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Have The Credit Card Companies Got Their Eye On You?
Credit card companies have ways of identifying people who are on the verge of collapse. They call it “behavior scoring.” You can bet they’ve got an eye on you if...
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You usually pay only the minimum monthly payment. |
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You often send in less than the minimum payment. |
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You usually pay late. |
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Your outstanding balance grows and hardly ever shrinks. |
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You fall behind on payments. |
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You’ve taken the maximum cash advance. |
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Find Your Debt To Income Rate
To find your debt rate, divide your monthly take-home pay into your total monthly debt. The answer will show your percentage of debt.
| 1. |
What are your total monthly household expenses? (Include mortgage, rent, auto loans, school loans, personal loans, and credit cards). |
$_________ |
| 2. |
What is your monthly take-home pay? |
÷ $_________ |
| 3. |
Take your total monthly debt, divide that by your take-home pay and that should equal your percentage of debt to income ratio. |
= $_________ |
How Do You Compare?
Your answer will result in a figure with a decimal. Anything after the decimal is equal to a percentage.
For example:
.10 is equal to 10%
.15 is equal to 15%
.20 is equal to 20%
.25 is equal to 25%
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10 percent
Congratulations! You have a firm hand on your spending. You’re in control. You’re a good credit manager. Continue as you’ve been doing. |
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15 percent
There’s no cause for alarm, but you should slow down on your charging and try to get your debt closer to 10 percent. |
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20 percent
You have a problem. You should stop using credit immediately. Stop unnecessary spending and work at reducing your debt. |
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25 percent and more
Red Alert. Your home, your car, and your debt are probably eating up 75 percent of your paycheck. It’s time for a dramatic change in lifestyle. You’ll probably need professional help. |
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Creditors Prefer To Work With Credit Counselors
They know that if you’re willing to see a professional credit counselor, you must be serious about putting your finances in order. Depending on your situation, in some cases, credit counselors can:
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Consolidate all your bills into one payment |
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Reduce your monthly payments |
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Reduce your interest rates |
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Waive late fees |
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Stop over-the limit fees |
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Reduce the size of debt you owe |
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Stop the collection calls and legal notices |
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Re-age your account so that it is not in default |
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Offer motivation, education, encouragement |
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Provide someone you can talk to when you have a question or concern |
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Prevent bankruptcy |
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Repair your relationship with creditors |
How Long Will It Take You To Pay Off $1,000?
Years to pay off $1,000 when paying the 2% minimum monthly payment of select interest rates.
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14% rate = 6 years to pay off the debt |
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16% rate = 7 years to pay off the debt |
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18% rate = 8 years to pay off the debt |
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20% rate = 9 years to pay off the debt |
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22% rate = 11 years to pay off the debt |
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The Cost Of Credit
Credit is not free money. If you hold an average daily balance of $5,000 on a credit card charging 18% annual percent rate, you will pay $900 a year in interest charges. How much do you owe and what interest rate are you paying? Check your statements and then check the below to see what it is costing you.
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$1,000 |
$2,000 |
$3,000 |
$4,000 |
$5,000 |
| 14% |
$140 |
$280 |
$420 |
$560 |
$700 |
| 15% |
$150 |
$300 |
$450 |
$600 |
$750 |
| 16% |
$160 |
$320 |
$480 |
$640 |
$800 |
| 17% |
$170 |
$340 |
$510 |
$680 |
$850 |
| 18% |
$180 |
$360 |
$540 |
$720 |
$900 |
| 19% |
$190 |
$380 |
$570 |
$760 |
$950 |
| 20% |
$200 |
$400 |
$600 |
$800 |
$1,000 |
| 21% |
$210 |
$420 |
$630 |
$840 |
$1,050 |
| 22% |
$220 |
$440 |
$660 |
$880 |
$1,100 |
• Recent Developments In The World of Credit
• Facts About Credit Cards
• Tips For Raising Your Credit Score |
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Copyright © 2006 Accurate Credit Solutions. |
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