Consumers advised to pay credit card debt and not save
May 29, 2009 by admin
Filed under News, News-Credit-Cards
In the current economic and financial climate, with the recession threatening the jobs of many people, it is not surprising that many people decide to put every spare penny into savings in the event that they should find themselves short of cash or experience a drop in income.
However, industry officials are warning that with interest rates at an all time low on savings, yet credit card rates still rising, many people would be better off using any spare cash to rid themselves of credit card debt rather than put it into savings accounts.
For those that have outstanding debt on high interest credit cards the amount that is being paid in interest each month can be crippling. At the same time the fact that the base rate is at its lowest level in history, at just 0.5 percent, means that savings accounts are paying little to nothing in interest on savings. For those that have high interest credit card debt putting money into savings means that they are earning nothing on their money but are paying a fortune on their borrowing, which makes no financial sense.
Instead, these consumers are urged to look at getting their credit cards paid off as quickly as possible, so that they have one less debt to worry about, do not have to spend a fortune on interest, and still have the credit available to use in the event of an emergency.
Once the credit card debt is paid off consumers can then think about putting cash into savings. However, many people are still making minimum repayments on high interest credit card debt, whilst putting spare cash away into a savings account that pays a paltry amount of interest.
Tags: Stoozing, Credit Cards, fact, base, savings, savings account, interest rates, credit card debtOne industry official said: “What many people are doing makes no financial sense at all. The amount of interest being charged on credit card debt far outweighs even the best interest rates being paid on savings, and consumers would be far better off saving the interest that they pay on their credit card debt than earning the paltry amount of interest that banks are paying on savings.”
That advise is absurd. Savings would be better put under a mattress then to put your family in jeopardy by paying off credit cards. Savings could be very hard to come by, as the economy is on thin ice. Also, it is very easy to default on a credit card. All you have to do is change your pnone number so the loan sharking banks and their collection agencies don’t bother you and you are in business. If you can get by with a ding to your credit you can rebuild it down the road no problem. It may be a few years but so what? It will be a few years before this massive currency manipulation and foreclosure tsunami comes to an end anyway. I don’t give financial advice, just information on options outside the box. If you want more go to my website.
Gary, while I value anyone’s input on the site I can’t see the advantages of sticking your head in the sand when it comes to debt. A simple change of telephone link is not going to stop anything.
If you are in debt, we would suggest that you seek independent financial advice as to your best course of action.
If you are a non mortgage holder, forget paying your cards off. Thery can’t really do diddly squat to get the virtual money back that they lent you.
They will rarely if ever take you to court, will sell the debt on to a company for pennies in the pound, normally with no CCA sent with the deed os assignment making the debts totally unenforceable.
Save the money, cards and virtual money are a thing of the past.