Originally published January 24 2005
When your credit card bills are mounting, put the cards away
by Mike Adams, the Health Ranger, NaturalNews Editor
Though many people are mired in credit card debt these days, it does not have to be an endless cycle of owing money to these companies. Instead, by making a budget and not living beyond your means, you can ensure that you will control your credit card debt. The best way to do this is to simply not use your credit cards at all, allowing you to know where your money is going.
Yet, credit card debt buries millions of Americans.
"You are in effect borrowing from the future to pay for the present," said Lyle Fogel, owner of Fogel Financial Planning, 100 W. Main St. "In essence, it's the exact opposite of saving or investing, and instead of earning money, you are paying interest."
Finances fall further behind because in addition to funding current expenditures, previous expenses are already on the credit card.
Most credit cards charge anywhere from 16 to 20 percent, according to the Consumer Credit Counseling Service of Central Indiana.
Make minimum payments on a credit card with a $2,000 balance and a 17 percent interest rate, and it will take more than 11 years to pay the card off.
Paying more than the minimum payment is one way to pay down that credit debt.
The credit card companies calculate the minimum to extend the customers' payments for as long as possible to boost profits.
But, even paying a small portion helps because there is less interest due each month.
Transferring high balances to credit cards with a lower interest rate sometimes can help.
The Web site www.free-financial-advice.net warns that these low balance transfers often expire in a few months.
Then, the interest rate may be even higher than the previous rate.
Also, new purchases made on these cards carry the standard interest rate, not the balance transfer rate.
As payments are made, they apply toward the low balance transfer portion first.
For those with more payments than possible to handle, refinancing the debt with a lower interest loan may help.
Another option is consolidating all loans into one payment or work with a debt consolidation company to lower both total debt and debt payments.
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