As time goes on, loan defaulters are increasing in huge numbers. Students are taking out loans and are not able to repay them in time. Some are not able to pay them back due to financial turmoil and some avoid repayment purposely. Whatever the reason, the aftereffects of not paying back a loan are simply perilous. Defaulted loans can shatter one’s financial records and reduce privileges normally enjoyed by a student. Therefore, if you default on a loan, you need to understand your options. You don’t need to panic because fortunately there are several websites that can help you connect to financial experts who can bring you out of dire consequences.
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When it comes to using credit, it is really important to always be thinking ahead. Remember, when you need credit you won’t likely be able to get it, so when you are working full time and things seem to be going your way financially, this is the ideal time to be applying for credit.
Take Joe for example. He is a 30 -year -old full time truck driver. He is earning $60,000 per year and life is good. He never bothers to apply for a credit card or a credit line because he is able to comfortably live off of his income. Then, tragedy strikes and he gets laid off from work. He soon depletes all of his excess cash flow and suddenly finds himself strapped for cash.
Credit is your reputation as a borrower. Before offering you a loan, lenders use your credit score to determine the amount of loan you can be offered, the term of the loan and also the rate of interest. You can raise the score by cleaning your credit report.
What is a credit report?
A credit report is a record of your borrowing and repaying activities including information on late payments, tax liens and bankruptcy. It also includes your identifying information and bank account details, and reflects your ability to repay a loan. A credit score is a computer generated number based on statistical analysis of your report. The score is relative and is accessed by your lenders to determine the risk they take by lending you money.
Students are often neglected with regards to getting any credit benefits from various lending or credit sources who are otherwise ready to offer credit to businessmen and other working professionals. But the students of today are the next generation and are our future. So its important to encourage and support them with the best available financial and credit opportunities so they can grow in their own fields and provide the best output for our country.
As such, student credit cards provide one mechanism for young people to establish credit as well as provide a financial back stop for education and living expenses while attending school. The cost of living today continues to rise, and the amount of money needed to finance an education, particularly secondary education and college education, is outpacing the rate of inflation by a considerable amount. Many parents cannot bear the entire financial burden of the academic costs for their children. Student credit cards provided by a variety of different banks, lending institutions and credit card companies provide significant opportunities for students to establish and build a credit history at an early age. Provided, of course, that the credit card is used with care and caution.
Cash or Credit Card? The decision is really up to you. I’ve outlined just a few of the pros and cons of using cash versus a credit card to shop. I personally prefer to use a credit card, but I wouldn’t recommend using a credit card unless you know you can pay off the balance every month.
Pros to Using Cash:
*Both methods are not subject to per-transaction fees, however some companies reward customers for using cash by giving them a discount or benefit as it costs the company less to process a cash transaction than a credit card transaction.
*If the networks are down or if the power has gone out, stores can still process cash transactions.
*Carrying cash is also handy for those rare stores/restaurants that don’t accept credit or debit transactions.
*Some people become more conscious about how much they are spending when they use cash. If using cash makes you more frugal, then that’s definitely something to take into account.
Cons to Using Cash:
*Money is quite dirty. It’s been touched by a multitude of hands. You want to make sure you wash your hands after handling money.
*Money can get really heavy if you end up with a lot of change.
*Cash transactions generally take more time to process than credit card transactions.
*With the exception of a few stores that give benefits to those using cash, there generally isn’t any incentive to make cash transactions (i.e. no rewards points).
Pros to Using Credit Cards:
*Transactions are usually processed quickly and credit cards are accepted almost everywhere.
*You don’t have to pay for your transactions until the due date, so it can buy you some time to get the funds if you don’t already have the funds available.
*You can earn benefits/rewards for using your credit card.
*Many credit cards also have insurances and other discounts and benefits attached to them that you could take advantage of,
Cons to Using Credit Cards:
* You pay a significant amount of interest if you don’t pay off your balance each month. Most credit cards charge 19% interest or higher.
* It creates an extra bill for you to pay each month.
* For some people, using a credit card causes them to spend more money than if they use cash to make purchases.
It’s really up to you whether you choose to use cash or credit to make purchases. You know your spending habits better than anyone else, so you need to decide for yourself what works for you. Neither one is really any better than the other, but if one method helps you to be more disciplined when it comes to spending and saving money, then by all means, use that method.