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Bankruptcy Lawyer Port St Lucie – 4 Misconceptions About Credit Card Debt

credit-card-debt

1.    You only need to pay the minimum each month.  Your credit–card bill will show the total amount you owe and a minimum payment, typically about 4% of your bill. Paying at least the minimum payment b ythe due date keeps you current and helps your credit score, a key way lenders grade your financial behavior.

However, if you payonly the minimum, you‘ll still pay interest on the whole balance that you owe, at interest rates that are among the highest in the financial world.

Your bill must show how long it will take to pay off your debt if you make only the minimum payment each monthand thats usually a frightening amount of time.

In reality, the minimum payment is something of a ruseessentially aenticement to get you to pay just enough to keecurrent while also running up high interest charges.

As you accumulate interest charges, your interest will actually begin to compound not just on what you owe, but also on your interest payments. In othewords,you will be paying interest on interest.

 If you cannot pay the entire bill each month, pay as much ayou possibly can.

  1. Your credit limit reflects what you can afford Irealityyour credit limit has no relation to what you can afford—or how much you should spend.

The credit-card company has lookeatyour record of payinyour bills and your other accounts and decided how much it is willing to loan you at onetime. It doesnt have aclue if you really capay off that much debt because it doesnt know how much income you have right now or your net worth.

You may be tempted to see a credit limit of $10,000 or more as a license to spend. But likely, thatdecision will put you in a financial holeand maxing out your debt will hurt your credit score.

  1. The interest rate will stay thesame over time. This isnt likely. The Credit Card Act of 2009 restricted hocreditcard companiecan raise fixed interest rates. In response, most companies that offered fixed interest rates changed them to variable rates; those variable rates will go up when other interest ratesgo up.

In addition, you will pay different interest rates on different kinds of borrowing. If you use youcard to get cash— something you should do only in a trueemergencyyou may pay aannual interest rate above 20%, probably far more than what you pay for regular purchases.

If you are late making a payment or if your check bounces, your interest rate for new purchasecan spike up to around 30%and that rate cacontinue indefinitely.

  1. The interest rate is theonly charge that I’ll see.  No such chance. Credit–card companies will hit you up with all kinds of additional charges when you makea mistake. Did you makea payment after the due date or miss one altogether? You‘ll be assessed a late fee of as much as $35.

Transferring a balancefrom one card to another? Youll pay a fee of up to 5% of the balance. Using your credit card instead of your debit card to get cash? Youll pay another fee of up to 5% of the amount, or a minimum of $5 or $10. Using your card overseas? Foreign transaction fees of up to 3% of the transaction may beassessed.

In short, the more you rely on thecredit card, the more you will pay for the privilege. Using a card that waymay make sense in a real pinch, but its a terriblehabit to get into because the interest rates and feeare so high that it can be hard to dig out once youre in thehole. Youll pay more and more just to keeyour debt from growing.

On the other hand, if you pay your bill in full every month, the credit card works for you, rather than the other way around.

If you would like to schedule a FREE consultation with a Bankruptcy Lawyer Port St Lucie, please contact Jon L Martin Bankruptcy Attorney at (772)419-0057 or visit us online http://jonlmartinlaw.com/. With over 40 years of combined legal and business experience, we have helped hundreds of people in and around Martin and St Lucie County to relieve their financial problems. Bankruptcy Lawyer Port St Lucie Florida and a chairman of Martin County Bar Bankruptcy Committee Jon L. Martin helps clients throughout the following cities and surrounding areas: Hobe Sound, Jensen Beach, Palm City, Port Salerno, Port St. Lucie, Stuart, Vero Beach, and the entire Treasure Coast of Florida.