Many people do not realise when their credit card debt is getting on top of them until it is too late.
The best thing to do to see how you stand with your credit card and how much you are paying back to them each month, is to calculate your monthly earnings and then calculate what you can afford to put back into your credit card account. You will then you have to divide your earnings by what you make in payments to your credit card and if you arrive at a figure of 15% or more going towards your card debt, then you are facing the chance that you are falling through a debt trap door that you cannot get out of.
If you find that you are in this position, the best thing that you can do is to stop using your credit cards and look at other areas in which you can cut back in your expenditure. The thing that I am going to suggest may not be what you would think, but it can go a long way to saving you a lot of money. The area in which you can save cash is your grocery bills, but I have to eat I here you say that is true as it is a fabric of our being, but it is the manner in which we spend our cash on groceries, that costs us a large slice of our monthly bills being higher than it should be.
Lets start with how many times that you have been looking through the newspapers, and you have came across money off vouchers on products that you do usually buy and ignored it and then threw the paper in the bin? Loads of times I bet and when in the supermarket do you go for the big named brands that are a lot more expensive but are told that they are of higher quality? Of course you do, but the fact of the matter is that the big name brands are not that much better, than the stores own branded labels and in many instances the product is made in the same place and are very similar.
Even if you see the big named brand with a promotion of 50% free or buy one get one free, you will find in many instances that it will still be cheaper to buy supermarket own brand products. And what you must also remember is that these firms are not going to sell their products at a loss. So just think at the high mark up price that they are usually at when not on a promotional price.
So by cutting down on your grocery expenditure, you will soon see the difference in your credit card debt, as you put what you are saving back in to clear your credit card balance.
At the same time as cutting your debt, remember to pay your credit card bills on time. Credit card late repayment penalties can work out to be very expensive and could actually undo all your good work. Credit card late payment penalties are currently being brought down to 12. This reduction was brought about by pressure from the Office of Fair Trading (OFT)
These days credit card or plastic money is very popular and used extensively. It is indeed of great utility if used in a calculative manner, but it is also the main cause that leads many people trap into credit card debt. Let see how it happen to most of people.
Many of retailers are implementing easy payment scheme for their products or services, with some fraction amount of money for monthly installed, you can buy thousand of pounds of items or go for a luxury vacation which you can’t afford to buy if one lump sum of money is needed, these monthly installment are automatically charge to your credit card. Every month, you just pay the minimum amount of your credit card balance and you continue spend on your credit card. Let use a case study to review on how a person credit card debt can grow and how it will take to get rid of it.
Case Study
Scott earn 2,500 a month, he is holding a credit card with interest rates of 12%. All his credit cards allow him to pay a minimum of 3% or 10 which ever is higher. His credit card limit is 15,000.
Scott’s credit card balance at current month is 4,550 (3000 in principle and 1550 interest). He tends to pay the minimum of his credit card balance and each month he will averagely swipe about 500 on petrol and other utilities.
Let see how’s Scott’s credit card balance grow:
Month 1
Credit card balance = 4,550.00
Minimum Payment = 136.50
New Credit Card Spending = 500.00
New Balance = (4,550 – 136.50 + 500.00) = 4913.50
Month 10
Credit card balance = 7976.02
Minimum Payment = 239.28
New Credit Card Spending = 500.00
New Balance = (7976.02 – 239.28 + 500.00) = 8236.74
Month 20
Credit card balance = 11109.85
Minimum Payment = 333.29
New Credit Card Spending = 500.00
New Balance = 11109.85 – 333.29 + 500.00) = 11276.55
Month 30
Credit card balance = 13662.60
Minimum Payment = 409.88
New Credit Card Spending = 500.00
New Balance = 13662.60 – 409.88 + 500.00) = 13752.72
Month 36
Credit card balance = 14961.02
Minimum Payment = 448.83
New Credit Card Spending = 500.00
New Balance = 14961.02 – 448.83 + 500.00) = 15012.19
If Scott continues his practice, his will hit his credit card limit after 36 month compare to current month.
Let say Scott stop using his card with the balance at month 36 of 15012.19 and continue paying the monthly minimum. It will take him 228 months which equal to 19 years to just to pay off his 15012.19 debt.
The above example is just a simple case study to show you how your credit card debt may piles up so quickly without you even aware of it. You need a lot of time and spend a lot of money on interest in order to get rid of this debt. In real life, many people have more than one card and other loans to support; hence situation may even worse.
How to get rid of credit card faster & affordable?
If you are already at this situation, the first thing you need to do is to change your behavior of paying the minimum only. Paying more each month will definitely pay off your debt faster but the question is you may say that you can’t afford to pay more than the minimum. In actually fact, the easiest, faster and affordable way to get rid of your credit card debt is maintain your current minimum monthly payment.
For example, we use back Scott’s case. If he affords to pay the minimum payment of his 15012.19 debt, which is 448.83, this is his affordable payment. If he continues to pay 448.83 every month instead of the minimum of his credit card balance, he will need only 43 months to pay off his debt as compare to 228 months. This mean, Scott will have his debt free life in less than 4 years instead of 19 years.
In Summary
Credit card will remain important in many people life, use it intelligently for your convenient, but you much carefully manage your credit card balance, don’t let this plastic money drag you into financial crisis; the ideal way is pay the balance in full each month.
Bad Credit Is Coming! – Signs That You Are Approaching Bad Credit
Many people in the United States today have bad credit, and the numbers have continued to rise. It isn’t just those who are lazy who end up with bad credit. Many hard working people who are well meaning end up in situations where their credit is ruined. The best way to avoid this is to look at the different warning signs that can indicate that you’re headed towards a situation where your credit can be destroyed.
If you don’t have medical insurance, this is one sign that you’re headed towards financial trouble. Statistics show that a large percentage of people who end up with bad credit are those who have outstanding medical bills. As the cost of healthcare continues to increase, getting sick or hurt could put you in debt that is difficult to get out of. If you don’t have health insurance, it may be time for you to get it. If you are maxing out your credit cards, this is another sign you are headed towards bad credit.
Credit cards are a key factor that causes many people to end up with bad credit. Their high interest rates combined with late payment fees and universal default can make them a nightmare for people who don’t use them properly. It is best to keep your credit card balance as low as possible. Only use your credit card when you absolutely need it. Always pay your bill on time and avoid maxing out your card at all costs. Many people also make the mistake of using the equity in their homes too much to pay for expenses.
While using the equity in your home can be a good idea for those who want to remodel their kitchen or bathroom, they should be used cautiously. Before you use the equity in your home, make sure you will be able to make the monthly payments with ease. You want to avoid situations where you could default on your payments. Living paycheck to paycheck or not having adequate savings is another sign that you could end up with bad credit. It has been shown that about 40% of American families have less than 1000 saved up.
This is alarming for a number of reasons. First, if you get into an emergency, you will have little money to protect you. This will leave you open to using a credit card or payday loan, something you want to avoid. This will get you into a cycle of debt that is difficult to escape from. The chances that you will get behind on your payments and ruin your credit are dramatically increased.
Because of this, it is important to start saving money if you’re living paycheck to paycheck. Get rid of bills that you don’t need. Saving money is an important part of building wealth, and if you’re living paycheck to paycheck, you’re not getting ahead financially, even if you make a large income. If you are only paying the minimum balance on your credit cards, it will be difficult to pay them off. It may take as long as 30 years to pay off your cards, and you could end up with bad credit if you stop making your payments.
Another thing that can lead to bad credit is co-signing on a loan for someone else. Even if you have good credit, the person that you’re co-signing with may not. If they decide to stop making payments on the loan, you will be held responsible because you signed for the loan as well. It is best to avoid co-signing for a loan at all times. If your home or car has been foreclosed or repossessed, this is a factor that can also cause your credit to be ruined.
If you have the misfortune to have a bad credit rating youll know how difficult it is to obtain credit. Or is it? Truth is that many people with bad credit ratings accept that theyre no longer able to borrow, which may not be the case. Some lenders are willing to lend money without making you go through a credit rating check. One service that offers this bad credit cash advance services.
All you need in order to qualify to apply for bad credit cash advance services is a bank account, work and a home address. Provided you have these you can make an application. If you want to apply for bad credit cash advance services then youll need to log on to the Internet and find a lender, which shouldnt be too difficult as there are many lenders offering this service.
Along with your bad credit cash advance services online loan application youll need to provide evidence of your salary, such as your last pay-slip, and your bank account details. Once you submit these you should be able to borrow money without a credit rating check being done.
You should note, however, that bad credit cash advance services are short-term borrowing. Youll need to repay the cash advance loan on your next payday via a direct debit from your bank account. If for any reason you need to extend this period, youll need to arrange this with the lender before they submit the direct debit application.
So if you are one of the million these days who is find it difficult to make ends meet and need a short-term cash advance but are worried that your bad credit rating will stop this, try bad credit cash advance services you may be pleasantly surprised with the answer you get.