One of the most common reasons that cause people to struggle financially is the repayment of debt. Credit card debt is easy to build, and it can be incredibly difficult to repay. Each credit card company has its own terms of use, and consumers often do not spend the time to read through this fine print before applying for and using the credit card.
Debt consultants in Victoria often find that consumers are unaware of how much they are paying in interest and fees by carrying a balance. This information is readily available from the credit card company, but the consumer has overlooked the information or not understood the effects of long-term interest.
Billing Cycles
Paying off a credit card in the same billing cycle or within the “grace period” means the consumer does not pay any interest or fees. However, as debt consultants in Victoria point out, the outstanding unpaid balance is charged interest from the transaction date. This can be up to 20%, which quickly adds up.
Cash Advances
Many people that come to debt consultants have used their credit cards for a cash advance. In general, the amount withdrawn as a cash advance is charged interest from the date of the withdrawal. This can be up to almost 25%, and it also applies to transfers between cards, unless there is a promotional deal.
The Minimum Payment
Paying the minimum balance prevents any additional fees or late fees, but it does not prevent interest. As interest is often significant on large balances, paying more than the minimum is critical.
