Credit Card Debt Reduction Is A Must
As a society, we have more credit card debt than at any time in our history. The average American family has $9,300 in revolving unsecured debt on top of the mortgage, auto and boat or RV loans. That is up about 240% from the amount of debt carried just 10 years ago. More staggering is the fact that the average family today spends about 122% of what they earn each year. How? Because as a nation we are going deeper and deeper in debt each year. Any family that continues that pattern will go into bankruptcy or worse. Let me show you in my e course how to eliminate your credit card debt quickly and easily. You can do this.
When Will Your Credit Cards Be Paid Off?
Minimum payments are calculated to keep you in eternal debt. The usual calculation is 90% interest and only 10% toward the principal balance. They mean to keep you in bondage forever if possible.
The average interest rate, even considering the low-end rates they lead with, is still 18.9 %, not including other fees like the $29 average late fee. Let's look at an example. If your credit card balance is $8,000 and you make the minimum payment at 18% interest, it will take 25 years and 7 months to pay off the balance. That assumes you make no further charges on the card.
You will pay $15,432 dollars in interest alone and the total of your payments will be $23,432, nearly three times the amount you originally charged. Congratulations! In order to get it now, you have reduced your standard of living to one third of what it could have been. Keep that up, and the American dream becomes a nightmare.
Recently, at the urging of the Federal Reserve, many credit card providers shortened the length of time it takes to repay by as much as doubling the minimum payments. Ouch! But that is actually a good thing. Still, isn't 10 to 15 years way too long to be paying on last summers vacation?
The Truth About Applying For Credit Cards.
I just read an article by a self-professed Credit Guru, and his advice was dangerous and just plain wacko.
He suggested that if you needed a credit card, go to the yellow pages, every local bank and every credit card site on the net and collect an application and submit it to each one. He boasted that if you apply for 30 credit cards, you're bound to get at least 10 approved. What hog wash! I'll tell you what's wrong with that strategy, but golly - where to start?
First, you don't want 10 credit cards - you'll actually have a better credit score with only 1 to 3 cards. If you submit 30 applications (or even 10) your credit score is headed for the toilet. Every creditor you submit to will immediately run a credit check. One check, even two, won't hurt you. But 10 or worse 30 makes it look like either everyone is turning you down, or your credit appetite is totally out of control. Either way, the cesspool is your fate.
Suppose you actually get 10 new credit card accounts (unlikely but sadly possible), what then? Your credit score is terminal and no one will likely extend credit to you for anything else. They will see you as a credit casually in the making. Here are better strategies:
1. Apply for only one new account at a time. Look at the terms carefully and try and determine if you will likely be approved. If not likely, don't apply. The turn down will hurt you.
2. When you receive a new credit card read the disclosures carefully. Did they deliver the terms they offered, or was it a high priced bait and switch?
3. Wait a couple of months at least before applying again for another account. Wait until you already have a positive payment record on the last account established.
4. If you need more credit, ask the creditor to raise your limit after 6 months or so, rather than applying for a new card. This will raise your score rather than lower it.
5. If you have poor or no credit history, try some of the other quick surefire strategies detailed in my book, including applying for a secured card.
Keep your eye on the big picture. Your goal is 750 Plus with low or no debt, particularly no credit card debt. Be careful where you get your advice. There are wackos and wanna-bees everywhere.
Even With A Perfect Payment History,
Your Credit Card Balance May Drag Down Your Credit Score
Did you know that a credit card account can drag down your credit score even if you are below your credit limit and have a perfect payment history. Well, it's true. The perfect payment history will help your score, but if you carry a balance from month to month of more than 50% of the available credit on the account, you will actually lose points. To get the most points, keep the balance below one-third of the available credit. Sounds strange, but it is a fact. More than that and you are looked at as possibly over-extended.
If you must carry a balance over 50%, and I don't think anyone should, get them first to raise your credit limit so that you can stay below the half-way point.
