Today, experts estimate that in the United States alone, Americans are more than $609 million in debt. In addition, the latest statistics indicate that consumers have on average 3.5 credit cards with the average household debt being almost $16,000. Although there are other ways for people to get into financial trouble, misuse of credit cards has without doubt been one of the biggest contributors to the country’s economics. This is certainly not to say that having a credit card is a bad thing. In fact, when managed appropriately, credit cards serve very important purposes.
Some of the other statistics that are alarming have to do with what the credit card companies are offering consumers. For instance, the latest annual percentage rate for new credit card offers is 14.35%. While this is certainly lower than we had seen over the years, the interest rate plays a key role in who well or bad a credit card would serve someone. Then, the annual percentage rate on credit cards with outstanding balances is currently at 14.48%. Knowing the average rate could be used as a guide when searching good credit card offers.
For overall revolving debt within the United States, 98% has to do with credit cards. Considering that the United States consumer debt is just below $2.43 trillion, it is easy to see what negative impact credit cards could have if the wrong card were chosen and if a card were not being managed properly. In addition, the average interest rate charged on credit cards with late payments of 60 days is over 4.27%. Of all people who have a credit card in the United States, 13% will eventually default on the agreement.
Although anyone interested in securing a credit card needs to understand the financial responsibility that comes along with this small piece of plastic, it is just as important that the right credit card be chosen. Unfortunately, millions of people lock into the wrong credit card, which quickly puts them at a disadvantage. Although this might not seem like a big deal, when you look at the statistics it becomes apparent that being a cardholder comes with a tremendous amount of responsibility. The right card coupled with proper money management, are key factors to being successful for spending and debt of this type.
While it would take some time and effort to compare different credit card offers, without going through this step, it would be easy to lock into a contract with hidden fees, high interest rates, and no features that would prove beneficial. Today, you could conduct a search through any search engine such as Google.com, Lycos.com Bing.com, or Yahoo.com to conduct a search for credit cards that would best match your needs rather than going with a cookie-cutter solution that lands you in financial trouble.
For instance, if you were most interested in a credit card with low interest, then your search would use keywords such as “low interest rate credit card comparisons”. On the other hand, if you wanted a card with a 0% introductory period and balance transfer capability so you could transfer debt from higher interest rate credit cards, use keywords such as “0% introductory balance transfer credit card comparisons.” In return for your search, multiple options would be provided. Simply clicking on several of the links, you would be redirected to a website that shows the top credit cards based on the features you want.
We want to provide you with a scenario showing why the wrong credit card could prove detrimental. Let us say that you had two credit cards, one with a $2,000 balance at 20% interest, and another with a balance of $1,500 and interest set at 22%. With rates like these, not only would it take you forever to pay off the $3,500, but also, you would be paying a significant amount of money to the credit card company just in interest. Then, if the credit card had multiple fees attached, you would be out even more money. This would be one example of the wrong credit card due to the extraordinarily high interest but now, let us say that you decided to secure a different credit card to transfer the $3,500 balances.
However, prior to being approved for the new credit card, no research on the benefits and potential risks was done. Thinking the new credit card would be beneficial, you transfer the $3,500. Unfortunately, instead of being on the fast track to financial freedom, you discover what you thought was a 12-month introductory period of 0% only applied to purchases, not balance transfers. Making things worse, the interest was actually a half point higher than the cards you just transferred balances from, and the new card charges significant fees. Now, you have new challenges on top of old ones.
Obviously, being in a situation such as this would make it extremely difficult for you to get out of debt. In addition, if the credit card debt coupled with all your other debt had you pinned against the wall financially, chances are good that your credit score would be at risk for serious damage. With a poor credit score, securing a loan for a home, car, boat, credit card, etc would be impossible. Additionally, bad credit would mean paying more in insurance premiums and even being passed over for someone else with good credit when looking for a different job.
As you can see, the “non-issue” of choosing the wrong credit card could easily and quickly spiral out of control. This situation is one that millions of people around the country face, which has wrecked havoc on credit, as well as family dynamics. Had those people spent a little time and effort to compare the different credit card offers, they could have chosen a different card, one that would actually put them on the road to financial recovery instead of burying them deeper in debt.
Now, we want you to look at the same scenario but this time with the right credit card being chosen.