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What Is a Maxed Out Credit Card? | Credit Card News & Advice

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Your credit limit isn’t a guideline or a suggestion. It’s an absolute amount that you shouldn’t exceed. In fact, you shouldn’t be anywhere close to that amount.

But what if you are bumping up against your credit limit? This is a state of affairs that’s commonly called having a “maxed out credit card.”

When Is a Credit Card Maxed Out?

A maxed out credit card is when you’ve reached – or even tried to exceed – your credit limit. An example explains this pretty quickly.

Let’s say you have a $3,000 credit limit on your credit card. And your balance is $3,000. That’s maxing out your credit card. If you aren’t careful and miss a payment, your finance charges could push your balance beyond $3,000, which also creates new headaches, like fees. So, at the very least make your minimum payment and make it on time.

Listen, gazing at the balance of your maxed out credit card for the first time can be a terrible shock. I know because I’ve experienced that moment. It isn’t pretty.

But I survived it and got out of debt. And with persistence and a debt-reduction plan, you can, too.

What to Do When You Max Out Your Credit Cards

Basically, you have two problems right now. First, you have credit card debt, and that’s stressful. Second, there’s likely been damage to your credit score.

The most pressing issue is the compound interest that’s racking up on your balance each month, so let’s tackle that first. Then, I’ll explain why you shouldn’t obsess over your credit score while you’re going through this.

Step 1: Embrace Reality (Not As Hard As You Think)

It takes courage to stare down your debt and admit that you’re in credit trouble. Whether you’re in debt due to impulsive buys or as the result of a divorce, illness or unemployment, the steps back to financial freedom are similar.

This is also a good time to think about how you got into debt. If it’s a medical crisis, I feel for you. That one’s tough, but you still have to deal with the financial fallout. Call your card issuer and explain your situation. You might be able to get relief, such as skipping a monthly payment or getting a lower annual percentage rate.

If you maxed out a credit card because you’re a shopaholic, then you need to look at why you’re overspending. Reckless spending often points to an emotional issue you need to address.

Whatever the reason, if you haven’t been monitoring your credit card account or tracking your expenses, then you’ve been using a credit card like it’s a free pass at Disney World. There’s a simple solution for this problem.

Step 2: Stop Using All Credit Cards

Even if you have low balances on other credit cards, don’t use them again until you’re out of debt. If you’re using your credit cards to survive month to month, then consider talking to a credit counselor. Start your search with the National Foundation for Credit Counseling. Act now before it gets worse.

Oddly, you might have the urge to get a new credit card during the early stages of paying off the balance. Resist the impulse to get a new credit card with a shiny new credit limit. The hard inquiry on your credit will take points off your credit score, but more importantly, you might overspend with a new card.

You can’t hit a moving target, so don’t add to your debt. Are you with me? OK, now it’s time to make sure you have the tools to pull this off.

Step 3: Set Yourself Up for Success

There are some basics when it comes to managing your money, and I call this your “personal finance foundation.”

I call it this because, to me, it feels like the foundation of a house. You can’t build a house on a shaky foundation. In personal finance, a shaky foundation leads to all kinds of problems, including debt. A solid foundation involves having a budget, tracking your spending and paying all of your bills on time.

This isn’t as daunting as you might think. There are lots of free apps and personal finance websites to choose from. Pick one you feel comfortable with. Then, enter your budget numbers and start monitoring where your money goes.

Step 4: Slash Your Budget to Smithereens

All right, now you’re on the move. Whether you have maxed out only one card or five, you have to pay more than the minimum payment on your credit card balance to make progress.

Decide what’s essential to your happiness and what’s more of a “want” than a “need.” Be ruthless. You’re going to take the money you save from the cuts and add it to the minimum payment of your target credit card, which we will identify in Step 5.

If it helps, remember that this is a temporary situation. You’ll have the freedom to choose how you spend your money when you’re out of debt. When I cut expenses to pay off my debt, I gave up a ridiculously expensive health club membership and started working out at a local gym.

After I got out of debt, I actually stuck with the cheaper option. So, your budget cuts can be temporary, or you might learn that your priorities have changed when it comes to really living within your means.

And don’t take away everything you love. If you look forward to your latte, keep your latte. But you’re going to have to cut something else in the budget to pay for it.

Step 5: Decide Your Game Plan

If you still have an excellent credit score, a balance transfer credit card is a good option. You’ll get a 0% APR for a period of time, usually about 12 to 18 months.

This gives you a chance to pay off – or at least pay down – the balance during an interest-free period. The trick is to figure out what your monthly payment has to be so you have a zero balance before your new APR kicks in.

If your score isn’t high enough for a balance transfer credit card, then consider getting a debt consolidation loan or just choosing a debt-reduction strategy on your own.

If you decide you need to pay it down on your own, there are a few good options. If it’s only one card, then it’s easy. That’s what you focus on. But if it’s more than one card, then make a list with the following information: name of the card, the balance and the APR.

Do you get excited about saving money? Then consider the debt avalanche method. List the cards from the highest APR down to the lowest. The card at the top of the list is your target credit card. This way, you tackle the card that’s charging you the most interest.

On your target card, pay more than the minimum payment. Remember the money you saved from Step 4? Now’s the time to apply your budget savings to the monthly payment of your target credit card. On your other cards, just keep paying the monthly minimums.

If you’ll get more of a rush from paying off a card quickly, then choose the debt snowball method. On your list, rank your credit card balances from the smallest debt to the largest amount. You target the smallest one first and get a sense of accomplishment more quickly. Note that you’ll pay more interest this way.

When I got out of credit card debt, I combined the methods to create my own strategy: the debt blizzard. I paid off my smallest balance first (snowball) and then switched to paying off the card with the highest APR (avalanche). Best of both worlds.

Step 6: Don’t Obsess About Your Credit Score

Every month, as your balance gets smaller, your score will get higher. A bad credit score is just a temporary side effect of maxing out your credit card.

Here’s why: The credit utilization ratio is the amount of credit you’ve used compared with the amount of credit you have available. The FICO score factors in your utilization ratio in two ways. It includes the ratio across all of your cards, but it also looks at the ratio for each individual card.

So, if you have a maxed-out credit card, your utilization ratio shoots up. When your ratio goes above 30%, it usually decreases your score. But if you want to improve your score more quickly, keep your ratio under 10%.

You can keep track of your score by signing up for a free educational credit score from one of the major websites that offer this. Or even better, if your card issuer gives you a free credit score (and some of these are actual FICO scores), pay attention to the number.

But don’t waste time having angst over it. As long as you’re sticking to your debt-reduction plan, your score will look better every month.

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Possible Raises Series B and Moves Fully Remote | State

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SEATLLE, Oct. 20, 2020 /PRNewswire/ — Possible raises $11 million in new equity funding to expand the team and to provide additional products for its customers. Union Square Ventures led the round, with participation from existing investors Canvas Ventures, Unlock Venture Partners, Columbia Pacific Advisors, Union Bay Partners, Tom Williams, and FJ Labs. The company has also secured $80 million in new debt financing from Park Cities Advisors.

Furthermore, the company is now fully remote and recently onboarded software engineers from across the US and the globe. Possible is committed to distributed work and actively recruiting for a number of other remote roles.

Possible provides friendly access to capital and a simple way to build credit for people who otherwise would get a payday loan or get hit with a bank overdraft fee. The company uses real-time financial data, rather than a credit score, to qualify customers and provide funds instantly through its iTunes and Android apps. Unlike payday loans or overdraft fees, Possible loans are paid back in small installments over multiple pay periods to allow customers to catch their breath. By reporting on-time payments to the credit bureaus, Possible enables its customers to build credit history and eventually qualify for cheaper, longer term financial products. On average, customers with low credit scores see their scores increase by 70 points within 4 months.

Tony Huang, Possible’s CEO explains, “So many people who live paycheck to paycheck can’t afford to build credit history. We’re helping them do it for the first time while providing them with a friendlier and more affordable small-dollar loan.”

Since launching in June 2018, Possible’s given out loans to hundreds of thousands of customers, helping meet short-term cash needs while building credit history or establishing credit for the first time. These customers, often with bad credit or no credit history, are underserved by traditional banks. Possible fills that gap and provides financial access to those who need it most while giving them the means to climb their way out.

Gillian Munson, Partner at Union Square Ventures, explains the thesis behind their new investment, “Through tech innovation, data-driven insights, and a focus on the customer, Possible is well on its way to winning the hearts and minds of both consumers and regulators alike, and building a trusted brand that endures.”

A 2019 Experian study shows 34.8% of consumers are subprime and can’t access money when they need it. They pay $106 billion in punitive fees each year to the existing financial system for short-term credit products. These consumers are trapped in predatory debt cycles of payday loans and overdraft fees without the means to rebuild their credit or improve their financial health. While there has been a number of new tech-enabled products in this space, most lead to similar debt cycles and don’t address the harder issue of improving long-term financial health. That’s where Possible comes in.

Since the company is now fully remote, Possible is actively hiring talent across the globe. Tyler, Possible’s CTO, explains, “Being fully distributed allows us to access the talent pool of the entire world. Our success so far is a reflection of the quality of our people, and we believe hiring globally will allow us to find exceptional people to join us in achieving our mission.”

About Possible

Possible is a fintech company based in Seattle, Washington. The company provides a friendlier and easier way for customers to access capital while also building credit history and improving long-term financial health.

About Union Square Ventures

Union Square Ventures is a thesis-driven venture capital firm based in New York City. USV manages over $1 billion in capital across seven funds and focuses investments in portfolio companies with the potential to transform important markets.

About Park Cities Advisors LLC

Park Cities Advisors LLC (“PCA”) is a privately held, SEC-registered alternative credit manager based in Dallas, Texas. PCA is focused on private lending across the specialty finance and FinTech sectors and provides debt capital to companies across a variety of industries through asset-based financing transactions.

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Possible Raises Series B and Moves Fully Remote | State News

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SEATLLE, Oct. 20, 2020 /PRNewswire/ — Possible raises $11 million in new equity funding to expand the team and to provide additional products for its customers. Union Square Ventures led the round, with participation from existing investors Canvas Ventures, Unlock Venture Partners, Columbia Pacific Advisors, Union Bay Partners, Tom Williams, and FJ Labs. The company has also secured $80 million in new debt financing from Park Cities Advisors.

Furthermore, the company is now fully remote and recently onboarded software engineers from across the US and the globe. Possible is committed to distributed work and actively recruiting for a number of other remote roles.

Possible provides friendly access to capital and a simple way to build credit for people who otherwise would get a payday loan or get hit with a bank overdraft fee. The company uses real-time financial data, rather than a credit score, to qualify customers and provide funds instantly through its iTunes and Android apps. Unlike payday loans or overdraft fees, Possible loans are paid back in small installments over multiple pay periods to allow customers to catch their breath. By reporting on-time payments to the credit bureaus, Possible enables its customers to build credit history and eventually qualify for cheaper, longer term financial products. On average, customers with low credit scores see their scores increase by 70 points within 4 months.

Tony Huang, Possible’s CEO explains, “So many people who live paycheck to paycheck can’t afford to build credit history. We’re helping them do it for the first time while providing them with a friendlier and more affordable small-dollar loan.”

Since launching in June 2018, Possible’s given out loans to hundreds of thousands of customers, helping meet short-term cash needs while building credit history or establishing credit for the first time. These customers, often with bad credit or no credit history, are underserved by traditional banks. Possible fills that gap and provides financial access to those who need it most while giving them the means to climb their way out.

Gillian Munson, Partner at Union Square Ventures, explains the thesis behind their new investment, “Through tech innovation, data-driven insights, and a focus on the customer, Possible is well on its way to winning the hearts and minds of both consumers and regulators alike, and building a trusted brand that endures.”

A 2019 Experian study shows 34.8% of consumers are subprime and can’t access money when they need it. They pay $106 billion in punitive fees each year to the existing financial system for short-term credit products. These consumers are trapped in predatory debt cycles of payday loans and overdraft fees without the means to rebuild their credit or improve their financial health. While there has been a number of new tech-enabled products in this space, most lead to similar debt cycles and don’t address the harder issue of improving long-term financial health. That’s where Possible comes in.

Since the company is now fully remote, Possible is actively hiring talent across the globe. Tyler, Possible’s CTO, explains, “Being fully distributed allows us to access the talent pool of the entire world. Our success so far is a reflection of the quality of our people, and we believe hiring globally will allow us to find exceptional people to join us in achieving our mission.”

About Possible

Possible is a fintech company based in Seattle, Washington. The company provides a friendlier and easier way for customers to access capital while also building credit history and improving long-term financial health.

About Union Square Ventures

Union Square Ventures is a thesis-driven venture capital firm based in New York City. USV manages over $1 billion in capital across seven funds and focuses investments in portfolio companies with the potential to transform important markets.

About Park Cities Advisors LLC

Park Cities Advisors LLC (“PCA”) is a privately held, SEC-registered alternative credit manager based in Dallas, Texas. PCA is focused on private lending across the specialty finance and FinTech sectors and provides debt capital to companies across a variety of industries through asset-based financing transactions.



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Business Loans – Make The Right Choice!

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Your business needs funding and there’s no denying that! ‘You need money to make money’ and this is most applicable in the business world! While it is fairly easy to start with an awesome idea, to make a business profitable, you need to invest a good chunk of capital.

Whether to buy equipment or hire the right minds, you need capital! And the best way to go about it is to search for the ‘right’ business loan solution. Finding the ‘right’ one amongst the plethora of available options is a tricky decision.

You’ll be under stress to match the repayment frequency. And thus, your business will suffer. Hence, finalizing the right business financing solution after analyzing your business structure, repayment terms, cash-flow, and urgency is the best practice.

Here’s a detailed breakdown of which business financing solution or small business loan will help your business better!

1. For Real Estate – SBA

SBA loan is one of the most popular loans for small business owners. This is pretty straightforward to understand but involves extensive paperwork. If you need a place to kickstart your business, this is most suited for you.

It is issued by a private lending party or a bank. But the interesting part is that this loan can be guaranteed up to 85% by the federal agency—Small Business Administration (SBA). Hence, lending institutions are free and content to give the loan.

The best things about this loan are the lowest down payments and low-interest rates. If you wish to pay in the very long term, you can do so. An SBA loan involves a lot of flexibility. The condition being you should have the right financial service provider to guide you.

2. For An Equipment Or Any One-Off Loan – Equipment Financing, Term Loan

Do you need a new computer, or a tablet for your employee, or maybe a vehicle for your business’ delivery needs? Equipment financing is best suited for such kinds of needs. You can also get up to 100% financing solutions.

But there is one drawback that you should be aware of. As long as the repayments are done on time, you’ll continue to have access to the equipment. But the moment you fail short of your commitment, the lending institution has completed control over ceasing it.

A business term loan is another solution for this kind of requirement. Term loans are based on the ‘term’ that can be anywhere from 1 to 5 years. So, the repayment has to be made in that time-frame. If you’re looking for business loans in Edgewater, NJ, this will be just about right for you!

3. Need To Balance Cash Flow – Business Line of Credit

Business Line of Credit is the best financing solution that can help you with balancing your cash flow or handling any emergencies.

You get access to a limited amount of funds for a set period of time that you need to pay with interest and as soon as you pay it back, your specific balance sheet is turned back to ‘0’. This indicates that you’re again eligible for using that fund.

You can do it repetitively. There is no drawback to this mechanism. So every time you have an emergency fund need, you can look towards the business line of credit.

The only shortcoming of this system is that the interest rate is high and may require collaterals for approval. However, it is one of the most appealing choices if you need capital and have a bad credit score!

4. Credit Card Based Businesses – Merchant Cash Advance

Do you own a business that involves payments via credit cards? If yes, then the merchant cash advance is the right solution for you.

A business like retail or food chain that makes use of credit card transactions the most, can utilize merchant cash advance to boost its business. The way this financing system works is, the lender will enquire about your daily credit card transactions to the terminal provider and get your exact details. Then, he will compare it with the asked amount. If both are in accordance, you’ll become eligible for the advance.

The repayment term is interesting for this financing solution. Instead of getting a fixed rate, the advance provider will give you the figure in percentage. So every day if you make $1000 and the decided percentage is 5, then $50 will be ‘withheld’.

A merchant cash advance acts more like an investment than a loan!

5. Have No Collateral – Invoice Financing, Equipment Financing

Not all businesses have the luxury of putting collateral on the line and getting access to the desired fund. If you fall into the same category, you do not need to worry! Invoice financing can help you out even in this crunch situation.

Your account receivables serve as collateral in this financing solution and can help you get a loan up to 85% of its worth.

The only downside is the interest rate that is marginally higher than the traditional solutions.

Bonus: For A Small Duration – Short Term Loan

What if you need a loan just for 18 months? You have some debt or need to manage the cash flow, but your requirement is small. Which loan is right for you?

Well, you can opt for a short term loan. This loan gives you instant access to a lump sum of money that should be paid within the next 18 months.

The best part about this loan is that bad credit doesn’t bother the process!

This can also support businesses that need temporary loans to manage or settle a few things. Businesses that do not need some loan that lasts for years!

But just like all other financing solutions, this loan as well comes with a few drawbacks.

The first one being the annual cost will be slightly towards the higher side and the second being that a few businesses may find it hard to cope-up with the weekly payments.

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