Find out how credit card interest works.

How Does Credit Card Interest Work?

That piece of plastic in your wallet is very convenient, easy to use, and a fast way to get into financial difficulties. A large part of financial trouble is directly related to interest rates (and fees). Let’s discuss how credit cards and credit card interest works. Once you understand, it’s easier to control your spending.

How Do Credit Cards Work?

A credit card is a form of a revolving loan, called a line of credit. The company assigns a credit limit (how much you can borrow in total). The amount you can charge to your credit card is called your credit limit. Every time you use the card, that amount is subtracted from your credit limit.

When you pay back your debt, your credit limit goes back up. You’ll also maintain a good credit score from all the major credit bureaus paying back your debt on time each month.

Your credit limit is:       $5,000

You charge:                     $1,000

You can charge:             $4,000   until you pay off the $1,000

You pay off:                     $500

You can now charge:    $4,500

A secured credit card has a set limit paid by you and placed in a secured account. You can only charge up to that amount. Secured credit cards are a great way to build or rebuild credit scores.

You can use a credit card for purchases, balance transfers, and cash advances. In exchange for using this line of credit, you are charged an interest rate, called an Annual Percentage Rate (APR).

If you would like to talk to a debt expert for more information, click the link below to get started. It’s totally free!

How Does APR Work?

APR is fairly complicated and is the reason that most people get into financial trouble. The credit card company assigns an interest rate to you based on your credit worthiness, the Federal Reserve, and other factors. The average ARP as of January 2019 was 15.96%.

APR is calculated or compounded either monthly or daily. For monthly compounding, the interest rate is basically divided by 12. For daily compounding, the APR is divided by either 360 or 365, over 12 billing cycles. However, it’s more complicated and your interest rate is actually higher than your stated interest rate, regardless of how it is compounded.

Let’s say you are charged a regular APR of 12.99%. With monthly compounding, your actual interest rate is 13.79%. With daily compounding, your APR is actually 13.87%.

You can also have a nominal APR and effective APR. A nominal APR is the true interest rate, based on compounding. Your effective APR includes all the fees that you’ll get charged. We’ll go over fees later.

How Does Credit Card Interest Work?

If you pay off your entire balance before the end of the billing cycle, there is no interest charged. If you don’t, the credit card company charges you for the average/actual daily balance times the monthly/daily interest rate and then times the number of days in the billing cycle if compounding daily. Clear as mud, right? Don’t worry, we’ll go over the actual math under the next heading.

The credit card company then adds in fees. The total amount of interest and fees plus a percentage of your purchases is your minimum payment. The credit card company pays itself first out of your payment. Anything left over is applied to your principal. This is why it is so hard, if not impossible, to pay off a credit card through minimum payments.  

Fees and Variable APRs

Every credit card is different, so you may or may not have these fees.

  • Annual fees – charged for the privilege of using the card. Ranges from $19 to $500 per year.
  • Balance transfer fees – if you move a balance from one card to another. READ THE FINE PRINT.
  • Cash advance fees – if you borrow money against your credit card, or use overdraft protections and convenience checks
  • Expedited payment fee – charged for making phone payment
  • Finance charge – monthly charge for carrying a balance
  • Foreign Transaction fee – charged if you use the card to make a purchase in non-US dollars. This includes purchases over the internet
  • Over-the-limit fees – if you charge more than your credit limit
  • Late fees – charged for paying late
  • Returned check fee – charged if your payment check bounces
  • Application fees – a one-time charge for applying for a card
  • Limit increase fee – charged when you ask for a higher credit limit
  • Replacement fee – if you lose your credit card

Variable APRs

All of these can increase your credit card’s APR.

  • Purchase APR – the interest charge on purchases
  • Introductory purchase APR – to attract new customers, a low APR for a limited time
  • Promotional APR – special rates offered for a short period of time or on certain balances
  • Balance transfer APR – lower APR on transferred balances, often short-term APR
  • Introductory balance transfer APR –   0% intro APR rates on balances transfer
  • Cash advance APR – charged on cash borrowed against your card
  • Penalty APR – often incurred after multiple late payments or exceeding your credit limit

As you can see, having a credit card can be really expensive! Examine your credit statement carefully so you know what you are being charged.

How To Calculate Interest Rate

Now comes the fun stuff! Math! We’ll break this down as simply as possible.

You’ll need to know

  • Your average daily balance
    • add together all the charges for your billing cycle
    • divide by the number of days in billing cycle – usually 30
  • Number of days in your billing cycle (on your credit card statement)
  • APR – let’s do just the purchase APR to make calculations simple

Now for some numbers…

Your card has an average daily purchase balance of $1,500 and your APR is 15.99%

Now, to figure your daily periodic rate, divide your APR by number of days in the year

0.1599 / 365 = 0.00044

Multiply the daily periodic rate by your average daily balance to find daily interest charge

0.00044 x $1,500 = $0.66

Next, multiply your daily interest charge by the number of days (30) in your billing cycle. This gives you’re your monthly interest charge

$0.66 x 30 = $19.80

Then you need to add in all the fees that your card charges to find the total amount you owe each month

Or you can use our online interest rate calculator!

Just remember that the credit card companies set up terms to benefit themselves, not you.

Pacific Debt, Inc

If you’ve found yourself in extreme credit card debt and can’t make the minimum payments. Pacific Debt, Inc can help you. To be eligible for the Pacific Debt settlement program, you must have more than $10,000 in unsecured debt, and it takes roughly 2 to 4 years to complete.

We are a debt relief company that can handle all types of debt, such as credit card debt, medical debt, and any other unsecured debt. If you’re tired of carrying around a heavy debt load, contact Pacific Debt today to help settle your debt.

Once you complete our debt relief program, your financial situation should be improved, except your FICO score. However, your FICO would most likely have a negative impact regardless because you’d only other option would be a bankruptcy, unless of course you can get approved for a loan, but that would only a temporary fix. You can obtain your free annual credit report once per year absolutely free.

Pacific Debt, Inc is accredited with the American Fair Credit Counsel and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

For more information, contact one of our debt specialists today. The initial consultation is free and our debt specialists will give you all your options. Stop making payments today you can’t afford and contact Pacific Debt to negotiate with your creditors for a debt settlement.


Click here to find out what types of credit cards you should have.

Why Your Equifax Credit Score Is Lower Than TransUnion

Why Your Equifax Credit Score Is Lower Than TransUnion

Your credit score allows you to get credit, buy large ticket items, rent an apartment, get certain jobs, and is viewed as a window into your financial trustworthiness. The higher your credit score, the better the loan terms.  But just what is your credit score and who is behind it? And why are your scores different from each reporting agency?

Who are the Credit Bureaus?

There are three different major credit bureaus; Transunion, Equifax, and Experian. Each one collects financial data from creditors. They then analyze this data and issue credit reports to anyone who has permission to obtain the report – potential employers, lenders, landlords, etc.

Each credit bureau collects slightly different data and since creditors are not required to report your data, each one may have slightly different information. For instance, Transunion includes extensive data on your employment while Equifax and Experian report only your employer’s name. In addition, each one uses a unique algorithm.

There are also “niche” credit bureaus. If someone wants to check your credit, ask which company they intend to use. You can then request a report from that company to verify all your information is correct.


FICO vs VantageScore

Your credit report will use one of two scores – FICO or Vantagescore. FICO is the most common one. It stands for Fair Isaac Corporation. Each credit bureau creates a FICO score based on what is reported to them. This may account for a difference in FICO scores among credit bureaus. One problem with FICO is that every time someone does a “hard pull” of your credit report, your credit score drops temporarily.

VantageScore is an algorithm developed by the credit bureaus based on the consumer credit information on file. It assigns different weights to different parts of a credit profile. Initially, the VantageScore used its own score ranges, but now uses the same scoring as FICO. VantageScore is especially helpful for people with a thin credit history or who are just starting out.

Regardless of which scoring systems is used, the credit score chart is as follows:

  • Excellent = 750 and above
  • Good = 700-749
  • Fair = 650-699
  • Poor = 550-649
  • Bad = Below 550

Equifax Vs Experian Vs Transunion

You are entitled to a free copy of your credit reports once a year. You can view these for free through AnnualCreditReport.com.

Equifax

  • charges for reports ordered through website
  • dispute button on website
  • paid credit monitoring subscription called Equifax Complete™
  • will notify the other credit bureau if you notify them of a fraud
  • credit freeze fraud alerts available, but must notify all three yourself
  • Equifax credit score – 300 – 850

Experian

  • charges for reports ordered through website
  • dispute button on website
  • paid credit monitoring subscription called Experian Credit Tracker℠
  • will notify the other credit bureau if you notify them of a fraud
  • credit freeze fraud alerts available, but must notify all three yourself
  • Experian credit score – 300 – 850

TransUnion

  • charges for reports ordered through website
  • dispute button on website
  • paid credit monitoring subscription through TransUnion credit monitoring service
  • will notify the other credit bureau if you notify them of a fraud
  • credit freeze fraud alerts available, but must notify all three yourself
  • TransUnion credit score – 300 – 850

What is the Difference between TransUnion and Equifax and Experian?

There is no difference between the three major credit bureaus. They will have different scores because of what is voluntarily reported to them. So why do they have different scores? Equifax, Experian and Transunion use different algorithms, there is different information reported to each company, and TransUnion places more weight on your employment history or personal information.

How Do I Know If My Credit Report Is Correct?

You should check your credit report once a year. It is free and simple. You can purchase a report from each credit bureau or go to AnnualCreditReport.com. You can also look into websites like Creditsesame or CreditKarma.

When you get your report, look for any errors with your personal information. Is your name correct? Address? Employer? Next, examine the open lines of credit. Did you actually open them? Are there loans or credit cards you don’t recognize? Some issues, like bankruptcy, are supposed to drop off your report after 10 years. Debt sent to collections should drop off your report after 7 years. However, if you have a judgement, the time limit is determined by your state’s statutes of limitation.

If you discover errors, you should dispute them. Send COPIES of documentation to the credit bureau along with explanations or the errors. You may have to do it several times and stay on top of them.

If you are denied credit based on your credit report, you can request the reason and a report. Some experts suggest spreading out requests for credit reports so that you get a different one every four months (for instance, TransUnion in January, Experian in May, and Equifax in September). This will allow you to look for fraud or other issues before too many months have passed.

If have had identity theft, you can contact each of the major credit bureaus individually and place a fraud freeze on your credit until you get the issue solved.

How Can I Improve My Credit Score?

If you are not happy with your credit score, you can start to fix it immediately. First, work on paying bills on time. Since 35% of your score is based on timely payments, it can be a pretty quick way to improve your score.

Next, use your credit carefully. Credit utilization accounts for 30% of your score. Credit utilization is the ratio of outstanding credit card balance versus your credit limit. The lower your utilization ratio, the better. For instance, if you have $1000 limit and $900 of outstanding balance, your credit utilization is 90%. Pay down your credit card bills. You can also ask for increased credit limits. Just don’t use the increased limits!

Credit age makes up 15% of your score. Basically, the longer you have had credit reported to the bureaus, the better. Having old credit – cards held for a long time – is also helpful. Lenders also like to see a variety of credit types. Credit variety accounts for 10% of your score. And finally, the number of recent inquiries count for 10% of your score. This means you do not want to apply for credit cards just to decrease your purchase costs. Every single time you do that, your credit takes a temporarily hit.  

Click here to learn how many credit cards you should have.

Our Take

Your credit report is very important to your future. Whether you are buying a house or car, looking for a new job, or wanting to start on your education, your credit score matters. There isn’t much difference among the three bureaus – Equifax, Experian or TransUnion – but each needs to be monitored for accuracy.

Pacific Debt has helped thousands of people reduce their credit card debt.


Should I Use a Credit Card for Everyday Purchases?

Should You Use a Credit Card for Everyday Purchases?

Whipping out a credit card is very easy. Plus, you get rewards – cash back or airline miles – for every purchase. Using a credit card for everyday purposes seems like a win-win situation. But is it? We’ll look at the pros and cons of credit cards and everyday use and answer should I use my credit card for everything?

Why Use a Credit Card for Every Purchase?

There are appropriate reasons to use a credit card for everyday purchases. As we’ve mentioned before, you can maximize your rewards points, in effect making your purchases work for you.

Responsible credit card use and repayment history can help your credit score. Most people don’t like to carry large amounts of cash, and a credit card is a great way around that. Another great reason to use a credit card is that you can accurately track every single expenditure. You’ll also have purchase protections when you use your card.

Pacific Debt has helped thousands of people reduce their credit card debt.


Why You Should Not Use a Credit Card for Every Purchase

There are some very good reasons not to use credit cards for everyday purchases. It is very easy to overspend. After all, your credit card doesn’t feel like it has a limit and it takes almost no effort, unlike writing a check. Another concern is fraud. Every time you use that card, your run the risk of someone getting the number.

Some retailers don’t allow you to use a card for small purchases since their fees are more than your purchase. There are some merchants who don’t take plastic. And finally, the more you use your card the higher your balance. If you don’t pay it off, it becomes very expensive as it becomes a revolving balance.

Using a Credit Card for Everything

If you choose to use your card for everything, there are a few rules that will keep you from overspending.

First, use one credit card. The more credit cards you use the more you will owe. Keeping it to one also keeps all your purchases on one card where you can track them more easily. Plus, you only have one to pay off.

Second, your credit limit needs to be large enough so you can cover your monthly spending. If yours isn’t, keep your credit clean and build up to a higher limit. The other option is to pay off your card several times a month.

Third, put up your debit card so you don’t deplete your account and can’t pay off your credit card.

Fourth, always pay off your balance every month. Otherwise, that $2.95 daily latte is going to get really expensive as your charges will end up revolving.

Since 2002we’ve settled over $200 million in debt for our clients. Contact us today to see how we can help.

Revolving Credit

When you are deciding whether or not to use a credit card every day, think about what happens if you don’t pay off your balance every month. Take our latte example. We’re going to make a few assumptions based on average credit card rates.

  • Our APR is 17.55%
  • Minimum payments of 2% of the balance

If you buy 30 lattes at $2.95 a cup, in one month you’ll owe $88.50. If you don’t use the card for anything else, it takes six months to pay off those coffees if you’re only making the minimum payments. After you factor in interest, each cup actually costs you $3.11. Doesn’t seem too bad, does it?

But this example assumes that you make no additional charges on your card for 6 months and you only make the minimum payment each month. If you do make additional charges, it takes longer than 6 months to pay off the lattes and the amount you effectively pay creeps up.

Let’s say you buy 30 lattes a month but only make minimum payments. At the end of the second month you’ll owe $162.00. If you stop using the credit card at that point, it will take you almost a year to pay it off and you’ll pay $3.15 apiece for the lattes. As you can see, it takes a long time to pay off a card making minimum payments and while 20 cents a drink doesn’t seem like much, it adds up!

If you are using your card for everything, let’s say you charge $2000 a month on your card. You make a 2% minimum payment. The next month, you charge another $2000. You now owe $3960.

Repeat for one more month and you owe $5880, roughly the average amount of credit card debt for Americans.

If you stop using this credit card immediately, it will take you 31.5 years to pay it off at minimum payments and you will pay $13,610. You can see that using your credit card and not paying it off gets very expensive very quickly.

Credit Card Grace Periods

People who are very organized may be able to take advantage of grace periods, the 21 to 27 days that you are not changed interest by your credit card company. However, this only works if you are very organized and track those dates. Otherwise, you will get into trouble very quickly.

Should You or Shouldn’t You?

Covering all your monthly spending with a credit card can be a good thing, if you have self-discipline and (we can’t repeat this enough) PAY OFF YOUR BALANCE EVERY MONTH. Don’t become one of the millions of Americans with credit card debt.

If you really want to try this, start with a secured card and see if your self-control, income, and expenditures are all on the same page!


Pacific Debt has helped thousands of people reduce their debt. Since 2002we’ve settled over $200 million in debt for our clients. Contact us today to see how we can help.


How to Manage Debt during the Holiday Season

How to Manage Debt during the Holiday Season

Entering the holiday season with a mountain of debt is a terrible experience. It’s made even worse with the added weight of an abysmal debt-to-equity ratio.

For parents, the weight of responsibility to provide for your children is multiplied during the holidays — one of the few times other than birthdays when the kids expect to receive gifts.

For children, the excitement of past holidays and the expectations of opening presents on Christmas day can create a crushing experience if they feel disappointment. So, what does this mean for parents?

Are you expected to get deeper in debt just to avoid disappointing the children?

Should you buy just a few good gifts or many small gifts?

Is there a way to satisfy your kids’ expectations and avoid more debt?

Believe it or not, there are many ways to avoid getting deeper into debt during the holidays and it all begins with expectations.

The Root of the Holiday Debt Problem

Is it wrong to spend money during the holidays?

No, it isn’t.

But it can do damage in the future if you aren’t careful with how you spend. That’s why you need to cultivate a habit of smart gift giving. Smart gift giving is different from normal gift giving, because you focus on needs over wants and completely cut out holiday overspending habits.

To begin your path to smart gift giving, you’ll need to identify your overspending habits. There are two culprits when it comes to holiday overspending: avarice and love.

Parents/family either love their children so much that they hate to see them disappointed on Christmas — resulting in overspending on Christmas gifts — or they’re so preoccupied with “having nice things” that they willingly fall deeper into debt.

Debt and gift-giving have gone hand-in-hand for far too long — it’s time to break up these two highly unlikely lovers and forge healthier holiday spending habits.

Check out these great ways to avoid going deeper in debt during the holidays.

Contact us today and chat with a debt specialist free of charge.

The Gift of Giving

Yes, it’s cliche. But constant repetition hasn’t made this any less true — giving will always trump getting. And luckily for all of us, giving doesn’t necessarily mean paying.

There are important, fundamental financial lessons to be learned and developed through giving:

  1. A focus on needs over wants
  2. The true meaning of value
  3. How material things and money affect wellbeing

Through giving, you can actually learn how to save money when buying things for yourself.

Think about it.

If you approach every purchase with a budget in mind, a healthy perception of value, and a focus on your needs, your purchases will become smarter, saving you money in the long run.

Learning to give smart gifts can actually teach you to save money.

Most gift giving involves spending. But you can also give time, knowledge, experience, and care. For example, if you know how to play the piano, you can offer to hold free lessons for the kids in your neighborhood. This is both a gift of time and knowledge.

Whichever type of giving you decide to adopt this Christmas, you’ll likely need to be more outgoing and social than you were before. Opportunities for giving don’t just show up on your doorstep — you have to learn about other people to identify what they need.

I had a friend growing up who celebrated Christmas, but not like the rest of us. He didn’t wake up on Christmas to a mountain of presents under a tree. He wasn’t ever home during the holidays.

Every Christmas, my friend’s family would do charity work in neighboring towns and sometimes different countries. He made new friends and lasting memories of helping those much less fortunate than himself.

Though an expensive excursion may be out of the question for parents struggling with finances, the idea is the same and it doesn’t have to cost money.

Here are some great ways to give without spending too much money (or none at all):

  • Host a dessert swap with neighbors
  • Grow and give away fruits and vegetables
  • Get a charity-focused credit card
  • 12 days of Christmas; acts of kindness
  • Employer gift matching
  • Fundraising for local charities
  • Organize a neighborhood food or gift drive
  • Donate your old clothes, toys, and goods
  • Donate blood
  • Host a cooking day with your friends; make dinner for random families

More than getting gifts, your kids deserve the valuable lessons that come from giving. Yes, random acts of kindness can make a big difference for those on the receiving end. But just imagine the nurturing effect giving will have on your kids.

In time, your children will become givers instead of receivers. You will spend less money on Christmas gifts and more time on learning the meaning of Christmas.

The Gift of a Brighter Financial Future

Sometimes, gift giving is made even more difficult when choosing a gift for those suffering from financial troubles. After all, would you buy an Apple watch for someone who struggles to pay their bills?

There are some great ways to actually improves the lives of those you are giving to, without removing the spirit and festivity of the holidays.

Parents can educate their kids to live or at least desire to live a financially savvy life. Though financial wellness gifts may not make much immediate difference, they will relieve the stress of future holiday debt.

Use the best budgeting apps to manage your expenses during the busy spending season. An good budgeting app can save you some valuable dollars here and there that will make a difference in the end.

By Christmastime, you should at least have a bit of your tax refund set aside for smart gift-giving. When it comes to teaching your kids about taxes, it’s important to lead by example. Plan a family tax prep night, to teach your growing kids about the importance of keeping receipts and records of transactions.

Professional Preparation for the Holidays

In the months leading up to the holidays, offer to work extra hours to impress your superiors. Your hard work leading up to the holidays could lead to a bonus or a promotion.

You can even express your desire to your superiors to earn some extra money to save up for the holidays. You may qualify for a pay increase if you accept extra responsibilities at work.

Besides working extra hard in your chosen career path, you also have the option to make money on the side to save up for the holidays.

Spending the next month as an Uber or Lyft driver will put some extra cash in your pocket for those added holiday expenses.

The Motley Fool reveals that you can make between $371 and $1,853 per month by driving for Uber. Of course, it completely depends on the time you put into it, but you can actually make enough money to pay for Christmas.

Other possible side gigs include:

  • Freelance writing
  • Dog walking
  • Social media manager
  • Caregiver
  • Airbnb
  • Garage sales
  • Donate plasma
  • Party planning
  • Research study participant
  • Become a tutor

No matter how much money you have or how much debt you’ve accumulated over the years, there is always a way back. Yes, the holidays are a time of giving, but they don’t have to be a time of going into debt.

Practice smart gift giving by focusing on needs over wants, saving up money beforehand, making extra efforts at work, sharing good financial practices with your kids, and by focusing on the real reason for the holidays: family.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

Disclaimer: We are not attorneys or accountants and can not give you legal advice. If you have legal or tax questions, you should contact the appropriate expert.

What Happens to Debt When You Die

What Happens to Debt When You Die?

What Debts Are Forgiven at Death?

What happens to debt when you die? It depends on the type of debt and if there are cosigners. Basically, all debts pass into the estate along with assets and other liabilities. Even if you have very little, you still have an estate in the eyes of the law.

Most people have wills (and if you don’t, you should). A will determines how assets are distributed. However, before anything is distributed, creditors are given a chance to claim part of the estate.

Talk to one of our debt specialists today to learn more about our debt settlement program.

What Are Different Types of Debt?

  • Secured Loans

  • Unsecured Loans

  • Student Loans

  • Taxes

Secured debt, like mortgages, are passed along with the asset. If you are given a house in a will, you also get the mortgage. If you are unable to pay the mortgage, the bank can seize and sell the house.

Unsecured debt, like credit cards, must be paid as long as there are enough assets in the estate. If the debt is in the name of the deceased and no one else, the debt must be settled with the estate.

If there is a co-signer, the debt passes to the co-signer.

Student Loans

Generally, student loans die with the borrower. In some cases, the debt also dies if the parent(s) of the borrow die. You will have to provide proof of death to the school or lender, which is referred to as a death certificate, or proof of death certificate. A proof of death certificate has to be signed by a funeral director and can be presented to companies and organizations to inform them of the deceased.

IRS Taxes

IRS Taxes never die. In fact, they may even increase because you will still have to pay income tax on anything earned up to the date of death.

Disclaimer

All these categories are very complex, particularly taxes.

You should have the guidance of an accountant or attorney.

Is Family Responsible for Deceased Debt?

This is another complex area. It depends on the type of debt and on the state where the deceased was a resident.  If you live in a community property state, the laws can be extra confusing, so talk to an attorney.

If your deceased loved one has debts,

talk to an accountant or attorney before agreeing to pay anything.

Can Collections Agencies Call You?

Absolutely. They can and will. However, once the estate is probated, all debts owed by the estate are gone. They may call you while the will is in probate. Refer callers to the personal representative (executor) named by the court to handle business on behalf of the deceased.

Remember, generally, and unless, your attorney/accountant says otherwise, you DO NOT owe anything.

Do not make promises or payments to collectors. Do not give the collector personal information including bank account numbers or social security numbers. The collector is not necessarily a collector but could be a scam artist who reads obituaries.

If the callers violate the Fair Debt Collection Practices Act (FDCPA) or your state’s FDCPA, report them.

What if the Primary Credit Card Holder Dies?

It depends on the status of the secondary credit card holder. If the secondary was only an authorized user, the secondary is not liable for the debt, the estate is.

Hint: don’t use the card after the primary dies, or you may end up with the debt. Credit card use after death can also be considered fraud.

If the secondary is a co-signer, the secondary is responsible for the debt of the primary cardholder.

Are there Deceased Credit Card Collectors?

Yes and no. They are either regular debt collectors or scam artists. Again, talk to an attorney or an accountant before agreeing to pay anything to anyone.

What Happens with Credit Card Debt after Death?

If there is not enough money to cover debts, the creditors will be notified as to that fact. They should write off the debt as part of the cost of doing business.

If there is money, the credit card company must stop adding interest and fees while the will is being probated.

In most cases, debt is not inheritable.

Again, talk to an attorney BEFORE agreeing to pay any debts.

Stopping Credit Cards After Death

The personal representative should contact the credit card companies. They may require a death certificate. Some credit card companies can be unpleasant about canceling cards. Keep at them until you get the cards canceled.

Do everything in writing and keep records of who you talk to, what you send, and what response you get.

If you are not the personal representative, refer everyone to the personal representative. You have no legal standing in the deceased’s business.

We can’t stress enough that you should talk to an attorney and/or accountant before settling debts. Debt after death can be a complex issue and you will probably need expert guidance.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

References

https://www.nerdwallet.com/blog/finance/debts-after-death-life-insurance/

https://www.creditcards.com/credit-card-news/credit-card-debt-death-1282.php

https://www.cardratings.com/what-happens-when-someone-dies-with-credit-card-in-th…

https://www.creditcards.com/credit-card-news/6-steps-when-credit-card-holder-dies.php

How Does Debt Consolidation affect your Credit Score

How Does Debt Consolidation Affect Your Credit Score

What is Debt Consolidation?

Debt consolidation combines most of your debts into one loan with a lower interest rate. It allows you to consolidate your monthly payments and hopefully allowing you to get debt-free sooner.

There are several ways to consolidate your debt. You could do a balance transfer credit card, take out a personal loan, borrow from your retirement account or against your home’s equity. You can also work with a debt consolidation company.

There are other options than debt consolidation. Pacific Debt offers debt settlement options for people with more than $10,000 in unsecured (generally credit cards) debt.

For more information on both debt consolidation and debt settlement,
talk with one of our debt professionals.

Does Debt Consolidation Hurt Your Credit Score?

Debt consolidation hurts your credit score in the beginning. Before getting a loan or getting a new credit card, you will have to have a “hard” credit check. This generally lowers your credit rating by a few points on each inquiry. Before you apply for new credit, research the different loans and ask for quotes based on “soft” credit checks. You can make an informed decision and limit the number of hard checks.

Opening the new account will also lower your credit scores for a short time period. However, as you pay off your debts on time and the account age, your credit score will improve. As you pay off your debts, keep some of the oldest credit cards open (and debt-free) to improve your credit history.

Should I Consolidate My Debt?

There are good reasons to consider debt consolidation. By lowering interest rates, you’ll save money. Just make sure that balance transfer fees don’t eat up the savings.

Rolling many debts into one debt can make your life simpler. If you’ve been plagued by missing or late payments, you may save money by avoiding penalties. Not having missing and late payments will help your credit score. Payment history makes up 33% of your credit score, so a better payment history is important.

A lower-interest loan will let you put more money toward the principal instead of interest fees.

For more information, talk with one of Pacific Debt’s debt professionals.

Where Do I Start?

    1. There are several strategies that make debt consolidation work.
      1. Have a plan: transferring debt around without paying it off won’t get you debt free or improve your credit score.
      2. Make certain that your consolidation loan will save you money, get you out of debt, and raise your credit score. Take fees into consideration.
      3. Investigate several options
        1. Balance transfer credit cards – these come with fees, so double check them to make sure that any interest savings aren’t eaten up. Check the time limits on paying off your transfer. The interest rate may increase dramatically after that time limit. Promo dates are generally between six and 24 months. PAY OFF your transfer before that date. If you cannot, this may be a terrible idea. Know the payment due date!
        2. Personal loans – Lower interest rates can help you pay off higher-interest credit cards. Shop around and ask for quote based on soft credit checks. Double check the terms as the interest rates may be very high.
        3. Retirement account loans – Talk with a professional accountant before doing this. There are severe tax penalties for not paying back a retirement account loan.
        4. Home equity (HEL) or line of credit (HELOC)- If you own a home with equity (you owe less than you can sell the house for), investigate this type of loan. You will need to have more equity than you do debt for this to work in your favor.  Be aware that if you do not pay your home equity loan back, you can lose your house.

Pacific Debt can help you understand your options.

What Should I Expect?

Expect a hit on your credit score, although you can limit the effect with soft credit checks. If you pay off debts, stop missing or making late payments, and then pay off your new loan, you should see improvement in your score over time.

If you have questions, Pacific Debt may be able to help you understand your options.
However, Pacific Debt is not able to offer legal advice or answer tax questions.

References
https://www.creditkarma.com/advice/i/how-debt-consolidation-affect-credit-score/
https://www.lendingtree.com/debt-consolidation/does-debt-consolidation-hurt-your-credit-score/
https://www.nerdwallet.com/blog/finance/consolidate-debt

Our Debt Specialists can help you explore your alternatives to bankruptcy, including debt consolidation and debt settlement options.

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Disclaimers

We are not lawyers and are not giving legal advice. We strongly recommend speaking to a professional before making any decisions.

How to improve your credit score in 30 days

How to Improve Your Credit Score in 30 Days

Your credit potential lives and dies by your FICO rating. You’ve probably heard that term but may not know what it means to you and your credit. In this article, we will go over some common techniques you can follow in order to start improving your credit score in 30 days.

What is My FICO Score?

FICO, or Fair, Isaac and Company, started in 1956. It is a data analytics company focusing on credit scoring services. Before 1956, you had to know someone to get a loan, or have a lot of collateral, or pay outrageous interest rates. FICO changed all that and allows people to get loans based on their history of paying back loans. FICO is a brand name, but credit reporting agencies either use My FICO or VantageScore.

The higher your FICO score the better loan rates are most of the time. Since your FICO score is very important, find out what you can do to start improving it right away. In some cases, you can start to improve your credit score in 30 days.

To have a FICO score, you must have at least one account open for six months or longer that has been reported to the credit bureau in the last six months. You cannot have a deceased person on the account. The report is not just late or missed payments, all formal loans are reported to the credit bureau.

Pacific Debt can help you become debt-free with their debt settlement program. Get your FREE consultation today!

Guidelines to Build Good Credit:

  • Pay your bills on time
  • Use credit sparingly
  • Stop applying for new credit cards. Each query by a credit card company lowers your score
  • Use your credit responsibly

You can get your FICO score very easily. You are entitled to one free report a year from TransUnion, Experian, and Equifax. You want one from each because they do not share data among themselves. To get your FICO report, contact:

TransUnion https://www.transunion.com
Experian https://www.experian.com
Equifax https://www.equifax.com/personal

On the report, you will see your score and a list of your creditors. There will be a section for all your open and closed accounts, defaults, bankruptcies, and any credit inquiries for the last seven to ten years.

Check this over very carefully. Mistakes happen. People often discover they have been victims of identity theft through their credit scores.

Generally, lenders prefer to see a 680 credit score or better. If yours falls below that, you can improve your credit score fairly quickly.

How to Improve Your Credit Score in 30 Days

Below is a step by step guide to start improving your credit score right away. In some cases, this can take longer than 30 days to see positive results.

Step 1: Request your annual reports and examine them carefully.
Step 2: Correct any errors you find. This is a lengthy and difficult process but stick with it.
Step 3: If you have late payments, make them up and then stay current on your bills.
Step 4: Pay off smaller balances.
Step 5: If you are in collections, contact them to see what you can do to resolve the issue. The collection report will stay on your report for seven years, but it won’t have as big an impact.
Step 6: Remove older, closed accounts. You need some of these older accounts to show that you do pay off your debts, but too many are a red flag.
Step 7: Ask your credit card company for either a lower interest rate or an increase in your credit limit. DO NOT use that increase for more purchases!
Step 8: Get secured credit cards. These require a deposit to show that you can pay off the card.
Step 9: Try to have no recent revolving balances (unpaid balances).
Step 10: Remove credit inquiries.

How to Remove Credit Inquiries Fast

Whenever you apply for a job, fill out credit card paperwork or even get a new cell phone, the company will usually do a “hard” inquiry on your credit. Each time this happens, it could drop your score by five points and stays on your credit history for two years.

To remove credit inquiries from your credit report

  1. If you did not authorize the inquiry, send a certified letter to the credit bureau
  2. Tell them you did not authorize it, to investigate it and then remove it from your account
  3. Include a copy of the report with the inquiry highlighted
  4. Request they send another report once the inquiry is removed within 15 to 20 days
  5. Keep a copy of the letter for your records
  6. Follow up

How Long Does It Take to Improve Your Credit?

You can make improvements to your credit score in 30 days. To make larger, more significant improvements will take time. A bankruptcy will stay on your report for at least six years and has a huge impact on your score. Missed payments and defaults take about 18 months to be considered less important.

My Fico Summary

The simplest way to maintain at least a 680 credit score is to pay your bills on time, use credit wisely, and avoid getting into debt in the first place. Unfortunately, that can be easier said than done. If you need help, a reputable debt settlement company like Pacific Debt, Inc can help.

Pacific Debt, Inc offers a FREE consultation. Their debt specialists will perform an in-depth analysis of your debt and advise you on your options. They ensure that you understand all the program details. Depending on your financial situation, Pacific Debt, Inc works directly with you to become debt free in less than two years. The company does not make money unless your debt relief program works for you. You have nothing to lose and everything to gain by contacting Pacific Debt for your free consultation.

Our Debt Specialists can help you explore your alternatives to bankruptcy, including debt consolidation and debt settlement options.

FREE CONSULTATION

5 ways to get debt relief from credit cards

5 Ways to Get Debt Relief from Credit Cards

Credit card debt is a problem for many Americans. For many people keeping up with monthly credit card payments is increasingly difficult. Causes vary. An illness, job loss, low income, or poor spending habits may be at the root. Spending more than you earn is very easy to do, especially with the convenience of a credit card.

If you cannot make your monthly credit card payments, act immediately! It’s easy to get caught up in increasing debt. You may not be able to break free without the help of a debt relief professional.

What types of debt relief help are available? We’ll discuss some options that may help you pay off debt. Hopefully, you can use these options to pay off your debt and start enjoying a debt free life.

What is Debt Relief?

Debt relief can come in the form of debt settlement which is the ability to negotiate or settle, your loan amount with the creditor. You may be able to lower the interest rate or even eliminate your entire debt.

Your situation is unique, and no one method fits everyone. Explore your options carefully and pick the one that makes the most sense for your situation.

Get a Free Consultation and find out how our Debt Settlement Program can start helping you live a debt free life today!

What Are My Debt Relief Options?

  1. Make Your Monthly Payments – Use our Credit Card Interest Rate Calculator to see exactly how much you’ll be paying on interest and principal.
  2. Debt Settlement – negotiate a lower balance on your debt amount
  3. Debt Consolidation – taking out a loan to pay off other debts
  4. Debt Management – working with a credit counseling agency
  5. Bankruptcy – a legal remedy to settling out of debt. Make sure to consult a lawyer in your area for more information

The last four options come with credit consequences on your Fico score. However, not paying your debt on time may also result in negative credit consequences. The biggest benefit of paying off your debt is that you will be able to rebuild your credit later. You can improve your credit score with effort and learn better money management skills.   

There are several types of debt that cannot be eliminated or settled. These include child support, student loans, and other secure loans.

What Do Debt Relief Companies Do?

Debt relief companies negotiate on your behalf with your creditors to help settle your debts. The debt specialists have worked with thousands of creditors. They know which creditors are willing to work out solutions and which are completely unwilling to settle.

Debt specialists know state and federal laws that govern lawsuits, collections, and statutes of limitation. Your debt specialist will guide you through each step of the process. The credit repair program takes two to four years and you’ll be in contact with your debt specialist at least once a month.

Once your debt is relieved, a reputable credit repair company will help you repair your credit rating. A good credit score makes it easier to buy a car, get a mortgage or even get better rates on credit cards and loans.

Steps Debt Relief Companies Take

  1. Your debt specialist will access your free annual credit report from Equifax, TransUnion, and Experian. You are entitled to one report each year, but they can be confusing. A debt specialist will guide you through the report.
  2. A debt specialist will go through your budget with you to see how much you can afford to pay each month
  3. Your debt specialist will work with your creditors to help settle your debts. They may be able to lower interest rates, settle on a lower amount, or even get the entire debt erased.

Who’s the Best Debt Relief Company For Me?

Pacific Debt, Inc has an excellent track record with credit repair. In business since 2002, they are in downtown San Diego. Pacific Debt has earned an A+ rating from the Better Business Bureau and is a BBB Accredited Business. They have settled over $200 million dollars in consumer debt. BestCompany.com ranks them as one of the best debt settlement companies.

Pacific Debt offers a free consultation. Their debt specialists will perform an in-depth analysis of your debt and advise you on your options. They ensure that you understand all options and all the program details. Depending on your financial situation, Pacific Debt works with you to be debt free in one to two years. The company does not make money unless your debt relief program works for you. You have nothing to lose and every to gain by contacting Pacific Debt for your free consultation.

Read real reviews from people who have used Pacific Debt to settle their credit.

A Certified Debt Counselor can help you from drowning in debt!

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How to stop drowning in credit card debt

How To Stop Drowning in Debt – A DIY Guide

Learn How To Stop Drowning in Debt Yourself

People fall into debt each day – it might just be a national epidemic. The problem with being in debt is that once you’re in, you’re in! It’s very difficult to get out of debt because it can be a financial trap.

If you can’t keep up with your credit card payments, or miss a payment, your credit will take a nose dive right into the toilet.

Cash is king, but good credit is just as important! Most people do not have cash reserves for a big purchase and must depend on credit. This is where good credit can be a godsend. Let’s discuss the necessary steps to take to keep you from drowning in debt.

Figure Out Your Debt Situation

Your first step in getting out of debt is to identify all your debt.

  • Get a copy of your credit report from annualcreditreport.com or creditreport.com. This gives you a list of all your creditors
  • Figure out the current debt amount, interest rate, monthly payment, due date and any other important information
  • Record all this so it is very clearly laid out

Once you have all the information you can make an informed decision. It might be depressing but it is important to know.

Most experts encourage you to pay off the highest interest debt first. Others suggest paying off the smallest debts first. Sometimes paying off the smallest debt makes you feel like you are making progress. It depends on your unique financial situation.

You may be able to refinance or renegotiate terms, interest rates, and other debts. Many people are drowning in student loan debt. Student loans are difficult to renegotiate, but refinancing can be done.

If you need help learning what your interest charge on purchases will be, try our finance charge calculator.

Start a budget

Next, find out where all your money is going. Write everything down. Include where your cash is going, where you use your credit card, and what you can eliminate.

This is the basis of your budget. Budgeting doesn’t have to be a chore, but it is the only way you are going to get out of debt.

Your budget should include necessary and discretionary expenses. Your budget should consider the following, although you may not have expenses in every category. Don’t forget annual expenses like car registration.

  • Housing
    • Mortgage/Rent
    • Property Taxes
    • Household Repairs
    • HOA Dues
  • Utilities
    • Electricity
    • Water
    • Heating
    • Garbage
    • Phones
    • Cable
    • Internet
  • Groceries
    • Food
    • Alcohol
    • Toiletries
    • Cleaning Supplies
  • Personal Expenses
    • Gym Memberships
    • Hair Cuts/Salon Services
    • Cosmetics
    • Babysitter/Child care
    • Child Support
    • Alimony
    • Subscriptions
  • Transportation
    • Fuel
    • Tires
    • Oil Changes
    • Maintenance
    • Parking Fees
    • Repairs
    • DMV Fees
    • Vehicle Replacement
  • Healthcare
    • Primary Care
    • Dental Care
    • Specialty Care
    • Medications
    • Medical Devices
  • Clothing
  • Gifts
  • Emergency Money
  • Entertainment Money
  • Household Supplies
  • Insurance
    • Health Insurance
    • Homeowner’s Insurance/Renter’s Insurance
    • Auto Insurance
    • Life Insurance
    • Disability Insurance
    • Identity Theft Protection
    • Longterm Care Insurance

Figure out how much you spend in each category. Be honest. If you eat out every day, include that! Now you have a good picture of where your money is going and how much/where you are spending it.

Your next step is to decide necessary and discretionary expenditures. You may have to give up eating out, drop a gym membership, or stop buying coffee for a while. It won’t be forever.

See if there are places you can cut down your necessary expenses. Could you get a less expensive car, move to a new place, or save money on other expenses?

Do What You Can Yourself

  1. Consider refinancing debt
  2. Call credit card companies, etc. and renegotiate your interest rates
  3. Drop or decrease expenses
  4. Consider consolidating debt through a home equity loan
  5. Use cash to avoid the temptation to whip out a credit card
  6. Wait 24 hours before purchasing a non-essential item
  7. Add another/better job if possible

Get Professional Help Paying Off Debt

A debt elimination agency may be able to help you set a budget, renegotiate interest rates, and teach you how to manage money more effectively.

Ask about

  • Services offered – look for a range of services
  • Free educational information
  • Developing a plan for the future
  • Fees/Contributions – get them in writing
  • Contracts or Agreements
  • State Licensing
  • Counselor qualifications and how they are paid (commission, etc)
  • Security of personal data

Getting into debt is easy. Paying off debt is what takes work and effort. Following these suggestions can definitely help you to stop drowning in debt.

A Certified Debt Counselor can help you from Drowning in Debt!

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