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These 5 Myths will Astonish you about Settling Credit Card Debt

These 5 Myths will Astonish you about Settling Credit Card Debt

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Credit card debt in the UK today totals to £72.6 billion – blighting the lives of all too many UK consumers. With the typical credit card interest rate being 18.5%, it’s perhaps unsurprising that the average household is caught in the grip of £2,668 worth of credit card debt.

With more people seeking credit card debt solutions than ever before, we want to demystify five credit card debt myths that many believe to be true.

Credit card debt solution myth one: Debt settlement won’t impact your credit score

Making ‘full and final debt settlement’ offers to your credit card creditors can write off a set amount of your debt(generally speaking creditors are known to accept offers of between 50 and 75%). However, debt settlement can negatively impact your credit score, because it marks your accounts with ‘P’ on your credit history (which stands for partially settled).

This debt solution won’t ‘wipe off’ any past defaults either (e.g. the times when you’ve missed a credit repayment or were late in paying).

However, it’s worth noting at this point that many other debt solutions can also affect your credit rating, which may make a fall in your credit score unavoidable.

Credit card debt solution myth two: You must pay a debt agency to settle your credit card debt

There are many options of debt solutions for dealing with your credit card debt, one of which involves using a debt agency. While some unscrupulous businesses present false information for convincing you that there’s no other option, the fact is that there’s never a situation where you must use a debt agency. That said, there are multiple benefits of debt intermediaries, such as there being able to advise you on your options from a debt expert’s viewpoint and negotiating with your credit card company on your behalf.

Credit card debt solution myth three: You should focus on paying your credit card over your other debts

Credit card debt is not a ‘priority debt’. If you have debts that fall into any of the following categories, with only a limited amount of money to be used on your repayments, you should pay these first and foremost (but you should regularly update all creditors as to your circumstances):

Credit card debt solution myth four: Anyone can choose a debt settlement for their credit card debt

To qualify for debt settlement, you need to be considered as being in hardship (e.g. your creditor won’t accept a cut-price offer for a credit card debt on which you’ve kept up with your repayments).

Credit card debt solution myth five: If you have a large credit debt, you only have the options of debt settlement or bankruptcy

There are many debt solutions available that can deal with problem credit card debt, and you should always explore all of your options before deciding what to do next. Possible credit card debt settlement solutions may include:

  • An Individual Voluntary Arrangement (IVA) – A form of debt settlement that allows you to repay your debts over a period of up to 6 years. This type of debt settlement will ensure interest and extra charges are frozen, while a debt agency acts as the negotiator between you and your creditors.
  • A Debt Management Plan (DMP) – A debt solution that arranges a repayment schedule for non-priority debts (such as overdrafts and credit cards).
  • An Administration Order – A debt settlement solution for those with: two or more debts; a total debt of less than £5,000 and a minimum of one County Court judgment.

We are National Debt Help. We help those who are struggling with debt.

Our debt advisors help you understand whether an IVA debt solution could pave your way to finally becoming debt-free.


What to Do If Your Prepaid Card is Stolen

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One of the most important financial management resources that we use today is the debit card. Essentially plastic money, it allows us to buy goods and services online and offline as well. The debit card is also known as a prepaid card. This is because it allows us to spend money that is already loaded into the card through an account. One of its most beneficial functions is that it can only be used to spend what we already have. Furthermore, it provides security since we don’t have to carry cash around with us. Unfortunately, it is a light and portable item that can be stolen. Whoever takes your debit card can begin to use your money if they figure out your password or PIN number. Hence, it is very important to take measures upon discovering that your prepaid card has been stolen. Here is what you can do in this instance.

  • Contact your prepaid card provider immediately

The first activity that you need to do is to contact the provider of the card. It is important to ensure that you report the loss of your prepaid card as fast as possible. This is so as to get it flagged and blocked reducing the chances of the thief spending your money. Taking this step also gives you an opportunity to recover all or part of the money that could already have been spent. Some financial institutions offer a special fee reimbursement on specific cases of loss. For example, if the prepaid card is lost as a result of interacting with the institution’s infrastructure. Furthermore, there are some protective measures applied on your bank account upon reporting that your prepaid card is stolen.

  • Request for a new prepaid card

Thanks to its portability and versatile nature, the prepaid card is an important element of modern personal finance. Therefore, if you lose yours, you need to get a new one. Hence, request for one with the card provider of your old card. They will provide you with a new one containing a 16-digit card number. Some financial institutions will even offer to provide you with the new card more rapidly through an expedited delivery system. While ordering a new card, it is important to enquire about any courier charges that could apply. In addition to that, ensure to activate the new card as quickly as possible so as to resume your normal financial life.

  • Update your billers

To promote convenience, some of us have programmed our prepaid cards such that bills are deducted directly from the underlying accounts automatically. This link is performed using the account number. Seeing as the new prepaid card will have a new bank account number, it is important to update your billers about it. This is so as to prevent bounced bills and general disorder. While doing so, update your contact information as well. This will help them to get in touch with you as fast as required for any clarification.

A prepaid card is a very important part of modern financial living. Losing it can not only put your money at risk, it also creates inconvenience in your life. Should this unfortunate incident happen to you, the tips above can help you to get back on track as quickly as possible.


Factors that Leave an Impact on the Borrowing Capacity

A few key factors tend to influence your borrowing capacity under all circumstances. It’s actually a single important factor that helps in determining whether you can own a home or not. Gaining a fair idea of how much you can borrow is of great help when you’re considering multiple properties simultaneously.

Once you gain a fair idea of your actually borrowing capacity, you’ll be able to adjust your property search accordingly. You may even achieve a few options that fall within your budget once you do your research. Many of you may simply be wondering about the factors that can prevent you from achieving the desired loan amount and the maximum amount that you can borrow.

Find out ways to enhance your chance of borrowing more:

Financial Commitments:

Prior to issuing a home loan, a lender has to determine the extent of mortgage repayment that you can afford. Apart from your income, the lender is bound to check out the commitments you have towards other outstanding debts.

A greater repayment capacity will enhance your power to borrow, more so, when you co-own a property with a relative. Your financial commitments may include vehicle financing, credit card repayment, repaying loans and other debts.

Loan Repayments:

The amount that you can borrow may be easily determined by the interest rate and the loan term that you sign up for. As the rate of interest falls, your repayment amount also gets lower. By opting for a short-term loan, you’ll end up saving much of the loan interest. You must accept a loan repayment term that matches your financial situation.

Living Costs:

Your loan application only gets approved when your lender does through your living costs. School fees and cost of child care are among charges that increase your living cost. Once the lender is able to identify your borrowing capacity, it becomes much easier for you to sort out these expenses. Even after maintaining a certain living standard, you’ll need to work towards repaying the mortgage.

Credit Rating:

Your credit rating is certainly an important factor that determines your borrowing capacity. By proving your worth as a reliable borrower, you’ll be able to convince the lender for a much higher loan amount. However, you’ll also need to repay the loan amount within the specified time-frame. Your loan application may be rejected after you’ve defaulted on repaying your utility bills and credit card bills in the recent past. Before even visiting a lender, you must check out free copies of your credit report for free from each of the 3 credit reporting agencies. All of the red flags appearing in your credit reports need to be compared and the discrepancies need to be resolved in any.



Asset Evaluation:

In an attempt to identify your actual loan requirement, a lender can run a credit check on the assets owned by you. All of the vehicles that you own as well as your investment options might affect a lender’s decision. These factors hold considerable ground in determining your loan requirement.

Keeping these factors in mind, you’ll need to work on all areas of opportunity just to enhance your borrowing capacity. This way, you’ll have more options of comparing loan and fresh job offers that come your way.


Lending Options When You Have Bad Credit

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If you have bad credit, then you may think that a loan is out of your reach. However, it is possible to get a loan without having a good credit score. There are many lending options that you have.

Home Equity Line of Credit

If you are a homeowner and the home has built equity, then you can get a home equity line of credit. This is a risky type of loan because you are using your home as collateral. However, it is one of the best options if you have bad credit.

You will be able to use your funds in whatever way that you want. A home equity line of credit typically has a lower interest rate than credit cards.

Secured Loans

Lenders feel more comfortable lending to people with bad credit if they have something that they can use as collateral. The item that you use as collateral can be repossessed if you do not pay the loan back. There are several things that you can use as collateral.

You can use your vehicle as collateral. A loan that is secured by a car is also known as a vehicle title loan. You can also use investments that you have as collateral. Additionally, some lenders will allow you to use your future paychecks as collateral.

Payday Loans

Payday loans are a popular option for people who have bad credit. It is relatively simple to get a payday loan. If you have proof of income and a bank account, then you will likely be able to get approved for a payday loan. However, there are downsides that come along with getting a payday loan.

Payday loans typically have high interest rates. Even though no credit check is required, your credit score will be affected if you do not pay back the loan.

Unsecured Loan

Contrary to popular belief, it is still possible for you to get an unsecured loan with bad credit. However, your lender will likely require that you apply with a co-signer. The co–signer must have good credit and a stable employment history. If you cannot pay back the loan, then the co-signer will be responsible.

You and your co-signer’s credit will take a hit if the loan is not paid back. However, there are benefits that you can reap from applying with a co-signer. You may be able to get a loan with a lower interest rate. A cosigner also allows you to get a loan without having to risk your possessions by using them as collateral.



Credit Union Loans

If you trouble getting a loan from a bank, then you should consider going to a credit union. It is easier to get approved for a credit union loan because the standards are more relaxed. They also offer loans for a lower interest rate because they work on a non-profit basis. Additionally, there are fewer fees and penalties.

Keep in mind that your credit score will still determine how much you will be able to borrow.

 


Simple Ways to Improve Your Credit Score

Simple Ways to Improve Your Credit Score

Have you applied for car finance recently but did not get approved because of bad credit? There are numerous factors that can affect your application for loans or a new line of credit, and among these factors, your credit standing plays a crucial role.

While you may have met all the other requirements but still can’t figure out why your loan application gets declined, it may be time to take a close look at your credit score.

When you have a less than stellar credit, it may seem like you’ve dug yourself into a deep, dark hole that you couldn’t get out of. However, you shouldn’t feel disheartened because there are simple ways you can do to improve your credit rating.

While the road to recovery is not easy, the good news is, it’s not impossible. But it will take plenty of effort and discipline on your part. So, to help you get started, here are several things you can do right now to get your credit standing back in good shape.

Check your credit report.

Remember when you were in school? If your parents wanted to know how your grades were doing, they would ask to see your report card. Improving your credit rating is basically the same thing. You can start by getting a copy of your credit history.

Just check online and look for sites, like creditsimple.com.au or creditsavvy.com.au, which offer this kind of service. It’s completely free, fast, and easy.

Look for possible errors.

If you think there are some mistakes on your credit report, you should carefully examine them and dispute these errors when necessary. The good news is that most credit bureaus and credit providers have set up a standard process to handle disputes for errors found on credit reports.

Pay your bills on time.

Staying on top of your finances can be overwhelming at times. But it’s very important that you track all your bills and pay them on time. Missing payments can put a dent on your credit standing and lower your credit score over time.

Usually, when you forget to pay a bill, after 30 days, a credit bureau will be notified, and this may affect your credit rating. So, to avoid this, you can set up arrangements like an automatic payment system from your bank to make sure you never fail to pay your bills on time.

Reduce your credit card balance.

One of the effective ways you can boost your credit standing is to pay down your credit card balances. If possible, keep your balances low, even those small balances as they may become a nuisance over time, especially if you have more than one credit card. This way, you can avoid saturating your credit report so many balances.

Use credit to your advantage.

While it may seem counter-intuitive to have outstanding credit, when you consistently pay them and avoid defaulting, this will have a positive impact on your credit score. When you show that you are not falling behind on your payments, it will show that you are a responsible borrower and can be trusted because you can pay your debts.



These are just some of the simple ways to get your credit standing in better shape. When you have reached a point where your credit rating is at a good spot, your chances of getting approved for loans will be higher than before.

Have you found other ways to improve your credit rating? If so, we’d love to hear from you. Please share your tips by leaving a comment, so that others may benefit.

 


How to get a car loan if you have a bad credit?

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Driving a car is of great need for the day to day of people, especially for those who live in a city where transportation is not reliable or cannot allow them to be on time for their commitments. Unfortunately, buying a car is probably the most expensive purchase you can make, which is why many people are forced to apply for a car loan instead of saving enough money to pay up front.

To start opting for a loan, you must take into account that in the same way as any other investment or purchase of great importance, you should take your time to analyze the entire process from beginning to end.

Some of the simplest and most important steps:

1. Review and understand your credit report

This is the first thing you should do before looking for loans to buy a car with bad credit, access a free copy of your credit report, then take the time to review it and verify its accuracy. This type of documentation has the greatest impact on your capacity when requesting a loan to finance a car.

In case you do not know your own credit history and you do not know if the accusations that are formulated against you are totally true, you could end up with a higher interest rate. That is why it is important that you know this type of information or get it repaired.

If you can understand your credit report you can explain all past negative elements, in the same way, you can explain the arrears in payments.

2. Idealize a budget according to your current finances

After you have reviewed your credit history, start calculating the budget based on your current income. It is important that you consider two different perspectives, for example. The total amount you are willing to pay for a car and the amount of money you are willing to pay each month.

For example, both the amount of money you pay for a car that is financed and your interest rate contribute to the amount of your monthly payment.

3. Do an investigation of the automotive lenders:

There are lenders who work only on loans for people with low credit scores. These types of loans usually have a much higher interest rate, which is not convenient because they end up paying much more money in the period of the loan. Search and research car lenders online to make sure you have the average rates on your car loans so you can calculate your rates. You can find the best bad credit auto loan offers from MoneyLend to help your search.

4. Find a way to negotiate the purchase price

It is possible that having a bad credit cannot change your interest rate, that does not mean you cannot negotiate the established price of the car. The price of the car to finance has nothing to do with the loan.

Find a way for the seller not to know your credit history, you really do not need to know. Try using some negotiation tactics so you can convince him to reduce the price of the car.

5. Consider opting for a co-borrower

Requesting a co-borrower can help you increase your chances of obtaining approval for a loan, thereby improving your conditions. The co-borrower will provide a guarantee to the lender because he will be obligated to pay all the payments and, otherwise, he will be obliged to repay the entire loan.

6. Do not allow unnecessary updates

Sellers will always make offers for the best service, do not be fooled by these commercial tactics, in this way it will be much more difficult to pay off the debt as soon as possible. Try to keep your contract as previously established.

7. Review in detail and carefully the loan agreement

Make sure you read every detail before signing anything. No matter how good a reputation the lender has, there are always details that can change what was agreed upon. Verify that all the information in the agreement is accurate. That includes the price of the sale, the rates applied, the interest rate and even the make and model of the car.

Where do I have to go to buy a car with bad credit?

If the loan application was approved, you must download and print the loan package and then take it to the dealer to make the purchase. Loan documentation includes recommended auto dealers close to your location.
When you have already found the dealer and you have made the selection of the car corresponding to the terms of the loan approval and the price has been determined the dealer will work with your lender.



Pros and cons

Loans with bad credit are very helpful when you need to buy a car and you do not have the available budget. This method of purchase offers many benefits, but also has its disadvantages. If you are planning or are in the process of acquiring a car with financing, it is worth knowing the pros and cons of this process.

Pros:

• Possibilities of having payment plans of up to six years with 0% interest.
• It helps you organize your payments and responsibilities.
• Ease of payment.
• You can have the car with you in a short time of waiting.
• You can choose the lender with the rates that suit you.

Cons:

• Take years to pay the debt.
• Pay a little more for the value of the car.
• Have a very large debt.
• It is necessary and obligatory to have a down payment.


Why You Need to Keep Using Your Credit Card After It’s Paid Off

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If you want to improve your credit score or get rid of credit card debt then you have probably learned the things you definitely shouldn’t pay for with a credit card, like mortgage payments, tuition, and really any sum longer than three digits.

You have probably also learned that getting rid of your credit cards altogether can hurt your score because length of credit history provides valuable points.

So you have these credit cards and you want to pay them down to $0–but you don’t want to get rid of them. Should you just sit them on a shelf?

The answer is no. Keep using them.

An Inactive Account Can Damage Your Score

Don’t run up a huge balance–keep your debt to credit limit below 30%–but do use all of your credit cards monthly for two reasons: 1) if you didn’t use your card that month, some credit card companies will consider you inactive and not report your hard-won $0 balance, and 2) if you go long enough at a $0 balance without using the card many credit card companies will close your account. Both of these instances hurt your score.

Small Charges Represent Responsibility

Those who want to know your credit score want to know that you responsibly use credit. If your account is inactive or closed it indicates irresponsible use of credit or no credit at all. Instead, carry a small balance and pay it off monthly. This proves you won’t make unwise purchases and will always pay on time.

Small charges paid off each month indicate you are less of a risk to future lenders.

Charges You Should Make to Your Credit Card

When choosing what to charge to your credit card and what to pay for with a debit card or cash, look to your budget. It is important that you are able to pay off the balance and/or always keep it below 30% of your limit. For example, instead of budgeting $300 for your car payment, label that $300 item “credit card payment” and charge your car payment to your credit card, then pay it off immediately.

Many credit cards provide incentives for purchasing certain items like gas or groceries. My bank offers one cent in cash back points for every dollar spent, so after I spend $2,000 I get $20 which I can apply to my payment or convert into gift cards. Research your credit cards to see if you can utilize similar perks.If your card offers perks for a particular item and you can pay off that item each month, charge it to your credit card.



Warning

If you are unable to pay off the balance each month, don’t charge anything carrying an interest rate to your card. This would add that interest charge to your credit card’s and end up costing you a good deal more than if you keep your card active with small purchases.

Consistent, responsible use of your credit card improves your score. Paying off that huge balance is only half the battle toward 850.

Author
Jaren Nichols

Author profile
Jaren Nichols is Chief Operating Officer at ZipBooks, a Quickbooks alternative for Mac. Jaren was previously a Product Manager at Google and holds an MBA from Harvard Business School.


Does your credit score affect your amorous pursuits?

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How many would ever attack their credit score to their online profiles that they create for dating? Not many but little do they know that their credit score might play an even bigger role in shaping romantic relations. When you talk of a credit score, you actually don’t just ascertain the amount of money the person has because it is more a way to know about a specific person’s attitude towards money and the responsibility he shares in this era of debt.

Previously, when people got married during their early 20s, they never spoke about their finances with each other. But times have changed now and when you meet someone who is in their early 20s and you invite them to a party, they arrive with almost a closet of financial stuff and this proves that money has always been important in the field of dating.

However, there are few studies which show how the mentality of people has changed about their finances. As per a recent survey done by Bankrate.com, it was seen that 2 among 5 adults are of the opinion that a person’s credit score would have an impact on the interest of a person who is dating the person. In fact, this figure includes 48% of the college graduates and 50% of the people with an annual income of $75,000 or even more than that.

As per a research by Federal Reserve, people with the best credit scores are most likely going to be engaged in committed relations and the more is the discrepancy between the credit scores of the couple, the more likely it will be for the relationship to end. This kind of result arrives because the initial scores show a constant credit usage which thereby leads to financial distress. So, as we see, people are giving more stress on credit scores before they are going on for a love relationship. There is greater importance on finances and scores.

According to a credit analyst of Bankrate, Mike Cetera, the results of the survey were definitely interesting but if more and more people get serious about knowing their credit scores and understanding them, people will gradually know how important it can be to take good care of your credit score in order to stay successful.

However, whenever you have a low credit score, there are many ways in which you can improve your score so that you are not seen as a risky lender when you approach a lending institution for a loan or an insurance policy. You might have been struggling with your medical bills and that could have spoilt your credit score. Whichever reason it may be, you should avoid hurting your romantic relation with your spouse.

Nevertheless, a better way in which you could determine the financial compatibility is by discussing on investing, saving, giving and sharing. As people are of the opinion that talking about your personal finances and your balance sheets are important, you should definitely give it a try to keep your love relationship going good.


Questions That Money- Savvy People Ask Before Taking Out Credit

Debt can be tricky, even those who are usually smart and thoughtful can fall prey to borrowing too much, becoming over committed and ruining their credit score. Whether it’s due to unfortunate circumstances or simply not thinking things through properly, debt can sneak up on you and once it’s got you in it’s grip it can be very hard to get out of. To avoid getting yourself into this mess, before borrowing you should ask yourself the following questions.

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Do I Need Credit?

First and foremost, why are you taking out credit? If it’s because you can’t be bothered to save or want instant access to cash for luxuries, think twice. If you can save up and buy things up front you will save yourself money in the long run. Credit shouldn’t be used to buy things you can’t afford, since this is a quick way to end up in a pickle. Sometimes borrowing can be positive though, perhaps you want to borrow money to buy a house, a car which will open you up to better job opportunities or maybe you need money instantly for dental or medical reasons. Make sure you can justify taking out the money, and consider saving instead if you are able to.

What’s My Credit Score?

Knowing your credit score puts you in the best position when it comes to borrowing money. There are places you can check your report for free, so find out what you currently have stored on your file. If your credit score is poor with previous missed payments and CCJs, if you need to borrow money you will need to consider an unsecured loan by a company specialising in poor credit lending. That way you’re not applying for lots of credit and being rejected, since many searches and applications on your file will bring your score down even further. If your credit score is good, you know that you can apply with confidence with the main high street banks and lenders.

Am I Getting The Best Deal?

Once you know what kind of companies you’re likely to get accepted with based on your credit score, make sure you shop around for deals. Different rates mean the amount you pay back will vary significantly. Use a price comparison site to check, and if the company offers a ‘soft search’ to see if you’re likely to get accepted then go for it. These soft searches don’t show to lenders and won’t bring down your credit score. Look carefully at the interest rates, what your monthly payments will be (and whether you can afford them) and how much you will pay back overall.


5 Easy Tips to Get Out of Credit Card Debt Fast

There are a few good things that you may have wished to do in life, but you can’t achieve these wants due to your debt. When you’re paying a certain portion of your income towards meeting interests, it actually affects your peace of mind.

Few good methods that all debtors must follow:

Use the snowball method

The snowball method is a method that you can use to cope with your debt by dealing with a credit card that depicts the lowest balance first. Just like a snowball gets bigger as it rolls, this debt repayment method is about meeting the lowest balance first and then attacking the next higher balance. It gives you a lot of confidence as you set yourself free from one debt to another. Paying off each bigger balance will continue adding more to your confidence level till the time you get debt free.

Automate your payments

Do you count upon every little earning? By setting up your account, you may allow your credit card dues to be debited from a bank account automatically. Then you may consider as if the money was never yours. By choosing to meet your credit card balance manually, you may consider repaying only the minimum balance in order to make way for your other prioritized expenses. You might feel as if you didn’t ever have any extra money once your credit card payments get automated. It’s in your best interest to repay the entire balance every month instead of bearing extra charges.

Track all expenses

A lot of people that require free money tend to consider credit cards as an option. They find it much easier to swipe a plastic card and then put their signature over it. Things change the sooner the billing statement comes. Then, you find yourself looking around your home for extra cash to meet your dues. You may consider setting an individual category for your credit card expenses. You may track your expenses and check where your funds are moving. You won’t find it tough to understand how you’ve used your credit card and racked up in purchases. By keeping a track of your expenses, you’ll be able to keep all of your debt at bay.

Opt for balance transfers

A number of banks can help you by consolidating all credit card debts into a single debt. To achieve the very best of balance transfers, get all of your balances transferred from a single account with a higher rate of interest to another with the minimum rate. You’ll end up saving a much higher amount. You must understand the fact that there’s nothing as free money. The credit card interest rates will remind you of the high-interest rates.

Use a portion of your savings

Creating a fund for handling emergencies lays the foundation of personal finance. An electronic fund will certainly help you meet your emergency expenses beyond everything. You may set a lump sum payment of a portion of this emergency fund when you have some investments, a partner that earns a successful living, a steady flow of income or when the emergency fund yields other benefits.

Achieve your financial freedom

You’re bound to enjoy a stress-free life the sooner you achieve zero debt. You’ll be using a certain portion of your money towards paying off debt. But once you’ve paid a card back in full, you can use that money towards enjoying a short trip along with your loved ones. Alternatively, you may even let that money grow by investing it somewhere and use it later for achieving other financial goals like that of making the down payment for your new house.

You’ll regain that life free of financial worries once you’ve succeeded in paying off all of your credit cards subsequently.

 


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