May 2016 - Getting Out of Debt Q&A

Top 5 Reasons Why You Should Avoid Paying with a Debit Card

Debit cards are the most popular non-cash transaction method in the U.S., with about 5.1 billion debit cards in circulation and $1.4 trillion in debit card purchases each year. Despite this popularity factor, paying with a debit card is generally a bad idea for many purchases when compared to alternative payment methods.

Why You Should Avoid Paying with a Debit Card

If you currently rely on debit cards for most of your purchases and orders, then don’t miss these major reasons why you should avoid paying with a debit card:

Legal Protections Against Fraud

According to Nasdaq, 31.8 million American consumers’ credit cards were breached in 2014 and the number of both credit and debit card breaches is supposed to rise 34% from 2014 to 2018. Globally, fraud losses on credit, debit, and prepaid cards hit $16.31 billion in 2014. That number is expected to fluctuate based on the increasing shift towards EMV cards (with chips imbedded in the card to prevent counterfeiting), and new technologies to prevent identity and financial theft.

For the time being, there are laws in place to protect consumers from fraud as much as possible. Most major credit card companies offer theft protection for their cardholders, which include both zero-responsibility policies for fraudulent purchases and email or text alerts when a large purchase is made far from the cardholder’s residence.

Under federal laws, credit cardholders are not liable for more than $50 of fraudulent transactions made on their card (again, many credit card companies don’t even hold you liable for a penny).

The story is somewhat different for debit cardholders, however. Under the Electronic Fund Transfer Act, debit cardholders have to notify their bank within 2 days of noticing a lost or missing debit card, just to qualify for the $50 loss liability limit.

If you notify your bank within a 2-60 day window, then you won’t be liable for more than $500 in fraudulent charges on your card. Waiting longer than 60 days to report the fraud may cost you the entire amount scammed from your account.

Worse still, even if you were to eventually receive a refund, you won’t have access to these funds until the claim investigation concludes.

Top 3 Ways To Create Financial Stability In Your Life

by Hank Coleman

Financial stability is a terrifying phrase because it’s something we all aspire to, even if we don’t quite understand how to get there. The phrase calls to mind thoughts of sacrifice, eating ramen, and living paycheck to paycheck while you save every spare penny, but it’s neither that complicated nor that scary.

You can become financially stable without giving up your lifestyle or sacrificing all your luxuries – and although you may give up some of them, you won’t miss them once you find yourself on stable ground.

How To Create Financial Stability In Your Life

Tackle Your Debt First

Paying off credit cards, student loans, and other forms of debt takes a lot of money. Those monthly payments are sometimes insane and it can feel like you’ll never dig your way out of debt. Don’t fall for that. Instead, grit your teeth and prepare to make some tough choices. If you have credit card debt, focus on paying off the card with the highest interest rate first – that’s even more important than taking on the card with the highest limit. Focus on paying off one card at a time. You can even use the snowball method for debt.

You can also look into consolidating your debt. This isn’t the best choice for everyone and it may not work for you, but there’s no reason not to consider it. Consolidating all of your bills into a single, smaller payment may help you get a handle on your debt. It can also help you get back on your feet financially.

Don’t Skip Out on Insurance

You need to insure everything. That might seem counterintuitive since insurance plans cost money, but do you know what costs more? Replacing your furniture, appliances, and mementos if something happens to your house, and replacing your computer, your phone, or your car when they’re damaged.

Take the time to do your research, however. Whether you’re insuring your home, your expensive jewelry, or your new phone, check out different options, read an Assurant review, look into other providers, and pick the best policy for your needs.

Why Scotland Is Far Ahead in Debt Consolidations

by Hank Coleman

There comes a time when money troubles affect all of us, but unfortunately it can all too quickly spiral out of control if you’re not careful. If you have more than one credit card or several different loan agreements in place then keeping track of everything can fast become a nightmare, leaving people wondering how exactly they should be handling their finances in the correct way.

Debt consolidation is one solution that can often help those who have their borrowing all over the place, and when it comes to this method you’ll find that Scotland is a country that takes a lot of stress out of money matters.

That’s because Scotland allows its citizens to take out something called a Scottish Trust Deed when they’re struggling with multiple repayment arrangements. This is a legally binding arrangement between an individual and their creditors, where unaffordable payments are transferred into a single affordable monthly payment. This legal agreement can only be carried out through a licensed Insolvency Practitioner, who then acts as the trustee for your arrangement.

The big advantage to using a Scottish Trust Deed is that you’ll be protected from your creditors. They won’t be able to take legal action against you for not making repayments, and you can also enjoy peace of mind that your home and car are protected against being repossessed.

The repayments are also based on your circumstances, so you will only have to pay what you can reasonably afford. The pressure of unwanted phone calls with creditors is also removed as a trustee will take care of everything for you.

Is it Ever Appropriate to Invest While in Debt?

by Hank Coleman

Should you invest while still in debt? When should you start investing? You may want to start investing despite still being in debt.

Is it ever appropriate to invest while in debt? The presence of the word “ever” in that question should be a hint that the answer is “yes”. If you figured that already, then good for you and right you are.

Is it Ever Appropriate to Invest While in Debt?

But it’s a “yes” with qualifications. Investing while in debt should be the exception to the rule. There are, however, a number of exceptions, some of which we’ll talk about here.

Investments that can be engaged in with skill, like binary options trades through Banc de Binary, are one such exception. These are trades that can be completed in seconds, which have the potential to multiply invested amounts several times over.

For those skilled at this method of trading, it’s a great way to make money, and can be used to gain the funds necessary for total debt cancellation. It’s also a risky proposition and one that should only be taken part in with money that won’t be missed if the investments don’t pan out. But for people who enjoy past paced and fun investment models, this can be a great one to add to your repertoire.

Most of the argument against investing while in debt comes results from a simple concept: debt tends to add up much faster than wealth. Investors hope for 7-9% annual returns from mutual funds and other stock market gains. But high interest credit card debt can accumulate at 25% annually – sometimes even more!

The math is simple. You won’t make money if you’re taking on debt faster than you’re growing wealth. If you have high interest consumer debt, there is almost no good reason to invest until it is paid off.