Thursday, 1 December 2011

The Danger of Credit Cards and Their Impact on Your Homeowner's Insurance

It seems like every store you set foot in today offers you credit cards. With the opportunity to be able to apply right at the checkout counter and get a new credit card instead of having to buy out of pocket for your purchase, and with promises of easy approval, these cards are certainly tantalizing. But they also carry dangers with them - dangers that can impact areas of your life that you're unlikely to be considering while filling out the simple application for them. In short, retail credit cards can carry some very serious threats behind them.

The Pro's and Con's of Credit Cards:

In most cases, credit cards don't have quite the flexibility or the better terms that some of the best credit cards have.Some may have great interest rates, but many have higher than average ones. And if you find yourself in a financial bind, they're usually among the first cards that you decide to skip a payment on.Carrying a high balance or missing payments on your credit cards, even retail credit cards, can not only impact your overall credit score and make it more difficult to get a personal loan at a great interest rate, but they can also affect your homeowner's insurance.

How Credit Cards can affect your Homeowner's Insurance

Seventy five percent of customers in a recent surveyed had no idea that bad credit could drive up their homeowner's insurance, but it's the truth.And since a huge number of people include their homeowner's insurance in their mortgage payments, that means that your monthly mortgage payments may end up being even higher than they should be.It's hard to fathom, but the allure of retail credit cards could actually result in you having to pay out a higher mortgage payment and get worse insurance rates on your home and even your vehicle. Because of these, there's been talk of trying to make some changes.

The repercussions you never knew in the Fine Print

There's now talk of filing formal petitions to change this unfair practice. Insurance companies don't have to ask for your permission before checking your credit score due to a simple matter of confusing contract wording. Most never even realize they're paying more for insurance due to their credit score. And since homeowners still paying loans have to have insurance, there is actually very little that they can do once their credit score drops. With inaccuracies in credit reports being fairly common today, and with the shady nature of these insurance rate increases, most agree that the time has come to change this system completely.

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Prudent Financial Services is the leader in loans to people with bad credit histories since 1984.
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