Think Twice Before Gifting Your 18 Year Old with a Credit Card

Owning a credit card by an 18 year old brings in galore of feelings of freedom, power and affordability, but often the accompanied senses of responsibilities, sensible spending and financial maturity is underestimated and ignored, which results into the existence of several credit card debt relief options and credit counseling services. Thus it is but common for the maximum number of parents to worry about their 18 year old children and their growing wants and demands that undoubtedly include the possession of a personal credit card. The same thought perhaps have moved the lawmakers to make it much harder for young adults of age 18-20 to obtain their own credit cards, according to the Credit Card Act of 2009. Under this act, anyone falling under the age group 18-21 has to meet few extra requirements before being eligible to hold a line of credit. They either have to give evidence of their high monthly and regular income in order to pay off the bills, or must have someone over the age of 21 with sufficient income and credit who will co-sign the clauses and terms with the card holder.

This is where the decision and duty of the parents come into play. The new age teenagers and young adults have a heightened level of awareness and information about all aspects and sources of consumerism, and have gathered knowledge of how to harness and exploit the same for gaining material luxuries and finding hedonist pleasures. What can be a greater and easier way than possessing a credit card in this respect! Thus the parents have to take a strict call on deciding whether it’s the right time to consider gifting a credit card to their otherwise grown up children or do they still need more lesson and wisdom of handling this responsibility. Unless you are blessed with an extraordinarily hard working, sincere and ambitious kid who would not rake his income for credit card, you have the power to acquiesce or deny their request. The fact is that, if your child’s income fails to satisfy the requirements of regular credit card payments, and does not meet the standard that creditors deem as satisfactory for handling the expense, then probably he/she should not have any business owning a credit card, and you too as a parent should understand the situation without being rushed in with parental emotions which can harm your child in the long run. On other hand, credit card should not be denied to a child who has taken care of his/her financial responsibilities and is not dependent on parents’ money; someone who has the credibility to pay off the loans regularly and can take charge of his/her own wants and needs. 

So the parent can exercise their sense of judgment by denying and restricting their undeserving children from owning a credit card if they lacks maturity and financial stability to handle their money wisely.

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What to pay first: high interest or high balance credit card?

A very common question that comes up all the time when a person wants to start getting their credit card debt under control is whether to pay the high interest credit card first or to get rid of the high balance credit card first! This is a situation which does not fall under the domain of help provided by the debt relief companies by services like credit card debt consolidation or credit counseling etc. At one end if you are anxious about having high interest credit cards that costs you every month and compounds the monthly amount you owe, if you are not paying off the entire balance. For some the interest rate may go up to even 30% on the amount borrowed which basically means agreeing to pay one third more for everything you bought on the card or more depending on how long you owe. While on the other hand, you have a credit card, with such an overwhelming balance that no matter what are you paying, the balance does not seem to ever go down. Thus even if you have a low interest rate you may be paying a lot of interest because of your high balance. 

So deciding about which one to choose to pay over the other can be the trickiest question of the moment especially for those who are not particularly great in handling their personal finances. The card holder tends to feel whether he will lose out on picking the right option first! As every dollar counts and is to be used most effectively, however, sadly enough these thoughts of saving penny never occurs at the times of our frivolous spending sprees! Anyways, this is the situation when a consumer often feels most frustrated and puzzled about their personal finances. The answer actually does not exist in this particular condition as the decision varies to either choose the credit card with highest interest rate or to choose the card with the highest balance depends upon the financial urgency and situation of the card holder. For example for someone who is neck deep in credit card debt, it is most important to take an immediate action than choosing between the two options which actually have a similar consequences at either cases.

 

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What Happens If A Debtor Has To Deal With More Than One Collection Agency For The Same Debt?

Getting trapped in the dirty vicious cycle of debt and its equally painful consequences has become the part and parcel of every American’s financial reality. In many cases even the most efficient debt relief companies fail to provide a perfect debt solution to the debtor to whom none of the options like debt settlement, debt consolidation or credit counseling prove helpful. In such conditions, when all the major debt repayment plans decline, the debtors have to solely deal with the creditors or the collection agencies at his own risk applying his individual skills and knowledge in negotiating with the creditors and debt collectors. The process of debt collection is always associated with fears, harassments and financial insecurities. However, one has to be aware of few facts and information regarding original creditors, collection agencies and junk debt buyers who are also known as the secondary debt collectors.

As a matter of fact, when your original creditors realize it too expensive and time consuming to extract debt from you due to your financial deterioration, they think it rather profitable to sell your debt to a collection agency at a comparatively lower cost. Now this time the debtor faces challenges of confronting a debt collection agency and its extraction methods. Thus if you are contacted by more than one collection agency for the same debt, it implies that the original creditor has given up on you and have hired a secondary or even a tertiary collection agency. In many cases when even the first collection agency sells off your debt to a new or a second agency, it indicates that the second collection agency has paid even lesser than the price with which the first collection agency has bought your debts. Thus it is time for the debtor to use some brain and contemplate easier ways to settle his debts and reduce the payments in case the debts have travelled down from the original creditor and the first collection agency to the second or third one, in which case the debtor may find himself at the receiving end than the debt collectors.

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The Key Lies in Managing Your Money Wisely

As we keep on sinking more and more into our debts and monetary concerns, even the debt relief companies with their various debt consolidation, debt settlement and debt management options are falling short of debt remedies. It is like getting locked in a room which has caught fire and having difficulty in locating the right key out of a bunch of dozens, to open the door. Well, imagining the situation may help in focusing on the most apt and handy option wherein the key to all cash crunches lies. The art of wisely managing our money does actually solve numerous financial downturns in our life. First of all, set an amount aside in order to pay yourself first which should be deposited in your personal savings account, which can be considered as the first healthy step towards managing your money. The task then starts from setting wise and realistic short and long term financial goals for now and your later life. These generally provide enough motivation and encouragement for achieving financial strength and success. Next it is most significant to understand the difference between needs and wants, followed by prioritizing each requirement according to its importance in life and survival.

This is a vital step that determines the person’s sensibility and maturity in managing one’s money, desires and debts. Needs regarding housing, mortgage, rent, food, clothing, transportation and medical aid should be of top priority. Next, one should have an honest knowledge about what and how much amount to spend to acquire the things of significance apart from having a clear knowledge about how much amount is being paid for vital needs and utilities in each month. Make sure to have information about the total household income and the total household expense along with the difference between the two amounts. Make an estimation of amount spent for clothing, furnishing and other aspects and list all payments and contributions you make each month, as well as keep a track of what you spend on food, recreation and other items for a week. Create a budget and a spending plan and remember to use credit facility only for your financial advantage. It is advisable to make down payments in credit or to pay back as soon as possible. Lastly, don’t forget to keep the financial records which acts as a storekeeper of all your financial data and facts with proper evidences and information.