A lot of individuals have outstanding credit card debt. If only the minimum amount is paid each month, it can take 10-20 years to get completely out of debt. During the interim, the charges for interest are incredibly high. Some people choose to combine their balances on a card with an interest-free period and transfer their balances only to get hit with extremely high interest rates at the end of the period. Many turn to assistance from a debt reduction agency such as Nationwide Debt Reduction Services.
January is generally the time of year when credit card companies are competing with one another to secure debts people have accrued over the holidays. According to a survey by Prosper Insights & Analytics, the average American spent $ 967.13-holiday shopping in 2017. Many providers offered no interest for the month of January in the past to help gain new customers. This is merely short term relief and the end result leaves the consumer with unpaid balances. Unfortunately, 2018 is not off to a good start, and it already looks like a bad year for anyone with a lot of credit card debt.
Higher Utility Bills During the Winter Are Strapping Consumers
January is the time of year that provides the hottest competition among the credit card providers, but in 2018 the competition is as cold as the weather. As utility bills rise, the budget of the average consumer is shrinking.
In 2017 the average utility bill was $76.56 to $190.36 depending on the state and usage. The only two credit card providers with good options for balance transfers to assist these decreasing budgets, are Barclaycard and AA. Considering the vast number of credit card providers, this news is downright dismal.
During the month of January in 2017, new cards with excellent options were being launched by AA, Halifax, M&S Bank, Virgin Money, The Bank of Scotland, Lloyds Bank and Post Office Money. The problem is not simply the significant decrease in competition by the lenders, the deals being offered are much lower in quality as well.
The Lack of a Budget
The longest interest-free period ever offered on a credit card for a balance transfer was a staggering 43 months, and it was from Halifax. This provided a generous period of over three and a half years for the individual to pay off their outstanding balance. The longest current period with zero percent interest is 38 months. While this is still a decent length of time, it is also much shorter than it was only a year ago. One of the most significant issues is most Americans do not have a budget. According to a survey conducted by Forbes in 2017, 75 percent of all Americans do not have a budget and are unable to cover a $500 emergency. 56.3 percent have under $1,000 saved and rely on credit cards for emergencies.
The Fee for the Size of the Transfer
In addition to the significant decrease in the time allowed for balance transfers, this is not the only area that has seen changes much less beneficial for the consumer. The size of the fee for the transfer must be taken into consideration as well. Sainsbury and Halifax are currently offering credit cards with no interest due for 36 months. Halifax is charging a fee of 2.5 percent, but the fee for Sainsbury is 2.89 percent. When the balance transfer is high, the difference in the transfer fee can make a big difference in the amount of the fee. For individuals whose debt is fairly small, the better option may be a credit card provider offering a shorter period of free interest with a much lower transfer fee.
Unfortunately, many people are not going to be able to pay off their debts from 2017 and will need to contact a good debt reduction agency such as Nationwide Debt Reduction Services for assistance. There are a good number of credit cards available in 2018 with no transfer fees. It is important to understand the credit card providers offering the best deals for balance transfers have been designed for individuals with a high credit score. Unless the credit history is excellent, chances are good the applicant will be denied.
The Credit History
Prior to applying for any new credit cards, the potential applicant should review their credit history and credit score. There are lenders who enable applicants to determine their approval chances before filling out the application. If the application is denied, it will leave a mark on the credit history and may affect the credit score. The most important actions a person can take are to avoid ending up in this situation again.
Instead of using credit cards to cover emergencies, deposit funds in the bank each month to cover any potential disasters. Holiday gifts are not reliant on the purchase price, and this spending can be drastically reduced. Dining out less, watching movies at home, and refraining from purchasing the latest devices will all help to reduce the monthly budget.