Acquiring Credit Card Debt
We have all acquired debt in some form at some point in life. Some people do it on a regular basis, others are not comfortable with taking on debt due to personal and financial reasons. To get approved to any debt, maintaining a certain credit rating is necessary. Not all are able to do that. Those who were able to maintain their credit score above the average line have acquired the ability to receive best credit terms. For them, financial deals and favorable credit terms from credits and lenders are easily available. Shopping around for one and fully understanding the credit is also essential.
Utilizing debt in the form of credit cards can be rewarding for responsible consumers. On the flip side, the same credit card can become a nightmare for those who are careless with it. Credit cards for the former group is a way to make life easier and build positive credit rating. For the latter however, it is a way to accumulate debt without an escape route. Therefore, it is necessary that you develop a complete understanding of how credit cards and debt in general works and how to use them appropriately.
Statistics suggest that almost half the American population with credit cards spend more than they earn every month. The most common reason being not having control over spending habits, because credit cards are easily available and relatively easy to use. Just one swipe and the bills are paid. While it makes sense to pay with credit card when there is shortage of cash and when convenience is the main factor of usage, improper use can lead to a lot of debt, plus interest and fines on those debt. For instance, take a credit card that charges 20 percent annual interest rate, which is not an uncommon number, on an outstanding balance of $10,000. A report from finance experts at bankruptcy filing Portland ME suggests that it may take almost two decades to pay off this debt, at a total cost of more than $25,000. For the exact number, you can see how long it will take to pay it off using tools available online. The number should come as a shock for those who can’t afford and who have no knowledge of what annual percentage rate of interest is for the debt they are assuming.
On the other hand, people with good credit rating are the ones who properly manager their finances, pay their bills on time and are highly appreciated by creditors and lenders. They will ultimately obtain the best deals available in the market without any collateral toward the loan. They are also charged the lowest rate or fees if any when they acquire the debt or make use of the credit cards. But the one big question haunts everybody irrespective of their credit rating or financial standing. That is “Will I be able to reach my financial goals with this debt?”. The answer to this question is, it depends. The explanation is beyond the scope of this snippet of information.