Many New Jersey families want to eliminate credit card debt but are unsure of where to start. The good news is that there are simple steps people can take to get their finances under control and immediately start lowering their credit card debt.
A study that will be published in the Journal of Marketing Research reveals that tackling small goals may make it easier to pay down large amounts of debt. However, starting with smaller balances may not be the best plan for all New Jersey borrowers. This is because paying off debts with higher interest rates may enable a consumer to pay off the debt balance sooner and reduces the amount of interest that will have to be paid overall.
Many people in New Jersey have credit card debt that will take a long time to pay off. When a person's credit cards are maxed out, the credit utilization numbers can wreak havoc on their credit score. Although making the minimum payment each month may keep interest charges from adding up, these payments do little to chip away at the actual debt.
According to information from the Federal Reserve, the total amount of credit card debt in the country in May 2015 was $901 billion, which is a 3.19 percent increase from the previous year. People are apparently taking on additional credit card debt and not paying their balances off, and that debt may increase even further if an expected interest rate hike takes place.
Many New Jersey residents struggling with credit card debt consider consolidating their revolving balances to lower their monthly payments and simplify their lives, but this may not always be a prudent strategy. Consumers with high credit scores may be able to pay off their debt more quickly after obtaining a low fixed rate, but doing so could temporarily damage their credit rating in certain situations.
For people in New Jersey and across the U.S., it can be very easy to fall into significant credit card debt by not understanding a few basics. Mistakes can be costly and can lead to financial challenges and even bankruptcy. For example, cardholders often choose to make the minimum payments due to finances or simply because they do not want to pay a larger amount. Making a late payment can damage a credit score. FICO states that payment history is 35 percent of how the score is determined.
Some consumers in New Jersey may have had the experience of receiving a bill from a collections agency without ever having been informed that they owed money. They might wonder whether this is legal, and the answer is that it often is. But there are steps a person can take to prevent this from happening.
Many New Jersey residents struggle with financial obligations resulting from credit cards, student loans and other forms of consumer debt. Since the 2008 recession, many have also made a habit of making late payments. This can cause late fees and an increase in interest rates. Fortunately, there are many things that can be done by some people to consolidate their debts.
Anyone in New Jersey who uses a credit card or has a bank account could be affected by arbitration clauses. An arbitration clause is an agreement between a banking institution and a customer to resolve any disputes outside of the regular court system. Although arbitration clauses cover tens of millions of consumers, a study by the Consumer Financial Protection Bureau found that a majority of consumers do not understand their implications.
Although people began to spend more money in 2014 compared to 2013, they often used credit cards to pay for purchases, especially retail ones. A CardHub survey shows that in 2014, Americans in New Jersey and across the nation spent $57.1 billion on credit cards, an increase of almost 50 percent over 2013 credit card debt figures. Around 2009, consumers had been more careful with their spending as a result of the financial crisis in the United States. During this time, they were more concerned about paying down or off their debts.