There is one thing that gets to people these days and it has to be credit.  If you haven’t got any credit then you’re ruined and if you’ve got credit then unless you’re a millionare you’re bound to get into a little trouble with it.  The trick is to manage your credit card debit to begin with and prevent yourself from getting too much, but that’s not always easy; and what if you already have a large balance?

Well we’ll talk about what you do to prevent this happening on another occasion, but for now you need to know what to do with the balance you already have.  There is one simple way of reducing the stress and payments, and this is to simply transfer your balance to another credit card.  You’ve heard people talk about it and probably wondered exactly what it’s all about.  It’s as simple as applying for another credit card and letting the new one take on your balance and charge you 0% interest for several months.

The best ones to go for are those that give you interest free for the longest period of time and without a transfer fee.  The logic behind it is that you can then pay some of your credit card debt off before the interest makes it even bigger.

If you have a mortgage then you need to make sure that you never miss a payment and that you keep everything up to date.  If you have mortgage arrears then try your best to get them paid off as quickly as you can.  The more you can show financial institutions that you are working towards becoming a better customer then the sooner they will allow you take out credit.

This can be a relatively long process to be sure, but one that will undoubtedly be worth it and also help you learn to manage your finances a little better in the future.  However there is another way that can help enormously and that is ironically enough a credit card.

There are such things as bad credit cards and these are perfect for helping you get credit if you have no credit!  You stand more of a chance getting these cards if you apply for them because they are specifically designed for people who have no credit.  The interest rates are very high and there are no lovely reward points; these cards are designed to help you make the financial world see that you can be trusted to pay off your bill at the end of each month without any trouble at all.

What you need to do is create a strategy and stick to it.  The best way of doing this is to work it out in the following way:-

• Work out how much money you have coming into your household.
• Work out how much money you have going out of your household.
• Don’t mess with the bills or anything else like that.  If you need to pay bills then don’t do it with your credit card!
• If you want to get the most out of reward points and cashback etc then you need to pay for these on your credit card.
• If you pay for items on your credit card, put the money to one side or into a separate bank account.
• This one is the most important of all.  Make sure you pay off your balance at the end of every month!  This is the most important thing of all and if you have followed the other instructions then you’ll be able to do it easily and still be able to function.  If you don’t have the money to pay the bill at the end of the month then you have clearly overspent or else you have miscalculated what money you have coming in or out.

Following these simply rules will allow you and your credit card to live in harmony with one another for a long and happy life.

If your credit card debt hasn’t reached the point where your credit rating has been affected then you might still be in with a chance of getting rid of it.  However, you will need a lot of willpower to do this.  This isn’t always easy to find when you’re the type of person that gets into debt with a credit card in the first place; but you simply must try.

First you need to change your spending habits completely.  If you’ve been buying things on your credit card you need to stop immediately and cut out the spending; only spending the money that you actually have!  The next thing you need to do is try and find another credit card.  Now i know this sounds ridiculous but you need to find one with a 0% interest rate on balance transfers.

When you look for this new card make sure that you tell the new company the entire amount from your old credit card that you want to pay off.  Don’t choose a credit card that charges you a percentage (often 2-3%) of your balance to transfer it, choose a free one.  When you’ve transfered your balance you will no longer have to pay the interest on your credit card debt and you won’t lose any points on the credit scoring table either!

The next thing to do is to get rid of the old credit card and close the account.  Then you need to set up a regular payment plan with your new credit card company and not spend any more on it.

It all works out in the end don’t worry.  The idea of a bad credit card is to make you take out credit, but more importantly make you pay it back.  This allows future lenders and credit card companies to see that you have seen the error of your ways in the past and you have changed into a responsible person to whom credit can be feely given without risk.  In theory the more credit you can get when you have a bad credit score the better; providing you pay it all off regularly and don’t miss a payment; missing a payment will ruin it all.

There is usually only one bad thing about a bad credit card, and that’s usually the interest rate; it’s usually through the roof!  This is to make sure you don’t miss your payments, because if you do you will be severely punished by this interest rate, and not only that, your attempts at improving your credit score will be significantly set back.

However, most bad credit card companies will also ensure that your credit limit is not over what you are likely to be able to pay back.  This is very important because it teaches you in future to only buy on credit what you can pay back at the end of the month.

The fist one on the list is usually the Capital One Progress card lately and it’s not too bad:

• High 34.9% interest rate.  However, this rate shrinks by 5% every six months if you maintain a healthy account and the balance is paid in full every month.
• Realistic credit limits of up to £2,500
• Identity theft protection.
• Online account management to make sure you’re doing everything right.
• Purchase protection insurance.
• Also a free credit report, just so you know what you’re up against.

These should be steps that you are willing to take in order to clear up your bad debts and not get into any more.  The worst reason for getting into further debt is the one that suggests you were trying to get out of it!  How frustrating is that?

The point behind it is to make the lenders think that you are capable of handling certainl levels of credit and applying only for what you can handle.  If you can show that you have paid off your debts and you continue to pay your bills on time and you are not in any bad debt programs or anything like that, then you may be able to proceed to build your rating again.

It won’t be easy, and credit card companies are not going to make it easy for you to regain your rating.  Where they didn’t used to mind if you defaulted before (simply because of all the interest they charged), now they can’t afford to let you get away with it.  This is the reason that most credit cards that exist to help you rebuild your credit rating have a very high interest rate.  The types of interest rates you’re looking at are as follows:  [these are from the leading credit building credit card companies at the moment]

• Capital One Progress Credit Card – 34.9% interest
• Barclaycard Initial – 29.9% interest
• Capital One Classic – 34.9% interest
• Vanquis Visa – 39.9% interest

They all have their individual pros and cons, but the object of this post is to simply tell you that you have to watch out for the interest rates on these babies because if you mess them up then you’ve missed your chance and that’s all there is to it.

Of course people need good sound financial education, but where are they going to get it?  It will probably be offered by a large bank or other financial institution that have other motives that are not so benevolent.  I can see it now, free financial advice for youngsters against getting into debt with loans and credit cards, from your friendly bank Lloyds, or HSBC or some other self serving institution.

Financial eduaction needs to begin in the family and needs to be taught by responsible parents.  This is simply because if you bring your children in an envirnoment where the credit card is used to get people out of trouble at the very first instance and the concept of saving money is completely lost, then there is no amount of schooling or specialist training that will prepare the children for what they have in store for them from the real world.

We all have to be resposible now and begin to educate the young ourselves; we should begin by leading by example.

Well if you’ve been in trouble in the past, and let’s face it the whole world has been in trouble with credit, then you can improve your situation and better your chances of obtaining the all important credit again; this might not even be for a credit card (you may have learned your lesson here), but it might be for a house or a loan of some sort.

The bad news is that you might just be required to get a credit card to prove that you can be trusted again.  There are a several different cards out there that they call “bad credit” cards.  These are credit cards specifically designed to deter you from spending too much money on them.  If you go nuts on these credit cards they will put you down and punish you quickly before you’re able to get out of hand.

How do they do this?  Well they do this with an astronomically high interest rate that even a fool wouldn’t be stupid enough to mess around with.  They also keep your credit limit very low and acheivable.  Sometimes you can get reward systems with them, but not very often, the idea of them is to improve your credit score and not to have fun and make money.

Check them out if you’ve had a bad credit score, they might just help you rebuild it.

Once you contact the insolvency service they will usually set you up with a case worker and start to provide you with help and support to pay back your debts.  If you do not want to pay off your debts then this is not the service for you and you should really go away and rethink where you want to be in a number of years.  Becoming debt free is one of the most important things you can do in this world at the moment and there are a few different ways in which you can do it.

To begin with you’ll no doubt have to work out an income and expenditure sheet so that you can prove to your creditors what you can afford, and then you can perhaps arrange a debt management programme where you pay all your creditors the same amount.  This might not seem like much to them to begin with, but any steps taken towards paying will be welcomed.  A debt management plan organised through the helpline can organise your creditors and enable you to pay just one lump sum each month.  After this your money will be divided out equally among those you owe it too.

Sounds sensible