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Are you clueless about your debt?

March 11, 2008

As it turns out, most of us are completely clueless when it comes to debt. That’s right, Americans are “financially illiterate,” according to a survey by Harvard Business School, Dartmouth College and TNS.

CNNMoney.com recently detailed the results of the survey of 1,000 people. The individuals were given a hypothetical scenario about credit card debt and asked to determine how long it would take them to pay that debt off.

Only 35.9 percent of the respondents could figure out how many years it would take for the amount on their credit cards to double, and 31.9 percent over-estimated how long it would take them to pay the debt off. What’s worse, 18.2 percent didn’t know how to respond to the question at all.

I wasn’t entirely surprised to read these statistics. Credit cards can be tricky to figure out. Things like interest rates, A.P.R.s and extra fees can be complicated, especially for those of us with less than stellar math skills.

That is why it is so important to educate yourself about credit cards.

Before you sign up for a card, make sure you understand all of the fees and rates that go along with it. If you don’t understand, ask questions. It’s more foolish to get in over your head with credit card debt than it is to have to ask the same question more than once if you don’t understand something.

If you don’t feel like your credit card company explained everything clearly, seek help from someone with knowledge, such as a certified credit counselor.

Likewise, if you’ve already accumulated credit card debt and you are worried about paying off debt, contact Advantage Credit Counseling Service for help. Our credit counselors can assess your financial situation and offer practical suggestions to help you pay off your debt and create a budget.

Also, if you have children, especially teenagers, educate them about the responsibilities and costs associated with having a credit card. The best way to stop someone from getting in over their head with credit card debt is to educate them at a young age.

Written by admin · Filed Under Debt 

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