(PRWEB) July 18, 2013 -- The Facts:
1. If you do not pay off your credit card in full at the end of the month, you will attract interest charges.
2. Even though the Reserve Bank has been dropping the official cash rate, this mostly impacts Home Loan holders not credit card holders.
3. If you had a $10k credit card at 23% interest, and you paid only $200/month, it would take you nearly 14 years to pay off and cost you over $32000.
4. Cash Advances from a credit card generally attract a much higher interest rate
Ultimately how you use your credit card, your purchasing and repayment behavior, are factors that all impact the cost of the finance and the financial impact a credit card with have on your budget.
Conflicting with this are the real needs of the individuals. All too often, credit cards are relied upon when income is insufficient to meet day to day expenses. In this way, unplanned purchases can result in increased indebtedness.
There are countless articles espousing the correct use of credit cards however the harsh reality is that the real day-to-day needs of the individual will always outweigh the perceived “responsible” use of credit. In other words, no matter how financially literate an individual is, if a need exists that is perceived to be greater than the consequence of increased indebtedness, then naturally the individual will always rely on credit to meet that need in circumstances where there is insufficient cash available.
This is not to say that the individual doesn’t experience a certain degree of regret or remorse following the use of credit. Despite this, the harsh reality for so many people is that the guilt they have when they feel “forced” to use a credit card is something that they have to live with – a situation describing a hidden cost of credit card usage.
As unemployment rises and savings accounts diminish, credit card use tends to increase as people pay for today’s essential costs only to worry about the consequences tomorrow. The risk of course is that the individual does not have the means to account for their past usage.
Increased unemployment levels symptomatic by a declining economic environment, the amount of people facing a situation where they have unmanageable debts with limited means increases as people “hit the wall”.
In such circumstances, it is vital that people turn to trusted, qualified professionals for support. Grant O’Donnell, director and founder of Debt Fix (one of Australia’s largest debt agreement companies says, “…If people find themselves in difficult financial circumstances and they are unable to pay their creditors in a way they would prefer, they should speak with their creditors in the first instance, as difficult as that might be amidst the pressure of mounting bills and debts…”
Debt doesn’t discriminate, meaning that is that no matter what income you earn or what assets you may have, if you live beyond your means then the risk of financial ruin is increased tenfold. In other words regardless of whether you are a blue collar worker or a white collar worker, if your income is insufficient to meet your costs in addition to debt repayments, you will ultimately be staring down the barrel of bankruptcy - unless of course corrective action is taken.
Grant O’Donnell says; “…There are always solutions to get out of debt. People need to know that there are options and the worst thing that they can do is ignore the problem and hope that it fixes itself…”
In such circumstances, Mr O’Donnell says that most people referred to friends and family for financial advice; “…Friends and family are great for moral and emotional support, but unless they are qualified financial professionals, they may not be able to provide the type of advice necessary to deliver the most appropriate conclusion…”
As well-meaning and intentioned close friends and family may be, unless you receive advise from a qualified professional, you risk potentially making your situation worse.
Mr O’Donnell went on to say, “…As hard as it may be in the face of financial stresses, it’s important to try to remain optimistic – there is always a solution and with proper with guidance and expert support, there are always options…” Mr O’Donnell said.
For more information, contact Debt Fix 1300 332 834 or http://www.debtfix.com.au
Nicholas Bregozzo, Debt Fix, http://www.debtfix.com.au, 1300 332 834 723, [email protected]
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