Debt Views

The biggest budget killer of all time is the high interest credit card. To have any chance of getting your finances in order and get ahead, it is most important to know how to stay out of credit card debt.

It used to be it would take an average of 52 years to pay off a high interest balance if you paid your minimum monthly payment! Do you think that’s bad? Well, it’s gotten worse. The average time it takes to pay off these credit card balances today by making the minimum monthly payment is: never!

29.99% compounded daily!

Unbelievably, there are many companies that charge 29.99% and even more on their customers’ balances and, if that’s not bad enough, they compound the interest daily. With a 29.99% card you pay about 2.5% interest per month on your balance.

So, if you owe $2,000 on a card that is charging this excessive and unseemly rate, you would be paying $50 the first month just in interest! I say the first month because if you don’t make your payment on time or if the minimum monthly payment due is less than $50, your total amount owed will increase the next month.

Many credit card companies will set your minimum monthly payment at less, or about the same as the 2.5% interest you will be paying each month. If they do this, and you continue to pay the minimum, you can see how you will never pay off the total balance or even pay it down at all!

However, if you would pay $70.00 a month, instead of $50 on this $2,000 total, you will be paid in full in a little more than 4 years. Do you think these credit card companies want you to pay your balance in full? You can bet they don’t!

High interest credit card companies hold you hostage!

Why would a credit card company want you to pay your balance in full when they are charging an interest rate 5 times the prime rate?

Is all of this making you sick? It should be, but if you have a particularly strong stomach, read some of the other wonderful things these great credit card companies do.

1-If you are late they hit you with a late charge, which is usually $35.00! Even if you’re total balance is $10.00! In this case they would be realizing a return of 4000% on a yearly basis.

2-If you pay over the phone they charge you $10 to $15 for about 2 minutes work.

3-Many of these scoundrels have a minimum finance charge. So, if you have a balance of only a few dollars, they will charge you a $10 fee anyway!

4-If you’re late with a payment, even though they love it because they get to rob you out of another $35.00, they’ll report you late to the credit bureaus so eventually they can ruin your credit rating altogether! Nice guys!

Why would a credit card company want to give me bad credit?

I am 100% convinced it is impossible for anyone to get ahead financially while having high interest credit card balances. These credit cards have destroyed the credit of millions and the companies are happier than pigs in mud that they do.

As long as they can keep your credit rating low, you will not qualify for good loans with reasonable terms. So these horrible credit card companies have a better chance of talking you into their horrible deals!

How do you start getting rid of high interest credit card debt?

If you want a shot at becoming financially successful you have to know how to stay out of credit card debt. Cut up all your cards. Get a debit card and never charge anything on a credit card again.

Pay off all the balances on all the cards by paying a large amount toward one each month. Pay the one with the highest interest rate and when it’s paid start on the one with the highest interest rate of those remaining.

If you owe $10,000, paying off $500 a month will have you paid off in a little more than 2 years. I know people who are paying $500 a month now and are not paying down their credit card debt at all because they are getting hit with late charges.

Refinance your mortgage to pay off high interest credit debt if you have to. It will be well worth it in the long run. If you don’t own a home or you can’t swing a refinance, go to a non-profit credit counseling service. They can get lower rates for you and set it up so you can make one payment a month to them. Just make sure you go to a non-profit debt management organization and they will handle your debt situation without charging you more fees.

It’s a sound financial move.

I can guarantee if you asked financial advisors, economists and/or financially successful people, “what is the first step to becoming well off?” Every one of them will tell you, “Learn how to stay out of credit card debt. Period.” Exclamation point!