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Making Smart Credit Choices: Requesting a Credit Limit Increase

People often get their first credit cards when they are young and have not quite established themselves financially. As such, it is easy to understand why so many people find themselves with lines of credit that have very low limits. It is not unusual for credit card companies to give new account holders lines of credit that are only for $1,000 or a little bit more. As people begin to progress a bit with their finances, though, they often need credit cards with higher credit limits. This can often prove to be a stalling point for some consumers, as they are not sure how to go about requesting a credit limit increase from their credit card companies.

Use Credit Responsibly

With so many financial experts suggesting that people avoid using credit cards, it may be difficult to understand why some people would want to increase their credit limits. If someone is responsible with their use of credit, though, it is very easy to wind up in a situation every month where they are utilizing a large percentage of their existing credit. Some people like to charge purchases, like gasoline, groceries and other common items, and then to pay off their credit card balance entirely when the payment comes through. If someone only has a $1,000 limit, and spends $500 on the card, they are regularly going to be at 50 percent credit utilization. That is something that can lead to a lower credit score. Suffice it to say, that everyone should use their credit responsibly and should make efforts to pay off their balances in full – or as close to that as possible – every month. Only then, should you seek to get an increased credit limit.

You’re Not Asking for a Favor

People often get intimidated when calling to talk to representatives from their credit card companies. They believe that if they say the wrong thing, they will get turned down flat, or that if they don’t mind their p’s and q’s that they will wind up getting slapped with a higher interest rate or something. Nothing could be further from the truth. You are the customer, and they are making money from supplying you with a line of credit. You never have to feel nervous about approaching a credit card company, be it to ask for a different payment date, to negotiate a lower interest rate or, in this case, to ask for a higher credit limit.

It’s Easier than you think

Most of the time, you will not even have to speak with anyone to get this done. All the major credit card companies have online portals that allow you to access your account. Typically, there is a link that you can access once you are signed in that will allow you to request a higher balance. Use this link. You will be taken to a form that asks you the reason for needing a higher credit limit. For example, the company may want to know if you are doing so to transfer another balance or to make a large purchase. Be honest, and fill out the form entirely. If you qualify, you will get a notification from the credit card company.

However, if you get turned down, you may want to call their customer service department directly. Speak to the representative professionally, and explain why you need a higher balance. If they turn you down, ask to speak to their manager or supervisor, then repeat your request. It may take a couple of calls, but if you persist, and have a valid reason for needing a higher credit limit (like the fact that you are making a lot more money now than you were when you got it, and want to avoid high credit utilization) you should be successful.

The Facts about Payday Loans for College Students

The college experience is, for many, the first time that a person strikes out on their own and achieves a greater measure of independence. Oftentimes, though, students are not prepared for what it means to be somewhat “financially independent” when they are also just getting started and trying to earn a degree. There is no doubt that many college students, even those who come from well-to-do families, often find themselves broke and in desperate need of cash. This all begets the question of whether or not payday loans for college students are a good financial alternative.

People who are strapped for cash often find that payday lenders are their only alternative when they need to get funds for emergency expenses. There are tens of thousands of lower income, working class households in this country that depend on the services that payday lending companies provide. It should come as no surprise, then, that college students are seeking out payday advance loans at a higher rate these days. Many college students are on their own, as it were, and they oftentimes cannot turn to their parents for any extra cash. Mom and dad are probably already paying a lot for their offspring’s college education. And with so many college students being young and not having a proven track record with credit, college students often have very low credit scores.

A low credit score can immediately disqualify a borrower from getting loan approval from banks or credit unions. This does not, however, negate the fact that students need to have access to cash to get by from one week to another. There is food to by, expenses to pay and a whole host of other financial obligations that college students have to deal with; just like the rest of us. But is seeking a payday loan the best path for college students to take when they need access to fast money for emergency expenses?

The Right Kind of Payday Loan Applicant

Everyone really has to make their own choice about whether or not they should get a payday advance loan. But there are some criteria that student applicants should be aware of if they are planning on getting a payday loan. Here are some of the things that students should consider before they apply for a payday cash advance loan:

  • Is the student borrower employed? Payday lenders only provide loans to people who are employed and brining in a regular income. Because payday loans are typically paid back from the pay check of an applicant, there is no use in students without jobs applying for these types of loans.
  • Does the student have a checking account? Payday lending companies typically use either a postdated check or an automatic withdrawal from a borrower’s bank account. Any student who wishes to get a payday loan should make sure that they have a valid bank account.
  • Is the financial need relatively inexpensive? Payday lenders typically provide loans that run between $100 and $1000. In other words, payday loans shouldn’t be used to pay back student loans or to take care of larger debts. Typically, these types of loans are used to help pay for things like car repairs, emergency medical bills or simply to give the borrower enough cash on hand to get by until they get paid at work again.

Students should consider all of the information that we just shared to determine if they can/should get a payday loan. Payday loans do help young people to understand how important it is to pay back debts on time, and when used responsibly they can be a great financial help for working students who need fast cash for expenses.

The Average Credit Card Debt in America

All of the new and upcoming technological advances in the financial industry have gone a long way toward changing our society into more of a cash-less society. The bottom line is that many consumers are turning away from using cash and using credit or prepaid debit cards to make purchases. Even minor things, like getting coffee every morning, are winding up on some peoples’ credit cards, and the result is consumer debt accruing like never before.

iStock_000014696238XSmall-300x225Credit Card Debt is on the Rise

The United States is just starting to get back to a place of relative financial stability. After the last Great Recession, you would have thought that people would have learned their lessons about avoiding debt when it is at all possible. That doesn’t appear to be happening, though, as credit card use is rebounding, with the Federal Reserve announcing that Americans owe in excess of $880 billion dollars in revolving credit as of this past October.

All that debt is great news for the big credit card companies, but it’s not necessarily good news for the average consumer. As those big credit card companies continue to rack up profits like never before, all of that excess debt can leave the average person scrambling to make payments on time and can actually lead to people suffering from lower credit scores than they ought to have.

How do you compare?

A recent study by Credit Karma revealed that about half of its 30 million online members have credit card balances that equal 40 percent or more of their credit limit. That is not good news, since the big credit bureaus are known to penalize consumers when their credit card balances go above 30 percent of the credit card limit.

So what are the penalties that get handed out? Lower Credit Scores! And once someone has a lower credit score, higher interest rates are soon to follow. Those higher interest rates can wind up costing the average consumer thousands of dollars over the years. Even worse is the fact that lower credit scores can lead to people getting denied mortgage loans, auto loans and even jobs or better insurance rates.

How much of an impact can a lower credit score have on your finances in the future? Let’s say you were borrowing around 165 grand to buy a house. With a 4.5 percent interest rate you would wind up paying over 130K over the life of a traditional 30 year mortgage. But if you had a lower credit score that resulted in you paying 5 percent interest instead you’d wind up paying over 150K on the same loan. Just a half point difference means that you’d wind up paying nearly $18,000 dollars more than you would have if your credit score was higher…

That extra almost $18,000 could have been invested in your savings for retirement, used to purchase a new vehicle or even used as college tuition for your kids, instead of getting that extra money, though, too many Americans are simply racking up the credit card debt like never before…

Here’s what everyone needs to do if possible. Pay off high interest credit cards as quickly as possible or negotiate with the credit card companies to get lower interest rates. And never, ever allow your credit card debt to exceed 30 percent of your credit limit on any card. Finally, pay cash or use prepaid debit cards to pay for things instead of putting them on the credit card. Small purchases add up to bigger payments and more debt that most of us simply don’t have the financial wherewithal to deal with over the long haul.