Updated: Mar 3
Okay for the perosnal financial topic, this one is from Fox Business. It's an article that talks about credit card debt and being that the Coronavirus is upon us, this article talks about American credit card holders in that 59% of them entered the Coronavirus pandemic with an outstanding credit card debt according to creditcards.com.
This percentage is equal to 110 million U.S. adults. Now it goes on to say that the study said that 56% of people were carrying debt for at least one year or that would be 61 million people. 27 million people have been carrying debt for years or more and 17 million of these people have been carrying debt for five years or more.
So we already know that credit card debt by Americans has been a problem for a long time and with a Coronavirus upon us it's making it much more difficult for people because not only do they have the debt but some people may not be working and we know that unemployment comes a very high right now. If you're somebody in that position what can you do?
Get Rid of Debt Accumulating Interest
The best options I would recommend is looking into balance transfers where you can go to the credit card company where they would offer balance transfers for 0% interest typically from 18 to 24 months.
A good site to even look at that is like NerdWallet or creditcards.com. So what you're saying here is 0% interest is a great way to transfer money that is sitting on other cards. It's a great way to save money over the long-term, especially if you are one of those people carrying debt for one, three or five years.
I know that they companies typically charge about 3% to transfer that balance.
So say you transferred over $10,000; then you would pay 3% or a $300 charge. If you're paying 5.9%, 12.9% or 18% or whatever on your other cards, it's worth it to transfer and that $300 to your balance and then pay the money down because again you're getting 0% interest. Now in some cases you may not get that rate; however, you may get 1.9% or 2.9% or something in the ballpark.
Make More Than the Minimum Payment
Yes, that would help you in the long run. I would make at least the minimum payment or as much as you can over that and having that ability to pay that down without interest will get you exponentially further in the game if you have to carry credit card debt. Some people are just having to do that to survive so this would be a really great way to try to at least alleviate a little bit of that stress. I would imagine that credit card companies are participating in some of the payment deferrals at that this time as well, so that would be something that you may want to look into to take advantage of it at this point.
If you are somebody who can pay their bills and is working, this is a great thing to do as well; because of the Corona it's just a good way regardless to manage your money in a better fashion so that you're paying less money to somebody else.
Just remember, the whole point is not to have a credit card debt in the long run, We are not big proponent of it. I like to think of it as personal finance cancer. The whole point for the credit card company is that they are wanting you to make that minimum payment hoping you stretch out your payments. In a sense they are calculating an investment time horizon as each month of interest is owed back to them.