| |
Personal Savings Rate and Credit Card Debt in the United States
By Daniel Cohen
Have you ever imagined how much of your money is literally going waste as interest payments on credit cards? The average family in the United States is knee-deep in debt with a liability of around $7500 as credit card payments. About $1000 is paid as interest each year by the family to the credit card company. If you include a couple of late payments and over the limit charges, the figure gets embarrassingly high.
Nearly three out of five U.S. households are accountable for the approximately $560 billion in outstanding credit card debt. The total consumer debt including credit card payments and home mortgages are around 6.8 trillion beating the total US national debt, which is around 5.9 trillion. There has been a noticeable decline in the US personal savings rate from 8% in the 1980s to less than zero in present times. There is a colossal increase in credit card debt which has increased by 400 billion dollars in the past decade to an embarrassing figure of $700 billion.
If you have more than one credit card payment to make with a high interest, you can transfer you balance to another credit where you pay zero or less interest. Do this only if you intend to pay the balance in full within the introductory period of the balance transfer. You can also move your balance from a card with a high APR to the one with the low APR. Make sure that you pay the amount in full as you already have to pay less money towards interest.
Make a list of all your credit card debts and the amounts owed on each card every month. Pay off the card with the lowest amount first. Then use that money to pay of the second lowest amount. Alternatively, you can pay off the credit which has the highest rate of interest first and then move down progressively to pay the credit cards with lower rates of interest. This way, you save a lot of money on interest payments.
The best advice, however to get out of your credit card debt and improve your personal savings rate is to stop using your credit cards and use them only in important or emergency occasions. Use the credit card with the lowest interest rate, if you have many credit cards, and put the rest through your shredder. Using the card wisely is the best step to personal money management in a country like the US which dwells in a lifestyle of credit card usage.
About the Author
Daniel Cohen recommends Find Credit Cards for comparing different Citibank credit card applications. See http://www.findcreditcards.org/issuer/citibank.php for more information.
Article Source: http://www.simplysearch4it.com/article/24620.html
| If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/24620.html" as shown above and make it hyperlinked. |
| Some other articles by Daniel Cohen | How Private Is Your Credit Card Information?
How will you react if you get a call one fine day from the collection agency stating that you are liable for charges on your account ...
Finding the Best Student Credit Cards
Being well versed in the art of personal finance and managing personal expenses is one of the first things every college going student must know. The moment your child sets foot inside the college campus, he ...
Finding the best cash back credit cards
Cash back are a good inducement for customers to make a regular use of their credit cards. Most customers are voluntarily asking for credit cards with the 'cash back' feature in ...
Finding the Best Airline Credit Cards
The airline credit card came into existence when credit card companies realized the profitability of teaming up with airline companies ...
What Is a Credit Union?
A credit union is a non-profit financial organization that is owned and regulated by its members through a representative electoral board of directors nominated from the membership itself. A member of a credit union can ...
Credit Cards and Your Child
Conventional thinking leads us to understand that school and college going children do not have any special usage of the credit card, other than downloading the latest chartbuster or purchasing ...
|
|
| |
|
|
|
