Debt Account – 4 Walls And A View http://4wallsandaview.com/ Sun, 10 Oct 2021 05:19:22 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://4wallsandaview.com/wp-content/uploads/2021/06/icon-5.png Debt Account – 4 Walls And A View http://4wallsandaview.com/ 32 32 Here’s why BOC Aviation (HKG: 2588) is weighed down by debt https://4wallsandaview.com/heres-why-boc-aviation-hkg-2588-is-weighed-down-by-debt/ https://4wallsandaview.com/heres-why-boc-aviation-hkg-2588-is-weighed-down-by-debt/#respond Sun, 10 Oct 2021 00:22:19 +0000 https://4wallsandaview.com/heres-why-boc-aviation-hkg-2588-is-weighed-down-by-debt/ David Iben put it well when he said: “Volatility is not a risk we care about. What matters to us is to avoid the permanent loss of capital. ‘ It’s only natural to consider a company’s balance sheet when looking at its level of risk, as debt is often involved when a business collapses. Like […]]]>

David Iben put it well when he said: “Volatility is not a risk we care about. What matters to us is to avoid the permanent loss of capital. ‘ It’s only natural to consider a company’s balance sheet when looking at its level of risk, as debt is often involved when a business collapses. Like many other companies BOC Aviation Limited (HKG: 2588) uses debt. But does this debt worry shareholders?

Why Does Debt Bring Risk?

Generally speaking, debt only becomes a real problem when a company cannot repay it easily, either by raising capital or with its own cash flow. In the worst case scenario, a business can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that he must raise new equity at low cost, thereby diluting shareholders over the long term. Of course, many companies use debt to finance their growth without negative consequences. When we think of a business’s use of debt, we first look at cash flow and debt together.

See our latest review for BOC Aviation

What is BOC Aviation’s debt?

You can click on the graph below for historical figures, but it shows that as of June 2021, BOC Aviation had a debt of US $ 17.1 billion, an increase from US $ 16.2 billion. , over one year. On the other hand, it has $ 461.4 million in cash, resulting in net debt of around $ 16.7 billion.

SEHK: 2588 History of debt to equity October 10, 2021

How healthy is BOC Aviation’s balance sheet?

We can see from the most recent balance sheet that BOC Aviation had liabilities of US $ 1.96 billion maturing within one year and liabilities of US $ 16.9 billion maturing beyond that. . On the other hand, it had US $ 461.4 million in cash and US $ 267.3 million in receivables due within one year. As a result, its liabilities exceed the sum of its cash and (short-term) receivables by $ 18.2 billion.

This deficit casts a shadow over the $ 6.15 billion company like a towering colossus of mere mortals. We would therefore monitor its record closely, without a doubt. After all, BOC Aviation would likely need a major recapitalization if it were to pay its creditors today.

We measure a company’s debt load relative to its earning capacity by looking at its net debt divided by its earnings before interest, taxes, depreciation, and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT) covers its interest costs (interest coverage). The advantage of this approach is that we take into account both the absolute amount of debt (with net debt versus EBITDA) and the actual interest charges associated with this debt (with its coverage rate). interests).

With a net debt to EBITDA ratio of 17.2, it’s fair to say that BOC Aviation has a significant amount of debt. But the good news is that he enjoys a pretty comforting 2.6x interest coverage, which suggests he can meet his obligations responsibly. Fortunately, BOC Aviation has increased its EBIT by 9.6% over the past year, slowly reducing its debt to earnings. The balance sheet is clearly the area you need to focus on when analyzing debt. But ultimately, the company’s future profitability will decide whether BOC Aviation can strengthen its balance sheet over time. So if you are focused on the future you can check out this free report showing analysts’ earnings forecasts.

But our last consideration is also important, because a business cannot pay its debts with paper profits; he needs hard cash. We must therefore clearly check whether this EBIT generates a corresponding free cash flow. Over the past three years, BOC Aviation has recorded substantial total negative free cash flow. While this may be the result of spending on growth, it makes debt much riskier.

Our point of view

To be frank, BOC Aviation’s conversion of EBIT to free cash flow and its track record of controlling its total liabilities make us rather uncomfortable with its debt levels. But on the positive side, its EBIT growth rate is a good sign and makes us more optimistic. Considering all of the above factors, it appears that BOC Aviation has too much debt. While some investors like this kind of risky game, it is certainly not our cup of tea. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks lie on the balance sheet – far from it. These risks can be difficult to spot. Every business has them, and we’ve spotted 4 warning signs for BOC Aviation (1 of which is potentially serious!) that you should be aware of.

If, after all of this, you’re more interested in a fast-growing company with a strong balance sheet, take a quick look at our list of cash net growth stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.


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Financial executives say default risk is already hurting economy https://4wallsandaview.com/financial-executives-say-default-risk-is-already-hurting-economy/ https://4wallsandaview.com/financial-executives-say-default-risk-is-already-hurting-economy/#respond Fri, 08 Oct 2021 17:58:00 +0000 https://4wallsandaview.com/financial-executives-say-default-risk-is-already-hurting-economy/ President Biden met with finance officials on Wednesday as he continued to try to put maximum pressure on Senate Republicans to raise the debt ceiling by October 18, when the Treasury Department said the United States would default. Shortly after the meeting, Senator Mitch McConnell, the minority leader, appeared to give in to his opposition […]]]>

President Biden met with finance officials on Wednesday as he continued to try to put maximum pressure on Senate Republicans to raise the debt ceiling by October 18, when the Treasury Department said the United States would default.

Shortly after the meeting, Senator Mitch McConnell, the minority leader, appeared to give in to his opposition to allowing Democrats to lift the cap in the short term through the usual channels. He said he “would allow Democrats to use normal procedures to adopt an emergency extension of the debt limit to a fixed dollar amount to cover current spending levels through December.”

The White House rejected Mr McConnell’s statement as an informal offer and said the president would prefer Republicans to allow the vote on a spending bill.

Leaders have all warned that the economy would be at risk if the country defaults on debts for the first time in history.

“This is already starting to wreak havoc on the economy,” said Jane Fraser, CEO of Citigroup, to the chairman. “It will hurt consumers. It will hurt small businesses. “

“It is no exaggeration to say that even small distortions in the Treasury market can cost taxpayers tens of billions of dollars over many years,” she added, referring to the market for bonds issued by the Department of the Treasury.

Mr Biden, seeking to explain the consequences to ordinary Americans, asked the leaders to explain what would happen if the United States only defaulted for a day or two.

“Certainly, as we know, today there are hundreds of millions of investors involved in the markets who have put their hard-earned savings on the markets,” said Adena Friedman, chief executive of Nasdaq. “And we would expect the markets to react very, very negatively.”

Kentucky’s McConnell has long said Democrats need to use a more complicated process known as reconciliation to overcome Republican opposition to raising the debt ceiling. In his statement on Wednesday, he reiterated that the reconciliation process was the only option he supported for a longer term increase in the limit, unless “Democrats give up their efforts to get through another historically reckless tax and spending frenzy “.

The financial sector was expecting two dark weeks. A report released by Goldman Sachs said there was little reason to believe Congress would meet the Oct. 18 deadline, but that “the response from the public and financial markets would likely force a swift political resolution.”

Senate Democrats are still weighing their options for a way forward. Jen Psaki, the White House press secretary, told reporters on Wednesday that the White House did not want to continue to extend matters with an extension. “We don’t need to go through a cumbersome process that brings additional risks every day,” Ms. Psaki said.

When asked why the White House is not supporting an increase in the short-term debt ceiling that could, at least temporarily, calm financial markets, Ms Psaki replied, “Why not do it now? She said Mr. Biden and Mr. McConnell had yet to talk about the debt limit.

The budget reconciliation process would most likely involve two politically charged ballot marathons which Biden said would be “laden with all kinds of potential dangers of miscalculation.” Democrats say there is no guarantee that Republicans would not drag these votes to inflict procedural and political malaise.

Another option would be to change Senate rules to weaken the ability to filibuster, a proposal that has become increasingly popular in recent years as the partisan deadlock has deepened.

Lawmakers have provided other exceptions to filibuster. In 2017, Senate Republicans created an exception to pave the way for Neil M. Gorsuch, President Donald J. Trump’s first Supreme Court nominee, to step onto the bench. In 2013, Senate Democrats did so to overcome Republican opposition to President Barack Obama’s nominees for cabinet and judge positions.

On Tuesday evening, Biden called the route a “real possibility.” On Wednesday, he said he wanted to explain “in plain language” what was at stake if Republicans remained indifferent.

“Democrats are ready to escalate and stop this economic disaster if Senate Republicans get out of the way,” Biden said. “It’s not fair, and it’s dangerous.”

Mr McConnell said passing the extension would “discuss the Democrats’ apologies for the time crunch they have created”, allowing them to proceed with reconciliation. “A more traditional bipartisan government conversation might be possible” if they abandon plans for giant spending bills, he said.


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Morningstar finds health savings account providers have improved their offerings, but transparency and fees remain hurdles https://4wallsandaview.com/morningstar-finds-health-savings-account-providers-have-improved-their-offerings-but-transparency-and-fees-remain-hurdles/ https://4wallsandaview.com/morningstar-finds-health-savings-account-providers-have-improved-their-offerings-but-transparency-and-fees-remain-hurdles/#respond Thu, 07 Oct 2021 13:00:00 +0000 https://4wallsandaview.com/morningstar-finds-health-savings-account-providers-have-improved-their-offerings-but-transparency-and-fees-remain-hurdles/ As health savings account (HSA) assets skyrocket, Morningstar’s annual assessment of the HSA landscape found Fidelity to be the continued leader for HSA investors and spenders. Posted: October 7, 2021 at 8:00 a.m. CDT|Update: 59 minutes ago CHICAGO, October 7, 2021 / PRNewswire / – Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment […]]]>

As health savings account (HSA) assets skyrocket, Morningstar’s annual assessment of the HSA landscape found Fidelity to be the continued leader for HSA investors and spenders.

Posted: October 7, 2021 at 8:00 a.m. CDT|Update: 59 minutes ago

CHICAGO, October 7, 2021 / PRNewswire / – Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today released its fifth annual health savings accounts (HSA) status report accessible to individuals. Morningstar rated 11 of the top HSA providers’ offerings for two different use cases: as an investment account to save for future medical expenses and as an expense account to cover current medical expenses. This year’s study finds that the top HSA provider for investors is Fidelity, and the top HSA providers for spenders are Fidelity and Lively.

Providers have made strides over the past year in reducing fees, streamlining investment menus and delivering higher quality funds, but there is still room for improvement. Despite the discounts, fees vary by provider and account balance; most require individuals to keep money in spending accounts before they can invest; and fund lines always contain redundant and niche options that can be difficult to understand.

“Transparency about HSAs and their associated fees is limited, especially when investors are looking to open an account that is not through their employer. Our HSA Provider Assessment helps investors understand and navigate the HSAs available to them, ”said Megan pacholok, lead author of the study and management research analyst. “Since we introduced our HSA assessments five years ago, we’ve seen vendors improve their offerings by reducing fees and simplifying investment menus. As HSAs continue to evolve, it is important that providers continue to be more transparent and include strong investment options. , and keep costs down. “

Highlights of the study include:

  • Fidelity continues to perform well above its peers, with a high overall investment account rating, including high ratings in the price and investment threshold and above average ratings in menu design and the quality of investments.
  • No HSA has achieved universally top marks, or a high rating, on the factors underlying HSA quality, such as attractive interest rates for expense accounts or a solid investment menu design for investment accounts.
  • The fees continue to fall; however, they vary among vendors. For example, Fidelity offers the cheapest 60/40 passive wallet at 0.02% and is the only provider that does not charge maintenance and investment fees. Other providers’ fees for a similar portfolio range from 0.22% to 0.68%.
  • Providers continue to fill their investment menus with high quality funds based on the Morningstar ™ Analyst Rating (Analyst Rating) and the Morningstar Quantitative Rating ™. HealthEquity is the leading provider with almost 60% of its investments made up of Gold-rated funds. About 85% of funds in each line were Morningstar Medalists – a fund with an analyst rating or a gold quantitative rating, from silver or bronze – and five vendors offer fully medal-winning ranges, nearly double last year’s total. It is still possible to rationalize the investment menus and avoid redundancies.
  • Funds that integrate environmental, social and corporate governance (ESG) criteria into their investment processes are increasingly common in HSA ranges. Currently, five providers include ESG equity options in their investment ranges. For example, the Fidelity and Bend ranges offer the Parnassus Core Equity Fund, an actively managed large-cap blended fund that achieves a leading Morningstar ESG engagement level. Morningstar’s ESG Engagement Level summarizes the opinions of Morningstar analysts on the strength of the ESG investment program at the strategy and asset manager level and is expressed on a four-point scale from best to worst: Leader, Advanced, Basic and Low.
  • Optum, HealthEquity, Fidelity and HSA Bank continue to dominate the HSA market with more than $ 51 billion in combined assets. This represents more than 60% of the total assets of the HSA, which amounted to $ 82.2 billion at the end of 2020 according to Devenir.

The overall rating of each HSA provider is listed below.

HSA Provider

Overall assessment as
Investment account

Overall assessment as
Expense account

Associated bank

Above average

Mean

Bank of America

Above average

Below average

Bend

Mean

Mean

loyalty

High

High

Health Equity

Mean

High

Health Savings

Mean

Below average

HSA Bank *

Mean

High

Living

Mean

High

Optum

Below average

Mean

PayFlex

Below average

Below average

HSA Authority

Mean

High

* HSA Bank is the provider of HSA plans for Morningstar, Inc ..

Additions under consideration this year include HSA offerings from Associated Bank and PayFlex. Fifth thirds and more are not included in this year’s report because they are acquired by HealthEquity.

Read the HSA Landscape report, including the full 11 vendor assessments and methodology, here https://www.morningstar.com/lp/hsa-landscape. An article on Morningstar.com summarizing the report’s findings is available here.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers a wide range of products and services to individual investors, financial advisers, asset managers and owners, pension providers and sponsors, and institutional investors in the debt and private equity markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly traded companies, private capital markets, debt securities and market data global in real time. Morningstar also provides investment management services through its investment advisory subsidiaries, with approximately $ 251 billion in consulting and management assets from June 30, 2021. The Company operates in 29 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

Morningstar’s Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc., including, but not limited to Morningstar Research Services LLC. Morningstar’s Manager Research Group produces a variety of ratings, including the Morningstar Analyst Rating and the Morningstar Quantitative Rating. The Morningstar Analyst Rating is derived from a qualitative review process performed by a Manager Research Analyst, while the Morningstar Quantitative Rating uses a machine learning model based on Morningstar Analyst Decision Making Processes, their past rating decisions and the data used to support those decisions. In both cases, ratings are forward-looking assessments and include assumptions about future events, which may or may not occur or may differ materially from what has been assumed. Morningstar Analyst Ratings and Morningstar Quantitative Ratings are statements of opinion, subject to change, should not be taken as guarantees and should not be used as the sole basis for investment decisions. This press release is for informational purposes only; references to securities should not be construed as an offer or a solicitation to buy or sell the securities.

###

© 2021 Morningstar, Inc. All rights reserved.

MORNING-R

Media contact:

Landon hudson, +1 312 696-6037 or newsroom@morningstar.com

Morningstar Logo (PRNewsFoto / Morningstar Research Inc.) (PRNewsfoto / Morningstar, Inc.)

View original content to download multimedia:

SOURCE Morningstar, Inc.

The above press release has been provided courtesy of PRNewswire. The views, opinions and statements contained in the press release are not endorsed by Gray Media Group and do not necessarily state or reflect those of Gray Media Group, Inc.


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We believe Nutrien (TSE: NTR) can get his debt under control https://4wallsandaview.com/we-believe-nutrien-tse-ntr-can-get-his-debt-under-control/ https://4wallsandaview.com/we-believe-nutrien-tse-ntr-can-get-his-debt-under-control/#respond Wed, 06 Oct 2021 11:34:53 +0000 https://4wallsandaview.com/we-believe-nutrien-tse-ntr-can-get-his-debt-under-control/ Berkshire Hathaway’s Charlie Munger-backed external fund manager Li Lu is quick to say “The biggest risk in investing is not price volatility, but the fact that you suffer a permanent loss of capital. “. So it seems like smart money knows that debt – which is usually involved in bankruptcies – is a very important […]]]>

Berkshire Hathaway’s Charlie Munger-backed external fund manager Li Lu is quick to say “The biggest risk in investing is not price volatility, but the fact that you suffer a permanent loss of capital. “. So it seems like smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess the level of risk of a business. We note that Nutrien Ltd. (TSE: NTR) has debt on its balance sheet. But the real question is whether this debt makes the business risky.

What risk does debt entail?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, then it exists at their mercy. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. While it’s not too common, we often see indebted companies continually diluting their shareholders because lenders are forcing them to raise capital at a ridiculous price. Of course, debt can be an important tool in businesses, especially capital intensive businesses. When we think of a business’s use of debt, we first look at cash flow and debt together.

Check out our latest review for Nutrien

What is Nutrien’s net debt?

As you can see below, Nutrien had $ 10.3 billion in debt in June 2021, up from $ 11.3 billion the year before. However, it has $ 1.79 billion in cash offsetting that, leading to net debt of around $ 8.48 billion.

TSX: NTR History of Debt to Equity October 6, 2021

How strong is Nutrien’s balance sheet?

The latest balance sheet data shows that Nutrien had liabilities of US $ 9.89 billion due within one year, and liabilities of US $ 16.2 billion due thereafter. On the other hand, he had $ 1.79 billion in cash and $ 6.68 billion in receivables due within a year. As a result, its liabilities exceed the sum of its cash and (short-term) receivables by $ 17.6 billion.

While that may sound like a lot, it’s not that big of a deal since Nutrien has a massive market cap of US $ 38.8 billion, and could therefore likely strengthen its balance sheet by raising capital if needed. But we absolutely want to keep our eyes open for indications that its debt is too risky.

In order to measure a company’s debt relative to its profits, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its profit before interest and taxes (EBIT) divided by its interest. debtors (its interest coverage). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

Nutrien’s net debt stands at a very reasonable level of 2.2 times its EBITDA, while its EBIT only covered its interest expense 5.0 times last year. While this doesn’t worry us too much, it does suggest that the interest payments are somewhat of a burden. We note that Nutrien has increased its EBIT by 26% over the past year, which should make it easier to repay debt in the future. When analyzing debt levels, the balance sheet is the obvious starting point. But ultimately, the company’s future profitability will decide whether Nutrien can strengthen its balance sheet over time. So, if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.

Finally, a business needs free cash flow to pay off debts; accounting profits are not enough. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, Nutrien has generated free cash flow amounting to a very solid 86% of its EBIT, more than we expected. This positions it well to repay debt if it is desirable.

Our point of view

The good news is that Nutrien’s proven ability to convert EBIT into free cash flow delights us like a fluffy puppy does a toddler. But frankly, we think his total passive level undermines that feeling a bit. Considering all this data, it seems to us that Nutrien has a pretty sane approach to debt. This means that they are taking a bit more risk, in the hope of increasing returns for shareholders. The balance sheet is clearly the area you need to focus on when analyzing debt. But at the end of the day, every business can contain risks that exist off the balance sheet. For example, we have identified 4 warning signs for Nutrien (1 is a bit rude) you should be aware of.

At the end of the day, it’s often best to focus on businesses that don’t have net debt. You can access our special list of these companies (all with a history of profit growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

If you decide to trade Nutrien, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.Promoted


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Personal finance dilemma: should I save my money or pay off my debt first? https://4wallsandaview.com/personal-finance-dilemma-should-i-save-my-money-or-pay-off-my-debt-first/ https://4wallsandaview.com/personal-finance-dilemma-should-i-save-my-money-or-pay-off-my-debt-first/#respond Tue, 05 Oct 2021 21:11:31 +0000 https://4wallsandaview.com/personal-finance-dilemma-should-i-save-my-money-or-pay-off-my-debt-first/ You made some money with your last paycheck and you have some left over after paying your mortgage or rent, along with all the other necessary bills. Rather than frivolously spending the money, you want to put it in a savings account or use it to clear some of the debt that’s hanging over your […]]]>

You made some money with your last paycheck and you have some left over after paying your mortgage or rent, along with all the other necessary bills. Rather than frivolously spending the money, you want to put it in a savings account or use it to clear some of the debt that’s hanging over your mind.

But that’s the million dollar question: should you save your money first or pay off your debt, especially when it comes to spending extra income in the long run?

In truth, both of these paths can be beneficial. But let’s break down the benefits of saving your money or paying off debt first, so you know what to do on the next payday.

Save Money – When is it a Good Idea?

Saving money is always smart, and it’s easier than ever with automatic backup apps. In addition, the banking and financial sector offers its own tools thanks to AI chatbots and similar developments. Either way, saving money can be a great choice if you want to build up enough money for any of these goals.

Emergency fund

An emergency fund is a little extra money you put aside for the proverbial rainy day. With an emergency fund, you won’t need to take out a loan or use your credit card to cover the cost of car repairs, home repairs, or even minor medical bills. Plus, an emergency fund can help you move from job to job if you lose your current job due to a global event like the pandemic or something else.

If you don’t have emergency funds in place, you may need to take out personal loans that will allow you to borrow money for a fixed term. However, then you will have to pay off the loans sooner or later, adding another debt that you will have to reckon with later.

Save for a large purchase (required)

It’s also a good idea to save money for a big purchase rather than using a credit card or loan whenever possible. Save for a TV, a new car, or even new furniture for your home, and you’ll avoid damaging your credit score, on top of practicing good financial responsibility.

Add to your 401 (k) plan

If your employer has a 401 (k) plan with a good matching percentage, it’s a no-brainer to funnel a portion of your salary into that plan, so you can get maximum retirement savings as soon as possible.

Benefits of fast debt repayment

However, it may also be wiser to pay off your debt quickly with a pay-for-your-money strategy for the following reasons.

Multiple debts with separate interest rates

If you have more than one debt in your name and they each have a separate interest rate, each of those debts will earn interest. Over time, this can really take a toll on your wallet and cause you to pay a lot more money on each loan over its lifetime than you would otherwise. If this is your financial situation, it might make more sense to pay off your debts as quickly as possible so that multiple interest rates stop accumulating.

You have debt collectors calling you

If your debts are so heavy that debt collectors or other organizations are constantly harassing you to make payments, paying off your debts as soon as possible may be your best bet.

Your credit score is going down

If your credit score has dropped significantly and continues to collapse, you can stop this by paying off debt quickly and starting to rebuild your credit soon after.

How to save and pay off debt simultaneously

In some cases, you may not have to save or pay off your debts; you may be able to do both at about the same time and take charge of your finances. Here’s how.

Pay off debt using the snowball method

The snowball method of debt repayment is to pay off smaller debts in your name as quickly as possible. Then, once those debts are settled, move on to the next highest obligations, then to the highest obligations, and so on until you are debt free.

By doing this, you will pay less interest over time and rebuild your credit score simultaneously.

Of course, if you decide not to pay off your debts as quickly as possible, you might want to invest in life insurance. For example, if you die unexpectedly, some of your debts could be transferred to other members of your family, such as your spouse. A comprehensive life insurance policy with guarantees like death benefits can provide your spouse or other family members with enough money to pay off your debts and keep them from being affected by it for years. .

Save once your debts are paid

Once your debts are settled, you can then start saving aggressively. Any money you would have spent on your debts can be placed in a savings account, in your 401 (k), or otherwise saved for future financial goals.

How much should you save?

While saving money is a good idea, many experts recommend that you build up your emergency fund so that it is enough to cover three to six months of your expenses. To accumulate enough money for this, store it in a savings account and you will be reasonably safe in the event of another major economic disruption like the COVID-19 pandemic.

Create an emergency fund

To get started, create an emergency fund of at least a few hundred dollars by saving aggressively during the first few weeks or months of your plan. Once this emergency fund is in place, you can take the next step. You can use an emergency fund calculator to calculate funds for an appropriate amount of emergency savings based on your income, bill payments, etc.

Summary

Ultimately, saving money and paying off debt are two smart decisions – you should be proud of yourself for considering both rather than wasting the extra money you have.

With the right plan and a little self-reflection, you can figure out if it’s smarter to pay off your debt first, save money until you have a little nest egg in an account. savings, or doing both at the same time, depending on how much money you have to be working with.



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These 4 measurements indicate that Wachenheim Castle (ETR: SWA) is using its debt reasonably well https://4wallsandaview.com/these-4-measurements-indicate-that-wachenheim-castle-etr-swa-is-using-its-debt-reasonably-well/ https://4wallsandaview.com/these-4-measurements-indicate-that-wachenheim-castle-etr-swa-is-using-its-debt-reasonably-well/#respond Tue, 05 Oct 2021 06:18:50 +0000 https://4wallsandaview.com/these-4-measurements-indicate-that-wachenheim-castle-etr-swa-is-using-its-debt-reasonably-well/ Berkshire Hathaway’s Charlie Munger-backed external fund manager Li Lu is quick to say “The biggest risk in investing is not price volatility, but the fact that you suffer a permanent loss of capital. “. When we think about how risky a business is, we always like to look at its use of debt because debt […]]]>

Berkshire Hathaway’s Charlie Munger-backed external fund manager Li Lu is quick to say “The biggest risk in investing is not price volatility, but the fact that you suffer a permanent loss of capital. “. When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. Above all, Wachenheim Castle AG (ETR: SWA) carries the debt. But does this debt worry shareholders?

When Is Debt a Problem?

Debt helps a business until the business struggles to repay it, either with new capital or with free cash flow. If things really go wrong, lenders can take over the business. However, a more common (but still costly) event is when a company has to issue stock at bargain prices, constantly diluting shareholders, just to strengthen its balance sheet. Of course, many companies use debt to finance their growth without negative consequences. When we look at debt levels, we first consider both liquidity and debt levels.

See our latest analysis for Schloss Wachenheim

How much debt does Wachenheim Castle carry?

You can click on the graph below for the historical figures, but it shows that Wachenheim Castle had 44.9 million euros in debt in June 2021, up from 55.4 million euros a year earlier. However, because it has a cash reserve of € 7.68 million, its net debt is lower, at around € 37.2 million.

XTRA: SWA Debt to Equity History October 5, 2021

A look at the responsibilities of Wachenheim Castle

According to the last published balance sheet, Schloss Wachenheim had liabilities of 115.0 million euros within 12 months and liabilities of 48.0 million euros due beyond 12 months. In compensation for these commitments, he had cash of € 7.68 million as well as receivables valued at € 62.8 million within 12 months. Its liabilities therefore amount to € 92.5 million more than the combination of its cash and short-term receivables.

This is a mountain of leverage compared to its market capitalization of € 135.4 million. This suggests that shareholders would be heavily diluted if the company needed to consolidate its balance sheet quickly.

We use two main ratios to inform us about the levels of debt compared to earnings. The first is net debt divided by earnings before interest, taxes, depreciation, and amortization (EBITDA), while the second is the number of times its profit before interest and taxes (EBIT) covers its interest expense (or its coverage of interest, for short). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

Wachenheim Castle’s net debt is only 1.1 times its EBITDA. And its EBIT covers its interest costs 25.3 times more. We could therefore say that he is no more threatened by his debt than an elephant is by a mouse. Also positive, Schloss Wachenheim increased its EBIT by 29% last year, which should make it easier to repay debt in the future. When analyzing debt levels, the balance sheet is the obvious starting point. But it is future profits, more than anything, that will determine Schloss Wachenheim’s ability to maintain a healthy balance sheet going forward. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

Finally, a business can only repay its debts with hard cash, not with book profits. The logical step is therefore to examine the proportion of this EBIT that corresponds to the actual free cash flow. Over the past three years, Wachenheim Castle has recorded free cash flow of 59% of its EBIT, which is close to normal given that free cash flow excludes interest and taxes. This free cash flow puts the business in a good position to repay debt, if any.

Our point of view

The good news is that Schloss Wachenheim’s demonstrated ability to cover his interest costs with his EBIT delights us like a fluffy puppy does a toddler. But, on a darker note, we’re a little concerned with its total liability level. When we consider the above range of factors, it looks like Schloss Wachenheim is pretty reasonable with its use of debt. This means that they are taking a bit more risk, in the hope of increasing shareholder returns. Over time, stock prices tend to follow earnings per share, so if you’re interested in Schloss Wachenheim, you can click here to view an interactive graph of its historical earnings per share.

If, after all of this, you’re more interested in a fast-growing company with a strong balance sheet, take a quick look at our list of cash-flow net-growth stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

If you are looking to trade Schloss Wachenheim, open an account with the cheapest * platform traders trust, Interactive Brokers. Their clients from more than 200 countries and territories trade stocks, options, futures, currencies, bonds and funds around the world from a single integrated account.Promoted


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Here’s Why Wendy’s (NASDAQ: WEN) Can Responsibly Manage Debt https://4wallsandaview.com/heres-why-wendys-nasdaq-wen-can-responsibly-manage-debt/ https://4wallsandaview.com/heres-why-wendys-nasdaq-wen-can-responsibly-manage-debt/#respond Mon, 04 Oct 2021 11:53:32 +0000 https://4wallsandaview.com/heres-why-wendys-nasdaq-wen-can-responsibly-manage-debt/ Warren Buffett said: “Volatility is far from synonymous with risk”. When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. We can see that Wendy’s company (NASDAQ: WEN) uses debt in its business. But should shareholders be worried about […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk”. When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. We can see that Wendy’s company (NASDAQ: WEN) uses debt in its business. But should shareholders be worried about its use of debt?

When is debt dangerous?

Debts and other liabilities become risky for a business when it cannot easily meet these obligations, either with free cash flow or by raising capital at an attractive price. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are ruthlessly liquidated by their bankers. However, a more common (but still costly) situation is where a company has to dilute its shareholders at a cheap share price just to get its debt under control. By replacing dilution, however, debt can be a very good tool for companies that need capital to invest in growth at high rates of return. When we look at debt levels, we first consider both liquidity and debt levels.

See our latest review for Wendy’s

What is Wendy’s debt?

The graph below, which you can click for more details, shows that Wendy’s had $ 2.41 billion in debt as of July 2021; about the same as the year before. However, it has US $ 568.1 million in cash offsetting this, which leads to net debt of around US $ 1.84 billion.

NasdaqGS: WEN History of debt to equity October 4, 2021

How strong is Wendy’s balance sheet?

We can see from the most recent balance sheet that Wendy’s had liabilities of US $ 372.8 million due within one year and liabilities of US $ 4.22 billion due beyond. On the other hand, he had $ 568.1 million in cash and $ 165.7 million in receivables due within one year. It therefore has liabilities totaling US $ 3.86 billion more than its cash and short-term receivables combined.

This deficit is sizable compared to its market capitalization of US $ 4.97 billion, so he suggests shareholders keep an eye on Wendy’s use of debt. If its lenders asked it to consolidate the balance sheet, shareholders would likely face serious dilution.

In order to measure a company’s debt relative to its profits, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its profit before interest and taxes (EBIT) divided by its interest. debtors (its interest coverage). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

Wendy’s debt is 3.8 times its EBITDA, and its EBIT covers its interest expense 3.0 times as much. Overall, this implies that while we wouldn’t like to see debt levels rise, we believe it can handle its current leverage. Looking on the bright side, Wendy’s has increased its EBIT by a silky 45% over the past year. Like the milk of human kindness, this type of growth increases resilience, making the business more capable of handling debt. The balance sheet is clearly the area to focus on when analyzing debt. But it is future earnings, more than anything, that will determine Wendy’s ability to maintain a healthy balance sheet going forward. So, if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.

Finally, a business can only repay its debts with hard cash, not with book profits. It is therefore worth checking to what extent this EBIT is supported by free cash flow. Over the past three years, Wendy’s has recorded free cash flow of 67% of its EBIT, which is close to normal given that free cash flow excludes interest and taxes. This hard cash allows him to reduce his debt whenever he wants.

Our point of view

As for the balance sheet, the bright spot for Wendy’s was the fact that it seems able to increase its EBIT with confidence. But the other factors we noted above weren’t so encouraging. For example, it looks like he has to struggle a bit to cover his interest costs with his EBIT. Looking at all of this data, we feel a little cautious about Wendy’s debt levels. While debt has its advantage in terms of potential higher returns, we think shareholders should definitely consider how leverage levels might make the stock riskier. The balance sheet is clearly the area to focus on when analyzing debt. However, not all investment risks lie on the balance sheet – far from it. For example, Wendy’s has 2 warning signs (and 1 which is a bit rude) we think you should be aware of.

At the end of the day, it’s often best to focus on businesses with no net debt. You can access our special list of these companies (all with a history of profit growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

If you decide to trade Wendy’s, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.Promoted


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How to recover from a credit card error https://4wallsandaview.com/how-to-recover-from-a-credit-card-error/ https://4wallsandaview.com/how-to-recover-from-a-credit-card-error/#respond Sun, 03 Oct 2021 15:18:10 +0000 https://4wallsandaview.com/how-to-recover-from-a-credit-card-error/ Whether you are using a credit card for the first time or have had one for years, mistakes happen. And while a credit card mistake can affect your credit scores, you don’t have to be hard on yourself. With a few changes in habits and a little time, you can start to see your credit […]]]>

Whether you are using a credit card for the first time or have had one for years, mistakes happen. And while a credit card mistake can affect your credit scores, you don’t have to be hard on yourself. With a few changes in habits and a little time, you can start to see your credit scores heal.

Here are some common credit card mistakes and tips to get you back on track.

Miss a payment

You are in the middle of a hectic week and you are losing track of time. This is when you notice the late fees on your credit card. If this happens to you, it’s always worth calling your credit card issuer. You may be able to get the fee waived if you request it, especially if you’ve never missed a payment before. In addition, the late fees serve as a warning since your credit scores will not be affected until you are more than 30 days late, that is, when the missed payment is reported to the credit bureaus. credit.

How missing a payment can be detrimental: Not only are these late fees an added expense, a missed payment more than 30 days late can dramatically lower your credit rating, sometimes up to 100 points.

How to avoid this in the future: Create a foolproof reminder system, like email or text alerts from your credit card issuer. You can also set up automatic credit card payments every month, but make sure you have the money in your bank account to cover your bills so you don’t have to pay overdraft fees. Some cards allow you to choose your due date, so you can schedule payments with a memorable day, such as the first of the month or the day after your paycheck is deposited into your account.

Maximize Your Credit Limit

It can be difficult to avoid charging more than the recommended 30% of your total credit card limit, especially if you have a low limit to start with or are faced with an unforeseen major expense. In an emergency situation, you may need to dip into your credit limit and that’s okay. But if you regularly max out your card, you potentially damage your credit over time.

How Maximizing Your Credit Limit Can Be Harmful: Your credit usage, or the total amount of your available credit that you charge, is a factor in calculating your credit scores. Generally speaking, the lower your usage, the better.

How to avoid this in the future: Reduce the use of your credit card for every purchase. You can use your credit card for some expenses each month, then use cash or your debit card for everything else. If your credit limit is low, call your issuer to find out if you would be eligible for an increase in your credit limit. Update your card issuer on your earnings if they increase, as this may help you qualify for such a rise.

Spend more than you can afford to repay

Compared to handing over all the money you have in your wallet, paying with a credit card doesn’t feel like you’re spending real money, so you can spend more. It can lead to a rude awakening when your credit card bill comes in, especially if you don’t have enough in your bank account to cover it.

How going over budget can be harmful: By design, credit cards can lock you into an expensive cycle of debt because you can charge up to your credit limit, pay only a small portion of your bill, and then top up until the end of your bill. limit next month. After a short time, your debt can reach thousands of dollars.

How to avoid this in the future: Don’t just put the plastic back without a second thought. Check your balance several times throughout the month, and if you’ve got a big expense coming up, plan it by putting some money aside to pay it off. If you’ve already overspent, switch to cash or a debit card while you pay off the debt. Budgeting can help you feel more in control of your money.

Close a card account without a policy

Thoroughly cleaning your wallet might seem satisfying, but you don’t need to take out the scissors just because you don’t use a card that often anymore. Sometimes closing a credit card is the right decision, but it can affect your credit rating. For this reason, you may want to consider ways to keep the account open.

How damaging closing a credit card can be: Closing a credit card that you have owned for a long time can reduce the average age of your credit card accounts. When it comes to your credit scores, you better get older. Plus, closing a card means a lower total credit limit. If your spending stays the same, it increases your credit usage.

How to avoid this in the future: There are good reasons to close a card, such as not wanting to pay an annual fee on a card you no longer use. But you may have other options, such as downgrading the card to a card with no annual fee, which allows you to keep the account open for less. Make sure to use this card several times a year to keep the account active. If it stays in a drawer for too long, the issuer may close the account due to inactivity and you will be faced with the same result as if you had canceled the card yourself.

Pay your credit card statements without looking

While you can put your credit card payments on autopilot, take an active role in monitoring your account as errors can occur. You may have no idea, unless your credit card company contacts you about possible fraud.

How ignoring credit card statements can be damaging: Suspicious charges, even small ones, can be the first sign that your credit card information has been stolen. By law, you are not responsible for more than $ 50 in fraudulent charges, although most cards waive your liability entirely. However, you must report the fraud. If you regularly pay your credit card bill without reviewing the charges listed on it, you may be paying expenses that someone else has accrued on your behalf.

How to avoid this in the future: Check every credit card statement before you pay it. If you’ve set up automatic payment, create a reminder to review your account each month. Whenever you see an unusual charge, call the number on the back of your card to report it. The credit card company will issue you a card with a new number.

More from NerdWallet

Sara Rathner writes for NerdWallet. Email: srathner@nerdwallet.com. Twitter: @sarakrathner.

The article How to Bounce Back from a Credit Card Mistake originally appeared on NerdWallet.


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Why 0% finance offers don’t always make sense https://4wallsandaview.com/why-0-finance-offers-dont-always-make-sense/ https://4wallsandaview.com/why-0-finance-offers-dont-always-make-sense/#respond Sat, 02 Oct 2021 16:00:38 +0000 https://4wallsandaview.com/why-0-finance-offers-dont-always-make-sense/ Recently, my house’s air conditioning system decided to fail, without warning, around the hottest day of the year. Since the system was older, fixing it didn’t make sense for my personal finances. I was pretty much forced to replace it with a new model – at a price of around $ 7,000. I was really, […]]]>

Recently, my house’s air conditioning system decided to fail, without warning, around the hottest day of the year. Since the system was older, fixing it didn’t make sense for my personal finances. I was pretty much forced to replace it with a new model – at a price of around $ 7,000. I was really, really unhappy.

Fortunately, I had the $ 7,000 available in my savings account to cover this expense. I make a point of saving money for emergencies because as a homeowner I know costly repairs can happen at any time.

I almost didn’t withdraw my savings because the air conditioning company offered me a deal that looked good: finance my new air conditioner at 0% over 24 months. With this offer, I could have accepted a monthly payment of around $ 300, which my incoming paychecks could cover without drawing on my savings. And since this was a 0% financing offer, I told myself that I had nothing to lose.

In the end, I paid for the replacement of my air conditioning system using the money from my savings. Here’s why.

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Fishing with 0% funding

You might assume that 0% finance offers are too good to be true. But for the most part, they are completely legitimate. It’s not uncommon to receive these offers to finance a purchase, whether it’s furniture, a new car, or a home repair.

But before signing up for a 0% finance offer, it pays to ask a key question: is there a discount for paying directly?

Often times, when companies offer 0% financing on an item or service, they factor the cost of the financing into the quote for the job. I was quoted about $ 7,200 to replace my air conditioner at first, but that $ 7,200 assumed I would fund the replacement unit.

When I requested a discount for not financing my air conditioner, the quote fell to about $ 6,900. It is still a lot of money. But since I had money in my savings account, and withdrawing that money wouldn’t deplete my emergency fund, I thought it made more sense to pay for my air conditioner up front and save the $ 300.

It does not mean that you always get a discount if you forgo 0% financing and pay in one lump sum up front. But in some cases, you will get some savings by paying directly. And that’s why 0% finance offers don’t always make sense.

If you don’t have money in savings to cover a given expense, or if you want to keep more cash (i.e. make sure you have enough cash), then financing offers at 0% is often a good way to go. Say you are looking to buy furniture worth $ 5,000 and can finance it at 0% over two years. If you only have $ 7,000 in your savings account, you should probably take out the Funding Agreement. If you don’t, you will end up with only $ 2,000 in the bank to cover unforeseen expenses.

But if in this example you have $ 25,000 in savings, you might want to pay for your furniture directly if you can get a discount. In that case, you’ll still have $ 20,000 in cash, and if that’s enough to cover at least three full months of living expenses, you don’t have to worry about withdrawing $ 5,000.

In my case, I’m glad I asked to prepay for my air conditioner in exchange for a small discount. Although I was unhappy with the expense, saving a little bit of money made me feel better about the big picture.


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Is your credit card balance making you cringe? A surprising source can reduce your debt https://4wallsandaview.com/is-your-credit-card-balance-making-you-cringe-a-surprising-source-can-reduce-your-debt/ https://4wallsandaview.com/is-your-credit-card-balance-making-you-cringe-a-surprising-source-can-reduce-your-debt/#respond Fri, 01 Oct 2021 22:17:00 +0000 https://4wallsandaview.com/is-your-credit-card-balance-making-you-cringe-a-surprising-source-can-reduce-your-debt/ Is your credit card balance making you cringe? A surprising source can reduce your debt Maybe an unexpected medical bill or a broken device triggered your credit card debt. Or have you just gone over budget for one reason or another? There are countless ways that debt starts to pile up and gets out of […]]]>

Is your credit card balance making you cringe? A surprising source can reduce your debt

Maybe an unexpected medical bill or a broken device triggered your credit card debt. Or have you just gone over budget for one reason or another?

There are countless ways that debt starts to pile up and gets out of hand before you know it. This is clear from data from Experian which shows that US credit card operators have an average balance above $ 5,000.

Whether you need to pay off above-average or below-average debt, you might not realize that a simple, free method could help you from an unexpected place. It starts with a phone call.

The road to get out of debt

Image of a man with a baby and on the phone.

Drazen Zigic / Shutterstock

First, get a good idea of ​​how much you can afford to spend on your debt, whether it’s in the form of a monthly payment plan or a lump sum.

When you pay only the monthly minimum (or less) on a large balance, your debt will likely last for months or years, and your interest rates will almost certainly rise. You may find yourself stuck in a cycle where the amount you owe keeps increasing even as you make payments, and a bad credit rating means higher interest rates when you borrow in the future, so which ends up hurting your chances of getting the best deal on a car loan or finding a low mortgage rate.

When you know how much you’re willing to pay on your credit card debt, it’s time to negotiate. That’s right: you can try to get yourself out of some of your debt.

Believe it or not, your lender probably wants to help you

Image of calculator and credit card phone computer.

Kudla / Shutterstock

Just asking your bank or other credit card issuer for a better deal is worth a try. Asking for a new repayment plan or an agreement to settle your debt is a strategy commonly used when negotiating with your credit provider.

Contact the card issuer and ask, politely but confidently, if you can work out a payment plan. Be prepared to itemize how much you can afford. While there are different areas where you can negotiate, you’ll want to start with the offer that saves you the most money and gets out of debt the fastest.

If you get the chance, most card issuers are more than willing to make a deal with you rather than risk you defaulting on the account and paying nothing.

Most importantly, stick to the terms of your new plan. If you don’t, the credit card company will be less likely to cooperate more with you. Only accept payments that you can handle until the debt is gone.

Different types of renegotiated payment plans

A credit card statement with a hand holding a blue credit card

Ariya J / Shutterstock

Ask to stop your interest

Apply for a plan to make monthly principal payments – the total fees you accrued before interest started charging.

The card issuer can close the account and you continue to pay the debt, but the new interest charges cease.

Or the lender can waive the interest you owe and divide the remaining balance into manageable payments. Either scenario keeps your debt from growing.

Offer a lower lump sum payment

You can also try to negotiate a large one-time payment that is less than your balance, but the bank will accept the amount to be refunded and close the account. For example, if your balance including interest and fees reached $ 5,000, you could offer to pay your original line of credit amount of $ 3,000.

If the card issuer accepts, you could save thousands of dollars and your debt will be considered fully paid.

Ask for a lower interest rate

As a last resort, ask for an interest rate reduction. Card issuers are more likely to agree if your payment history is consistent and you agree to close the account or freeze purchases. You will switch to regular monthly principal payments with a negotiated and reduced interest rate.

Pay a pro to help you or negotiate your debt yourself

Image of business people meeting a credit card.

shin sings eun / Shutterstock

Many people are successful in negotiating with their lender on their own. But if you need help, a credit counseling service, debt settlement company, or lawyer familiar with credit issues may be able to help.

Debt settlement company fees typically include a percentage of the amount the company ultimately saves you by negotiating a lump sum payment. Credit counseling services take an amount you provide and negotiate with your creditors to make small payments at all. The fees can run into the thousands of dollars.

Research any business you are considering. The Federal Trade Commission describes the red flags for debt settlement scams, as a company guaranteeing it can do away with your debt or telling you to stop contacting your creditors without explaining the repercussions.

More ways to avoid debt

Image of scissors and cut credit cards.

Nuchylée / Shutterstock

Why you ended up struggling with your bills – a series of bad luck, an unforeseen crisis, or just bad spending habits – is less important than finding a way out of your debt.

  • Stop paying too much interest. When you carry balances on multiple cards, you can lower your interest rate when you accumulate your credit debt.

  • Shopaholics: Take control of your shopping. This lasting advice is worth remembering: buy only what you can afford each month. When you need to find the best deal to stay within your budget, you can find a useful online shopping comparison tool.

  • Understand your credit score. Getting out of credit card debt and monitoring your credit score go hand in hand. A free credit report helps you track your progress to improve your score, which increases your chances of getting better interest rates in the future.

  • Put your pennies to work. While your credit debt is an urgent financial priority, you can always put money aside for later by investing money that you won’t miss: the pennies and dimes you have left over when you buy something. thing. Here is how you can invest your “spare part”.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.


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