Is eliminating credit card debt a good investment?
Provide your own debt help program by directing money you’re investing in non-retirement portfolios toward paying off credit card debt. In general, financial advisers do not recommend accessing or terminating retirement investments for paying off credit card debt.
Paying off credit card debt is a good “investment”
Eliminate the high cost of credit card debt: Creditors are required by law to post the annual percentage rate of your credit card debt on each monthly statement. The APR includes the card’s interest rate, membership fee, and penalty fees calculated as an annual percentage of your account balance. Let’s say that your APR is 15 percent, and you owe $2,000. If your balance and APR don’t change over one year, you’ll pay $300 in finance charges.
No commissions: Stock brokerages charge commissions for buying and selling stocks. Paying off credit card debt is commission free, and eliminates the cost of carrying credit card debt.
Reduce financial risk: Paying off credit card debt saves money and reduces the risk or ruining your credit should you become unable to pay your debt. Investing in the financial markets can involve losing the amounts you’ve invested when markets decline. If you’re carrying high APR credit card debt, paying it off is a risk-free “investment” in financial security.
Improve your credit: Paying off credit card debt improves your credit scores and suggests to credit bureaus that you are in control of your finances and can responsible handle credit card debt. Don’t close accounts you’ve paid off as this reduces your total available credit and can reduce your credit scores.
If you’re struggling with credit card debt, please contact a consumer credit counseling and debt consolidation service for debt help.
(No Ratings Yet)
Loading ...Ultimate debt relief: Understanding the psychology of debt
You’ve dug yourself into a hole with credit card debt and wonder what’s next. Digging out of debt is important, but first you may have to dig deeper for understanding psychological factors leading to credit card debt.
Devil in the details: discover what you’re buying, where and why you’re using credit
Financial anthropologist and money coach Denise Hughes identifies factors contributing to problems involving credit card debt:
- Having a different “money-style” than your spouse or partner: Using credit cards for funding purchases you want to keep secret, or revenge shopping when you’ve had a domestic spat are examples of how conflicts over money can create credit card debt.
- Compulsive shopping: Rewarding yourself with a plastic-funded shopping spree after a bad day at work may seem therapeutic, but it can lead to family problems, divorce and bankruptcy.
- Entitlement and deserving: Do you treat yourself because you “deserve it”? Do you over-spend when you’re angry, depressed or lonely?
- Making purchases using revolving credit: Buying things that you cannot pay for within one billing cycle causes credit card debt to increase and can lead to penalty fees and lower credit scores.
Using credit cards in place of meeting deep-seated psychological needs such as feeling loved and appreciated, having fun, having an influence over your own life, and enjoying personal freedom can lead to financial problems.
Attempting to replace vital emotional needs with over-spending using credit cards suggests that you’re attempting to fill a vacancy in your life by buying things. Consulting with a financial advisor or consumer debt counseling service can help with improving your finances and quality of life.
(No Ratings Yet) Loading ...Check your credit report as part of debt reduction plan
It’s important to know what’s in your credit file if you’re following a debt reduction plan. The information contained in your credit report can serve as a cautionary tale about your past spending habits, and as motivation for getting your finances back on track.
How to check your credit report
Check your credit report at least once a year. You’re entitled to get a free report every 12 months from each of the three major credit reporting agencies: Equifax, Experian and TransUnion. If it’s been a long time since you’ve seen your reports, request all three to become familiar with the information contained within them. After that you may want to stagger reviewing the reports throughout the year. Visit Annualcreditreport.com to request a copy of your files.
Reviewing reports can help with debt
So exactly how does reviewing a credit report help with debt reduction? Information on your report can be used to determine who you owe money to and how much your outstanding balances are. While you probably already are familiar with the monthly statements you receive for various loans and other accounts, there’s always the possibility that you have outstanding credit card debt or other obligations you haven’t dealt with like accounts that have been turned over to collections.
Reviewing your report also allows you to correct any inaccurate information. Check everything from your name, social security number and addresses, to names of creditors owed. Credit reports often have incorrect or outdated information, and it’s on you to fix it. You can also ask to have certain information removed from your file, such as bankruptcies older than 10 years.
Change your habits to repair credit
As you make changes in your spending habits and begin to pay down debt, you’ll see that reflected in your credit report and credit score. Credit scores can be increased by lowering your debt-to-income ratio, paying off credit card debt and paying bills on time. If you need help setting up a debt reduction plan that can help improve your credit history, consider finding a reputable debt counseling firm that can help.
(No Ratings Yet) Loading ...Poll: Kids worry about having enough money, too much debt
A U.K. study found that two thirds of kids 12 to 16 are worried about not having enough money in the future. The poll conducted by the Personal Finance Education Group, a charity focused on financial education, surveyed 1,000 kids between the ages of 12 to 16.
Will they have too much credit card debt?
Among the survey’s findings, 62 percent are worried about not having enough money and 30 percent worry about being in debt in the future. The poll also found that 77 percent of kids want to attend a university in the future, but half of them worried about getting a job later in life even if they get a degree.
Most of the kids polled (95 percent) said is important to learn to manage their money. Topping the list of the things they are most interested in learning about are: household bills, budgeting, saving, and the cost of having their own house of apartment, among other things.
Parents can teach children
Kids want to learn about handling money, avoiding credit card debt and other financial information. Much of what they will learn about handling money is likely to come from watching their parents. So if you are a parent and have a lot of credit card debt and other bills, it’s a good idea to start making some changes in your own financial behavior. Getting help with debt can allow you to form better financial habits that can be passed on to your kids.
If you aren’t sure where to start, it may be wise to find a reputable debt counseling firm. Finding debt solutions now can help you avoid even bigger problems down the line and put the steps in place for your kids to have a brighter financial future. As you work through your financial difficulties be open with your kids about your efforts to manage money more wisely.
(No Ratings Yet) Loading ...Consumer sentiment rose slightly in June, but overall consumers are negative about their financial situation. The Consumer Sentiment Index edged up to 48.5 from the previous month, with people earning less than $50,000 and senior citizens having the weakest consumer sentiment. A number above 50 indicates more people feel positive.
Economy still hasn’t recovered
“The economy is treading water and really hasn’t shown any momentum toward recovery,” said Ed Farrell, a director at Consumer Reports National Survey Research Center. “Consumers remain cautious, especially households with income less than $50,000, who have been hurt the worst and face the biggest stresses regarding jobs, unpaid bills, and health care access and affordability.”
One of the biggest concerns among consumers is the job market. The U.S. unemployment rate is at 9.2 percent and many Americans are struggling to keep up with mortgage payments, credit card debt and other bills. The Consumer Reports Trouble Tracker showed that people are dealing with more money problems than the previous month, although their problems aren’t as severe as a year earlier.
Finding debt solutions
If you’re feeling negative about your finances because you have a lot of credit card debt and other bills, it may be time to make some changes. Getting help with debt is important whether you are employed or jobless. Among the debt solutions to consider is debt counseling. Tackling a mound of debt and other financial problems can be overwhelming, so having help could make the process more manageable.
You could also consider credit consolidation. This would allow you to combine multiple credit card debts and other bills to make the payments more manageable and pay less interest over time. You can consolidate debt on your own with a bit of organization and persistence. However, if you choose to use a debt consolidator, take time to research different programs and get all the terms and conditions before signing up.
(No Ratings Yet) Loading ...4 simple ways to save while in debt
It may feel like you’ll never get your credit card debt paid off and begin to build a savings. However, adjusting some of your spending habits and reviewing your bill payments could help you escape the debt trap for good.
- Adjust your attitude. Even if you have a lot of credit card debt it’s not the end of the world. Many people have found themselves harassed by creditors and confronting enormous mounds of debt but have managed to turn their situation around. By changing your behaviors and thoughts about money, you, too, can begin digging out of debt.
- Put together a debt reduction plan. It’s almost impossible to pay down a lot of credit card debt and other bills without a plan. The first step in a debt reduction plan should be to total up all the debt so you have a realistic idea of where you’re at. After that you’ll need to set up a budget that accounts for all household income and expenses. If you aren’t sure how to set up a budget, a debt counseling firm may be able to help. Cut out or reduce any expenses that are not necessities.
- Prioritize your bills. There are certain bills that must be paid each month, such as housing costs, utilities and food. Consider putting those bills on an automatic bill payment plan to make sure they arrive on time each month. On-time payments will keep you from accumulating a lot of late fees or having interest rates jump, which can potentially save you hundreds–or even thousands–of dollars each year.
- Build a nest egg. If you find that tweaking your budget is freeing up more of your income, use some of it to build an emergency savings. Putting away $25 out of every paycheck is better than not saving anything. Also continue to make the payments on your credit cards and other bills, and divert any extra cash toward paying off one of your debts. After you get to a zero balance, roll whatever you were paying each month toward another debt. Before you know it you’ll be debt free and have a nice balance in a savings account.
(No Ratings Yet) Loading ...5 Warning signs that you need help with debt
You may think it is natural to have a lot of credit card debt and other bills. That’s because it is not uncommon for many Americans to juggle multiple credit cards, mortgage loans, auto loans and other debt on middle class incomes. It can become easy to buy into the notion that “you’ll always have a car loan” or “you have to borrow money to get ahead,” among other myths.
Take a look at these 5 warning signs to see if you have too much debt:
- You think about your credit card debt and other bills constantly. Do you have trouble focusing on your job or other tasks because debt woes are always at the forefront of your mind? Getting help with debt can help relieve some of the stress and allow you to make progress on a debt reduction plan. Look for a reputable debt counseling firm that can help.
- It’s getting more difficult to make the minimum monthly payment on your bills. Being unable to make the minimum payments will result in late fees and probably an interest rate increase to the default rate. It will also keep you from making much progress in paying off your balance.
- You are frequently late with bill payments. Part of what goes into determining your credit score is whether or not you are on time with monthly payments. Pay close attention to the deadlines for getting your payments to creditors. Being even an hour late will have negative repercussions.
- You have just about maxxed out credit cards. Are you using credit to buy groceries, gas and other necessities because your income just doesn’t stretch? Wracking up credit card debt this way is a losing proposition no matter how you look at it.
- You are afraid to total up your debt. Knowledge is power, so equip yourself with the information you need to make progress on a debt reduction plan. As shocking as your debt total may be, you need to know it to get moving in the right direction.
Get help with debt
Once you admit that you have a debt problem, commit to get help. Depending upon your situation a debt consolidation or debt settlement could help. Talk with a debt counselor to rind the right approach to your money woes.
(No Ratings Yet) Loading ...Are you still paying for the holidays?
The average consumer owed more than $4,200 in credit card debt at the end of 2010, according a report from Experian. Residents of San Antonio had the highest average credit card balance of $5,177, followed by $5,115 in Jacksonville, Fla., and $4,960 in Atlanta. The consumer credit reporting agency said many people may even still be feeling the squeeze from credit card purchases made during the holidays.
Too much credit card debt
Maxine Sweet, vice president for public education at Experian, said in a statement: “We want consumers to understand that spending at the holidays or at any other time of the year can often have broader implications to their overall fiscal fitness.
“By carrying over credit card balances and utilizing a significant portion of their available balance, they can potentially negatively affect their credit scores, which can in turn hurt them when it comes to applying for other types of credit down the line including mortgages and car loans. It’s important for consumers to get that debt under control before it has a lasting impact on their credit scores.”
Credit debt relief
If you are looking for credit debt relief from hard credit card balances, even small changes in your spending habits can help jump start a debt reduction plan. Adding extra money to the minimum payment for just one credit card can help you knock down that balance faster. Use any tax returns or bonuses to pay off credit card debt. Finally, it’s important to review your finances every few months to adjust spending so that it advances your debt reduction strategy.
(No Ratings Yet) Loading ...Equifax, author team up to offer help with debt
Personal finance author David Bach has partnered with Equifax to issue the Debt Free Challenge. The goal is to get 1 million people to pledge to pay off $1 billion in debt.
Crippling debt load
“Personal debt has become a major problem for American consumers — the average American family is carrying close to $15,000 in credit card debt,” Bach said in a statement. “Unfortunately there is somewhat of a paralysis that sets in when it comes to getting out of debt — it can seem overwhelming and people don’t know where to start. The Debt Free Challenge can be that first step.”
Debt reduction tools
If you sign up for the challenge, you can download a free chapter from Bach’s book, Debt-Free for Life: The Finish Rich Plan for Financial Freedom. You also get to try out Equifax’s Debt Wise product free for 30 days. After the free trial ends the cost is $14.95 a month. The Debt Wise product basically helps you set up a debt stacking plan to pay off various debts.
Structured debt help
Although there could be some benefit to having a structured plan to pay off credit card debt and other bills, think long and hard before signing up for such a plan. If you really are committed to paying off credit card debt and can stick with a program, it may be worth a try. But be honest with yourself. If you really have no intention of following through with a debt reduction plan, signing up for a paid program could just end up being another monthly expense you can’t really afford.
Use any tools you can find that might help with your debt reduction plan. Before paying for debt help, search for free debt counseling programs or other materials that can help get your finances in order.
(No Ratings Yet) Loading ...Consistent credit card labeling practices: Food for thought
In a recent interview, Elizabeth Warren, an advisor to the Obama administration slated to head a new federal consumer rights agency, noted that she has received numerous suggestions for providing consistent regulation and guidelines for overseeing consumer credit and lending practices.
Citing inconsistency in advertising credit terms and finance charges, professor Warren recommends standardized food labeling requirements a potential model for clearly communicating the terms and features of consumer credit cards and loans. Consistent labeling would assist consumers with comparing features and avoiding hidden terms that can increase debt. Debt consolidation and credit counseling services typically advise consumers to shop credit card offers and compare terms and conditions.
Managing credit card debt: Understanding credit terms and conditions
Primary consumer complaints include misleading advertising, and credit card and loan terms and conditions that are incomprehensible if not illegible.Although credit card companies frequently promote low interest rates, they may not promote annual fees and other charges assessed to consumers as part of the “fine print.” Examples of credit card terms that can lead trouble include:
- No interest if paid within “x” months: This offer can quickly gain your attention, and may lead to a buying spree based on the presumption that you’ll pay off your balance within the promotional no interest period. If you fail to do so, or make a late payment, the credit card company may assess deferred interest to your original balance.
- Transfer balances to a new card with a “low or no initial rate”: This is similar to the no interest promotion, but targets consumers who are carrying credit card balances. The offers claim that you can transfer your balances to a new credit account with a low initial rate. Many of these offers also require paying a transfer fee, and may include provisions for higher interest rates after the promotional period expires. Comparing terms is important before using credit cards for debt consolidation.
- Too good to be true? Look again: Car dealers, consumer lenders, and retail establishments depend on consumers making impulsive decisions to buy and borrow to pay for their purchases. Avoid pressure for buying, and don’t be talked into buying or borrowing before you’ve fully reviewed terms and conditions associated with opening a credit account for financing your purchase.
Pay attention to your instincts and walk away from any situation that makes you uncomfortable. You can also find reputable non profit debt consolidation and credit counseling services if you need debt help.
(No Ratings Yet) Loading ...- This blog covers a wide variety of debt consolidation and loan topics.
We rely on a large network of financial experts and leading authors to write the content for the DebtHelp.com Blog.
Get help with debt before seeking an auto loan
Keeping your personal "debt ceiling" from crashing down
Will debt ceiling deal lead more people to seek help with debt?
- September 5, 2011–September 11, 2011
- August 29, 2011–September 4, 2011
- August 22, 2011–August 28, 2011
- August 15, 2011–August 21, 2011
- July 25, 2011–July 31, 2011
- July 18, 2011–July 24, 2011
- July 11, 2011–July 17, 2011
- July 4, 2011–July 10, 2011
- June 27, 2011–July 3, 2011
- June 13, 2011–June 19, 2011
- June 6, 2011–June 12, 2011
- May 30, 2011–June 5, 2011
- May 23, 2011–May 29, 2011
- May 16, 2011–May 22, 2011
- May 9, 2011–May 15, 2011
- May 2, 2011–May 8, 2011
- April 25, 2011–May 1, 2011
- April 18, 2011–April 24, 2011
- March 21, 2011–March 27, 2011
- March 14, 2011–March 20, 2011
- March 7, 2011–March 14, 2011
- February 28, 2011–March 6, 2011
- February 21, 2011–February 27, 2011
- February 14, 2011–February 20, 2011
- January 31, 2011–February 6, 2011
- January 24, 2011–January 30, 2011
- January 17, 2011–January 23, 2011
- January 10, 2011–January 16, 2011
- January 3, 2011–January 9, 2011
- December 27, 2010–January 2, 2011
- December 13, 2010–December 19, 2010
- December 6, 2010–December 12, 2010
- November 29, 2010–December 5, 2010
- November 22, 2010–November 28, 2010
- November 15, 2010–November 21, 2010
- November 8, 2010–November 14, 2010
- November 1, 2010–November 7, 2010
- October 25, 2010–October 31, 2010
- October 18, 2010–October 24, 2010
- October 11, 2010–October 17, 2010
- October 4, 2010–October 10, 2010
- September 27, 2010–October 3, 2010
- September 20, 2010–September 26, 2010
- September 13, 2010–September 19, 2010
- September 6, 2010–September 12, 2010
- August 30, 2010–September 5, 2010
- August 23, 2010–August 29, 2010
- August 16, 2010–August 22, 2010
- August 9, 2010–August 15, 2010
- August 2, 2010–August 8, 2010
- July 26, 2010–August 1, 2010
- July 19, 2010–July 25, 2010
- July 12, 2010–July 18, 2010
- July 5, 2010–July 11, 2010
- June 28, 2010–July 4, 2010
- June 14, 2010–June 20, 2010
- June 7, 2010–June 13, 2010
- May 31, 2010–June 6, 2010
- May 24, 2010–May 30, 2010
- May 17, 2010–May 23, 2010
- May 10, 2010–May 16, 2010
- May 3, 2010–May 9, 2010
- April 26, 2010–May 2, 2010
- April 19, 2010–April 25, 2010
- April 12, 2010–April 18, 2010
- April 5, 2010–April 11, 2010
- March 29, 2010–April 4, 2010
- March 22, 2010–March 28, 2010
- March 15, 2010–March 21, 2010
- March 8, 2010–March 15, 2010
- March 1, 2010–March 7, 2010
- February 22, 2010–February 28, 2010
- February 15, 2010–February 21, 2010
- February 8, 2010–February 14, 2010
- February 1, 2010–February 7, 2010
- January 25, 2010–January 31, 2010
- January 18, 2010–January 24, 2010
- January 11, 2010–January 17, 2010
- January 4, 2010–January 10, 2010
- December 28, 2009–January 3, 2010
- December 21, 2009–December 27, 2009
- December 14, 2009–December 20, 2009
- December 7, 2009–December 13, 2009
- November 30, 2009–December 6, 2009
- November 23, 2009–November 29, 2009
- November 16, 2009–November 22, 2009
- November 9, 2009–November 15, 2009
- November 2, 2009–November 8, 2009
- October 26, 2009–November 1, 2009
- October 19, 2009–October 25, 2009
- October 12, 2009–October 18, 2009
- October 5, 2009–October 11, 2009
- September 28, 2009–October 4, 2009
- September 21, 2009–September 27, 2009
- September 14, 2009–September 20, 2009
- September 7, 2009–September 13, 2009
- August 31, 2009–September 6, 2009
- August 24, 2009–August 30, 2009
- August 17, 2009–August 23, 2009
- August 10, 2009–August 16, 2009
- August 3, 2009–August 9, 2009
- July 27, 2009–August 2, 2009
- July 20, 2009–July 26, 2009
- July 13, 2009–July 19, 2009
- July 6, 2009–July 12, 2009
- June 29, 2009–July 5, 2009
- June 22, 2009–June 28, 2009
- June 15, 2009–June 21, 2009
- June 8, 2009–June 14, 2009
- June 1, 2009–June 7, 2009
- May 25, 2009–May 31, 2009
- May 18, 2009–May 24, 2009
- May 11, 2009–May 17, 2009
- May 4, 2009–May 10, 2009
- April 27, 2009–May 3, 2009
- April 20, 2009–April 26, 2009
- April 13, 2009–April 19, 2009
- April 6, 2009–April 12, 2009
- March 30, 2009–April 5, 2009
- March 23, 2009–March 29, 2009
- March 16, 2009–March 22, 2009
- March 9, 2009–March 15, 2009
- March 2, 2009–March 9, 2009
- February 23, 2009–March 1, 2009
- February 16, 2009–February 22, 2009
- February 9, 2009–February 15, 2009
- February 2, 2009–February 8, 2009
- January 26, 2009–February 1, 2009
- January 19, 2009–January 25, 2009
- January 12, 2009–January 18, 2009
- January 5, 2009–January 11, 2009
- December 29, 2008–January 4, 2009
- December 29, 2008–January 4, 2009
- December 22, 2008–December 28, 2008
- December 15, 2008–December 21, 2008
- December 8, 2008–December 14, 2008
- December 1, 2008–December 7, 2008
- November 24, 2008–November 30, 2008
- November 17, 2008–November 23, 2008
- November 10, 2008–November 16, 2008
- November 3, 2008–November 9, 2008
- October 27, 2008–November 2, 2008
- October 20, 2008–October 26, 2008
- October 13, 2008–October 19, 2008
- October 6, 2008–October 12, 2008
- September 29, 2008–October 5, 2008
- September 22, 2008–September 28, 2008
- September 15, 2008–September 21, 2008
- September 8, 2008–September 14, 2008
- September 1, 2008–September 7, 2008
- August 25, 2008–August 31, 2008
- August 18, 2008–August 24, 2008
- August 11, 2008–August 17, 2008
- July 28, 2008–August 3, 2008
- July 21, 2008–July 27, 2008
- June 16, 2008–June 22, 2008
- June 2, 2008–June 8, 2008
- March 17, 2008–March 23, 2008
- November 12, 2007–November 18, 2007
- November 5, 2007–November 11, 2007
- October 29, 2007–November 4, 2007
- October 15, 2007–October 21, 2007
- September 17, 2007–September 23, 2007
Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.
- Auto Loans (1)
- Consumer Credit Counseling (69)
- Credit Cards (37)
- Debt Advice (114)
- Debt Consolidation Options (60)
- Debt Consolidation Scams (15)
- Debt Management Options (62)
- Debt Settlement (27)
- DebtHelp.com (208)
- Economy & News (19)
- Helping Consumers (54)
- Managing Debt (65)
- Mortgage Fraud (2)
- Saving money in today's economy (21)
- Your Credit (19)