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    According to a study of 7 million Americans by the Urban Institute, more than a third of the individuals are in trouble paying back their debts and 35% of Americans have their debts in collections. Their debt is so far past due that they have been turned over to the debt collection agencies. Typically, this happens when the bill hasn’t been paid for 180 consecutive days. This also means that your debt has been reported to the credit reporting agencies and might also have a detrimental impact on your credit score.

     

    Hefty fees for overdrafts on ATMs and debit cards – Beware of them!

    According to a CFPB study, overdraft services for debit card purchases and ATM use can ring up hefty fees on small transactions. The minimum amount on debit card transactions that lead to an overdraft fee is $24. This amount is based on checking account data from the bulk of large banks that are supervised by the bureau. The report also says that more than half consumers pay back their negative balances in 3 days and 76% of them pay back within a week.

     

    New issue of bank credit cards reach a 6 year high

    Studies reveal that there were a total of 16 million bank credit cards that were issued during the initial 4 months of 2014. This is indeed a 6-year high and is also a jump of 17.3% from the figures collected in 2013. During the same period, the total dollar amount of new credit that was originated was $77.5 billion, which is also a 6-year high and an increase of 25% from the same time in the year 2013. A hail of credit card offers is a periodic phenomenon. While sometimes they come with 0% financing, sometimes they come with an interest rate that is way lower than what you’re paying now. Financial habits of consumers have changed post Great Recession, considering that nearly 30% Americans pay off their credit card balances in full each month.

     

    Debt consolidation – Is it a permanent way out or a temporary relief?

    Raising a family isn’t an easy task as the pressure to keep up with the soaring costs and offering the best to your kids can put a lot of strain on your family’s finances. Getting help of debt consolidation companies or utilizing a low interest line of credit to combine your debt might seem like the ultimate solution for your fiscal woes. However, unless you bring your expenses in line with your income, consolidating would only provide you a temporary relief. Here’s what can be suggested as some ways to deal with your debt situation.

     

    • Start tracking your expenses: Start tracking your expenses for a month to analyze what you’re spending on and then start reducing wherever you can right away. You need to balance your budget and this means living within your means.
    • Determine your seasonal expenses: Take a retrospective glance at your last year’s seasonal costs so that you can predict this year’s expenses. Items like property tax, home and car maintenance costs, activities for your kids, clothing, fall into the category of seasonal expenses. Include this amount in your monthly budget. Every month, set this money aside instead of relying blindly on credit.
    • Consolidate your debt: As your expenses have reduced in line with your income, now you can look for the best way to consolidate your debt. If you’re home-rich but cash-poor, you can even use your line of credit for this. Make sure your payments fit within your budget.

     

    In a nutshell, we can conclude saying that getting out of debt isn’t easy but it is easily manageable with patience and discipline. Celebrate your progress each year and know that you’re one-step closer to a debt free life.

    By: Jimmy Simond

     

    The Costa Rica News (TCRN)

    San Jose, Costa Rica

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