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business
Consumers take
another major hit
to the wallet in 2006
PHOENIX, Anz. Amencans
are headed into the New Year
bauding record heating costs,
high gas prices and mounting
receipts from the holidays.
Now, 10 add to their woes, mil
lions of credit cand holders are
finding significant increases ©
their minimum payments.
For the next few months, their
minimum payments could
even double undl their credit
card balances are reduced.
MBNA, Ciabank, Discover,
Capital One and Bank of
America have announced they
are implementing January
2003 guidelines issued by the
Federal Reserve, requiring the
monthly increase. Credit card
holders are now required to pay
amounts that could easily equal
4 percent of their total balance
each month, while 2 and 2.5
percent was standard unul
2000. More banks are expea
ed to follow suit.
Mike Sullivan, director of
education tor Take Charge
America, a non-profit credit
counseling company, savs
many card holders will ke a
financial hit in the short run,
but its more important
think of long term goals. "It
vouve only been paving the
minimum balance on vour
credit card, it might be a strug
gle to come up with extra cash
each month,” he said. “Jus
keep in mind, youll be making
those payments for a drastically
shorter time period, and poten
tally saving thousands of dol
lars in the long run.”
Sullivan adds that the real
impact of this change is the
indusion of the fees and some
of the pnncipal amount that
must be paid. It a dient is in
some trouble, they may have
late fees of $29 a month, with
interest at 2.42 percent a
month, plus the 1 percent of
the principal. If that dient has
a $5,000 balance, the $29 late
fee is equal to another 0.58 per
cent of their balance, thus get
ting the total up o 4 percent
figure that's been kicked around
in financial cirdes.
“In the past, the consumer
may only have been required to
pay the periodic interest, and
possibly less in some cases,” Sul
livan said.
The credit card industry says
average houschold consumer
debt in the United States is
abour $9,000, exduding mon
gages. Many of those Ameri
cans are living pay check to pay
check and fear the added pay
ment could be the final straw
that pushes them into financial
ruin. Sullivan has several sug
gestions to prevent that from
happening;
Make a budget and stick 1o
it. A big shoe sale is not a reason
to stray from the plan. Write
the budget down and check it
frequendly.
Visit a credit counselor. If
you are positive you cant make
your minimum monthly pay
ments, creditors have special
programs that may be able o
reduce monthly payments.
Furthermore, new laws require
people filing for bankruptcy to
meet with a aredit counselor at
least twice. Meeting with one
now, could prevent the mess
altogether.
Move vour pavment due
date w several days after you
receive vour pavcheck. This
ensures you will have the
money 0 make the payment,
as well as less time 0 spend
vour money on other items.
Dont apply tor more credit
cards. 1t you are struggling o
meet the monchly pavments
tor the cards vou have now, its
almost cerain vou wont be
able 0 attord vet another
monthly pavment.
Use vour ax retum o pay
credic card debr. - Dont wait o
file vour W 2, The sooner vou
file it, the sooner vou'll receive a
retund. Paving oft a large
chunk of your balance will
reduce the amount of your
monthly pavments.
Use vour savings to pay cred
it card debr. It vou have SIOO
I d Savings account at 3percent
interest, vou will earn a litde
more than $3 i one year. It the
savings is used to pay off SIOO
on an 18 percent card, vou will
save SlB, six times the interest
vou would have eamed in vour
account.
Cur down on entertainment
expenses. Wait for movies to
come out on DVD, rather than
Pat hetfegson
VA FHA Conventlonal approved
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Jefferson Appraisal
Pat Jefferson Realty
1126 Tl¢h Street
Augusta, Georgia 30901
Serving the
investment needs of
the community.
o& i A
"‘ e e
T e et
,;f .- !l;'
ger Rl
; : %
Constance L. Woods
Financial Planring Speciakst
Financial Consultant
investment Management Specialist
Retrement Plan Consultant
One Tanth Steet. Sute 600
Augusta Ga 30901
(706) 823-8144
wrerw e smithbarney comwoods
THIS IS WHO WE ARE. THIS IS HOW WE EARN IT."
SMITH B!\RNEYIIr
/
U 0 Lt o Glatal Marhale re AR righie rmancved Meadur BPC Souih Bermey @ 8 Genion sl serece wank of Ciigrouy
SNGemanD 14 Sarve® Amiat o Suioup 4 s AR 00 SR oot e b eT ot
shelling out S2O for two tickets,
and despite what java junkies
sy, Sarbucks is not a daily
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the lines of brown bagging and
board games.
About Take Charge America
Founded in 1987, Take Charge
America. Inc. (TCA) is a non
profit 501(c)(3) organization
headquartered in Phoenix, AZ.
TCA 15 committed to helping
consumers gain control of their
finances and offers a vanety of
services including education,
budget and financial counseling,
and when necesary. debt man
agement.
TCA abso serves as an effective
mwsource for the business commu
mry We help financially dis
tressed consumers re-organize
therr finances and return hun
drech of mullions of dollars annu
ally w financial instituzions. pro
fessional service providers. and
bustnesses of all sizes and dexcrip
nons that may otherwise have
been lost to the economy in bank
ruptey. TCAs divensified pro
grams are unlized by tens of thou
sandls of families and single men
and women throughout the
United States each year
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