How Easily Money Can Be Sucked Out of Your Pocket: An example

There are so many ways for financial institutions to suck the money right out of your pocket and leave you deeper in debt. Today, I received a letter from a credit card company stating: "Our records show that the balance on your account exceeds your agreed credit limit. Due to this we believe your current credit limit may be insufficient for your needs. To discuss a credit limit increase please call xxxx." This particular credit card was used to make three purchases this month. I used it because it has a 0% interest rate. I always pay my credit card balances off at the end of each month, unless of course, I can make more money from the money borrowed than the interest charged. However, with this card, I had "taken my eye off the ball" so to speak. I didn't realise the third charge I had made to the card would take me over my credit limited by £248.00 When I used the card to make the payment I (naively) assumed the card would be rejected if there were insufficient funds in the account. Obviously, I was wrong! It had charged my card, hence this letter. I contacted the company concerned to find out how this could have occurred. I took out this credit card because I believed the company had ethical values and I certainly would have thought such a payment would have been refused. The response from the company was:"Because you have such a good credit history we automatically allow payments to go through even if it takes you over the agreed limit." It sounded like they had done me a favour - but that's not the case. 1. I lost my 0% interest rate - so I had to pay the whole balance off in one to avoid interest. Now if I was like some people, and didn't have the cash to pay this debt, I would also have been clobbered with extra interest each month and lost my 0% interest rate. 2. I also received a hefty "over the limit" fee. Some favour eh?In hindsight it is, of course, my own fault for making assumptions. So, some action for you to take: Learn from my mistake! Make sure you stay on top of your credit card transactions so you don't make the mistake I did. The main reason for this is that if you do not have the cash to pay the full balance off, you may end up paying higher rates of interest. It's so easy to get caught out and end up paying hefty fees and interest - ultimately building up more debt than you really want to... or worse, more debt than you can afford.

Debt Consolidation - When it might be right for you

I’m often asked by Financial advisors if I am “anti-” debt consolidation loans. The answer is simple - No I am not.
What I am opposed to is debt consolidation loans that do not resolve financial issues.
You see, many people will consolidate their loans and simply HOPE that will mean they get out of debt and become debt free forever. As much as that might be a great fairy tale ending, the stark truth is different.

My research shows that most people (89%) who take out a debt consolidation loan end up back in the same situation within a few years.
Nowadays though, some loans are payable over many years - as much as 30 years. That's just like having another mortgage!

Debt Consolidation loans have their place, just like many other credit facilitities. However you should know when they are right and when they are not - so make sure you seek the opinion of more than one advisor. I would recommend talking to at least three, so you get a good objective perspective on things. Also seek advice from the National Debt Line and The Citizens Advice Bureau.