Financial Crossroads California Addresses the Credit Treadmill Issue

Article Written By: Financial

The average American adult carries just about $20,000 in unsecured credit card debt. The Santa Ana Financial Crossroads institute in particular recommends that the focus should be on resolving this debt. Part of this challenge is in educating people in how they think the debt will be paid back. For instance, contrary to popular belief making the lowest possible monthly payment does not resolve your credit card debt.

It fact, there are some very simple popular scenarios that are often told about to consumers. You may in fact have heard of this one: The one of a typical consumer who charges up about 20,000 in credit card debt making the usual monthly minimum payments at an 8% interest rate. If you are one of the average American consumers right now in this trap, it would take you 259 months to pay off this debt. This is equivalent to 21.5 years, during which time $7,194 only goes towards interest.

It gets even worse when you miss even one or two payments. In this case, the interest could rise in upwards of 20 to 30%. Such is a typical case in which the interest is jacked up to 28%. This changes everything. The same scheduled monthly minimum payments for $20,000 of debt you were carrying now will take 2,463 months to pay off. Instead of the original 21+ years, the duration of debt repayment is 205 years.

In this case, you will pay back a whopping $275,117 dollars in interest! Can you believe that? This is a prime example of a systematically premeditated assault on the consumer as noted on the link on www.financialcrossroads website. Once you have fallen pray to enticing offers, such as zero interest, you then are stuck in a vicious cycle. It seems almost impossible to break free of the consumer financial death trap.

The way the credit card industry catches and hooks people is similar to the way an animal pounces on its prey. Once you are caught in the trap, then you are drained of all your financial resources. High interest charges, over-limit fees, late fees, discontinued grace periods, and double cycle billing, are among the top ways to keep running up your bill.

You end up forever paying the consequences for allowing yourself to become enticed by the credit treadmill. If that is not enough, there is also the endless harassment from creditors who call your home.

Even the credit card companies who are considered the most trustworthy are gradually bleeding Americans wallets to death. In just one year alone, credit card companies brought in $17.1 billion just on outrageous late fees, over-the-limit fees, and other penalties.

This is a trend that has continued for many years. In 1980, Americans rang up credit card debt to an astronomical amount of $69 billion a year. Now in the past year 2006, American credit card debt is at $1.8 trillion a year, and there is no evidence that this trend this trend slowing down.

This is a ten fold increase in money raised from penalties dished out by consumers within less than two decades. And it never stops. Every since year more and more Americans wind up blindly jumping on the credit treadmill.

It all starts with the decision to get that first credit card. When consumers first get the money, they feel good having all this credit thinking they will never go overboard. If you remember saying this when you were approved for your first credit card remember you will not be the last credit card treadmill victim.

Furthermore, if you are currently deep in credit card debt, do not beat up on yourself too much. Even some of the smartest people in the world have had this problem.

Part of the problem with running up huge unsecured debt totals is in deciphering the fine print of most credit agreements. Some contracts are so deceptively written that even a college graduate often has a difficult time encrypting the meaning of them.

If your heart jumps while you run and duck for cover every time the phone rings you are not alone. You are just like many other Americans who are right now caught up in the "credit treadmill."

About the Author

Based in Santa Ana, Financial Crossroads is a member of The Association of Settlement Companies (TASC) and offers solutions and programs to Americans looking to get debt settlement.

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