Credit Card Debt

ATTENTION GAINER:

I am going to need some audience participation. Everyone take a $5, $10, or $20 dollar bill out. How many of you are willing to rip your money up? You probably wouldn’t do it and think this is crazy, but we throw money away like this in the name of our car, television, or shoes every month. Let me give you an example.

SIGNIFICANCE (ATLEAST 1 SOURCE):

Let’s say you owe $1000 on your credit card and you have a minimum payment due of $25 and you are being charged 19% interest. How long do you think it would take you to pay it off by just making the minimum payments? The answer is 7 years according to the February 2005 issue of University Wire. And for the first year you …show more content…

Another way this debt multiplies is by not paying off the balance each month. Over half of all credit card owners fail to pay off their entire balance each month as noted in the January 2005 issue of the Irish Independent. If you aren’t able to pay it all off each month then you are probably spending more than you earn. This balance also accumulates if you fail to pay your bill on time or if you go over your limit. The credit card companies are then able to tack on a penalty fee of around $40 to your bill.

Next, we can blame the lenders for their lending policies. They actually want to lend money to people who are less likely to pay it back. You see when you pay your minimum payment and carry the balance over to the next month you are actually doing exactly what they want you to do because the credit card companies earn money through the interest charges. They want to lend money to young people and students because of the increased probabilities of a lifetime of debt and the penalty fees that come along as a result, as reported in the March 2005 issue of Daily Mail.

TRANSITION:

Now that we are aware of our spending habits and the way credit card companies take advantage of us, let’s take a look at what we can do to avoid or solve this problem.

SOLUTION (ATLEAST 2 SOURCES):

The best way to avoid this problem is by leaving your cards at home and using your cash or a debit