Credit card debt would be so critical to make sure a good financial records .
Some would say that any credit card debt is bad news. Credit Card Companies add a penal level of interest to any balances that are left outstanding after the month end. They only require a minimum payment and are quite happy with customers who simply do that because they earn their money from the interest they can charge. Anyone who has a stubborn balance that never really seems to come down should actually ask for realistic bad credit installment loans lending at a much better rate of interest and pay the balance or balances off. Those in regular employment who can make out a case for approval should act to get rid of these balances; the interest paid is a waste of money. You should take the time to look at your finances and specifically your credit cards and see if you are living beyond your means.
A Juggling Exercise
Credit cards became an instant hit when they were introduced. They were so convenient and did allow people to buy something immediately using up the credit limit that the provider allowed. In the days before the recession companies did little checking on the suitability of applicants and many people had several cards, each with a credit limit that was often raised without the customer actually asking for it. Some juggled balances by accepting 0% interest deals which were introductory offers and basically merely disguised the fact that the owner was over extending himself or herself. The recession brought misery but years on it seems that many Americans have not really changed their behavior.
True, credit cards have become virtually the only way to buy some things. Companies like those in car rental use them as a form of ID and guarantee against the return of their car. Airlines and hotels are now commonly bought online and that involves using a card though debit cards are a possibility. There is nothing wrong with a credit card as such; it is the temptation that it provides where the trouble starts.
One of the dangers of credit card debt is that customers can be in denial. It is possible to dismiss the debt because there will be no nasty letters while the customer is with the agreed credit limit. As long as the minimum payment goes in on time the credit card companies are happy. This attitude of ignoring a growing problem is similar to another feature in American society; lack of provision for retirement which will arrive all too soon. Indeed some people don't really know the total level of credit card debt they have, especially where they still have a number of cards. The worst situation is having insufficient funds to pay the minimum requirement on a specific card and needing to draw money from another to fulfil the payment.
If you can only afford to pay the minimum required each month then you are in trouble, not tomorrow or the day after but in a matter of months at best. If you wrote down two lists, one your monthly income and the other your monthly expenditure then it is likely to make poor reading. A budget is one thing that does not show liabilities. A company's balance sheet shows assets and liabilities. It would make sense for you to have something similar, updating it regularly. If you did this you would see your liabilities rising month on month. It does not take a financial genius to see the problem that is looming and the need for urgent action before it is too late.
If you are finding money tight to the extent that you need to use your credit card for everyday household bills you are probably in trouble. What you could do if you were hit with an emergency bill out of the blue is anyone's guess. There will come a point when your plastic has run out of credit and nowadays credit card companies are far more careful about increasing credit limits without evidence that the user is in control of his or her finances.
It is certainly time to act, especially if you have a card with no more credit on it. You may be paying the minimum each month but that hardly provides any significant new credit and won't in the coming months. If you can earn extra money then it is time to look at your alternatives but also to look at economies you can make. Paying off balances with a personal loan has already been mentioned.
Recent Federal Reserve figures make poor reading because consumer credit card debt is around $800 billion with the average debt per household $16,000, bearing in mind that there are households that do not have cards. The average available credit per card is just over $1000 which is problematic if you consider the issue of consumers getting closer and closer to their credit limits. 56% have failed to make a payment at least once in the last year while 26% have a larger balance than a year ago. Equally if not more concerning is the statistic that the average percentage of monthly income going on servicing credit card debt is 14. This is not a situation that is sustainable over any great period and it is certainly an indication that savings per household will not increase any time soon.Read more Comments