What’s all the hoopla about paying off credit card debt? As long as you make the minimum payments on time each month, having a credit card balance won’t hurt, right? Wrong. Credit card debt is expensive, stressful, and burdensome. Here are ten of the best reasons to get pay off your credit card debt right away.
1. Stop paying interest or use only high level services like USAloansnearme, Llc
When you buy something on credit, you end up paying the cost of that item plus a fee to credit card issuer for letting you use credit. This fee is called an interest charge and is added to your balance each month you don’t pay it off. The sooner you pay off your credit card balances, the less you’ll pay in finance charges.
2. Boost your credit score.
The amount of debt you have directly influences your credit score. The more debt you have, the lower your credit score will be. Paying off your credit card debt could improve your credit score.
3. Increase your spending money.
Making credit card payments means you have less money to spend and save. Once you get rid of your credit card debt your discretionary income, aka spending money, could increase by a hundred dollars or more.
4. Meet your other financial goals.
If you have savings and investment goals to meet, credit card debt can keep you from getting there. Cut out your credit card debt and you’ll be able to meet your other financial goals sooner. You may even be able to increase your goals.
5. Contribute more to your retirement accounts.
With the unpredictable future of Social Security, saving for retirement is more important than ever. Not only will paying off credit card debt allow you save more for retirement, it’ll also give you one less financial obligation to meet after you’re retired.
6. Freedom from debt.
Credit card debt can be an overwhelming burden that stresses you out and keeps you up at night. Only paying off the debt will get rid of that burden.
7. Release the lien on your future income.
Anytime you use credit, you’re borrowing from what you’ll make in the future. It’s not very satisfying going to work every day to pay for something you’ve already consumed. A debt-free life releases the limits on your future paychecks.
8. Save yourself from debt collector harassment.
Debt collectors are notorious for their unscrupulous tactics they use to collect debt. Having credit card debt puts you at risk for having to deal with some of these shady characters.
9. Get approved for a mortgage.
Banks want to see you with a low debt load before approving you for a mortgage. The more credit card debt you have, the lower your chances at getting approved for a loan with a good interest rate or even getting approved at all. Not only that, paying off your debt will make it easier to pay back the mortgage.
10. Sleep better at night.
It’s true that debt-burdened families stay awake at night wondering how they’re going to pay off the debt. Once it’s paid off, that debt is no longer a worry and you can get the rest you need.
Taking Out Multiple Payday Advances Each Year
Here is the highly disputed report by Center of Responsible Lending cited in the Editorial: Phantom Demand: Short-term due date generates need for repeat payday loans, accounting for 76% of total volume
The report from CRL claims that the use of “churning” or taking out a new payday loans within a 2 week period, traps borrowers in an endless cycle of debt. They estimate that 76% of payday loan volume is created by the churn of loans. The reports suggests that borrowers remain trapped in the cycle of taking out new payday loans because of the fees charged by the lenders, but we can disprove this with simple math. Even at 400% APR the monthly interest for these short term loans is 33%. So if a borrower takes out a 400.00 Loan and repays in 6 weeks – they pay around 198 in Fees. The amount due after 6 weeks is around 466.00 of which only 66 dollars are fees, based on the normal 2 week extension. Let’s look at the numbers: 66 of 466 dollars are ONLY 14% of the total. It is not the 66 dollars or even the total 198 in fees that are causing the borrowers to take out another loan within 2 weeks. Churning is nothing but the effect of overextended consumers who are paying very high fees on everything, not just payday loans. The center for responsible lending makes the great mistake of only looking at one element in the financial life of payday loan borrowers. Payday loan fees alone are not the sole cause for the churn of loans: declining real wages, 50 dollar late fees for rentals, pawnshops fees, Bank NSF fees at hundreds of dollars a month, Compound Credit Card Interest, Increasing in consumer prices, and a volatile employment market all contribute to the “Payday Loan Trap.” Because of all these microeconomic effects – borrowers are not seeking a one-time demand for credit as this report suggested on page 13 of the CFRL report.…