Leave Home Without It...How to Avoid Credit Card Debt

Written by Johann Erickson


It would seem that a day doesn’t go by without receiving a credit card offer inrepparttar mail. Oftentimes,repparttar 135679 offers seem too good to pass up. But before you’re tempted to apply for that “platinum card”, there are a few things you should know.

Too many people see credit cards as a means of buying things they wouldn’t normally be able to afford. It’s very easy to live beyond your means when you only have to make a “low minimum payment” once a month. But what most people fail to realize is that interest only continues to pile up on your outstanding debt. When you make onlyrepparttar 135680 minimum payments on your credit cards you're often not even coveringrepparttar 135681 interest fromrepparttar 135682 previous month, let alone making a dent in paying offrepparttar 135683 principal. At that rate you can be paying off your credit card debt for decades. It’s like trying to put out a fire with an eyedropper full of water. Also, be wary of those seemingly thoughtful letters from credit card companies praising you for being such a valued customer and as a "reward", they offer to let you skip a payment. Don't be fooled. Interest is still accumulating, making more money forrepparttar 135684 credit card company.

If you feel yourself drowning in a sea of debt, there are some things you can do to help yourself. For starters, look into lowering your credit card interest rates. Sometimes all it takes is a phone call to your current credit card provider to negotiate a lower interest rate, especially if you threaten to take your business elsewhere. If they’re not willing to work with you, then it’s well worthrepparttar 135685 time to do a little research to find out which credit cards are offering a better rate. Generally speaking, anything under 12% is considered good. If your credit history is fairly stable it’s an easy process to transfer your credit card balance onto another card. Just remember,repparttar 135686 point of making a balance transfer is to pay down your debt. It should not give you license to start charging above your means once again. If you’re not careful, this kind of maneuvering can become a vicious cycle.

Maxing Out on the Minimum: Don’t Get Trapped Making Minimum Credit Card Payments

Written by Elizabeth Walling


It’s an easy trap to fall into: you get that pre-approved credit card offer inrepparttar mail, most likely with an appealing introductory interest rate forrepparttar 135678 first six months. You feel like you deserve a little extra spending money, andrepparttar 135679 minimum payment is only 2% ofrepparttar 135680 balance; even you can afford that! You promise yourself that you'll start making more thanrepparttar 135681 minimum payment afterrepparttar 135682 introductory rate expires, and by then you might even get that raise you’ve been expecting from work. However, we all know these plans never turn out quite like you expected. A family member falls ill, and you have to take an unusual amount of time off of work, meaning you won’t be getting that raise any time soon. Then whenrepparttar 135683 car breaks down, you have to use any extra spending money you have to repair it just so you can get to and from your job. You can still affordrepparttar 135684 minimum payment on your credit card, though, and you decide to just stick with paying that. After all, what difference could it make?

The truth ofrepparttar 135685 matter is that it can make an enormous difference. The minimum payment isrepparttar 135686 perfect amount to ensure you will be paying on your balance for years and years to come. Inrepparttar 135687 end, you could be paying several times more than your original balance in interest charges alone. It may not seem plausible, but it’s hard to ignore when you haverepparttar 135688 numbers right in front of you. Here are two examples of what happens when you make onlyrepparttar 135689 minimum payment on your credit card:

Let’s say you have an meager $1,000 balance on your credit card, which hasrepparttar 135690 average interest rate of 18%. Your minimum payment is $20 per month. If you payrepparttar 135691 minimum payment, you will be paying off this balance for eight years, and you will pay more than $850 in interest charges.



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