In consumer law

According to new figures released regarding the recent holidays, the average American family incurred $1,054 in credit card debt during the giving season. The average credit card rate of interest is 17.5%. These two numbers together don’t seem very ominous, but consider what that does to a family’s budget. The interest payment on $1,054 at 17.5% is $15.37. That’s just for the privilege of continuing to keep that balance out of the hands of the debt collectors; it doesn’t do anything about reducing the amount. To pay that amount off in one year, so that you can start fresh for the 2018 holidays, it will cost $183.74 per month.

Well, you say, I’ll take two years to pay it off. That will lower my payments. Yes, it will, this year. To pay off that debt in 24 months at 17.5%, your monthly payments are $160.32, a savings of about $23 per month. But next January you’ll be looking at doubling that amount (assuming you charge the same $1,054 and pay the balance over two years). Now your monthly credit card payments are $320.64 and they’ll stay there indefinitely as long as you continue to charge roughly $1,000 at Christmas and plan to take two years to pay it off. That’s over $300 per month forever! Meanwhile, the credit card companies are happy to collect $15.37 each month in interest from their millions of customers like you.

The moral of this story is, get out of debt as quickly as you can. Pay off those credit cards even if you have to cut back on a few things. Maybe give up the premium cable TV channels, or cancel some subscriptions to magazines you don’t read anymore. Sell some stuff you never use but hold onto for sentimental reasons. Stop eating out every day for lunch. Quit going to the convenience store or the drive-through latte shop every morning on your way to work. Start paying cash whenever you can. Pulling out your wallet and thumbing through dollar bills makes you more aware of what you’re spending. Swiping the card or tapping your smart phone makes it seem like you aren’t spending any money.

If you find that you just can’t do it, that you’re barely treading water without getting anywhere, contact us. We can help.

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