It is ironic that the households that need to most money help are the ones who pay the most for it. Is it a flaw in the system or are these people targeted on purpose? No matter the case, the results remain the same. Households struggling with credit challenges end up paying more in the long-run despite some company’s attempts to lower their costs.
Bank accounts
No longer are the days when checking accounts are free. If you don’t keep a minimum balance within your account or set up direct deposit with your employer, you are subject to monthly management fees. These costs do not target the credit challenged, but most people with debt troubles will not have the surplus cash to maintain a high daily balance. Direct deposit is easy if your employer gives you that option.
Bank Loans
If you are trying to get approved for a bank loan, it would be to your benefit to make sure your credit score is good beforehand. A poor score could potentially get your application denied. If approved, the interest rate will be at the higher end of the scale. Higher rates will make that loan much more expensive to pay off in the end. If your credit score falls into a sub-prime category, take the time to improve it before you apply for the loan. You will save money in the end.
Credit Cards
The worse condition your credit score is in, the more you will pay in interest. Creditors have the right to hike your rate at any given moment with just cause and they send borrowers notice of said changes. Increased interest rates are often linked to: lowered credit scores, high credit utilization rates, late or missed payments and poor credit history. Once the rate goes up, it is very difficult to get it lowered. Lowering debt and cleaning up credit history takes time. In the meantime, the balance on your card is not charged a penalty interest rate.
Payday Advance Lenders
Direct payday advance lenders charge the same fee to all customers. There are no credit bureau checks to determine interest status. More often than not, these loans are used by credit challenged people so their budget is affected by the higher rates. Some lenders will apply higher interest to those who need additional time to pay the loan off. Understand the direct lender’s terms and conditions prior to applying to find the most reasonable service.
Utility Companies
Each company will have their own program, but there is lots of help offered to households with lower incomes. A utility company may request a security payment, based on the results of a credit check, before opening a new account for you but monthly utility charges are not affected by your credit. Some folks will struggle to obtain that extra cost to open an account. In fact, electric companies often have programs, based on income, to help lower your monthly bill. If household income qualifies you for the program, it is in your best interest to take them up on it. These programs are based on income not credit, but since many low-income households do struggle with credit challenges, the assistance programs help lower the budget’s monthly demand.
Work to improve your credit score for many reasons. You will soon see how better credit rankings will improve your overall finances. You could get the utility security deposit back, your, offers for lower rate credit cards to transfer higher balances and limit the need for payday advance loans to make it through to your next paycheck. Say good-by to unnecessary fees and penalty charges by lowering debt and improving money management. Your household budget will improve.
