Credit Card Debt

About Credit Card Debt
Although the amount varies considerably from time to time, it is thought that the average credit card debt across the board would be somewhere in the vicinity of $7-8,000. This means that if you have three cards, without control, you could conceivably be in debt, in excess of $21,000.

Credit card debt and all it entails, needs to be taught in every school in the land.

Young people, before they leave to join the workforce, need to be educated on the use of credit cards and the problems that arise from allowing it to build up without any restraint. Most people don’t realise how high the credit card rate can be (that is, the interest rate) and how it can hurt them.

" The average credit card debt is in the vicinity of $7000 - 8000 ..."

Perhaps our education system needs major changes so that high school students get compulsory training in money, finance and economics. Students today are taught many things on many subjects, but they are not equipped or taught the basics they need to survive when they leave the school system.

Children need to learn about chequebooks and credit cards. They need to learn about paying board, about taxation, about loans and loan sharks, about interest, about their credit rating. The also need to be taught about investment and how they can put in simple strategies to increase and protect their wealth. It’s easy to get into debt when you have a job and a regular income coming in, but unfortunately the real world sometimes can take that job away and overnight the burden of the debt becomes much heavier.

Credit card debt especially is a real problem because some people find it is a debt they cannot control. It is very sad to see people that you know will be in debt all their lives.

5 Things Your Credit Card Company Keeps Quiet About

Your credit card company keeps quiet about the following:

  1. If you only make the minimum payment appearing on your credit card statement, then on an average balance of $4,000 each month, it will take you over 40 years to repay the balance. It means there is no real time set down for you to pay the debt back. It’s an open-ended type system and it is in the interest of your credit card company to let you pay only the minimum amount, because they are getting high interest on the outstanding amount, month by month.

    It is in their interest that you are in debt, because this is there business. Once you pay back your debt, they no longer have an income. Most credit card companies will let you pay off your credit card balance forever if you let them. In fact, a lot of credit card companies do not like you to have your credit card at a nil balance from month to month because it slashes their income considerably.

  2. When you take out a normal loan it is usually for a particular term and therefore your repayments are geared to be able to clear that loan by the end of the term. With credit cards however, there is no fixed term and therefore there is no end set down. Someone said it’s like the energiser bunny seen on TV that just keeps going, and going and going and going.

  3. Credit card companies usually have what is known as a “teaser rate”. This is a low rate, which encourages you to take out a card. After a period, (usually 6 months) it’s bumped up to a very high rate. This introductory credit card rate is heavily advertised, but what you don’t see is the fine print. The fine print (which is so small that you need a magnifying glass to read it) clearly sets out the conditions, and one of these is that the rate will increase. Be careful, because like any other offer or business opportunity put before you – if it sounds too good to be true, it generally is.

  4. Remember that credit card payments are due mostly on the last day of the month or on the first day of the next month, or on the date shown on the credit card statement. Ensure your payment reaches them before the due date or you will be hit with a late charge. What also happens is that you will be charged interest on
    " Watch credit card promotions - sometimes there is a catch  ..."
    the entire balance from the time the balance was debited on to your credit card account. It is very difficult for you to win with your credit card in this type of scenario. The moral is to make sure you pay your credit card off so there is a nil balance each month and if you cannot afford this, always pay the minimum amount and pay it by the due date.

  5. Watch promotions where credit card companies offer incentives to transfer your credit card balance to their card. They usually entice you with a lower rate of interest and it really sounds like a generous offer. However, just check that there are no catches. With some cards, if you don’t charge something new on the new card each month, the interest jumps up to the regular rate for that credit card which is usually very high. If you to make a late payment, then the promotional rate will disappear and you will be hit with the regular high rate. You have to carefully check out what’s in the offer, and if necessary ask these questions before you accept the proposal put before you, however attractive.