Credit
Card Debt Advice for Americans
Jeanette Fisher
Credit Card Debt: How to
Become Credit Smart
Being able to buy things on credit has allowed
Americans to own and enjoy things--often for
years--without having to wait and pay cash for them.
In that way, the concept of credit has been a boon
to experiencing the American Dream. Unfortunately,
there is also a dark side to credit--one that can
turn the American Dream into a life-destroying
nightmare.
The figures are startling. More than 70 percent of
American divorces are caused by the stress brought
on by financial difficulties, and three out of every
four Americans are a mere three paychecks away from
having to face potential default on their debts.
But how can this happen in the richest country in
the world? The answer is simple: misuse of credit.
In order not to become one of those depressing
statistics, it's important that you become credit
smart--long BEFORE you find yourself in financial
difficulty over your head.
First, let's look at the nuts-and-bolts of what
credit card debt actually costs. When you buy something using
a typical credit card, you will, on average, end up
paying more than 130 percent above the actual cost
of that item, compared to what it would have cost if
you had paid cash. No matter how terrific the sales
price may have been, your savings will be more than
offset by the interest charges you'll end up paying
if you pay by sending the monthly minimum payment to
your credit card company.
If you pay the minimum amount suggested on your bill
each month, you'll normally be paying 90 percent
interest, with only the remaining ten percent going
to the reduction of the principal on your balance.
It can take years to pay off relatively high ticket
items, and you'll end up paying many times more for
the item than its original sales price. Yet more
than 70 percent of American consumers pay only the
minimum amount on their monthly statement and never
give any thought to how much interest they'll pay
over the life of the debt.
To avoid potentially devastating financial
difficulty, and to save money (and possibly your
marriage), it's important to become credit smart.
First, pay cash, if at all possible. Second, if you
can't pay cash at the moment, ask yourself if you
truly NEED whatever you're contemplating at the
moment. Perhaps you can put it off for awhile, and
then pay cash for it.
If you need the item right away, put it on your
card, but when the bill comes, always pay a little
more than the minimum amount each month. Even a
small amount can save you hundreds, or even
thousands, of dollars over the life of the loan.
Finally, if you can, pay off your credit card in
full each month. That way, you'll avoid paying any
interest at all.
Credit card debt can ruin your life and the lives of
everyone in your family. Take time to learn how to
use it wisely--to improve your quality of life
without creating undue amounts of stress.
Copyright © Jeanette J. Fisher.
Jeanette
Fisher teaches how to get out from under credit card debt,
how to use credit to make money, and six ways to
build strong credit to finance your first home and
multiple investment properties. For a free credit
advice and free ebook "Credit Tips for Mortgage
Financing," see
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