Much has been made on our credit repair services blog about the importance of staying on top of your personal finances.  I’ve also written about both good and bad debts in the past, and the important distinction between the two.

And yet, I keep hearing people say that all debts are bad, and anyone who owes any amount of money to another person is already standing on the precipice of total financial ruin.  Well, okay, maybe not quite that hyperbolic, but there are quite a number of people out there who view consumers with outstanding debt in almost the same light as smokers or people who text in a movie theater.

But those in the know are already aware that not all debts are created equal; there are some that can be used for good.  To help you discern the differences between good and bad debts, let’s look at 2 major debts that affect your credit report, and see if we can find the positives in them; at least from a credit clean-up perspective.

Credit card debt

Most people view any outstanding credit card debt as a bad thing, and usually they’re not too far off.  If you use your credit cards as your main source of payment, chances are your card falls into the “bad” category as you struggle to stay on top of the payments each month.

Of course, if you’re only using it to make a few light purchases each month – say, for groceries and a tank of gas – and pay the balance each month on time, any remaining balance you may carry over will be more manageable than say, breaking out the plastic for every penny you spend while on some extravagant Euro trip and leave you barely living paycheck to paycheck.

Home loans

Home loans are generally considered good debts (gotta have some place to hang your hat, right?) unless you start using your mortgage like another bank account.  Most people also buy a house in the hopes that it’ll be an appreciable asset as time goes by.  Of course, with the real estate market in the state it’s in now, there’s little chance of that happening.

If you’re currently barely able to tread water on your mortgage payments – to the point where the next major home repair emergency that pops up could leave you in serious financial trouble – it might be considered a bad debt.

Want help turning your bad debts around?  Give one of our specialists a call to make it happen, Cap’n.

Getting into credit card debt is easy – just ask the millions of consumers already wallowing in it.  Getting back out of debt is the hard part, but fear not – it CAN be done.  All it takes is careful planning, a lot of discipline, and a little time, and you can live your life worry- and debt-free.  Here’s how:

What can you afford to pay?

This is the all-important first question you need to ask yourself before you set about coming up with a payment plan.  Figure out how much you have to pay off before your debts are wiped out, and how much you can afford to put down each month.

Start by gathering all of your monthly bills and pay stubs together, and use them to draft up a working monthly budget for yourself.  Once you have an idea of how much you make each month vs. how much you spend, you’ll have a better idea of how much you’ll be able to sock away for debt settlement each month.

Your best bets

There are basically 2 schools of thought as to the best method for paying off your credit card debts.

1. Start with the lowest balance. This option has you paying your debts down from smallest to largest balance.  This is usually the easier method of the two for people to get behind, as it quickly produces noticeable results.  Once you see how quickly your smaller debts are falling by the wayside, you’re more easily encouraged to stick with your repayment plan.

1. Start with the highest interest rate. This option makes more sense from a purely mathematical standpoint, but it can be difficult to stick with, as the payoffs aren’t as fast or as often as the lowest balance first method.  Paying off your higher interest cards makes sense because the longer you leave them unattended, the more interest you’ll accrue and have to pay off later.

What’s the best method for me?

This is really a question only you can answer.  If you value immediate satisfaction, stick with paying your cards down starting with the lowest balance.  If you’d rather not be mired in interest payments for the next few years – and you aren’t easily deterred – start with the accounts with the highest interest rate.

It’s fast, it’s easy, and it’s the best deal of your life – all you have to do is sign on the dotted line and all this can be yours!

Yeah, credit card offers can be pretty damn enticing when they promise you the world and everything in it.  Before you know it, that shiny new card that promised to help you set the world on fire took a torch to your wallet instead, leaving you deep in credit card debt and in need of credit repair fast.

In the interest of saving you from having to replace the wallet your new card burned through, here are the top 5 credit card offers companies use to trick you into signing up.

1. 0% APR. This is the most common offer prospective customers find when they get a new credit card sign-up form in the mail, and why wouldn’t they be?  That’s the most enticing offer I can think of when I go looking for a credit card.  Hell, why wouldn’t I sign up?  Because I read the fine print.  The fine print that said if I was ever late on a payment, my APR could skyrocket up to 30% in penalties, and that’s the last you see of 0% APR.

2. Low APR. Okay, so what happens when that 0% introductory rate wears off – you do still get a lower APR than most, right?  Well, yeah, probably…  It’s really up to the card company, and what they deem as “low.”  And in a lot of cases, a low APR rate isn’t any lower than 15%, which isn’t usually low enough.

3. It’ll help you build your credit. Newsflash, paying your balances each month helps you build credit.  You can do that with any credit card.  Unless you’re looking into getting a secured credit card, in which case you’ll want to make sure they report information to the credit bureaus, since not all secured cards do.

4. 0% fraud liability. If you’ve reported a lost or stolen card before it’s been used by a thief, you’ve already got 0% fraud liability.  If your card is used before you report it, you’re only liable for up to $50.  So any card company that advertises this as a real bonus is full of it.

5. You’ve been PRE-SELECTED! And so has everyone else on your block!  Seriously though, all this really means is that you’ve been selected to get the offer, not the card itself.  You usually only get these card offers when your credit rating falls in their range.

Well here’s some good news in the world of credit repair: According to an article posted by the Associated Press, consumers have started paying their credit card bills on time again.

Late payments on credit card accounts are at the lowest they’ve been since before the recession kicked into high gear, according to data collected from six major credit card companies.  Defaults on card payments (aka charge-offs) are also on their way back to a more normal level as well.  I guess people really DO read this blog and follow my words of wisdom…

Experts are expecting the trend to continue through the rest of the year, as more and more consumers remember the importance of paying off their bills on time each month in order to maintain a good credit score.  According to the source, overall outstanding balances on credit card debt fell to “only” $790 billion – yup, billion with a B –this year.  That may not sound too impressive initially, but just last year, that figure was up to $831 billion, and back in 2008, it was as high as $973 billion.  So yeah, progress may be a little slow going, but we’re definitely getting there.

Here come the credit card offers!

So what does this mean to card issuers?  It means more credit card offers going out in the mail!  After all, what better way to celebrate a decline in late payments and overall outstanding credit card debt than to offer consumers more ways to fall right back into the same money pit?

Of course, not everyone will be getting offers for Platinum AMEX cards in the letterbox – none of the major card issuers or banks will be contacting consumers with lower-than-average credit scores, so don’t be too disappointed if you don’t get an offer in the mail.

Instead, why not take it as an opportunity to fix your bad credit?  We’ve got credit specialists waiting to help you take charge of your credit again and establish all new lines of credit as well.  Give one of them a call; just make sure your bills are paid on time.

We’ve had this question pop up on more than one occasion with our clients recently, so I thought we’d cover it here.

More and more consumers are strongly considering switching to paperless billing statements for their monthly credit card and bank statements.  Instead of getting a paper bill in the mail each month, consumers instead would receive emails containing their statements in downloadable files.

Some creditors will even send out regular emails containing just the card’s balance and the next due date.  The idea is to better protect consumers from possible identity theft, as well as cut down on all the paper clutter.

But is going completely paperless for your billing statements really the best idea – especially if you’re trying to repair your credit and delete late payments or remove a charge-off?  Let’s take a look at some of the pluses and minuses behind paperless billing.

+ Less clutter

One major positive aspect of going paperless with your account statements is the “paperless” part.  I mean, seriously, who ISN’T sick of opening their credit card debt statements and having a redwood tree’s worth of paper spill out all over them.  Switching to online-only for your bill statements would not only save a few more trees, it’ll also help you keep your bills organized better.

+ Better protection against identity theft

Here’s the biggest positive paperless billing can have in its corner.  We’ve talked in length about the importance of protecting yourself from identity theft, and going completely paperless is a great way to help you do that.

-  It’s easier to forget things

Going online-only with your bills is certainly convenient, but the entire automated process can make it harder to catch an error on your credit card statement if you become complacent enough to let the whole process handle itself, and forget to regularly check your statements.  There’s also the fact that you’ll now have to go through a lot more security checks and come up with more passwords to navigate your way around each company’s website.

-  You’re more susceptible to email scammers

Paperless billing may help protect you from identity theft, but you’ll start to receive quite a few more pretty convincing looking emails that say they’re from your bank and/or creditors, but are really email phishing scams out for your passwords.  Pro tip: Never respond to an email that asks you for any of your personal information.  Your bank and creditors already have that information on file, and will call you if they ever need it again for any reason; not send you an email.

A common story relayed to My Credit Group by clients suffering from credit card debt is how often they’d use their credit cards as a “pick-me-up” of sorts.  In other words, whenever they were feeling down for whatever reason, they’d use their credit card to buy something and feel a little (or a lot) better.

You’d be surprised how common stories like this actually are – hell, I bet more than a few of you read that first paragraph and nodded in agreement.  I’ll admit I’ve been guilty of impulse and emotional shopping on more than one occasion.

Doing it for the thrill

Everyone knows there’s a certain thrill to be had when making a purchase.  Whether you’re buying a gift for someone else, or spending your hard-earned cash on yourself, there’s a joy that comes with spending money.

Now imagine buying something without really even having to pay for it (at least, not immediately).  That’s the kind of thinking that fuels a lot of impulse shopping with a credit card; you see something you want, but can’t afford just yet.

But instead of doing the sensible thing and waiting until you have the money to make the purchase, you instead whip out your credit card and buy it anyway, intending to pay for it whenever the bill comes in.  Or, if you’re using your cards as a pick-me-up, you make the purchase because it makes you feel better (at least for a while).

Curbing Your Spending Enthusiasm

If you’re using your credit card to make you feel better whenever you’re down, or you’ve adopted the “buy now, pay later” mentality, it’s likely your credit card bills – and possibly even your credit reports – are reflecting your spending habits, and that won’t look good to lenders should you ever try to apply for a new line of credit.

So what’s the best way to stop you spending habits from getting the best of you?  Follow these simple tips:

• Look for other ways to give yourself the emotional boost spending money gives you.  This can be tough for a lot of people, so try any other number of things you enjoy to help ease the burden on your wallet.  For example, I started working out again, using my apartment complex’s workout room instead of renewing a gym membership.

• Don’t buy something just because it’s there.  If you enjoy shopping too much to just drop it like a bad habit, consider switching to browsing your favorite outlet and making a note of what you want to buy so you can come back later when you actually have the money to buy it.

• Similarly, if you’ve switched to doing most of your shopping online, and have your credit card information saved in Amazon’s records for quick and easy purchases, consider deleting your saved information from their records.  Not only will this protect you against any threats of identity theft, it’ll make the process of buying something online a little more inconvenient if you have to input all of your billing and shipping information whenever you’re trying to impulse buy.

Related articles:

• Are Banks Still Not Disclosing Their Fees?
• Are Credit Card Protection Plans Worth It?
• Avoid These Secured Credit Cards
• Spending Limits for Debit Cards?
• 5 Credit Card Mistakes You Must Learn From