Credit Card Debt Should Be Decreased
Posted at by ifydcat on category CreditIn our present time, almost every person has concerns about credit card debt reduction, since this particular type of debt never seems to go down unless extreme measures are taken. With the high potential for job loss or reduction in income that we have today and the fact that credit card debt includes some of the highest interest rates, if consumers want to improve their financial health, credit card debt reduction has to be a main priority.
It is no big news flash to report that interest rates are on the rise, because in May 2009 the average credit card’s interest rate was 13.94% and now it is about 1% higher; if we could reduce our credit card debt it would reduce the amount of money we are spending on payment of all of our debt.
The rising interest rates are not the only thing that causes added emphasis to be placed on credit card debt reduction, because revolving credit accounts will often create the most added stress on all credit scoring systems such as FICO scores
To make a point, consider that over 65% of a person’s credit score is based on two quick facts: the frequency with which credit is used and how good their repayment history is revealed to be.
Credit cards may be used to maximum available limit if credit debt reduction is not a priority for the people involved, but this may be okay because the payments are low and the full balance is not too high.
The unfortunate part of this scenario is when a reduction in income inhibits the ability to repay and utilization is high, the credit score begins to suffer some ill effects. If a payment is missed due to substantial financial strain, the late payment will be reflected in the credit score and the borrower will be punished for this by receiving a much lower score.
Of course, worst-case scenarios are never popular when it comes to hedging against personal financial risks such as using credit cards. The realities in this situation are very clear: we are experiencing a horrible economic recession, while credit card interest rates are going up and credit scores are becoming much more important when credit approval is considered. This collection of facts added together should encourage all of us to think about making plans to help reduce credit card debt everywhere.
All people have their own individually personal reason why they are carrying debt on their credit card. It does not matter if that person is in a comfortable position with their job situation or just not worried about owing money.
When referring to dollars and cents, though, we should examine just how credit card debt reduction can help us now and in the future.
It is tougher for anyone to get credit approval when there is very much existing credit card debt and no matter how much you use your credit card, that is why credit card debt reduction affects everyone.
The reasons why reduction of credit card debt is important are listed above.
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