Tag Archives: personal loan

Bad Credit Card Debts

The credit card debt is almost always referred to as the second worst debt you will ever get into. Most of the credit cards will charge 2-3 percent interest per month on advance purchase using this credit facility. The figures 2-3 percent may appear real small but if done on a monthly scale this spells out 24-36% per year interest, you can easily double the amount payable in 3 years. What may not be known to most people are the compounded interests that are accrued if credit card bills remain unpaid with the interests, meaning you get charged with interest on your current interest. The other phenomenon is the minimum payable due in the credit card billing statement, this is the minimum amount required for you to pay to update your account. sec-mortgage

It is usually 5% of the total amount borrowed. If the minimum amount is paid and updated, this leaves the 95% billing plus the monthly interest subject to another cycle of compound interest. This will practically be charging interests with interest on top of interest. You should know that the credit card industry is a multi-billion dollar industry in USA today.Not all credit card debts are bad. If credit is done to purchase a salable item for profit while short on cash, this methodology is quite handy especially if payment is done before the cut-off date of the interest due.

Using this credit facility to do business is quite effective especially if you closely monitor the month end interest due dates.There are bailing out options from heavy credit card debts may be offered by competing credit card companies to lure clients to transfer to their service, this facility is a secondary mortgage. Second mortgages are offered with very low interests to attract the creditor to buy off all his payables from the original company. Banks may also offer loans for people with bad credit standing to allay his current business debt crisis.


What is a personal loan

paydayA loan is a debt that can be taken from banks to meet your current financial needs and then repaying the principal amount along with an interest to the bank later. Loans are very essential and are also easily available. Different banks provide loans to their customers for various needs. It can be any personal need for buying a car, or a home loan etc. Even if you need to set up capital for starting a business you can arrange for loans from the banks.

A personal loan is usually a short term loan unlike a mortgage loan which spans for ten to thirty years. These are generally lesser than five years. You can use this to finance your new vehicle or your new home, consolidating debt and even to finance your vacation. The borrowed amount is paid back in installments which may or may not be on a regular basis. This service is provided at a cost which depends upon the amount borrowed and the duration of the loan.

This can be classified into two major groups- secured loans and unsecured loans

Secured loans are those in which the borrower has to mortgage an asset or property as collateral against the amount borrowed. In case of any fraudulent activities or default in repayment, the bank can take over the asset.

Unsecured loans do not require any mortgage against the sum borrowed. This service is provided usually with a much higher rate of interest because of the higher risk. In case of defaulting the lender can take legal actions.

Whatever loan you take you must be thorough with the terms and conditions. Make sure of the interest rates and duration. One type of loan that you should look into (at times unavoidable) is payday loans. These are loans borrowed with the guarantee of your next paycheck. They have extremely high annual percentage rates.