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Why Debt Settlement May NOT Be The Best for You

You’re overwhelmed with credit cards.   You make your minimum monthly payments.  Your balances never decrease.  And you feel trapped in a hole with no end in sight.  Sound familiar?  You’re not alone.  Many people in this situation are looking for the fastest way out.  As they surf the web to look for debt relief options, they will most likely stumble across on an advertisement that says something along the lines of, “Reduce your debt by over 50%, cut your monthly payments in half!”  On the surface, it sounds almost too good to be true.  You decide to call a debt settlement company, and can’t turn down an offer to pay your creditors a fraction of what you actually owe!

Here’s the catch.  Most debt settlement companies fail to tell you in detail all the pitfalls that are associated with the program.  Don’t get me wrong, a debt settlement program is great for those who are suited for it.  I’ve personally seen some creditors negotiate a settlement for as low as .20 on the dollar!  Before you enroll in this type of program, it’s crucial to know what the downsides are.

What you need to know about a Debt Collection Settlement

  1. Collection Calls – Most debt settlement companies will tell you that they can stop creditor calls just by sending them a cease and desist letter.  This is half true.  According to the FDCPA (Fair Debt Collection Practices Act), a collection company must cease communication with the consumer if they sent a cease and desist letter.  However, this only applies to 3rd party collection agencies.  No one can stop the original creditor from calling you.
  2. Increase in balances- I’ve heard this statement way too often.  A debt settlement company will tell you that they will negotiate on the balance at the time of your enrollment.  However, many consumers fail to realize that once you stop making payments, late fees and penalties will be assessed.  If you enroll an account that has a $2,000 balance, don’t be surprised if you see a balance as high as $3,000 at the time of settlement.
  3. Possible Legal Action- This is perhaps the scariest thing a consumer can go through.  A sheriff delivers a court summons to their front door step, and now the creditor wants to sue the consumer.  If a creditor wins a judgment, the court can order wages to be garnished or a lien attached to any personal property.
  4. Taxed on $$ Forgiven- Let’s say you owe $10,000 on a credit card.  Your debt settlement servicer successfully negotiates a settlement at 35%.  The amount saved ($6,500) may be taxable income.  Any debt forgiven above $600 must be reported to the IRS.
  5. Credit Score– I thought I’d throw in the obvious as well.  Enrolling in a debt settlement program will literally destroy your credit.  You will have delinquencies on your credit as well as potential collection accounts.

After reading this, you might think that no one in their right mind should enroll in a debt settlement program.  That’s not necessarily the case.  Potential candidates for this program will have these characteristics:

  1. Judgment Proof- Just because you are judgment proof doesn’t mean a creditor can’t sue you.  Being judgment proof simply means that a creditor cannot garnish your wages due to federal or state guideline and you have no assets.
  2. Insolvency- People who are insolvent (owing more than what they are worth) are good clients for debt settlement because they won’t be liable for the amount forgiven.
  3. Access to Emergency Funds- In case a creditor is willing to give a substantial discount on a card, you should have some kind of emergency funds (friends, relatives, family, etc) who will be able to help you out.
  4. Ability to complete program under 36 months- Anyone who cannot complete a program within 36 months in a debt settlement plan probably shouldn’t enroll.  If it takes you more than 36 months, bankruptcy is probably the best option.

To summarize, each debt relief option has its pros & cons.  It’s important to fully understand the ramifications of each program before you commit yourself.  Debt settlement is a wonderful option for those who need to get out of debt, but only a certain percentage of people are good candidates for this type of program.

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A Guide for How to Handle Student Loan Debt for Recent Graduates

If you’re one of the many recent college graduates having trouble securing work right now, don’t be too alarmed because it’s happening to a lot of people right now. One thing you definitely don’t want to do though is go into default on your student loans. Many companies will check your credit score during the hiring process, and if you haven’t taken care of your student loan debt it could cost you the job. The good news is that there are plenty of resources available to help you manage your student loan debt and prevent you from going into default.

That’s not to say it’s a completely rosy picture though, many of us are more than just a little in debt from college, and dealing with your loans can add tons of stress to an already stressful situation. If you choose to ignore it though, you will be facing much more stress in the future. American Education Services (AES), who handles most of the Federal student loan programs doesn’t have a reputation for being the easiest people to deal with. It is important that you follow up on everything with them, and don’t take someone’s word for granted over the phone. It’s not official until you have it in writing.

Finally, this guide is written with the repayment of Federal student loans in mind. If you have a private loan you will have less options available to you, and the information here will be of no use.

Student Loan Debt Relief Guide

Repayment Options

  • Postpone Repayment by Forbearance and/or Deferment
  • Adjust your repayment options
  • Cancel the loan if you have a qualifying job
  • Discharge the loan in bankruptcy

Forbearance and Deferment Options

Although forbearance and deferment are closely related in that they give you more time to find work (Up to 3 years), deferment is preferred because the federal government will continue to pay off your interest. There are a number of qualifying factors for each of these options. Although a forbearance is easier to obtain than a deferment, and is sometimes still available even after a loan has gone into default, the interest on your loans will continue to accrue. Please note that deferments will not pay off the interest on unsubsidized loans.

Deferment Qualifying Factors

  • At least half-time enrollment in a qualifying school – This does not necessarily mean that re-enrolling into school is a good idea just to postpone repaying your student loans. Having clear minded and realistic career goals is much better.
  • Graduate or Post–Graduate Fellowship Program – If you are lucky enough to land yourself a fellowship then you will be qualified to defer your student loans.
  • Physical Disability or Rehabilitation – If you have a disability that is currently preventing you from working, or are enrolled in either a drug or alcohol rehabilitation program you qualify for a deferment.
  • Unemployed – If you are unemployed and seeking full time employment you qualify for a deferment.
  • Economic Hardship/Underemployed – You will have to fill out a Statement of Financial Status in order to prove your eligibility and receive a deferment.
  • Family Leave – If you are pregnant you qualify for a deferment.
  • Public Service – For military personnel, if you are called to active duty to serve in a hostile zone while attending school you qualify for a deferment on your student loans. Other types of public service that qualify for deferment are The Peace Corps, Public Health Workers, National Oceanic and Atmospheric Administration Workers, and Volunteers for Tax Exempt Organizations like the U.S. Department of Education.

Adjust Your Student Loan Repayment Schedule

There are several different plans available to make your transition into your professional life easier. If you’ve run out of forbearance and deferment options, then these programs can make repayment of your student loans more affordable.

  • Graduated Repayment Plan – Starts your payment off small and increases them incrementally, typically every 2 years.
  • Extended Repayment Plan – If you have more than $30,000 in student loan debt you may qualify for a long term plan of up to 25 years.
  • Income Based Repayment Plan – If you have unstable work conditions, these types of repayment plans adjust the amount you owe each month based on how much income you are earning.

Canceling Your Student Loan

Certain professions are able to cancel either part or all of their student debt. If you are in a qualifying profession this is certainly a great opportunity.

Professions That Qualify for Student Loan Cancellation

  • Teachers
  • Peace Corp
  • Active Duty Military Serving in Hostile Zones
  • Nurse or Medical Technician
  • Law Enforcement and Corrections Officers
  • Head Start Employees
  • Child or Family Services Agents
  • Professional Providers of Early Intervention Services

Bankruptcy

Although it is certainly not the best option available, if you do find yourself in this unfortunate circumstance you may be able to discharge your student debt. It is not easy however, and you will have to show that you are likely to continue having financial difficulties if the debt is not removed and prove that you have tried to repay the loan in good faith.

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Declining Credit Card Delinquencies Suggest Financial Crisis Recovery

Financial experts and economists have been suggesting that the U.S. economy is in recovery, and now the proof may be in the numbers. American consumers have been making more timely payments to their credit card issuers. In February, the number of delinquent and charged off credit loans and accounts were down. In addition to making their payments on time, consumers are still spending less, which in turn means that credit card companies are earning less money. Have consumers finally learned to live within their means, or is this a temporary trend?

Financial recovery in the works?

Credit Card Spending

The February data for credit card and other consuming spending is not out yet. You can, however, make some observations from January data. For example, credit card balances declined by $4.25 billion in January. This was a 4% decrease when comparing it to the $2.02 increase in spending that took place in December of 2010. Most financial experts attribute the December increase to holiday shopping, however this was the first month that spending had increased since the summer of 2008.

Expectations for spending in February are an increase in consumer spending, especially in the retail sector. The increase is relatively small, only about 1%. When it comes to spending on other types of purchases, though, spending is up in a big way and expected to continue that way.

Types of Purchases

The types of spending consumers seem to be gravitating to is on big-ticket items such as vehicles, boats and vacations. Hybrid vehicle purchases on the Toyota Prius increased by 69.9% in February. Overall, auto sales are up 17%. As consumers search for ways to cut back on gas consumption and to save money at the pump in the process, an increase in purchases of hybrid and good gas mileage vehicles is expected to continue.

Whether or not the U.S. economy is in full recovery mode is yet to be seem. In the meantime, there are some positive signs that this is the case. A decrease in delinquent credit card payments and charge off accounts and an increase in consumer spending are all symptoms that suggest the financial crisis is coming to an end.

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New Unemployment Debit Card Costing Consumers

We are a part of a debit nation. Cash and checks are becoming more and more obsolete. Now days, we turn to debit for everything from daily purchases to disability benefits, and now unemployment payments.

Over 30 states have made commitments to begin issuing debit cards for those on unemployment. Deals have been made with Bank of America Corp., JP Morgan Chase and US Bancorp.

Wyoming is one of the latest states to hop on the debit bandwagon. High unemployment states such as California and Florida are looking to implement the system by the end of this year. While it may seem like a good idea, most consumers seem to prefer the snail mail method, as transferring payment via debit card has been costing consumers more than they’d like.

Programs vary by state, but consumers are generally charged $1.50 ATM withdrawals, and 50 cents for bank calls.

In some states those receiving unemployment benefits are required to use the prepaid debit cards, while other states provide other payment options. Some banks charge overdraft fees of $20 instead of preventing charges exceeding the balance of the prepaid debit card. In Pennsylvania they charge for lost debit cards, contacting the call center, checking card balances, making withdrawals and balance inquires.

While many consumers believe that the fees are illegal. The U.S. Department of Labor allows the fees as long as the states allow consumers to get the money for free. Consumers can get the money for free if the use the debit cards for all purchases or withdrawal all the money one time, according to Suzy Bohnert, a Department of Labor spokeswoman.

Joan Evans the Workforce Service director in Wyoming encourages consumers to use the debit cards, as they are a better way to serve clients, as they don’t have to wait in line to cash their checks. “The individual decides how to manage his drawdowns using the debit card,” she said.

“If you use your card the right way, you shouldn’t have to pay fees at all,” a representative at www.Credit-Land.com said. “The goal is to make it easier for consumers to access money and give them greater ease at purchasing in an Internet world.”

But the consumer consensus is in – saving 15 minutes of their time waiting in line is not worth the penalties.

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Girl Scouts Now Accept Debit Cards

It’s that time of year— that time when those Girl Scouts dress up in their matching patch-adorned green vests, and go door-to-door peddling Thin Mints and Tagalongs to any one with a dollar. I know they’re little girls, but they turn from sweet to sour in a few minutes when you explain that you’ve got to pay rent, or you spend your last change on parking, or whatever it may be, they change from Priscella to Cruella.

Because who has the dollar has the power, these Buttercups have learned at an early age the benefits of having money. In an attempt to teach the Ohio chapter of the Girl Scouts financial literacy, their branch has begun taking credit cards at various booth locations in Central Ohio. This means that any one 18 and up has no excuse to not succumb to the Girl Scout cookie peer pressure.

Girl Scouts have teamed up with AppNinja’s Swipe Credit Card Terminal for the iPhone in order to accept credit cards at various booth locations in central Ohio during March. Since the beginning of March, credit cards have accounted for over $1,500 in sales.

That’s a big step for both the Girl Scouts and for my sweet tooth. “Our Cookie Program is our largest business literacy program for girls,” said Tammy Wharton, CEO of the Girl Scouts of Ohio’s Heartland Council. “They also are learning to use new technology to market cookies. Customers can use a new smart phone app — the cookie locator app — to find cookie booth sales.”

AppNinjas is the developer of Swipe Credit Card Terminal for iPhone, which changes a merchant’s iPod touch, iPad or iPhone into a credit terminal that is safe and secure. “Swipe Credit Card Terminal for iPhone will teach them even more new technological skills they may likely use in the future,” explained Wharton.

Girl Scouts pride themselves on giving girls business skills that they will use for the rest of their lives. That’s why developing financial literacy is of the utmost importance. The program is designed for girls who are destined to take control of their finances in a digital future through a sustainable income, budgeting, managing credit, investing and being a loyal consumer.

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What Are My Debt Relief Options?

With the decline of the current economy, many people find themselves struggling to stay afloat during these tough times. Individuals find that they have mountains of debt with no end in sight, and they have debt collectors calling them at all hours of the day. Medical bills, student loans, the loss of a job, or just overspending could contribute to the financial crisis. Things just keep getting worse and worse. It can be devastating for a person to face. However, financial debt can be conquered. Here are some realistic choices to consider to help with debt relief:

What Are My Debt Relief Options?

Debt Negotiation

Sometimes people have so much credit card debt that they cannot even make the minimum payments. The credit cards are maxed out and the situation seems completely out of control. In this case, debt negotiation is one option to seriously consider. Individuals negotiate with their creditors to obtain lower payments, lower interest rates, and reduced fees, making it more manageable for them. Sometimes the negotiator can reduce the debt up to 50%. Most of the time, before creditors will negotiate, consumers will need to be more than 3 months delinquent on their accounts. However, while consumers are in debt negotiation, it can lower their credit score.

Debt Consolidation

With debt consolidation, a person usually takes out one loan to pay for many others. People can usually secure a fixed loan at a lower interest rate. Consumers will take debts from credit cards, department store cards, and other secured debt and combine them so they are easier to manage. Sometimes companies charge a lot of money for this service so consumers need to make sure that this is cost effective.

Credit Counseling

Sometimes people are not organized enough to form a budget and stick to it. Therefore, they might consider a credit counseling company to help them get out of debt. Credit counselors can direct individuals on how to manage their money and create a budget so that they can become debt free. They will inquire as to what might be the source of the problem so they can develop an understanding on how to proceed. The counselor will show consumers how to acquire a personalized solution to solve their financial burdens.

Debt Management Plan

Another debt solution is a debt management plan. A debt management plan is not for everyone, but one’s credit counselor could suggest that they sign up for a debt management plan. A person gives the credit counseling company money each month in which they pay the unsecured debt. Individuals come up with a schedule that works best for them, and a creditor might agree to lower interest rates or some fees. A plan will entail that all monthly payments are paid on time, and while in the plan, consumers may be required not to apply for more credit.

Do It Yourself Approach

A person might decide to forgo all of the counselors and negotiators and just do it by themselves. They want to take control of the situation and budget their finances on their own. They can negotiate with creditors and pay off the highest interest rates first, or they might get another job to make some extra money. They also get the scissors and cut up the credit cards. In order to do this, a person needs to have a lot of self-discipline and control and stick with it until their financial burdens are lifted.

Chapter 7 Bankruptcy

This should be the last resort for a person to take. With bankruptcy, a consumer obtains an order from a court that says that they are not required to pay their debts. It is a very long and burdensome process. Bankruptcy will greatly affect a person’s credit, as it stays on the report for 10 years, and it can make it hard to buy a home, car, get insurance, and possibly even get a job. People need to consider this option long and hard because much of the time, the long-term consequences are not worth it and it is public record for anyone to view. However, if the financial situation is completely hopeless, it can allow a person to start over and rebuild their life.

Do Nothing

Sometimes people do not want to believe that their debt is out of control. They are in denial and so the creditors keep calling. This option will result in more stress and anxiety and possibly even a lawsuit. It is advisable not to disregard the financial burdens because they will continue to pile up and only get worse.

Consumers who find themselves falling more and more behind on their debts need to take charge of the situation and find the help that they need. Consumers need to research the options and find the best solution for them so that they will become free from debt.

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American Express Makes a Move on the Tech Savvy

American Express is out to bring younger customers on board through Foursquare. Foursquare is a social networking start-up that utilizes computers and phones with global positioning technology to let others keep tabs on where they are.  Foursquare rewards users for checking into their favorite places.  The locations must be participating with Foursquare in order to count.  The more often a customer “checks in,” the more rewards they get.

Foursquare is an ideal place for AmEx to gain new customers and keep up with advancing technology.  “The credit card company has to keep up with the times,” says one Foursquare user and rightfully so.  In today’s competitive business world, you have to find a way to stand out from the crowd.

With more young people obtaining credit cards, AmEx is in a race with other credit card companies to gain loyalty from those who are already tech savvy.  That’s because this demographic is spending more money online these days.  Last year, AmEx recognized that because over $100 billion is being spent online, they need to find new ways to encourage younger customers to use their card instead of a competitors’ like Discover or Capital One.

The Wall Street Journal noted that online sales are increasing at 20% as opposed to 15%, which is the rate for all other types of purchases.  With numbers like this, is it any wonder that AmEx is willing to take the plunge with the lesser known social network.

Foursquare has tried to partner with other credit card companies before to no avail.  They may have needed to mature a little before a major credit card company could take them seriously.  Perhaps trying a test run with one another will help AmEx and Foursquare see how this setup could work out to their advantage.  Both companies are hoping to benefit from new customer loyalties and profit from the venture.

AmEx and Foursquare will make their debut in Austin, Texas, March 11-20, 2011, at the South by Southwest Interactive Festival.  The goal is to eventually go nationwide after a test run of the partnership.  Together, they could reel in a younger crowd that is enamored with technology and willing to be loyal customers for a lifetime.

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Know Your Debt-To-Income Ratio BEFORE Applying for a Mortgage

When you are hoping to get a mortgage or other loan, you know that a potential lender will looking carefully at your credit score. But did you know that they will also be examining every aspect of how you use credit?

Debt to Income Ratio for Mortgage

Before you apply for a mortgage, be sure to calculate your debt to income ration for your proposed mortgage and consider these other factors and how they will affect your overall debt to income ration and your budget.

How much do you owe vs. how much do you make?

Examining how much you owe vs. how much your make (your debt-to-income ratio)  for a month can be helpful, especially when it comes to understanding a lender’s perspective. A high ratio can send a signal to lenders that your monthly expenses are unmanageable, and that your overall budget will not support a loan repayment. This can obviously discourage a lender from giving you money. In addition to your credit score, your debt-to-income ratio is a primary factor used by lenders in their review of a loan application.

Your debt-to-income ratio is easy to calculate. Simply divide your total monthly debt by your total monthly income. Use your gross (rather than your net) income – it’s the figure most lenders use. The debt figure encompasses those reported to credit reporting agencies, and can include your utilities (as well as any installment loans).

What lenders want

While lenders use different criteria, a good, generally accepted rule of thumb is this: no more than 28% of your income should be allocated for a mortgage payment. The upper limit for this figure is 33%.

What are the possible effects of your debt-to-income ratio? If shopping for a home, it limits the amount you can potentially spend. If your debt is extremely high it can cause you to be denied – even if your credit score is good! But take heart – there are things you can do to increase your chances of securing a loan.

First, look at any installment loans you’re currently carrying. This includes car payments and student loans. Generally speaking, lenders won’t count installment loans against you, as long as you have 10 (or fewer) payments remaining on the loan(s). So, before heading out to secure a loan, improve your standing by paying any installment loan down as much as possible.

Then, make a completely realistic examination of your budget. If getting a loan is important to you, be brutal. Find areas where you can cut back; don’t be afraid to get creative!

  • Consider bundling your Internet and cable TV services.
  • Are you really using that gym membership, or is it just a psychological prompt for you to get some exercise?
  • Determine your priorities, then look at where you can reasonably cut back on expenditure.
  • Pay down credit card balances (no, you don’t need to close out the cards; doing so can actually work against you).
  • Save money for possible emergencies – remember, experts say that it can’t hurt to have as much as a full year’s income in reserve.
  • Avoid making major purchases, such as a new car or furniture for the home you’re hoping to buy.

If you’re unable to get your expenses in check, strongly consider getting help from a qualified financial adviser. Select someone with whom you can be completely forthright about your monthly expenses. They, in turn, will help you get yourself immediately – and permanently – on the right track. If your goal it to buy a home, check around.  Some banks have programs for people who need credit counseling to get on track to get meet that goal, they might be willing to lend you the money to buy once you have completed the program.

Before you take on a new commitment, it is important to change your way of thinking about debt. This will not only help you qualify for the loan, but assure that you will be able to comfortably make the payments too.\

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Why Every Small Business Needs a Merchant Account

If you have a small business or even run a website on Ebay, then a merchant account may give you the ability to process credit cards and debit cards, which gives you the convenience of never having to turn away a paying customer because you can’t process their payment. There are many companies that offer merchant accounts for businesses. Below is some information on what it actually is and how you can sign up with a provider.

Why every small business needs a Merchant Account

A merchant account is essential for any company that needs to process credit or debit card payments. Not anyone can open a merchant account – only legitimate business organizations with suitable qualifications can open a merchant account. Because society is quickly moving to a cashless monetary system, you are leaving sales and income on the table if you don’t have the ability to process debit cards and credit cards for your small business – especially if you do business online!

Where to get a Merchant Account

Small business owners can get a merchant account from independent sales organizations (ISO), or member service providers (MSP), and merchant banks. Merchant banks are different than your standard investment bank because they make investments in small businesses with their own capital. ISO’s and MSP’s are licensed and accredited brokers of credit card services which maintain contracts with banks to process and handle credit card and debit card transactions. These independent companies provide various services to vendors including debit and credit card processing equipment, product sales & client service, settlement management, paper storage and other essential business services. North American Bancard for example, is a company that provides all these services.

Before selecting your merchant account provider you should confirm the independent sales organization’s credentials. A qualified ISO must be accredited and sponsored by a verified financial institution and all affiliations must be declares on all legal documents. One tip is to verify the ISO you choose is sponsored by an FDIC insured financial institution.

Businesses should also compare costs between the various merchant account providers before making their selection. But be sure to compare apples to apples and take equipment rental or purchase prices into consideration. For example some merchant account providers, such as North American Bancard, offer businesses free equipment, service and support, in addition to guaranteeing the lowest processing rates.

Processing Payments with a Merchant Account

The proliferation of online services and payment options has changed the merchant processing landscape in recent years, allowing merchants and businesses to accept credit and debit card payments online. Some merchant account providers offer online payment processing, but you find it better to go through a dedicated e-commerce site that specializes in these services.

Even with the increase in online shopping, the vast majority of payments are still accepted via a credit card terminal, similar to those you would see in a store like Wal-Mart, or your local grocery store. Credit card terminals permit clerks to slide the credit and debit cards through the terminal to read and process the transaction. Some of the more advanced credit card terminals can process gift cards, allow cashiers to manually enter credit card numbers or expiration dates, and even verify and process checks. The information is then securely transferred to the merchant bank or third party vendor via a secure phone or Internet connection.

In addition to processing credit and debit cards more quickly, credit card terminals offer less expensive rates for processing transactions and are safer for customers and businesses alike, because they reduce the need to keep credit card numbers on site and diminish the threat of credit card number theft and identity theft.

Who Needs a Merchant Account?

Almost any business could benefit from utilizing a merchant account. Whether your company is a fortune 500 company or a two person family based business, if you process credit cards or debit cards, or would benefits from accepting these forms of payments, then you can benefit from using a merchant account. Since many people no longer carry much cash, accepting credit and debit cards can be more convenient, safer, and quicker than having someone write a check, and it’s certainly better than missing out on a sale!

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Eliminate Credit Card Debt through High Interest Savings Accounts

After the recent economic meltdown, many Americans have started depositing money in their savings accounts. But unfortunately, people who are knee-deep in debt are not quite well versed with the concept of eliminating their debt by using a high interest savings account. Instead, they take out credit card debt consolidation loan to pay off their outstanding dues. Now, you must be wondering if high interest savings account can be utilized to pay off the owed amount to lessen your financial obligations.

Reason behind choosing high interest savings accounts

Savings accounts with online banks, regional banks, credit unions and community banks often give high interest on the savings accounts. Therefore, you can rely on these accounts to pay off your insurmountable debts. An online search will help you to find banks that give high interest on the savings. You can eradicate your credit card debt with the high return from your these accounts.

Use Debit Instead of Credit

You can use the cash in your account through a debit card offered by the high interest savings accounts. Instead of exhausting your credit card limit try out your debit card to buy things. Limited cash in your hand will restrain you from over expenditure. Along with that you will start a good habit of spending within your budget once you start using your debit card. Avoiding the use of your credit card and focusing on paying your arrears will help to wipe out the piling debts.

Know how your savings accounts can eliminate your credit card debt

Profitable returns that you earn from your high interest savings account can be used to pay off your debts. Using your debit card will help to depreciate the credit card balance growth. The high interest savings account can be an effective solution to eradicate your debts. But remember, closing your accounts might have a negative effect on your credit report. It may also affect your ability to get a loan in the future. Therefore, you need to be more responsible while using the credit card so that you do not incur debt burden. Occasional use of the card and paying off the balance on time will help you to avoid mounting bills. You can be less reliant on your credit card if you possess a high interest savings account that will manage your financial situation with ease.