Many Americans are weighed down by credit card debt. According to a recent survey, the average credit-using household is nearly $16,000 in debt. Making things worse, the average interest rate on this debt runs somewhere in the teens. If you want to avoid or get free of this kind of burden, here are some things you can do to take control of your finances:
Realize That Not All Debt Is Bad
People have a tendency to label things as good or bad, but debt doesn’t necessarily fall into either of these neat categories. Some debt, in fact, can be a very positive thing for your financial security. Borrowing money to buy a house can increase your wealth, provide a better home for your family, and give you an investment that can provide a good return in the future.
Know The Good From The Bad
While borrowing money for a new house or college tuition can make a lot of sense, not all debt paints a pretty picture. According to most financial experts, credit card debt is particularly unfavorable for families trying to save for the future. While there’s nothing wrong with using a credit card for convenience or in an emergency, it’s not a good idea to use it for things you can’t really afford. Save in advance whenever possible.
Know What You’re Spending
Most people run into trouble not because they are greedy, but because they don’t have a firm grasp on where their money is going. Take a little time to get organized. Figure out how much money you have coming in, how much you’re spending on necessities, and which luxuries you could do without.
Get Debt Help
If you’re already among the many Americans who are struggling with credit card debt, you don’t have to handle it alone. Debt consolidation services can help you roll your debts into a single monthly payment. By doing this, you can pay down your loans more quickly and in some cases even lower your interest rates. The sooner you can get out from under the burden of all your credit card debt, the sooner you can build towards true financial freedom.Read More
Credit card debt per indebted household has hovered around $15,000 since 2010, according to data from the United States Federal Reserve. Families may pay hundreds per month just as a minimum payment towards servicing their credit card debt. The sad truth is that only making minimum payments might mean that you will be paying off your credit cards for years.
For families looking to get out of debt quickly, other strategies must be employed. Different forms of debt management plans are growing in popularity as American families realize that they need a real solution to their debt problems.
Debt consolidation is one method for managing your debt that combines it all into a single low-interest monthly payment. You will end up paying off the same amount of debt, but you do so at lower interest rates, allowing you to pay it off much sooner than if you’d just made minimum payments on high-interest credit cards. The savings from interest alone may total up to thousands over the lifetime of the loan.
How Does It Work?
The foremost question that people ask is why they can’t just get lower interest rates on their own. The answer is the organizations like CreditGuard that provide debt consolidation services do a lot of business with lenders and qualify for lower rates. By rolling your debts into one single monthly payment, you take advantage of their business clout and end up saving money.
Every month, you will make a monthly payment roughly equal to the amount you currently pay each month to service all of your debts. Your debt consolidation provider will then make low-interest monthly payments on time to each of your creditors.
Your Credit Score
Regular, timely payments will help your credit score improve, which is often a goal for families looking to get out of debt. An improved credit score gives you more opportunities for home or auto financing, college loans, starting a business or other major expenses on credit.
If you and your family could use a break from worrying about when you’ll pay off all your debt, perhaps debt consolidation is right for you.Read More
Did you ever notice that people use the word “should” a lot? “Oh, I should really lose weight.” “I should really get out of debt.” Unfortunately, “should” very rarely turns into “did”. If you want to put your financial house in order, it’s time to dispense with the “I should do” mentality and get into an “I must do” one. Here are four steps you must do in order to have great credit management skills and a great credit score.
- Borrow No More Than You Can Afford: People get accustomed to borrowing when they can’t afford something. This is not the way to go about it. Although you may not have the money in your bank account right now, you need to make sure you can pay down the credit card debt in a reasonable time. Knowing what your financial limits and boundaries are will help you develop better credit management skills.
- Only Use a Fraction of Your Credit: You may have a $5,000 limit on that silver credit card, but that doesn’t mean you need to max it out. According to financial experts at companies like creditguard.org, If you want to avoid running into trouble, use smart credit management and stay below 50 percent of your available credit. If you really want to build a great credit history, stay below 30 percent.
- Pay It Off Within a Month: Minimum payments will not only kill your credit score, but will drain you financially. When you elect to pay only the minimum each month, you are simply giving money away. If it’s at all possible, pay your balance off in full at the end of every month. If not, pay as much as you humanly can.
- Pay On Time: Paying on time is an essential aspect of having great credit. A missed payment puts a black mark on your credit history, making it harder for you to qualify for favorable terms in the future. It adds a fee on top of your regular payment. It may even raise your overall APR, meaning you’ll pay even more for the money you’ve already borrowed. No matter what, make sure you pay your bills on time.
- It’s Not Too Late: If you’re reading this and thinking, “Yeah, I wish I’d done all of this,” take heart. It’s never too late to have great credit. If you’re in a jam, there are excellent debt consolidation and credit counseling programs that can help. Take that first step with a credit counselor, change your credit management habits, and the rewards will come before you know it.