April 2015 - Getting Out of Debt Q&A

Understanding Credit Card Debt Early In Your Life

Credit card debt is a grueling reality for many. As gradates from college or grad school, or any young adult, looking to start a career and/or potential family, the weight of credit card debt can literally and figuratively carry is certainly a burden. Student loans alone have increased over 8% in the last year.

Many young adults are unaware of the dangers of credit cards, and how to appropriately use them to not accrue more debt on top of what may already be very present for them. The reality of debt among American households is only increasing; statistics show that in the last year there has been a 3.3% increase in credit card debt, creating 8.8 billion dollars in national debt, and average of $15,611 per household, just from credit cards.

As interest accrues the interest paid quickly exceeds the cost of the item that was initially charged. It is easy to think that paying it later is more appealing. However, this can often lead to thousands of dollars in extra, and unnecessary expenses.

What To Do With Credit Card Debt

How do we get out of this cycle? Well, some curriculums have suggested we teach financial literacy in high school, and require students to pass the course in order to graduate. The counter argument however, recognizes that teachers themselves may not be equipped to offer truthful information to their students. Is it ethical for a teacher that had $50,000 in debt to provide this education for students?

General advice outlines several basic do’s and don’ts in order to have a better handle on debt and begin to reduce owed debt the smart way.

1. Don’t pay just the minimum: this is often an easy trap to fall into as thirty-five dollars a month in comparison to the $500 that is due becomes far more appealing. As mentioned above, this can quickly add up. The unpaid difference does not go away. It only gains interest and will cost more in the future.

How Credit Card Processing and Electronic Payments Shaped the US Market

by Hank Coleman

The following is a Guest Post by Jordan Greer. If you’re interested in writing an article for Money Q&A, please visit our Guest Posting Guidelines page.

The widespread, almost all-encompassing use of credit cards today means plastic money has become a part of life that’s taken for granted by the millennial generation. A few older heads still remember what times were like in the days without credit cards. How bothersome and inconvenient transactions were in those days. How visits to the bank were staple fare at least every other week, visits that were as necessary as they were frustrating. All that changed though, with the arrival of credit cards.

The sheer convenience is in itself reason enough for the popularity of credit cards. There’s also the safety factor and a whole lot of other benefits that have made credit card usage so popular. This is, however, a very micro viewpoint. Credit cards have a strong effect on the economy of both the USA and the world in general.

Impact of Credit Card Processing on the Economy

The credit card is no ordinary monetary tool. It was a means of empowerment for a generation, and the numbers play out to prove just that. But before getting to that, it is imperative to understand how credit cards function. A study conducted by the US Department of Commerce’s International Trade Commission found that from the period between 1999 and 2004 credit card payments have grown by a massive 11.8%.To provide some perspective, that’s a growth of a whopping $33.4 billion in the United States.

Short Term Loans: Common Mistakes That Could Cost You Big

by Hank Coleman

There are many households today living paycheck to paycheck. These families barely have enough money to pay the bills each month, and many of these families’ budgets are disheveled the moment a financial emergency arises. Whether it’s an emergency car repair, or an unexpected medical bill, even a few hundred dollars could set you back for the next few months.

Fortunately, there are financial resources that can be relied on in your time of need whether you have perfect or poor credit – short term loans. Short term loans, often referred to as cash advances or payday loans, can be beneficial… when they are used correctly.

A Quick Fix When In Need

When you’re in need of a few hundred bucks, one of the easiest ways to get these funds is to apply for a short term loan online. There are literally hundreds of companies across the country that advertise attractive short term loan offers. When consumers in need see things like, “Bad credit ok. No credit check. No employment verification” many are swayed to apply.

An instant approval will get you a few hundred dollars to handle whatever financial emergency you have. So what’s so bad about these types of loans? Nothing… unless, of course, you fail to be a responsible borrower.

Take, for instance, these most common mistakes listed below:

1. Failing to Review and Understand Interest Rates and Fees

When you’re in a financial jam, chances are you’re not thinking about what you’ll need to pay back. In the heat of the moment, all you’re concerned with is the amount of funds for which you can be approved. Many consumers skim through the contracts and simply sign so that they can receive their funds.

However, the interest rates and fees are extremely important and will need to be repaid as well. For instance, for every $100 you borrow, the lender may require you to pay back $30 extra. This means for a typical $300, you’re looking at a total of $390 to repay the loan.