In the times of economic uncertainties, choosing to pay off your credit cards is probably one of the most excellent financial decisions you can take. On the other hand, most people have become addicted to using their credit cards. There are loads of attractions in the world and people often use their plastic cards in order to fulfil their wishes, without realising potential circumstances.
In the end, it becomes difficult to pay off the credit card debt and millions of people across the world are struggling with increasing interest rates on credit cards. Hence, the numbers of bankruptcies have significantly increased in the recent past.
First of all, in order to clear your credit card debts, you must stop using them. According to the financial
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According to a few financial experts, it would be advisable to pay off the cards with highest debt first. On the other hand, a few suggest that you must pay off the ones with smaller balances. However, you must consider paying off the ones with higher rate of interest, regardless of the balance on it.
The whole purpose is to eliminate the debt; hence these higher-interest cards would be an obstacle while you plan to reduce your debts. At the same time as it sounds tempting to go out and eradicate the debts, it is extremely difficult to do so. Therefore, you need to make a proper plan and stick to it until you accomplish your goal. You must understand that it took a while for these debts to pile up and it would take some more time to eliminate them.
In case if you find it difficult to stick to your financial plan, it would be suggestive to get some credit counselling. Credit counselling process involves a professional reviewing your financial progress, so that you could gain a better understanding of your expenses in accordance to your
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Ensure that you choose a reputed credit counsellor, who can set a financial plan for you in accordance to your existing financial condition. In quite a few instances, the credit card counsellors would negotiate the terms with your creditors to lessen the interest rates, reduce the late fees and also reduce the outstanding balances.
Debt consolidation is another effective way to pay off your credit cards. However, there is a significant amount of risk attached to this option and hence you must pay a lot of attention to the terms involved. For the most part, debt consolidation loans are commonly suggested to home owners. They can easily use the equity on their home and get a second loan from their mortgage lenders, keeping their house as collateral. All the credit card debts could then be paid off with the second loan on your house.
At the same time as it may sound easy to pay off the credit card debts with the home equity loan, you must understand that these loans are to be paid over the period of 10-15 years. This would extend the terms and you may perhaps end up paying more in the long-term. Ensure that you calculate the true cost of these debt consolidation loans, before getting a second mortgage on your
Debt is heavy. It sits on your shoulders and weighs you down. Debt is also addictive. It 's easy to throw something on credit when you don 't actually have the money to buy it. It gives you instant gratification, and that can feel good - in the moment. But, for many people, there comes a point where they can 't use their credit anymore and debt is all they are left with. The stress of having to pay it all off can take its toll on your happiness and health, so you must come up with a way to get out of debt and start living a debt free life. Following are two things that will help you get out of debt once and for all.
Dave’s second step is to pay off all of your debt. His method for this is called the debt snowball effect. You list every debt you have in order from smallest to largest, leaving out your mortgage. And you pay off the smallest debt first, once that is paid you take what you were paying towards that debt, and apply it to the next debt, and so on. This is exactly what the church advises us to do in the One for the Money Guide to Family Finance written by Elder Marvin J. Aston, in the debt elimination calendar. I believe that is probably one of the fastest ways to get out of debt
Start the debt snowball by paying minimums on all of your debts except the smallest one. Place any extra money to that smallest debt. This will make that debt paid off much quicker.
Credit cards: for some they are the paths to financial freedom, for others they are a necessity for daily purchases. During the recent economic crisis, many have sought out to find the cause. One common suspect is the credit card industry, which is comprised of more than six thousand card issuers (Clayton 209). This issue is debated in the two-part article “Should Congress Regulate Credit Card Rates and Fees?” “Yes” and “No.” Tamara Draut, Director of Economic Opportunity, Demos, argues yes, claiming the credit card companies’ ability to adjust terms and interest rates traps cardholders in everlasting debt. On the contrary, Kenneth J. Clayton, Managing Director of Card Policy for the American Bankers Association, argues no, stating that regulating credit card companies would hinder many people from obtaining credit and further damage the economy. Although both Draut and Clayton present strong evidence for some aspects of their arguments, both writers make assumptions which they fail to support and ignore the complexity of the issue, making their arguments overall unpersuasive.
This way, you will not build up a large debt and easily be able to pay all your dues. Another thing to note, credit card bills have a minimum sum to pay along with the overall outstanding amount. If you are unable to pay off the total amount you owe, it makes sense to keep paying the minimum amount due until then. 5. What is the difference between a'smart' and a'smart'?
I asked her did that sound familiar? Now we began the discussion on her Financial DNA Personal Environment appraisal. It was of importance for Janet to understand the effects of one’s environment and how this was the first step in resolution by developing strategies to move forward (Massie, 2006, p. 144). I informed Janet that implementing a strategic debt pay-down as part of the actual budget and financial plan was her in road to financial stability. Janet welcomed this idea and felt now was the time to correct her thinking and approach to financial decisions. I suggested that we apply the spend down plan in accordance to Dr. David Murphy (n. d) in the lecture Spending and Debt on alleviating credit card debt. Dr. Murphy (n. d) asserts, “Pay off smallest first. Once smallest is paid off, add that payment to second debt. Once the second debt is paid off, add that payment to third debt, etc. until all debts are paid (p.
Finally, so far the best ways to be able to pay off student loans are to either save up money up to the age of college preparation, find a degree that can pay well, and to find a college that can give you the best
For debt, it begins with a simple late or missed payment. These missed payments allow companies to punish card owners without discretion. With this, lenders hike up interest and payments on their customers for negligence, regardless of what their reason may be. Whether it was a tough month for the family or someone died and expenses had to be payed, lenders do not care one bit. From 2013 alone, student debt was at 1.21 trillion dollars, and mortgage standing at a whopping 7.9 trillion (Miller, R. K., & Washington, K. (2014). These loans also feed into why we as a country are in debt, which currently stands at seventeen trillion. These missed payments also greatly affect interest rates from lender companies. Companies wait for payments to come late, which allows them to impose fees and hidden charges that must be paid along with the delinquent payment. With increased rates comes...
With the economy in the U.S. going so well, credit card companies are issuing more credit. Consumers are then using their new found credit to buy without even thinking of how they will pay for the products. They get the credit cards because of the appealingly low 5.9% introductory rate and go for it, but the credit card companies usually run those rates up to 18% or more in the first six months before the consumer pays off the purchase, (Insight into the News IIN, 1997). This in turn leads consumers into over-extending themselves. Although 96% of all consumers use credit cards responsibly, according to the American Bankers Association '97, the typical person who files for bankruptcy takes home less than $20,000 a year and has more than $17,000 in credit charges, and that's not overextending what it is.
Credit card debt is one of this nation’s leading internal problems. When credit was first introduced, and up until around the late 1970’s, the standards for getting a credit card were very high. The bar got lowered and lowered to where, eventually, an 18 year-old college student with almost no income and nothing to base a credit score on previously could obtain a credit card (much like myself). The national credit card debt for families residing in the United States alone is in the trillions (Maxed Out). The average American family has around $9,000 in debt, and pays around $1,3000 a year on interest payments (Maxed Out). Many people have the concern today that these interest rates and fees are skyrocketing; and many do not understand why. Most of these people have to try to avoid harassing collecting agents from different agencies, which takes an emotional and psychological toll on them. While a lot of the newly recognized “risky” people (those with a doubted ability to make sufficient payments) are actually older people who have been customers of certain companies for decades, the credit card companies are actually consciously targeting a different, much more vulnerable group of people: college students. James Scurlock produced a documentary called Maxed Out on this growing problem, in which Senator Jack Reed of (Democrat) of Rhode Island emphasizes the targeting of college students in the Consumer Credit Hearings of 2005
It is a norm and expectation in society today for students to pursue higher education after graduating from high school. College tuition is on the rise, and a lot of students have difficulty paying for their tuitions. To pay for their tuitions, most students have to take out loans and at the end of four years, those students end up in debt. Student loan debts are at an all time high with so many people graduating from college, and having difficulties finding jobs in their career fields, so they have difficulties paying off their student loans and, they also don’t have a full understanding of the term of the loans and their options if they are unable to repay.
We now live in a society where kids start their adult lives “in the red”, as their debt exceeds their income. (Draut, 2005) 60 years ago this wasn’t the case, as told by Studs Terkel in Hard Times-An Oral History of The Great Depression, “I had no idea how long $30 would last, but it sure would have to go a long way because I had nothing else. The semester fee was $22, so that left me $8 to go.” (Turkel, 1970) Imagine that! 60 years ago tuition was $22 dollars a semester! Furthermore, 45% of adults under 35 state they find themselves resorting to credit card use for basic living expenses like rent, groceries and utilities, (Draut, 2005) adding to their mounting debt. This use of credit puts them into an entirely different category of indebtedness: survival debt. (Draut, 2005) Imagine being forced to borrow to live! (Draut, 2005) If a car breaks down or someone gets sick, the only option available is using a credit card. (Draut,
The debt will never get cleared up if charges keep appearing on the bill, and even when purchases stop the debt is normally so extensive it takes months if not years to pay off and it can completely plummet a credit score. Also, “College students who are unprepared for financial decision making may make risky decisions such as compulsive spending and debt accumulation. Financial stress impacts both academic achievement and retention.”Stores will try and get many to sign up for their cards and they do this by offering deals. The more cards owned, the more available to spend, which will lead right back into debt. However, a good idea to stay ahead is to pay as much off as much as possible each month. It does not have to be paid in full, but try to at least pay more than the minimum. Debt is all over the world, it 's not just with college students, but with older people as well but college students need to know what debt is good debt and when their limit is before they are drowning in
The American dream was brought about in the 1930’s and for centuries the dream has been a goal wished by many and pursued by few. The American dream has been noticed in famous novels including The Great Gatsby, Watchmen and Revolutionary Road. The historian by the name of James Truslow Adams used the term during the great depression to recognize, moral values, religious practices, and societal expectations. In reality, most people start dreaming and setting goals in their life when they are young. In modern day, Student debt is crushing a generation of non wealthy Americans, home ownership transitions have declined and it is becoming harder to make ends meet. In consequence, the American dream, is now dying in the light of young Americans.
This is supported by the study of Hakim and Haddad (1999) which found that the loan repayment obligations related to income and are an important factor in the possibility of default.... ... middle of paper ... ... According to the Credit Counselling and Management Agency (CCMA) (2012), the main reasons people fail to pay a debt were poor financial planning (25%), high medical expenses (22%), business failures or slowdowns (15%), loss of control over the usage of credit cards (13%), and loss of jobs or retrenchments (10%). Therefore, Lea, Webley and Walker (1995) found that debt with economic, social and psychological factors are closely related.