Credit card debt is one of the easiest types of debt to accumulate and one of the most difficult debts to pay off. As of May 2019, the Federal Reserve reported that credit card debt reached a national balance of $848 billion. With credit card debt affecting so many Americans, it’s important to understand how this type of debt accumulates and how you can manage it effectively.
If you’re interested in paying off credit card debt without spending any extra money, our Debt Free Life solution is here to help!
Credit card debt is one of the most toxic types of debt you can carry. If you miss a payment or carry a high balance on your credit cards, your credit score can be affected. Having a low credit score makes you a high-risk borrower – making it more difficult to acquire loans, get a job, and even secure a place to live.
Not only does credit card debt hurt your financial standing, but it can also affect your mental health. A recent survey by The Balance found that carrying debt directly corresponds with overwhelming anxiety for many Americans, and financially anxious individuals are more prone to carrying higher credit card balances and medical debts. In contrast, financially confident people are more likely to invest in loans with lower or more beneficial rates, such as mortgages and auto loans.
Credit card debt is “bad debt” because the interest rate on a credit card is usually much higher than other types of loans. Also, the minimum payment for a credit card is usually low. This might sound like a benefit at first, but paying the minimum rather than the entire balance each month means you’ll pay interest on top of the balance that’s already building up in your account.
Annual percentage rate , known as APR, is the amount of interest you’ll see applied to your credit card balance (if you carry a balance). Your personal APR is an annual calculation, based on your credit score. Your APR is determined by running a report on your credit – so if you have a good or excellent credit score, you will most likely secure a lower APR. If your credit score is on the lower end of the scale, you might face a higher APR (which means you’ll pay more interest on your credit card balance each billing cycle).
If you’re paying your credit card balance off each month, you probably won’t be affected. However, if you carry a balance on your card, you’ll notice that APR might change based on your credit card balance and how much you’re paying off each month.
Your credit card has a fixed APR (remains the same but can be affected by late payments over 60 days) or a variable APR (subject to change). There are a few other types of APR you might come across when applying for a credit card.
All this information is listed on the credit card company’s website; it’s important that you review all these details before applying for a credit card so you can avoid unexpected fees and know your limits.
If you want to eliminate your credit card debt for good, Symmetry’s Debt Free Life program can help. The Debt Free Life program pays off your credit card debts using the cash value of a life insurance policy. This method allows you to pay off credit card debt without spending any extra money each month. Connect With A Debt Free Life Consultant
Once your debts are paid off, your Debt Free Life policy turns into a retirement savings plan. Since Debt Free Life is a life insurance policy, you are protected with comprehensive life insurance coverage in addition to being able to pay off all your debt.
If you are among the millions of Americans carrying a balance on credit cards, understanding credit card limits such as your APR and interest rate will make budgeting for expenses easier, so you can know exactly where your money is going each month.
Whenever possible, try to pay off your credit card balance in full every billing cycle. This will save you the hassle of dealing with high interest rates and fees, and you can rest easy knowing that your hard-earned money is working for you.
If you want to learn more about paying off credit card debt with Symmetry’s Debt Free Life program, fill out this short form to connect with a Debt Free Life consultant in your area. With video conferencing options available, you can connect with a licensed consultant who can help you get started on the path to financial freedom in just a few simple steps.
This article is written for informational purposes only and should not be taken as financial advice. For a detailed consultation regarding Debt Free Life, please reach out to your Symmetry Financial Group insurance agent.