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4 Thoughts You Have As Total Credit Card Approaches | total credit card

If you've been living under a rock lately, then you've probably heard about the new definition of “total credit card debt”. The original definition was the amount of credit card debt owed by the consumer to creditors. In this case, interest is added to the total debt. The original definition still applies, however. It only matters what kind of debt we're talking about.

Suppose a person has a total credit card balance of $1,880 which has an annual fee of $300. That person also has an account with a bank that pays a certain percentage interest each year on the money. Despite this obvious loss, that person keeps both because they have an annual fee. When the customer service representative asks about payment plans, this is when the total debt starts to come up. Since interest is figured into it, there's no way to make up for it in the first year. In the first year, the customer paid the minimum required monthly payment and hoped that enough money would eventually go out to pay down the principal.

At some point, hopefully sooner rather than later, the customer service representative will ask the question: “So, how much of your total credit card balance is due?” or “How much of your overall credit card balance is overdue?” Of course, you know the answer to this question. If you are anything like the average American consumer, your total credit card balance is really a pretty small portion of your total credit card history. So, don't panic.

The reason you don't panic is because this is not as severe a problem as it might seem at first glance. The problem is mostly cosmetic and has little to do with your ability to pay down the balance. It also has everything to do with the fees and charges you are being forced to pay as part of your credit card billing cycle.

For example, when you first open a credit card account, the company issues you a credit limit equal to 100% of your initial credit card balance. Then, you are charged with all manner of fees and additional charges by your lender, such as an interest rate that is significantly higher than the national average. Because you are paying so much interest, the amount you owe begins to steadily rise. The minimum payment doesn't keep up.

And here's the worst part: those hidden fees and charges add up! In most cases, a high interest rate on a credit card company's cash advances is a “side income.” The credit card company makes their money by charging consumers extremely high interest rates on cash advances. Then, they give the consumer a small percentage point reduction to the interest rates and charge a small fee for the cash advance itself. What does that do? It adds up to huge amounts of money over time.

When this happens, your debt begins to build up and your score begins to fall. The only way to avoid this dangerous situation is to eliminate credit cards altogether. All credit cards carry the same dangers-they can cause you great financial distress if you fail to make your minimum payments or if you use your card too frequently. And if you fail to make your payments on time, you will incur finance charges on an increasingly rapid basis until your balance exceeds your available credit. And, that's not even considering the possible legal ramifications of failing to make your payments on time.

To help you avoid these pitfalls, seek out a total credit utilization ratio calculator that is designed to help you understand your debt-to-income ratio and your overall credit score. Enter the amount of money you currently owe in minimum payments and the amount of money you plan to spend in the next year and then compare it to your annual income. The resulting figure is your total credit utilization ratio, which is a good indication of what your actual credit score is and what type of credit score you should aim for. Using this information, you can work towards raising your credit score and improving your total credit utilization ratio.

Total Visa – total credit card | total credit card

Total Visa – total credit card | total credit card

Total Visa – total credit card | total credit card

Total Visa – total credit card | total credit card

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