on the road to recovery, its effects are still not being felt by the ordinary American. The unemployment rate is still rising, foreclosures are occurring in almost every state, and the amount of credit available in the market is still limited.

Given all these challenges, what can a struggling person do? Well, we have compiled a list of blogs that can help you during the tough times. Everything from how you can save on your grocery bill to how you can lower the operating cost of a business is discussed here.

Billshrink Guy posted one of the best money saving blog post for this week. His post, “16 Depression Era Money Saving Tips” provided comprehensive recommendations from buying used stuff to moving to a more prosperous location. The blogger also puts a lot of things in perspective when it comes to money management.

BloggyBiz has a recent post about effective small business management. The article entitled, “Saving Tips into Business Management” is very helpful. It looks at the major operating costs of running a business including marketing and staffing. The tips are mostly commonsense stuff that is nevertheless beneficial to anyone with a small business.

If you’re looking for ways to save on food, then the blog Not Made of Money is the right one for you. The just-posted article titled “Family Food – Easy Ways to Keep the Budget in Check” provides useful tips that can help American households save on food. For example, it advises readers to eat at home rather than go out and to make meals in bulk for time and cost considerations.

Madison @ My Dollar Plan blogs about consistently good bank deals. Posting whatever bank bonus, generous interest rate, and other great deals, people who are having trouble with their current bank should consider looking into this site for alternatives. The most recent post, “Bank of American $25 Bonus” is just an example of the kind of article she regularly features.

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