Accumulating credit card debt, racking up high interest rates is scary; yet this does not stop individuals of all ages from swiping their card away. Being unable to pay your debt monthly can result in a long-lasting disturbance that will affect you and your family.
1. Too Much Credit Card Debt
According to Value Penguin, the rising level of credit card debt in Singapore is alarming. It is the fastest growing category of consumer debt in Singapore.
With the average “credit card debt of Singaporean households being approximately S$1,956, according to the latest data from the Department of Statistics of Singapore”.
This steady acceleration is worrying especially since families tend to overlook the rising rates of interest.
2. We’re Not Paying Off Our Credit Card Debt as Quickly as We’re Adding to It
Although Singapore’s average credit card debt per capita is lower than in most countries, Singaporeans tend to have “rolled over” balances. This means that instead of paying for credit card debt every month, the “rolled over” balance showcases the actual data for credit card debt over a couple of months.
Pushing away the responsibility will not lessen the burden on your shoulders. Therefore, instead of maxing out your credit cards and having rolled overbalance, try minimising the credit card debt that you acquire and pay by the end of your billing cycle.
3. High Credit Card Interest Rates
There are a lot of credit cards available in Singapore. However, research shows that the highest interest rate was 28%, while the lowest rate was about 15%. It is important to note what the interest rates are – as this will determine how much your monthly bills will be inflated. Don’t be shocked if you have been keeping track of your spendings and yet there are additional charges! (there is a high chance that these are the interest rates).
Although banks in Singapore allow balance transfers, it is still your responsibility to understand and do your research before fully utilising your credit card.
4. It Can Take a Frighteningly Long Time to Pay Off Credit Card Debt
Eliminating credit card debt takes a lot of patience. If you only make the minimum payment each month, it can take you a decade or more to pay off your debt. And just like your properties, this debt will be passed on to the next of your kin.
Instead of leaving your family an insanely huge debt to pay off, perhaps you should consider calculating how much you should pay every month not to be drowning in debt.
For example, if you owe $6,000 on a credit card with an interest rate of 18%. If your minimum payment is 4% of your monthly balance, it will take you 11 years and nine months to pay off that debt making only this required minimum monthly payment. You’ll pay a total $9,474 to pay off that $6,000 debt. And this assumes that you won’t add any new debt to your card during this time.
5. Making a Late Payment Will Haunt You
Not only will you have to wake up every day worrying about how to pay for your credit card debt, but it will also adversely affect your credit score.
Applying for different credit cards and other loans will be more difficult as the establishment will find it hard to trust you. Therefore, if there is a rainy day for you or your family, you might not be able to provide. Compromising and perhaps, even adding more to your existing debts.
Obtaining a credit card is not like the movies where you use it for every whim and other spontaneous purchases. You are relying on money that you do not have, therefore, it is crucial to be a conscious spender.
Society is fearsome about not being able to satisfy their needs and wants. However, what’s even scarier is that if you are swimming in debt; not only are you compromising your present lifestyle but the future of you and your family.
Consider an item before purchasing it with your credit card. Although it may seem as if you have loads of money to spend away, the interests of the bank (both literally and figuratively) do not necessarily benefit you 100%.
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