Most of us have credit cards. It is difficult to avoid them. Banks love them because they get rich off of them. Folks become addicted to them and wind up in a never ending spiral of high and unaffordable interest payments.
The cost and good options.
All studies show that folks spend more when they use credit cards as opposed to paying cash. Credit cards become addictive.
Banks obtain money at extremely low rates. The Federal Reserve practically gives them loans at almost no cost but then charge rate of interest anywhere from 9% to 29% and sometimes even more.
Here is an example of how credit card companies squeeze the consumer.
Balance $ 3,939.49
Interest rate 14.4%
If you only pay the minimum it will take 16 years to pay it off for a total repayment of $7,601!
If you pay $136 it will take 3 years for a total of $4,881.00!
The above does not take into account either additional use (more Charges) or late payments or missed payments or over draft charges. To calculate how long it would take to pay off your credit card balance, you can use this handy calculator: http://www.federalreserve.gov/creditcardcalculator/
We often see clients with much higher balances. What if your balances are about $39,000? After 16 years you will pay the banks about $76,000. Paying the balance in 3 years the total is about $48,000.
The one question you have to ask yourself: who can better use the money? You or the banks?
If you cannot pay off your credit card balances in about 1 year you are a candidate for a "fresh start" by filing a Chapter 7 or a Chapter 13.
If you find yourself in a credit card trap please feel free to call us. Our consultation is free and confidential.
Robert J Adams & Associates has helped thousands of good people, just like you, save their home. Take advantage of our free and confidential consultation today.