This article reveals the truth about how banks allocate the monthly repayment in the bank’s interest by establishing a hierarchy predicated on the various interest rates they charge, so that holders of cashback credit cards will always be punished, whatever action they take. It also shows why it is important to renew your plastic once the opening cashback credit card offer time finishes.

A leading finance lender lately started a television campaign which made great play about the awful truth that a large majority of card suppliers split up usage habits into various categories then allocated a different interest rate depending on which category was taken into consideration. These different levels were based upon the perceived spending models of the average credit card holder. Such people include holders of cashback credit cards.

If you go by the advert, a large majority of credit card companies presume that the card user will start by transferring the balance from a previous card (thereby wiping the balance out) for an average period of 39 weeks. This will be at zero percent interest rate for that time. The credit card owner will then make a new purchase using his or her plastic which will on average draw an interest rate of approximately 15%.

The card user may also use the cashback credit card for getting some ready cash. Your interest rate for cash is set higher than the rate charged for purchases, and this is on average between 19% and 21% but which might reach as high as 23 percent or over.

Now here’s where the trickery starts. As the monthly payment comes around, the cashback credit card lender will ensure the less costly purchase items are at the head of the list when the time comes to pay the minimum, or whatever proportion of repayment has been decided by the card holder.

Thus the most expensive parts of your credit card usage - and that’s usually the cash component - is put right at the back where it will rack up more interest, and where all that interest will be further compounded when interest is charged to the existing interest (we all know how it works, don’t we?)

The cashback credit card user may believe that they are clearing things in a uniform manner, and that if one type of cash attracts a higher interest rate then that will be balanced out by the goods purchase which will be charged out at a lower interest rate. The reality is very different. Because the bank will always put the less costly portion first in the paying hierarchy, and allow the more expensive parts to just sit there accruing interest.

These higher interest rate segments will thus always be the last to be paid. In the average case, for the first 9 months of this cashback credit card all the repayments will be used to pay the zero interest portion while the new purchase and the cash component remain clocking up interest.

More importantly, the more expensive parts will always be at the back, always being paid off last. Last to go will be that cash advance, with its massive 21% or whatever it is. It is ironic to think that the longer the 0 interest period, the longer the interest will rack up! Then when you add on the fee that most cashback credit cards nowadays charge for making that balance transfer, then you know why the credit card companies are making so much money.

The only credible solution is to dump the cashback credit card and transfer the balance to a new card when the interest free period ends. Based on what we’ve seen the banks do as a matter of course, that really is the only option. No exceptions.

An excellent free service which does all the above is the Credit Card Balance Transfers site in the States and the similar Credit Card Balance Transfers UK site in Britain.

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You might well be considering how you will be able to repair your credit rating after bankruptcy, right? Well, really bankruptcy, as much as possible, shouldn’t be proclaimed by anyone because this is a very unfortunate condition for the individual who is in debt as well as the lenders.

What’s sad about this is that, there are people who consider this as their last course of action and they are left with no other option. While others find it a bit hard but are still able to deal up with the state of affairs, still look for choices that would help them reconstruct credit after bankruptcy. The question now is, what are the real possibilities of doing so?

Let’s think positive , we know life must go on. If you declare bankruptcy your valuable account history doesn’t matter any longer. Anything that would be declared after bankruptcy is a means of beginning all over. It can be a battle but it is still achievable to rebuild credit after bankruptcy.

You will be really fortunate if you can find financial companies that will lend to you after a declaration of bankruptcy. However this is a case by case matter, it would really calculate on how loaning firms are able to see your credit report and whether they will consider you worthy of their trust.

Let’s say that you find a means to reconstruct credit after bankruptcy, then hold onto it because that’s your beginning point. Don’t miss the chance of showing these lenders that you are in for a change. Building a sound credit history with the company would be a great beginning too.

Everybody should have an opportunity to continue life after declaring bankruptcy. If everything went bad earlier, then he or she can reconstruct a new standard of living and live by that. You can acquire all the help you desire from financial consultants.

Reconstructing your credit after bankruptcy through thorough research and learning how the financial system works would help. You don’t have to rush things because what is important is that you have options to check into. All you have to do is to do your own research so you can realize the most out of your time waiting.

Read more on how do I improve my credit score

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If you have poor credit and want to do something about it, it’s usually just a simple matter of following a specific step-by-step procedure that will ensure a relatively quick and hassle-free improvement in your credit score. But it is important to have a plan in place and not just get your current credit report and start making phone calls to the company’s have reported derogatory entries. Here’s a simple checklist for how to improve credit score:

1. Request your free copy of your current credit for. Federal law mandates that every person is entitled to one free copy of their credit report from each of the three major credit reporting agencies each year. Everyone should take advantage of this and stay current with what is on their credit report. This way you can be proactive and quickly remove any items any accuracies (which are more common than you think).

2. Get a credit repair guide and read through it to get an overview of the process of repairing your credit score. There are several guides available, and one in particular called “Credit Secrets Bible” is probably the most popular one. It is written by experts in the credit repair business. It gives you step-by-step instructions for how to go about analyzing your credit report and expediting improvements in your score.

3. Avoid companies that make promises of improving your credit score for a fee. There’s nothing that these companies can do that you can’t do yourself as long as you have the proper knowledge. You can easily obtain this knowledge by using a guidebook such as the “Credit Secrets Bible” guidebook mentioned above. The vast majority of companies that claim they will improve your credit score by a certain amount basically are preying on individuals either don’t want to take the time and effort to improve your credit score or think they have a choice because the system is overly complicated and they would never be able to understand it. Both of these are erroneous assumptions.

4. Once you are armed with your credit report and a good guidebook on how to analyze and start to improve your credit score, take action. The first time you go through this process it may be a fair amount of work if your credit score is low and you haven’t ever gone through the process before. These days, a “low” credit score is anything below 600. It does you no good to get your credit report, in a guidebook, and then do nothing with it. So be sure you are ready to put some effort into this because in the long run it will be well worth the time you spent on and if you do it each year the entire process shouldn’t take more than a few hours.

The above four simple steps should keep your credit score stable and allow you to take advantage of more attractive interest rates, or even get loans that others can’t get, because of their poor credit scores. So remember, repairing your credit score is not difficult process just takes the test of time and effort but will pay off big dividends with your ability to borrow money attractive interest rates.

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