Credit
?Credit Card Debt Calculators: Keep Credit Card Debt Under Control
A credit card debt calculator may be the answer to your credit card problems. Many consumers today feel overwhelmed by their credit card debt. Their credit card balances are high, and their minimum monthly payments don’t seem to make a dent in the amount of debt they owe.
The Problem With Credit Card Balance Transfers
Some consumers transfer their credit card debt to new credit cards that offer lower interest rates, thinking that will solve their credit card problems, only to find that making a payment one day late can raise their interest rate even higher than it was with their old credit card company. By using a credit card debt calculator, consumers can take a more informed approach to managing their credit card debt.
What Do Credit Card Debt Calculators Do?
Credit card debt calculators allow you to determine the amount of time it will take you to completely pay off a purchase you are thinking about charging to your credit card account, assuming you make just the minimum monthly payment each month.
For instance, if you are thinking about buying a flat screen TV with your credit card, a credit card debt calculator may show that it will take you 20 years to pay off the TV at the minimum monthly payment.
There are very few people using twenty year old televisions in their homes. In this instance, a credit card debt calculator can show you that, unless you are sure that you can make more than your minimum monthly payment, it does not make sense to purchase this television with your credit card.
You can use a credit card debt calculator to determine if the life of a purchase is equivalent to the length of time it will take to pay for it. This will help you to make smarter purchases and allow you to adjust the amount you pay the credit card company each month so that you do not end up paying for something long after you have stopped using it.
The Hidden Cost Of Increasing Average American Credit Card Debt
On a seemingly daily basis, the amount of debt that the average American owes on their credit cards is increasing. The entire financial world, not just the credit card market, is being affected by this trend. Mortgages, school loans, car loans, bankruptcies, and foreclosures are all affected by the average rate of credit card debt.
Credit card debt consolidation and other even more extreme methods that people turn to in order to eliminate their credit card debt have become more popular as the average credit card debt has gone up. Consider the actual statistics on credit card debt in America to see if the situation is really all that serious.
The Statistics on Average American Credit Card Debt
Here are some of the statistics. The average American credit card is carrying a balance right now of about $1,000. If the cardholder pays nothing more than their minimum two percent payment on that balance each month, they will have finally paid off the entire balance after twenty two long years. During that time, the interest charged to the account will reach $2,300.
On a national level, the average American household currently owes $8,500 in credit card debt. Individuals who have at least one credit card currently average more than $9,000 in debt. These statistics indicate that, since the year 1990, the average amount of debt that Americans owe on their credit cards has increased by 300%.
If you are wondering, what you spend in interest or even if you have not worried about until now, the average American spends more than $1200 a year in just interest payments alone.
This means that the average interest charges that are being paid on credit cards are larger than those that individuals have to pay for their rent or mortgage payment.
The average interest rate being applied to credit cards is also steadily increasing, currently being found at 18.9%. Introductory rates can sometimes be 23%. If you have had credit problems in the past, your rate could even be 30%. Half of all Americans claim that they will never tell their friends about the amount of money they owe on credit cards. The percentage of people who have reached the maximum limit on their cards: 23%. During the last year 13% of Americans have made at least one payment thirty days late. And 11% have admitted that the collection process has begun on their delinquent accounts.
Some Very Practical Credit Card Debt Advice
Even though so called financial experts may sometimes disagree, the fact remains that credit is not something that is inherently bad. The problem is not the credit itself but rather the improper or uncontrolled use of credit. If you find that you have this problem you should not feel like you are the only one. In fact, the country itself has this problem. When national bills cannot be paid, the country extends credit lines that it has with different financial institutions.
Unfortunately, getting credit card debt advice that is beneficial in real world situations is not easy since many people who offer such advice have rather fanatical ideas. Anyone who suggests that people should not have or use credit cards at all simply is not being realistic. Consider the following tips that are designed to be useful in the real world.
Limit Yourself to Just One
About the best credit card debt advice you can get is if you do not already belong to a credit union then join one. Then go into your credit union and ask them for a credit card with a decent sized limit that you can use but is not outrageous.
The credit limit on your credit card will not be raised by a credit union unless they first contact you to give you notice of the increase. Using cash to make purchases, however, is always preferable to raising your credit limit. Credit unions also tend to charge interest rates of ten percent or sometimes even less on credit card accounts. You can expect that this rate will remain stable instead of getting higher and higher.
Emergency Back Up
The idea of buying something now and paying for it later is simply too tempting; everyone will make some kind of foolish purchase on their credit card at least once. It is important, though, that you do not allow this to become a habit. Keep your credit card to be used as an emergency back up plan, not the first line of attack.
Make sure you have the necessary funds to pay for it when you give into the temptation to use your credit card to make a slightly irresponsible purchase. Remember, though, that you do not have a credit card to use that way. Its only for back up.
Is A Secured Credit Card Right For You?
Secured credit cards look like regular cards, but they aren’t technically the same. Because credit is essentially a loan extended to you by the card issuer, requiring you to pay it back on time, these cards aren’t really proper credit cards.
If you pay off your conventional credit card withing a billing cycle, you won’t have to pay any interest. However, you might still have to pay annual fees. The benefit of credit cards is that they allow you to buy things immediately, even ones you wouldn’t necessarily be able to buy without saving up several paychecks.
Saving money for little things is a good idea. However, if your car’s transmission fails or you decide to take a loved one on a big vacation, that could be a lot harder. Credit cards are also prestigious and incredibly convenient.
Being able to whip out the ‘plastic’ and make the transaction happen is often required to look like you’ve got your act together without carrying mass cash. This is why so many people use them every day!
However, if you’ve had some bad luck or made some purchases that were really too big to handle, you may no longer have the credit score to get a regular credit card. This is where a secured credit card comes in.
You can still get all the bonuses of a credit card without having to deal with the problems. On a secured credit card, you put up money in advance. This amount becomes your effective spending limit. That keeps you from being able to get in the same kind of trouble using a secured credit card that you can using ordinary credit.
Also, it’s a great way to rebuild less than stellar credit, provided the issuer (company) that provides the secured credit card report to the credit bureaus. While the secured card won’t let you ‘go big’ on things beyond the cash you put in… you’ll get all the convenience and prestige of having plastic, and you can fix up that credit at the same time.
If you’re thinking about using a secured credit card to improve your credit situation, be sure you use a card to report your on-time payments to the credit agencies. If you don’t do this, your score won’t improve. If you’re just looking for insurance against over spending and the convenience of a credit card, you can use any secured credit card - just make sure you find one that’s low in fees.
