The difference between good debt and bad debt

When you talk of debt the first thing that comes to mind is a credit card bill waiting to be paid or a mortgage, you never associate debt as being something good for you. But there are instances when debt can actually be good for you. This can be explained by categorizing debt as good debt and bad debt.

Bad debt

This is where you purchase consumables you cannot actually afford to purchase on credit. Credit card debt is the most common form of bad debt. You pay for an item over a period of time and the item does not appreciate in value with failure to pay affecting your credit score.

Good debt

This is where debt can be considered as an investment. If the money borrowed is invested on something that will appreciate in value over time the debt has been used for a purpose to increase your financial situation. For example a loan you invest in a business which will double the investment in a few years’ time.

As you can see if utilized properly a debt can earn money for you whereas if used improperly it can cause you many problems.

Posted By: Financial Resources 101

Why Accept Credit Cards For Business?

Anyone who is running a legit business knows that they should accept credit cards for business because it will bring thing a ton of customers. If you do not accept credit cards your business will not go far. However, this does not mean that you cannot accept other methods as well. But, it has been proven that people who accept credit cards acquire more customers than those who do not accept them.

Online merchant account services have been put into place so they can help you get started with accepting these types of payments.  Think about it many merchants accept alternative forms of payments even though most merchants have stopped accepting checks. But, still the more options that you have available for the customers to pay with the more people you will attract due to the fact that everyone has their own preferred payment methods that they like to use.

When customers decide which merchant they would like to shop with you may be rather surprised to know that a lot of their decisions are based on what payment methods they accept. If you do not allow credit card purchases to be made – and a variety of credit card options – you will find that you may have tons of visitors but not so many purchases.

Overall, when you are in the business of selling products and services it is important that you are flexible to meet your client’s needs. If you are not – especially with payment methods – you will find yourself not where you want to be with your business.

Is debt consolidation right for me?

If you’ve got several unsecured debts to several creditors, and you’d like the chance to make them easier to manage and/or lower your monthly expenditure, you may find a debt consolidation loan useful.

You can use a debt consolidation loan to repay all your existing unsecured debts – leaving you with just one debt to repay… to just one creditor.

You may wish to arrange to repay your loan over a longer period of time – which will reduce the amount you are spending each month (and hopefully lower your payments to a level you know you can comfortably afford).

Of course, a debt consolidation loan will only be right for you if you can afford to repay it (just like any other loan).
Let’s take a quick look at the benefits and drawbacks of a debt consolidation loan, so you can figure out whether one may be right for you.

Benefits

1. If you arrange to repay your loan over a longer timeframe, you’ll pay less on a month-by-month basis.
2. Consolidating your debts could help you avoid damaging your credit rating. This is because you’ll only have one payment to make each month, so your finances should be easier to manage and you’ll find it easier to make sure you leave enough money aside each month to cover your payment.
3. You could lower the interest rate you’re paying – if you’re consolidating debts with high interest rates, and your debt consolidation loan’s rate is lower than these.

Drawbacks

1. The amount of debt you are carrying won’t actually be reduced by a debt consolidation loan – you’ll owe just as much as you did before, although it should be a little easier to manage.
2. If you arrange to repay yur loan over a longer timeframe, you could pay more in interest (in the long run) than if you’d repaid your debts in a shorter timeframe. This is, of course, unless the interest rate on your consolidation loan is significantly lower.
3. Making smaller repayments each month will mean you could be in debt for a longer period of time.

Posted By: Mlava