Posts Tagged ‘credit card debt’
Personal Debt Relief Will Be Harder to Get Soon
Posted by admin | Filed under Budget, Credit Cards, Reduce Debt
Unless you have been hiding under a rock, you’ve heard about the Banking Crisis, “The Banking Bailout” or the “700 Billion Gambit”. What most people do not seem to realize, is that because banks are tightening up on their money, and their lending guidelines, whether it be home loans, auto loans, home equity loans, or yes, unsecured loans such as credit cards.
This is a huge problem to every American, whether or not you think you are directly affected or not. We can all probably put off selling or buying a house, selling or buying a car, but what if we already have credit card debt. The average American with at least 1 credit card owes more than $8000 in credit card debt.
Here are two scenarios that could get people in trouble.
- If you are credit card surfer, those that shift debt to low or no interest: those offers may dry up, causing minimum payments to go up.
- If you carry high debt to credit limit: debt limits lowered, means high debt ratio > lower FICO > higher interest rate.
In scenario number 1, you want to make sure you have a back-up plan. Do you have other banks offering you low interest rates now! Now might be a good time to shift, because they may not be available. What is your debt to credit limit per card? Ideally you want to have no more than 80% of your credit limit per card and the lower the better overall.
In scenario 2, it may pay (no pun intended) to get more credit now, so that if it your limits get cut back, then you are still below the magical 80% ratio of debt to credit limit.
With the Credit Crisis, you won’t find Credit Card companies with 0% interest and zero fees any more but here is one that is worth checking out.
Discover More offers 0% interest for 12 months, with a maximum Balance Transfer fee of $75.