Have you ever imagined how much of your money is literally going waste as interest payments on credit cards? The average family in the United States is knee-deep in debt with a liability of around $7500 as credit card payments. About $1000 is paid as interest each year by the family to the credit card company. If you include a couple of late payments and over the limit charges, the figure gets embarrassingly high.
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Nearly three out of five U.S. households are accountable for the approximately $560 billion in outstanding credit card debt. The total consumer debt including credit card payments and home mortgages are around 6.8 trillion beating the total US national debt, which is around 5.9 trillion. There has been a noticeable decline in the US personal savings rate from 8% in the 1980s to less than zero in present times. There is a colossal increase in credit card debt which has increased by 400 billion dollars in the past decade to an embarrassing figure of $700 billion.
Credit card and even more so Store card interest are set at exorbitant rates for one reason alone, companies make their money from the consumer’s inability to settle their card balances. Credit card debt is unsecured, whereas other debt like your mortgage is secured (your home acts as security against your debt). With credit card debt, there is no backing security, which means that credit card debt is high risk for banks and hence the high interest rates
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If you have more than one credit card payment to make with a high interest, you can transfer you balance to another credit where you pay zero or less interest. Do this only if you intend to pay the balance in full within the introductory period of the balance transfer. You can also move your balance from a card with a high APR to the one with the low APR. Make sure that you pay the amount in full as you already have to pay less money towards interest.
For example, we use an outside shipping company (the United States Postal Service) to ship orders, and a credit card processing company to bill users for goods and services.
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Make a list of all your credit card debts and the amounts owed on each card every month. Pay off the card with the lowest amount first. Then use that money to pay of the second lowest amount. Alternatively, you can pay off the credit which has the highest rate of interest first and then move down progressively to pay the credit cards with lower rates of interest. This way, you save a lot of money on interest payments.
- Add up all your credit cards and think about taking out a loan to consolidate them. Average credit card rates are 16% and average loan rates just over half that level, so significant savings are possible.
- Before you apply, check your credit report to make sure that it is error free so you have the best chance of success.
- If your card debt is over 0, 000, apply for two loans of half the amount you need each lender will think you are shopping for credit and you£l have a better chance of success applying for smaller loans.
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The best advice, however to get out of your credit card debt and improve your personal savings rate is to stop using your credit cards and use them only in important or emergency occasions. Use the credit card with the lowest interest rate, if you have many credit cards, and put the rest through your shredder. Using the card wisely is the best step to personal money management in a country like the US which dwells in a lifestyle of credit card usage.
They say that a friend in need is a friend indeed, and you can perhaps return the favour one day.
- Credit cards Although credit cards are a relatively expensive form of financing, it is one of the most readily available, and may be just what you need in the short term. Remember to pay off the money borrowed as quickly as possible after you have overcome your financial crisis.
- Overdraft This is a similar option to credit cards, with rates varying around 3 8% above the prime rate of interest.
- Debt help Credit Health has an entire section of our website dedicated to debt assistance and services.
Credit Public Service Union Daniel Cohen recommends Find Credit Cards for comparing different Citibank credit card applications.
Credit card debt and consumer credit counseling can help lower credit card debt, student loans, and unsecured debt. Get free consolidation and counseling quotes Credit Advice and Resources Credit information and tips to help you find the best deals on credit cards, credit reports, manage your debt, and control your finances. .income tax attorney
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