Should You Consider Credit Card Consolidation?

If you have multiple credit cards and multiple interest rates, you may be wondering if consolidating credit cards could help you, or would hurt you in the end.  While there isn’t a right or wrong answer for your individual situation, here are some things you should think about when considering credit card consolidation.

Will It Make It Easier?

Many people look to credit card consolidation because having one credit card payment instead of multiple tends to be a lot easier from a bill paying and money management perspective.  Most financial pundits don’t recommend that people have more than 3 credit cards, because it can get really difficult to manage your spending across so many cards.  Then, the logistics of paying each of those bills can be challenging as well.

Will It Make It Cheaper?

Consolidating your credit cards can also make it cheaper to pay them off.  Many credit card companies offer 0% or low APR balance transfers for a set period of time.  If you have multiple high interest rate credit cards (say 19.99%), transferring to a lower interest rate card will save you on interest each month.  Then, if you do that for multiple cards at a high interest rate, you can really save a lot of money.  That is where credit card consolidation can really help you get out of debt faster.

Can You Qualify?  

The biggest question when it comes to consolidating your credit cards is if you apply for a credit card, will you be approved?  If you have a lot of credit card debt and haven’t really been responsible with it, it could be difficult to get a new credit card to consolidate all your other cards onto.  In order to qualify for the best interest rates (especially the 0% APR balance transfer rates), you typically need to have excellent credit.  To get excellent credit, you need to pay all your bills on time, including your multiple credit cards.  You also need to show the ability to pay off future debt, since the credit card company will not know you are looking to consolidate.

An Introduction to Critical Illness Cover

Whilst scientists have made great steps in recent decades improving length and quality of life, as people are living longer so they are more prone to develop what is know as a ‘critical illness.’ Such illnesses can incur significant secondary treatment costs, require improvements or amendments to housing, and include costs for care.

They also can result in the main earner from a house suddenly finding themselves unable to work. Legal and general critical illness cover, and similar policies, are designed to protect against all of these eventualities, allowing the policy holder to concentrate on the most important thing: recovering their health, without having to worry about the financial implications of their condition.

How Does It Work

Critical illness cover works like any other form of insurance, at least initially. You pay a set amount depending on your underlying health and habits when the policy is taken out. In return you receive a lump sum, or regular payouts in the event of you developing a critical illness. With most policies these payments will continue for the rest of your life, although some will have set time spans, so if you’re considering getting such a policy, make sure you check.

What Is Covered

The UK market is extremely well-regulated when it comes to critical illness cover, and the Association for British Insurers has a list of illnesses and a code of best practice when it comes to the selling and provision of critical illness cover. The list of covered illnesses is constantly being reconsidered depending on medical advances in the treatment of certain diseases. Additionally, each provider will cover for a different number of these illnesses, with some policies paying out a different amount of the value of the policy for the severity of the condition.

The original four illnesses that were covered by CIC were heart attack, heart bypass, cancer and stroke, and these remain the most common illnesses.

How Is Diagnosis Agreed

This varies slightly from provider to provider, but in general most companies will require the agreement of at least two independent medical experts. In some cases companies will have a list of doctors that they know and trust, so you may need to get an assessment from one such expert.

How Are Premiums Calculated

Exactly like life insurance premiums. At the time of taking out the policy you will have a full and comprehensive assessment of your lifestyle, people who are active, don’t drink much and don’t smoke will have to pay less for their premiums than someone with a sedentary lifestyle who smokes a lot.

Is It Worth It?

Ultimately, that decision is up to you, however, if you’re still in full-time work and/or have a dependent family, then it’s very important, perhaps more so than life insurance. Obviously, individual circumstances vary, but it’s certainly worth considering carefully.


A Few Ways to Save Money Around the House…

Now is a great time to think about saving money around the house.  And believe me, there are a ton of different ways to do it – from small projects, to quick phone calls, to huge undertakings that will take a lot of time.   No matter how big or small your ambitions are, here are some great ways to save money around the house.

Small Projects

The first thing you should think about when looking to save money around the house are small projects you can do to save some money.  For example, you could turn down the temperature setting on your hot water heater, and save on your energy bill.  Or, you can switch your old light bulbs for CFL bulbs to save money on your electricity bill each month.

Another thing to consider is weather-proofing your home, especially before the cold weather comes in the fall.  By keeping the warm air in, you can further reduce your energy costs.

Quick Calls

Another way to save money is to make some quick phone calls and see if you can lower your bills.  For example, if you haven’t looked at your insurance policy in a while, it may be a good idea to see if switching can save you money.  For example, you could call a competing company like Castle Cover home insurance and see if they can give you a better rate than what you’re currently paying.  A short phone call could save you hundreds.

Also, you can apply the same tactic to your utility companies as well, and see if they have any better rates or promotions they can give you.

Big Ideas

Finally, there are always big ideas that can help you save money.  For example, you could consider getting solar panels for your home.  Not only could you possibly eliminate your entire electric bill, in some cases you could sell back your excess electricity to the grid and get paid for it.  That could make it worth the big expense of investing in solar panels.

Avoid These Investments that Don’t Keep Pace with Inflation

Investing for retirement is nothing more than a race, and your pursuer is inflation. If you stash your savings in anything that inflation can catch, you’ll only be wasting your money.

Inflation is the word people working at the Fed (with intelligent sounding titles, like “chairman”) use in place of the phrase “rising prices.” Inflation is the realization that as time goes on, things get more expensive. Hop in your time machine and go back 10 years. You’d find that gas was nearly a dollar per gallon, movie tickets were almost half what they currently are and property taxes were still outrageously high, but slightly less so than today.

(Of course, if you’ve recently thought about refinancing your home, you know that deflation is just as much a concern as inflation. But will save that for another time… :))

Why Do Savers Need to Worry About the Pace of Inflation?

Most people think savings is the opposite of spending, but this analogy isn’t really accurate. Savings is just delayed spending.

Savings Account

Photo by jonathansin

Think about savings and inflation this way. You golf every week for $22. Then one day decide that you’d rather quit golfing, save the weekly $22 for 30 years so that you can golf for 30 years after you retire. You are diligent and stash away the weekly $22 for the next 30 years, right up until retirement. The first day of being work-free, you grab your old golf clubs and head to the links. Surprise, a round now costs $65 to play. Grabbing a calculator, you realize that instead of trading 1,560 rounds of golf in the past for 1,560 rounds of golf in the future, you traded 1,560 rounds in the past for 528 future rounds.

Would anyone disagree that 1,560 rounds is better than playing 528 rounds? This is exactly how savers get burned when they invest in instruments that don’t keep pace with inflation. Unfortunately, there are a number of ways people invest that lose to inflation.
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