VIEWS: 35 PAGES: 4 CATEGORY: Debt & Credit POSTED ON: 5/10/2012
There simply is no acceptable level of credit card debt balance. If you are running a debt on your credit cards from one month to the next, you are paying over the odds for your purchases, because the interest is always accruing. Even if your credit card debt is not yet out of control, and if you know what’s good for you, get out of credit card debt while you still can.
By Dermot Farrell Copyright © 2012 http://www.CreditCardDebtSecrets.org The Secret Behind Credit Card Debt – Copyright 2012 – http://www.CreditCardDebtSecrets.org There simply is no acceptable level of credit card debt balance. If you are running a debt on your credit cards from one month to the next, you are paying over the odds for your purchases, because the interest is always accruing. Even if your credit card debt is not yet out of control, and if you know what’s good for you, get out of credit card debt while you still can. The Problem with Credit Card Debt and Why it is Necessary to Get Out of Credit Card Debt While You Still Can There are four aspects to the credit card system, which make a credit card debt a great danger to your long-term financial peace of mind, and they are: Low minimum repayments Extortionate interest rates Denial Consumer pressures The problem with credit card debt, when taken from the perspective of debt, is that because of the low minimum payments and the very extortionate interest rates, credit card debt tends to increase rapidly. For many credit card debtors, it ends up getting out of control, and once out of control it is difficult to recover from. Whichever way you look at it, credit card debt is not good. Even if your credit card debt bankrupts you, it’s an enormous waste of your resources and it really is a good idea to get out of credit card debt, if you know what’s good for you. For instance… If a credit card debtor owes $20,000 in credit card debt and their average annual interest comes to 18%. At 2% minimum payment (which is the rate of payment which is set as a minimum by most credit card companies) it works out at $420 per month. At this rate it will take just over 85 months to repay the debt. This is only if they do not make new purchases during these 84 mounts. And, of course, this is outrageous. Everyone makes purchases in their credit cards. So these figures, noted above, are based upon a debtor who stops making new purchases for 7 years. You get the picture? Credit card debt is designed to spiral out of control, and will do so once you take your eye of off the ball. The Secret Behind Credit Card Debt – Copyright 2012 – http://www.CreditCardDebtSecrets.org So even in the case of a credit card debtor, who stops using their credit cards and simply makes these minimum payments, this debt of $20,000 adds up to $35,700 by the end of that 85 month period. That’s 67.5% interest! Now that is a lot of interest. If this is not a good enough reason to want to get out of credit card debt, do remember that even if you think your credit card debt is under control the latter two dynamics, which are ‘denial’ and ‘consumer pressures ’ (see below), will pull you back towards credit card indebtedness. So, even if your credit card debts are not out of control today, they can very easily get out of control, and fast. And even if you manage to keep your credit card debts under control, as long as you are holding a balance of debt on your credit cards, on a monthly basis, because of the extortionate interest rates, you are quite simply throwing your money away. The Influence of Denial and Consumer Pressures on Your Credit Card Debt Denial: Denial makes a credit card debtor tell themselves “I’ll fix it tomorrow”. However, ‘tomorrow’ usually never comes and meanwhile that controllable debt is rapidly spiraling out of control. Also, by the time the monthly payments become extortionate, the debt is already out of control. This means that by the time the debtor becomes aware of the problem, their debts are often substantial and they have an uphill battle to get themselves out of debt. Consumer pressure: We are surrounded by financial temptations. There are so many advertisements out there telling us to buy today and payback whenever. The consumerist society which we live in is based upon debt; and everywhere you go, whether it be the bank, the shopping mall, the garage, anywhere at all you will find promotional offers designed to get you into debt. Society needs debtors, and easy credit terms help to keep the economy buoyant, because money keeps on changing hands which is a good thing. Well, these are the macro economic arguments for a consumer based society. Whether or not you are helping society by getting in debt, I do not know. But one thing for sure, just because everyone else is getting into debt that does not means that you have to. This is a difficult thing to achieve. My best advice to you is simply to think twice prior to singing on the dotted line or take out your credit card. Your credit card is not a life enhancer. It’s a pre-approved loan… So just think of it that way. The Secret Behind Credit Card Debt – Copyright 2012 – http://www.CreditCardDebtSecrets.org So if I Want to Get Out of Credit Card Debt Does this Mean I Cannot Use My Credit Card Ever Again? The only reasonable application for a credit card is to use it and then pay off the credit card debt grace period whereby no interest is applied. By doing this you will not be racking up accredit card debt. Furthermore, it may seem like a crazy idea, to use a credit card in this way, whereby you buy something today and pay for it next month, however, when you think about it living in debt is mad idea. If your debt situation is not too bad, then do what you have to do to get out of it, such as budgeting, for example. And even if your credit card debt is already out of control, then remember it’s never too late, you can get out of credit card debt if you really want to. In this case do some research and decide on a debt elimination strategy which will help you to get out of credit card debt. And then once you have gotten free from the debt, make sure you stay out of it! The Secret Behind Credit Card Debt – Copyright 2012 – http://www.CreditCardDebtSecrets.org
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