Why Credit and Associated Fees / Interest are Keeping You Poor

Do you feel like you have a decent income yet somehow are always short on cash? If so, you should check out how much money you are paying in interest and fees to your bank and credit card companies. For example, if you are being charged $35 for an overdraft at your bank once per month then you are paying $420 in overdraft fees per year! If you go over your credit limit and make a late payment to your credit card then you are probably paying $70 per statement. Start adding up all of your late fees, interest, and the like, and you may find that you are paying hundreds of dollars per year in fees. If this is happening to you then you need to make a plan to get your credit balances far enough down that you won’t ever go over the limit and to always pay your bills on time. As far as overdrafts go consider overdraft protection. Even if that is only $100 in your overdraft account it is often times enough to protect you from overdraft fees. It seems surprising, but many people have overdrafts on their account for a small amount of money, like $2 or $3. This is very annoying and expensive. That’s why it is so important to get out of this cycle.

The first thing you want to do is create a plan to have a small buffer in your checking account. Having $100 there could easily save you much more every year. Once you get the account funded then start focusing on paying of your credit cards. If you are over the limit contact your credit card company and ask for a forbearance on fees for 2-3 months so you can get caught up and below your limit. Considering the economic climate you are likely to get some help from your credit card company if you just ask.

These are just a few suggestions to help you take control of your money and save up to $1000 a year, maybe more, depending on your situation. That equals out to about $83 per month, which could really help with groceries, gas, or other living expenses.

Start focusing on ways to help you get your finances in order so that you can stop paying the banks and credit card companies your hard earned money!

Posted in Home Budget