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The Real Cost of Your Credit Card Balance

Authored By: Genisys Credit Union on 7/27/2016

Frustrated woman holding credit card

 

Do you find your credit card statement a confusing word salad?  With so many government regulations required on the statements, the only part of it that’s easy to understand is the “payment due”! 

It’s easy to just make the minimum payment month after month, but if you are going to carry a balance on a credit card, there’s a lot of information on the statement that you need to understand.  One of those pieces of information is Annual Percentage Rate (APR).

 

 

APR is the total cost of borrowing money, expressed as a percentage of the total owed, applied per year.

That extra $.40 might not seem like much, but it adds up over time.   A lower APR means your monthly payments and total costs will be lower. In many cases, it also means getting out of debt sooner. Let’s look at steps you can take to lower the APR on your debt.


Shop around

If you wanted to buy a new blender, you’d do research, find out which one is the best, then compare prices to make sure you are getting the best price. Most people are willing to invest that much time and energy into a relatively minor household purchase.  Unfortunately, financial tools don’t get the same treatment.

Think of the APR like the price tag.

 

Consolidate

If you have several high-APR loans, it might be time to investigate consolidation options. Consolidation can take several forms.

Be mindful when you consolidate your high-interest debt to avoid conditions or other terms that might hurt you. Many sketchy firms offering consolidation loans have emerged, offering terms that sound too good to be true.  

The bottom line is to make sure you understand exactly what it will cost you to carry a balance on your credit card.  Be sure to look not just at your minimum payment due but the APR that you are being charged on that card. 

Whether you’re struggling under the weight of high-interest loans or are just getting started in your financial life, sometimes talking to a credit education service  or looking to a consolidation loan can help keep you get on track and stay in good economic shape.

 

© Genisys Credit Union and www.genisyscu.org, 2016.  Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content



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