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Worried About Missing A Credit Card Payment?

Forty-six million Americans (almost 1 in 5 adults) think they will miss at least one credit card payment due date in 2020, according to a new WalletHub credit cards survey released today. This indicates that cracks in the foundation of consumers’ finances are beginning to show, under the strain of mounting debt. The average American household already owes a near-record $8,700 to credit card companies. In light of that, WalletHub’s survey examined people’s experiences with late payments and their attitudes regarding the likelihood of future encounters.

Worried About Missing A Credit Card Payment? - money worries image

Why do so many people expect to miss credit card due dates in 2020?

“The reason that roughly 46 million people expect to miss at least one credit card due date in 2020, according to WalletHub’s latest credit card survey, is that we’re stretched too thin – in terms of both time and money,” said WalletHub CEO Odysseas Papadimitriou. “U.S. credit card users started 2020 with more than $1 trillion in credit card debt. Up until this point, we’ve managed to keep our accounts in good standing at historical rates. However, expecting to miss due dates is a sign of cracks in the foundation. And not only do 18% of people expect to miss at least one credit card due date in 2020, but 30% us say that not having enough money is the reason we’re most likely to be late.”

What are some tips for credit card users concerned about late payments?

“The easiest way to avoid late payments, and the fees and credit score damage that can accompany them, is to set up automatic monthly bill payments from a checking account for at least the minimum amount due each month. This will at least remove forgetfulness as a potential cause,” said WalletHub CEO Odysseas Papadimitriou. “Automated payments won’t do much good if you don’t have enough money in your bank account, however. So careful budgeting and saving are key, too.”

Is it worth asking credit card companies to waive late fees?

“Credit card users who almost always pay their monthly bills on time but fail to do so once in a blue moon should definitely try to ask their credit card company to waive any associated late fee. It really can’t hurt, and 9 in 10 people who’ve tried in the past say they’ve been successful at least once, according to WalletHub’s new credit card survey,” said WalletHub CEO Odysseas Papadimitriou. “This is actually one reason why credit cards that emphasize ‘no late fees’ as a feature are sometimes overrated. You might get that on other cards, anyway, just by asking. Plus, ‘no late fee’ often actually means no fee the first time you miss a due date. After that, all bets are off.”

Key Survey Findings

Credit card issuers are forgiving…if you ask nicely.

Nearly 9 in 10 people who have tried to get a credit card late fee waived were successful. Women are 18 percent more likely to have tried to get a fee waived than men but are also 2 percent less likely to have been successful.

Payment priorities change with age.

People aged 18 to 44 are most worried about missing credit card payments. The 45-59 demographic is most concerned about their mortgage, while those over 59 put tax payments as their biggest worry.

Luxury can lead to lapses.

People with high income are almost twice as likely to miss a credit card payment due to forgetfulness as people with low income.

Men and women react differently to fees.

When asked about their attitudes toward getting a late fee, women are 39% more likely than men to feel “punished.” Men are twice as likely to feel “indifferent.”

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Changing Your Relationship With Debt

Debt can be a terrible burden to have to live with. What can start with a small amount on an overdraft can slowly snowball into tens of thousands owed to various different companies. Pretty soon, you will be juggling a whole host of repayments to several loan companies. 

Debt can lead us to make some pretty poor decisions with our lives. It can make us desperate, and in the worst cases, can cause us to turn to crime to try to solve our problems. The cycle of debt can also cause severe problems when it comes to your relationships. The stresses and strains of harboring a large amount of financial weight can bring us to breaking point with our loved ones. If the debt is shared, not dealing well with the stress can create cracks. But if the debt is primarily on one partner, this can cause a whole different set of tensions. In many cases, people choose to hide their debts from their partners, and this will only lead to a feeling of betrayal and mistrust. 

Debt can tear families apart and put people on the streets. And, if you are in any way struggling with debt, you should take immediate action to stop it from ruining your life. This can be hard to do, and you may not know what the best course of action might be, or who to turn to for support.

Changing Your Relationship With Debt - credit cards and wallet image
Image by Steve Buissinne from Pixabay

Getting The Help That You Need With Debts

In the first instance, when it comes to dealing with personal debts such as loans, credit cards, or student loan debt, you should reach out to a friend, family member, or partner and ask them for help. To be clear, this does not mean that they should lend you money. Quite often, taking a loan from someone that you are close to can be problematic as it may lead to arguments. It is only useful if it is a meaningful amount of money that can be used to clear entire debts. Otherwise, it is often just adding to the problem. 

The type of help that you will want to get is emotional support and constructive advice. Being able to talk to someone about your money problems will be vital as it can help you feel as though you are not alone. 

If you have a partner, make sure you involve them in the situation. They have a right to know about the problems that you are facing, even if they do not directly affect them, it can still be a cause of great tension in your life, and they need to be able to support you through it. 

Seeking Support From Debt Charities

To get support, you should reach out to the citizen’s advice bureau, or a debt charity such as Step Change. Having help from people who are trained to deal with your specific problems will be greatly beneficial to you and your situation. 

They may be able to signpost you towards a robust solution so that you can start to overcome your situation. There may be ways things that you have not thought about doing that can help immensely. 

If you have a complex relationship with managing your money or the stress of your situation is weighing down on considerably, then you might need to talk to a counselor who can help you to process the problems that you are facing. 

Restructuring Your Personal Finances 

One of the primary ways that you can fight debt in your life is to change the way that you deal with your finances. You may be in the habit of ignoring the money that you have going out because it causes you stress or anxiety. This is perfectly natural, and this is a defense mechanism that you will have developed. Unfortunately, it is not terribly helpful getting you out of debt and could, in fact, cause your problems to worsen.

Getting ahead of your debts will mean understanding where your money is being spent every month. For this, you will need to create a full and thorough assessment of your income and expenditure. You should ensure that you do need to leave anything out and be fully honest with yourself about what you are spending money on. Denial will only worsen your situation. 

Start with your most essential outgoings first. This will be your mortgage or rent payments. This will be outgoing that you probably cannot do very much about, but it is important that you prioritize paying it. 

Next up, look at things such as your utility bills. Your gas, electric, water, phone, and broadband. You may be able to lower your consumption or switch suppliers for many of these things. So, shop around and make the switch to the company that offers you the best deals. Make sure that if you are on a limited offer, that you understand the terms and look at switching again if the prices start to rise. 

Your debts should obviously be on the list. You need to pay these every month so that you are not going to get further into the financial black-hole. More on how to reduce the payments on these later. 

Then you will get to your non-essential spending. This will include items such as satellite and streaming subscriptions, gym memberships, as well as memberships to clubs. There may be things that you are paying out for that you don’t even remember that you have. These are prime examples of things that you should cancel in order to save some money. 

Setting yourself budgets for your food shopping is a good way of managing your money. Have a look at home much you are spending on average each month and try to use that as a basis for planning. Think about areas of your shop that you are spending too much on. Are you buying branded items, when an own-brand product would be much cheaper? Get yourself into the habit of shopping in a more savvy manner will mean not picking up impulse buys and working off a shopping list. 

One way of managing your spending is to spend more time planning meals. If you are cooking from scratch, and also have a plan for your meals each night, you can use cost-effective techniques to get ingredients that can be used across a number of meals so that nothing gets wasted. 

Keep in the habit of documenting and tracking everything that you are spending. It may feel completely unnatural to you, but doing this will teach you to control the way that you use money, Building a new relationship with your finances takes time, and eventually using spreadsheets and checking your online banking regularly will feel natural. 

Restructuring Your Debt

One way to deal with the debt that you have currently is to take out a consolidation loan. If you have multiple debts, you will have a few different interest rates. Some of your debts may be more pressing than others, and you may constantly be juggling them. When it comes to paying them off, you will probably not get to pay them all off as there will always be one or two of your debts that keep escalating because you have too many to manage. 

Taking out a consolidation loan will mean that you can put all of your debts into one easily affordable monthly payment. This will make the overall debt much easier to manage. 

Once you have paid off all of your other debts with your consolidation loan, you should cut up your credit cards and close the accounts so that you are not tempted to go back into more debt. 

Worst Case Scenarios

If your debt has gone too far, you should get in touch with a firm that can negotiate with your lenders to agree on a settlement. Doing this may mean that you can avoid filing for bankruptcy, while also giving you the opportunity to clear your debt in a more manageable manner. 

The lender may agree to cut some of the debt for you. There will be an agreed-upon payment plan that will be easier for you to manage in your current situation.  

Nobody wants to file for bankruptcy, or have any court judgments hanging over them because they have failed to pay a debt. Getting in there early and discussing your options with a company that can renegotiate your position may be greatly beneficial to you. 

Getting out of debt may well take you a great deal of time and effort. It will need you to remain focused and change your way of thinking about money. It is possible to get out of debt, though, and although it may feel as if it is the end of the world when you are tangled up in interest and loans, it can get better. Reach out and get the support that you need, but most importantly, work at yourself in order to improve your own relationship with money and debt. 

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Is There A Credit Gender Gap?

In the US, Moms are 3.6 times more likely than dads to give their kid a credit card, according to a new WalletHub survey released today. Parents can make their child an authorized user on their account and give them their own card tied to the parents’ credit line.

Making a child an authorized user can be good way to teach them responsibility and help them build a credit history before they are old enough to have a credit card account in their own name. However, not all parents decide to give their kids a card. Below are a few key stats from WalletHub’s survey:

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Key Stats

  • 2.4X more daughters have credit cards than sons.
  • Kids in private school are almost twice as likely to have a credit card.
  • Dads are 3.4 times more likely than moms to monitor their kids’ credit card spending.

Q&A with Odysseas Papadimitriou, CEO of WalletHub:

What is an appropriate age to give one’s child a credit card?

“It’s a good idea to give your child a credit card for emergencies when they are in high school,” said WalletHub CEO Odysseas Papadimitriou. “That’s when young people start to exercise their independence more and more, making access to funds for emergencies increasingly important. Plus, adding your child to your credit card account as an authorized user can help them build some credit history, making it easier for them to get their own account after they turn 18. When they’re eligible to get their own account, set your child up with a secured credit card, and have them fund the security deposit themselves. This will give them good practice without too much risk. But it will be their own money at stake, which is important.”

What explains 2.4X more daughters having credit cards than sons?

“My guess is that parents tend to see their daughters as being responsible enough to handle a credit card at an earlier age than their sons,” said Odysseas. “However, the need for financial literacy is gender-agnostic. And the kids who are least responsible may actually need the most hands-on training.”

Should parents closely monitor their kids’ spending?

“Parents should monitor their kids’ spending, both to keep them safe and because it can provide some valuable learning opportunities. But they shouldn’t try to be sneaky about it,” said WalletHub CEO Odysseas Papadimitriou. “Rather, parents should discuss spending decisions with their children in order to help calibrate how they think about money and improve their financial literacy. Credit cards make this whole process a lot easier than cash.”

A copy of the full report can be found at https://wallethub.com/credit-cards#survey.

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Hitting the Financial Bottom: 3 Options for You to Consider to Prevent Debt from Ruining Your Life

If you are unable to pay your debts, it’s always advisable to seek professional assistance as soon as possible. Taking prompt actions against such cases helps remedy your financial situation. Unfortunately, finding solutions to one’s debts is not as easy as it sounds. If you find yourself hitting the financial bottom as a result of your debts, here are a few strategies to consider.

Hitting the Financial Bottom: 3 Options for You to Consider to Prevent Debt from Ruining Your Life - debt worries image

Debt Management Plans

These kinds of plans make it possible for you to settle your unsecured debts in full, but often with fees waived or with reduced rates of interest. A debt management plan allows you to make a single payment to the credit counseling agency every month. The payment made is then distributed among your creditors. With this approach, however, you will have to live without your credit cards because they will be closed until the plan is completed. Although the debt management plans cannot affect your credit scores, closing the accounts will most definitely do. Therefore, make sure you apply for credit cards again once you have completed the plan.

Bankruptcy

There is little or no point of entering a debt management plan if you cannot pay as agreed. You can always talk to a bankruptcy attorney before you can decide to pursue any relief plan. Most attorneys will not charge for the initial consultation, so do not fear approaching one.

The most common type of bankruptcy is Chapter 7 liquidation and this can be used to erase the unsecured personal loans, credit card debts, or even medical debts. If you qualify for this process, debt relief can be done in a period of 3 to 4 months.

You should note that not every individual with an overwhelming amount of debt qualifies for debt relief through bankruptcy. For your family size and state, if your income surpasses the median, you may be required to file Chapter 13.

There are numerous law firms that can offer the professional help you need. Make sure you search around to ensure you are working with the best bankruptcy attorney in your area. You may also consider visiting www.steinbergerlaw.com/ to learn more about Chapter 7 bankruptcy.

Debt Settlement

This approach should always be the last resort when it comes to seeking debt relief. Debt settlement organizations often ask debtors to stop paying their debt and place their money in their controlled accounts instead. As the money accumulates, the company approaches every creditor, and you as the debtor continue to fall further behind payments. This approach may work since the fear of not getting anything may prompt the creditors to accept any form of settle even when it means getting a smaller lump-sum, as long as they agree not to pursue the debt any longer.

However, with this approach, you subject yourself to collection calls, potential legal action, or even penalty fees. Debt settlement cannot stop any of these from happening while the negotiations are still ongoing.

Last Words

When you are about to hit the financial bottom, make sure you consider the three options above. Best of all, make some time to talk to a bankruptcy attorney to get all the help you need when seeking debt relief.

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Credit Card Debt – Are You Paying Thousands in Extra Interest?

Millions of people around the world use credit cards and despite our best intentions of clearing the balance very month, most of us will carry a balance. In fact the average outstanding credit card balance is $5700 in the USA (source ValuePenguin) and is over £2500 in the UK.

Chances are when you take out a new credit card you will be offered the opportunity to pay via direct debit either the full balance or the minimum amount every month. Since most people use credit cards as flexible spending for emergencies or contingencies it can be difficult to commit to paying off the full amount. This is especially true when transferring a balance from another card.

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Statistics show that over 65% over credit card holders carry a balance from month to month

Did you know that if you opt to pay the minimum balance you could take over 20 years to pay off the card? It is far better to agree a fixed monetary amount each month than the percentage which is often suggested by the credit card company.

The video below explains in more detail and you can prove it for yourself by using a credit card calculator

For more financial education tips and videos visit The Personal Finance Academy

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