Consider everyone you know, your friends, your coworkers, your family; you would imagine that most of them are financially savvy. Yet the latest research indicates that 55% of people who own a credit card are in debt. This shocking number highlights that many people are struggling financially and are doing little about it.
Credit cards should not be seen as the keys to financial freedom. They are the shackles that could potentially stop you from ever experiencing financial freedom unless you tread carefully. While credit cards are a fantastic way to manage your payments, earn rewards, increase credit and ensure you are covered when traveling it is only when you are using them correctly. If you are staying in debt on your credit card then the price you are paying severely outweighs any other benefits.
One survey indicated that of those with credit card debt the average balance is just under $5000. With average interest rates for credit cards between 15% and 20%, this is the equivalent of diving into big holes to escape small ones.
If you are experiencing credit card debt then look at your options. Check your repayment rates and if you are paying a high amount see if you can transfer that debt to a new card with a 0% rate for a starting period. This will let you get a headstart in paying off that debt. You then need to increase you payments beyond the minimum to ensure you are paying this figure off, not letting it last forever.
The 2008 financial crisis was a lesson to the world that most did not learn. Banks, home buyers and people using excess credit were all hit strongly when the market bust. New statistics now show that credit card debt is higher than ever during the peaks before the financial crisis, house prices are higher than ever before and banks are still practicing predatory lending. The market will face another correction in the coming years. Ensure your finances are in order so you don’t feel any unnecessary effects.