Before opening up a new line of credit or applying for an additional credit card, weigh the risks. Many consumers do not realize they inadvertently hurt their credit scores by making financial missteps. According to a recent piece by CNBC.com, it is a risky time to carry new credit card debt due to the potential interest rate hike by the Federal Reserve. By receiving credit counseling, you figure out an intelligent method for cutting debt and staying out of debt. A trained and certified Christian credit counselor fills you in on the bigger picture as it relates to credit scores, a workable budget and savings goals.
Paying more in interest
If you don’t resolve your credit card debt, you could end up paying more in the form of interest payments to your creditors. People who consolidate debt with a debt management plan enjoy a lower interest rate. According to CNBC, the Federal Reserve data shows consumers’ credit card debt now totals about $900 billion. The number is about 3 percent higher compared to last year.
Feeling the squeeze to pay the minimum
Most people realize they will not get out of debt for a long time unless they pay more than the minimum on their credit cards. If you take out more credit card debt or fail to come up with a plan to reduce debt, you could feel financial pressure just to pay the minimum balance. A new survey by Prosper showed only 37 percent of people pay their credit card balance each month while 15 percent pay the minimum due.
Rolling over credit card debt
When you get credit counseling, you don’t just learn how to live below your means. You also come up with a debt management plan so you know your credit card debt will be gone within a certain number of months or years. The National Foundation for Credit Counseling found most consumers roll over $2,500 in credit card debt every month. If the Fed does follow through with the promise to raise interest rates soon, the debt on $2,500 becomes more expensive in terms of interest owed.
Other risks associated with taking out too many credit cards include dealing with late payments or credit card delinquencies. Also, you could end up with no money leftover every month to save for retirement or other financial goals. You can avoid bankruptcy and debt settlement scams by talking to the trustworthy credit counselors with Christian Credit Counselors. We look forward to providing credit counseling so you can build wealth and live a life with financial peace. For more information on credit counseling, please contact us.
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