German folklore claims the town of Hamelin was saved by the Pied Piper, who lured rats out of the city by playing from his flute. Today they celebrate this tale as Rat-Catchers Day. Here at ACCC, we can’t help with that type of pest. We can help with pests that can hinder your financial stability. These pests can ruin your credit, garnish your wages, and leave you with mountains of consumer debt. There are numerous financial pests out there, but we will focus on the financial pests you really need to get rid of.
#1 Financial Pest to Get Rid of: Credit Card Debt
First, let’s look at credit cards. Credit card debt in the US has increased to $1.04 trillion. The average American owes a balance of $6,354.00. It has become a problem not just for lower and middle-income households, but even for wealthier ones. The average credit card debt increases with your income, and those earning over $160,000 average $11,200 in debt. You must pay your balance in full and on time to get rid of this financial pest. Failing to do so will result in interest, which creates more debt. As it piles up, not paying also causes a drop in your credit score. If you find yourself unable to pay the balance in full, pay as much as you can each month. If you are overspending, you may want to cut back.
#2 Financial Pest to Get Rid of: Payday Loans
Next, we will look at payday loans. Of the many financial pests to get rid of, this is one of the most dangerous. A payday loan is given as a way to access fast cash, usually for a car repair or medical bill. The loan is due by your next payday. Failure to do so will cause the loan company to collect your security deposit, which is your paycheck itself. Then they charge notoriously high-interest rates if you’re late. Some have gone as high as 600%! If you fail to pay it off, you end up applying for another one to cover that cost. This causes a vicious lending cycle. In lieu of this, we recommend dipping into your emergency fund or asking friends or family for help.
We focused on credit card debt and payday loans because they cause the most harm. Besides the two types of debt we’ve covered today, there are other types of debt that can pile up, such as mortgages, car loans, medical bills, etc. Before getting them, there’s a process to make sure you are able to pay a mortgage or car loan. Their terms are fixed at a low-interest rate payable over a reasonable amount of years. In contrast, credit cards and payday loans are hard financial pests to get rid of. Avoid them as much as possible! You’ll be in much better financial shape if you do!
To speak with a certified credit counselor about paying off debt, call ACCC today at 800-769-3571.