Money Savvy Living Autumn 2013 | Page 6

Getting Debt Free: Pay Off Credit Cards

IIf you are among the average American household, you probably have around $7100 in credit card debt. Credit card debt can be overwhelming because no matter how much you pay, it seems like the debt just never goes down. Credit cards are a revolving type of debt, which means that the interest compounds daily. So when you wake up tomorrow, you will have a higher balance than when you went to bed last night. Credit cards also typically have high rates

of interest, with the average credit card rate being around 12%; however, many credit cards have rates well over 20%. While the Credit Card Accountability Responsibility and Disclosure Act of 2009, or CARD Act, does limit interest rates and fees that companies can charge, it still may not be as easy as you would think to pay off those balances.

There are a few things that you can do, within your current budget to work toward getting debt free:

Pay your bills on time. Even if you are only a day late, credit card companies will charge you a $25 late fee, which will be added on to your bill total. Remember, anything that goes onto your account, whether a new purchase or a late fee,