By Maxine Shapiro, KERA 90.1 commentator.
Dallas, TX – As the market drifts about today, this might be a good time to look at a subject most of us avoid like the plague: credit cards and the debt that comes with them. I'm Maxine Shapiro with KERA Marketplace Middays.
At least every other day, I receive in the mail some offer for a new credit card. You know, those familiar envelopes enticing to us to get THEIR credit card for some low introductory offer. It's a volume game for those credit card companies and it's working.
According to Fools.com, there are "more than one billion cards in circulation - four for every man, woman and child." There are debit cards, gold card, platinum cards, prepaid cards, business cards, secured cards, smart cards, store cards, and student credit cards. Cardweb.com reports the average balance for all households with at least one card was over $8000. Interest rates on that debt average at about 16%. That calculates to over a $1000 a year just in interest payments alone.
So what do we do? Fools.com has a few recommendations. Since we're hard pressed to find any investment or savings that pays 16%, it is now recommended that yes, you take your savings and investments and bring down your credit card debt. A couple years back this was debatable. Then the market broke and now interest rates for savings accounts are obscenely low. If you have no savings or investments, then transfer your balance to a lower interest card and start paying more than the minimum.
And another route to go is consumer counseling. As reported on Cardweb.com, "a three-year study on the change in consumer financial behavior after receiving credit counseling services" revealed a positive change in payment behavior. There are a lot of good reputable firms out there that can help. Make sure you're comfortable with any of their recommendations.
See, that wasn't too bad. For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 PM.