A financially stable, two-parent family can afford raising children. But what if you are a single mother with low income? You can still make it through. But if being a stay-at-home mother is your full-time job? At least for some period, during the first year, when your baby needs you around 24/7?

Ok. Child social support payments and unemployment benefits can help you. But this money will barely be enough to cover all your bills and credit card payments. So, what do you do with your credit card balances? You just set your priorities and try to provide your baby with all the necessary. And credit cards can wait.

So, your baby already walks and makes attempts to say his or her first words. Things got much easier now. You can go to work again and make some money for living. And there they are. Your old plastic ex-friends, the ghosts from the past that you abandoned a couple years ago. You decide it is high time to do away with your old debts. But you just don’t know where to start. You have no idea what has been going on with your cards during those two years.

Here are three steps that can help you to eliminate your old credit card debts.

Step #1.
First of all, find out your status quo. Make a list of all your balances with interest rates and minimum payments, and credit card bills, of course. Count your total debt and estimate your financial abilities. Make up a scheme of paying down your debts.

Step #2.
If you your income is pretty low, do not expect it will be a piece of cake to eliminate your old debt and handle your current credit cards. If you are determined to pay off your debt, you will have to reduce your spending to the minimum. Try to use every opportunity to make some extra money. Think about selling something you can do without and about how you can save on gas, utility charges, etc.

Step #3.
You can resort to credit counseling services. Such organizations promise to reduce your credit card debt for a fixed price. However, you can manage your debt on your own better. No one but you knows your financial standing and possibilities. But you can find a nonprofit organization with a good reputation.

Now let’s move on to your debt.

Most probably, a large portion of what you owe to creditors is more the result of the snowballing effect of credit card late fees, default rates and overdraft fees, than the actual amount of your purchase charges. There is a chance that lenders will agree to waive some of the fees.

After you negotiate the best conditions for eliminating your debt, start paying off the card with the highest interest. This can be some of your reward credit cards. As for other plastics, keep making just minimum credit card payments on them. Pay off card after card sticking to the principle of cards with the highest APR are first. If you have two cards with equal interests, pay down the plastic with the smallest balance. This way you will reduce the total amount of money you are to pay that month.

If you think that you can mess up all those indebted credit cards of yours, you can consider getting a balance transfer card and consolidate all your debts on it. Interest-free period will be of great help in your debt-relief process.

You can also think about taking a personal loan to get rid of your debts. Perhaps one of your friends or family members will help you. You can agree on paying some nominal interest to him or her. This will make paying down your credit card debts easier and faster.

What else to add?.. Well, I will quote the words of Richard Gere’s character from “Runaway Bride”: “I guarantee there’ll be tough times. I guarantee that at some point you are gonna want to get out of this. But I also guarantee…” that when you are though with paying down all your debts, you will feel a great relief.

When people decide to start their own family, especially if they are young, most tend to think that they are tying the knot with the tongue not to be undone with the teeth. Standing at the altar exchanging wedding vows very few couples think about marital agreement. Husband-and-wife-to-be hope their marriage will last till death do them apart.

And of course, an overwhelming majority of the just-marrieds do not even think about how divorce can affect their credits. However, if we take a closer look at the financial problems caused by divorce, credit score drop will definitely be in the top 5.

So, how come former spouses can face bad credit just for the reason they have split?

Joint credit card accounts and loans are the stumbling block. When you file for divorce, no matter what decision concerning your finances the court announces, it will make no difference to your credit issuers. They will keep charging you the same fees and rates.

There can be two possible scenarios after divorce. And it is hard to say which one is the best-case and which one is the worst. It is either you or your ex-spouse become responsible for your former loan or credit cards. Generally, the total amount of the money borrowed is split between the divorcing spouses, depending on the individual income of every spouse.

On the one hand, if you are obliged to pay off the outstanding balance on your joint credit cards, it implies extra payments to make. If your ex-better half is awarded this “pleasure” of paying down your joint debt, this might seem much more acceptable and convenient to you. But here is where the root of all your credit score evils hides. Once your ex-wife or ex-husband fails to pay on time or misses a payment, it will affect your both credit histories. Both of the credit reports will indicate the missed or overdue payment. That is how your good credit can go bad. And if your ex never had a reputation of a diligent credit card holder, say hello to bad credit cards.

What can be done about that?

Well, most of the divorces do not come out of the blue. So, before all the divorce proceedings you should better first settle all financial issues with your spouse. Actually, it is better for both of you to have your individual credit histories and keep them fresh, as well as have separate bank accounts, cell phones, credit cards, etc. in your own name. But it is quite natural that when it comes to some big purchases or loans, you apply jointly. A car loan or a mortgage can require both incomes to qualify.

If you realize that your marriage stands no chances to be saved and you consider divorce as the only option, you should establish credit history in your own names before you file for a divorce. Though you will have to start afresh by applying for a secured or a prepaid card, it will be better for your financial standing.

Convert all joint accounts into individual account. This will make the matrimonial suit in the divorce court pass without serious complications associated with dividing financial responsibilities. Concentrate on splitting credit card accounts first, as credit consumers tend to miss their monthly payments on plastics more often than on secured loans.

With separate credit histories and credit card accounts you can undo the teeth, cast off the marriage chains and start writing a new page of your life.

You know that people with good and excellent credit are eligible for the best credit card deals with low interests and great rewards. While customers with a credit that needs some improvement or those with no credit sometimes have to bend over backwards to qualify for a credit card with a decent interest rate and a moderate annual fee.

This is fair to some extent. No doubt that people with good credit history didn’t get it like manna from heaven. They have worked hard to build a strong credit. And the banks’ policy is also quite clear. They prefer to deal with loyal, prosperous and creditworthy customers with good credit. Such clients roll in lenders’ good graces.

As for bad or no credit owners, credit card issuers are not so merciful and generous. People who can qualify for poor credit cards only are a bad risk for creditors. And credit issuers need to make up for this risk somehow. High fees and rates are a good compensation. It is just one of the credit card market’s laws. Creditors make profit from their customers. But why then the unbeneficial for lenders 0% APR credit cards exist? Where is the profit?

I’ll start with a short flashback. In 2002, 2003 when the Fed rates were the lowest, many credit card issuers offered 0% interest cards to different customers. The qualifying standards were not that stern as they are now. But even back then the question “How do creditors profit from this type of deals?” lingered on card holders’ minds. The scheme is pretty simple, in fact.

Creditors have enough of other sources of revenue to compensate for the side effects of issuing low interest credit cards.

Annual Fees
Five years ago most 0% APR credit card owners had to pay an annual fee for the privilege of using such a plastic. The fee ranged from $15 to $20, as a rule. These days, however, most 0% intro interest deals are not applied an annual fee.

Late Fees
You can benefit of your credit card with 0% APR till you are accurate with your monthly credit card payments. Once you are late with your payment, a creditor imposes a late payment fee, usually from $19 to $39.

Default Rate
It is not even the late payment fee itself that can shake your financial standing, but it is the default rate that can be triggered by being late with paying your monthly bills. Learn punctuality with your credit card payments, otherwise, kiss a good-bye to your 0% rate and welcome new doubled interests on both, existing balances and new charges.

So, annual and penalty fees, as well as default rates – that is how credit card companies make up for the unprofitability of the 0% APR credit card deals. But now that the Fed rates went up, as compared to those of 2002 rates, it became more difficult to find a good low interest offer with favorable terms. But once you find one and get approved, hold it, don’t drop it, for low interest deals are really great and can actually save you money.

Here are another three types of financial personalities, in one of which you might recognize yourself.

Financial Personality #4: The Experienced

Your Traits: You manage your credit cards in that responsible, confident way that is characteristic of people with sober mind, organized and business-like. You have your budget planned out, and keep your finances under control. You make your credit card payments on time and you have good or excellent credit.

What Credit Cards to Look for:You should get reward credit cards with some special rewards programs. Rewards that you can really enjoy. It can be an airmiles rewards card that gives you a chance to redeem your miles for an exotic vacation trip, or a card that will grant you a gift certificate to visit your favorite restaurant, or a deal that will enable you to contribute money to your favorite charity fund.

Beware of: With your stainless credit report and your talent to manage your credit cards flawlessly you can choose any credit card offers you like. You can make reasonable profit of any card deal. Until you are guided by common sense, you will avoid even the most intricate hidden pitfalls.

Financial Personality #5: The Avoider

Your Traits: Finances is not your strong point. You do not really like to discuss economic situation in the world, and you get panic-stricken when it comes to opening your credit card bills and analyzing your personal finances. You might be an artist, a creative person that does not really care for material values.

What Credit Cards to Look for: If you get suddenly concerned with your money matters and decide to choose a credit card to get finances together, you are going to need a plastic that will claim your attention to your finances. Find a card that will encourage and stimulate you to open, first, and then pay your bills on time. There are credit cards that reward you for making several monthly payments on time in a row. You can also go with an issuer that will not penalize you for late payment and will not report it to credit bureaus, so your credit score will not get hurt. In general look for low interest credit cards, no annual fee offers, cash back credit cards.

Beware of: Credit cards with high credit limit. You need strict limits on the amount of money you can spend, otherwise, you can find yourself in a debtor’s prison with a destroyed credit score. Point rewards credit cards are no option for you as well. You risk forgetting to redeem your points, or the date they expire, or something else.

Financial Personality #6: The Better Person

Your Traits: Maybe you are not as perfect as Mr. Experienced and you make financial missteps once in a while. Or maybe you had some credit problems in the past when you were young, or after you lost your job, or fell seriously ill. But you learn quickly. You still carry a pretty large balance, but you are working hard to regain your financial freedom. You are writing a new page of your financial life.

What Credit Cards to Look for: The solution is right on the surface. You should get a balance transfer card with 0% intro APR. Find a deal that offers you the longest interest-free period possible. Do not let the balance transfer fees slip your attention. You can transfer your total credit card debt and start paying it down at 0 interest. But if you feel that you will not handle eliminating debt within the promotional period, you can transfer a part of your debt you are sure to pay off.

Beware of: Do not give in to the temptation of spending much money. Rewards credit cards and high limits are contraindicated to you. Every time you take out your plastic you should be focused on the fact that you are trying to eliminate your debt. And I guess, a new waffle iron or a gift card for the extra $100 spent will not make you closer to your goal.

So, these are the basic types of credit personalities. Even if you have not recognized yourself in any of them, you may have found some similar traits.

You have, probably, tested yourself answering a couple of psychological quizzes to find out what kind of person you are, what character you have, what psychological type you belong to, etc. But have you ever thought about getting to know what financial personality you have? I have found an interesting research on different types of financial characters.
Keep reading and you will learn something new about yourself and your spending habits. I was quite surprised. It’s fun, besides, you will find some useful information below, like recommendations on credit card choice and management for every type of financial personality.

Financial Personality #1: The Big Spender/The Diva

Your traits: You are a hard-working person, maybe even a workaholic to some extent. You earn good money, and you are aware of your worth. You can pamper yourself with the latest technological devices or a new expensive garment in your wardrobe. You are prone to impulse buying. And this can get you into financial trouble.

What Credit Cards to Look for: Consider getting a credit card that will not cost you a fortune once you go too far with your purchases. If you get a low interest credit card or no annual fee card, your occasional bad buying decisions will not burn a hole in your pocket. For the rates and fees on such cards are more that moderate.

Beware of: Reward credit cards. This type of cards will be an extra psychological temptation for you to overspend. You can easily get involved into the “spend more money – collect more points” game.

Financial Personality #2: The Futurist

Your traits: You do not live for the day. You always think about tomorrow. You do not overindulge yourself in short-term pleasures. Look before you leap – is your life credo. You think twice before making large purchases and you have some savings for a rainy day. You keep your finances under control.

What Credit Cards to Look for: Reward credit cards that pay dividends into your future, or the future of your kids. Consider getting plastics with rewards that contribute to your IRA or to 529 college savings plan for your kid’s future tuition fee, or credit cards that will help you to pay down your mortgage principal. After all, you can just get a cash back credit card and decide how to spend (or what investment to make) the rebates you will get.

Beware of: Since you are a very responsible credit card user, you do not have to pursue low interest credit cards. You have very little chance to slip up. Once you are the one with wise and diligent credit personality, make your credit card payments on time and in full, you just have to get something in return from your creditor for you good financial behavior.

Financial Personality #3: The Newbie

Your traits: You have just flown away from your parents’ nest and you are learning to live on your own. Your credit experience is just like an unfledged little bird. You are just beginning to feel the taste of the real adult life. You are busy with your new job, studies, a new place you live in. So, you are not too much into checking your credit report, making calculations on your expenses, and other activities associated with financial management.

What Credit Cards to Look for: Get a prepaid card. It will teach you the basics of credit card management and will not let you to overspend. A credit card with low APR and low credit limit is another good option for young people. College students can also apply for a student credit card. This type of card has been designed to meet students’ specific needs.

Beware of: Avoid credit cards with high credit limits, high annual fees and interest rates. Once you make a financial misstep (which can easily happen due to the lack of experience), such plastics will put you off the rails.

To be continued…