Feeling Trapped by Debt? How to Break the Cycle
Do you feel stuck in a never-ending cycle of high-interest debt? If so, you’re not alone. In fact, USA TODAY reports that around 80 percent of Americans are in debt. People accumulate debt for many reasons, but one of the reasons for your debt might be that you’ve fallen for some sneaky strategies banks use to get people into debt and keep them there.
Fortunately, you have options for getting out of debt. Read on to learn some of the ways that banks may try to trick you into accumulating debt and what you can do find relief.
One of the subtle ways that banks take advantage of their customers is by charging automated fees. Have you ever looked at your bank statement and been surprised to see a late fee or other charge with no explanation? Fees are so common that many have come to accept them without a fight.
If you want to get out of debt, you have to be proactive about catching unfair or faulty fees. Check your bank statement regularly and call your bank to request that they waive any fees you think are unreasonable. The bank representative will likely tell you that they can’t do anything. Don’t be discouraged. Politely repeat your request and ask what they can do to help.
If you keep pressing the matter in a respectful tone and remind them of your excellent record with the bank, they will be more likely to agree to waive the fee.
Another sneaky way that banks hurt you financially is in the way they process transactions of customers with overdraft protection. You might assume that your charges will appear chronologically in your account. But that is not always the case. Some banks reorder transactions to maximize overdraft fees.
For example, say you have $100 in your account. You spend $30 at the gas station on the way to work. Then later that day, you spend $12 at lunch. And on your way home, you buy $80 worth of groceries. If your transactions are ordered chronologically, you’d only tap into your overdraft on the third charge.
But if your bank puts the $80 first, $30 second, and $12 last, then you’ll have overdrawn twice. This sly ploy costs you money.
As with other automated fees, you can call your bank to dispute the charge. Another way to protect yourself is to avoid letting your account balance get low. A good rule of thumb is to keep at least $1,000 in your checking account at all times.
Credit Card Trap
A third way banks try to keep their customers in debt is by encouraging people to make the minimum payment on their credit card. At first, you might think they’re offering you the low payment option to help you.
But in reality, your bank benefits from keeping you in debt, and the less you pay, the more likely you are to not pay the full balance by the end of the month. As a result, you get hit with steep interest rates on the remaining balance.
Don’t be fooled. Avoid accruing interest by paying more than the minimum payment each month.
Other Ways to Get Relief
If you’re suffocating in debt, you have additional options for finding relief. Many credit repair companies offer services to help you refinance your debt and boost your credit score. At BoostMyScore, we go one step further than most credit repair companies by adding positive information to your credit card report instead of merely removing the bad information.
For more information on how we can help you undo the damage of debt and quickly improve your credit score, contact us today!