By Roger Caldwell
I am not a financial expert, an accountant or a bookkeeper, but most people in America are in debt. Many owe on a home and a number of other bills each month, and this week the focus of the article is credit card debt. Credit cards are a way that America is able to buy items and things that they don’t have cash for.
Debt is a reality in 2022, and younger Americans are taught at an early age to charge things when they have no cash. When they are hungry, they charge food, when they want some new clothes, they charge it. The majority of this stuff they do not need, but they are consumers, and it feels good.
It is obvious that many Americans don’t pay attention or read the fine print on their statement. They are unaware when the payment is due. Credit card is a vicious cycle, and many people are late when they pay their monthly credit card bill.
According to “Wallet Hub,” 42 million Americans expect to miss credit card due dates in 2022. There are many different reasons such as lack of money, big spenders, not paying attention to the due date, too many bills, and in some homes 5 to 10 credit cards. The average balance of credit cards in most households is $8,000, and in 2022 Americans are $859 billion in debt.
As many Americans are struggling with paying their due date on their balances, there is a negative chain reaction from the credit card company. Each time the customer is late paying their credit card, there is a $38 late fee with only a 1-day grace period. There now is a higher penalty for using the credit card on new purchases, and the average APR is raised although everything cost more.
If a customer has 5 credit cards and they are late for each one during the month, they pay the credit company an extra $175 each month in late fees. When the customer pays only the minimum payment there is a warning on the statement that it will take 11 years to pay off the credit card. The company also charges interest and other miscellaneous charges.
Very few credit card holders pay off the entire balance in full each month. Most Americans are stuck, and they make a payment every month, and they are caught in the vicious cycle of credit card debt.
As a result of the pandemic in 2022, it now cost 19. 5 % to purchase a new credit card. The credit companies are charging almost 20% to use their money, and if you have a bad track record everything cost more.
Many Americans don’t understand why they pay every month, and their balance stays the same or increases. It is obvious they are late, they pay only the minimum payment, and they have high penalties on their bill.
If Americans are doing badly with paying off their credit cards, Blacks are in worse shape.
Blacks must study their credit card statement each month and pay before the due date. Pay off the card in full every month if possible and pay more than the minimum payment. Lower the number of credit cards in the household and lower the balances. Control when you use your card, and it should be used for emergencies only.
Discipline is the key to not going in debt with credit cards. There are times when you need a credit card but pay it off in full at the end of each month. Climbing out of debt is not easy, but your credit score is important when spending money on major items and capital goods. Talk to a financial planner