To change the future, we must understand the past. However, looking back can be difficult, especially when it comes to financial matters. According to his 2022 Money and Mental Health survey conducted by Bankrate and Psych Central, 49% of his respondents said checking their bank accounts caused them anxiety.
One of the reasons so many people are resisting is increasing consumer responsibility. TransUnion reported that US credit card balances have risen to his record $866 billion by the end of 2022.
So where does credit card debt come from and how much does it cost? The answer is in your statement. If you don’t look them up, your balance can get even higher.
Avoidance is common and normal
Some of you may want to open your credit card statement, but something else always comes to mind. Or you know you don’t like what you see, so you’ve already decided not to open them, so shred the letter or hit delete right away.
“It’s common for cardholders to not check their statements each month,” says Thomas Nitsche, senior director of nonprofit credit counseling organization Money Management International. “Apps, alerts and online access have made this information easier to access, but for some consumers watching their spending is psychologically and emotionally uncomfortable.”
In fact, Dr. Dana McNeil, a San Diego, California-based marriage and family therapist, says that as humans, we tend to avoid dealing with what makes us uncomfortable and do what feels good. increase.
“We know we need to build ourselves, our budgets, our plans for the future, our six months of emergency savings, but we prioritize pleasure,” McNeil says. “You know what you should do, but you don’t, and layers of guilt and shame pile up. Your parents don’t make sure you do your homework.
How Ignoring Statements Can Deepen Your Debt
“Avoidance of problems, especially those related to credit, can lead to long-term losses,” said Nitsche, noting that 43% of cardholders do not know the interest rate on all accounts with balances. I pointed to a recent Bankrate study that shows. “So they may not even know how much interest they’re paying each month.”
If your account has a high interest rate and you’re adding small payments to your account each month, not only will it add to your debt, but it’s also very expensive.
Without looking at your credit card statement, you may not realize you’re paying for more goods and services than you actually can afford. As the months go by, your balance increases. If you don’t track your spending and review your statements showing all your transactions, you can’t identify your role in the matter.
Another problem that can arise if you don’t check your statement regularly is the lack of what Nitsche calls a “gray charge.” These are unnecessary recurring fees and unnecessary subscription renewals that add to your debt. If you don’t see them, you forget them.
And credit card fraud. Credit issuers typically detect and warn you about it, but fraud can go unnoticed if you’re not careful. For example, if a relative accessed your account and made charges you didn’t approve at a store you frequented, those transactions could slip under the radar. never know.
Credit card statements provide important clues
It’s time to change the description on your credit card statement. they are not afraid They are your roadmap to getting out of debt and taking control of your finances. These records give us important insight into what we need to do to make positive change.
In addition to your current balance, which you’re most likely trying to ignore, your credit card statement tracks:
When and where the card was used for purchases
Recurring charges, such as monthly subscription fees
When using caching
Payments made to your account during that cycle
Minimum invoice amount and due date
Interest charged by the issuer on the balance
APRs associated with your account
Important messages such as late payment warnings
Non-financing fees added to the account by the issuer
How long it will take to pay off your current balance if you only pay the minimum payment and expected interest costs
Obviously, these items will give you details about how your account is handled and how much it will cost you to carry forward the debt.
Make powerful changes based on what you see in your statement
If there is an error in your statement, such as evidence of credit card fraud, we can quickly address it. Dispute all errors.
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From this point on, pay your bills on time, if any late fees are incurred. This action also helps improve your credit rating, as your payment history is the most important credit evaluation factor.
You may find that your credit card interest rates are exorbitant, so act. Contact your issuer and ask for a reduction (we don’t guarantee a reduction, but it’s worth a try) or consider transferring your debt to a 0% annual balance transfer credit card. If you consolidate your debt within the interest-free repayment period, you will only pay a nominal transfer fee.
Transactions that appear on your statement can also be a conduit for making better spending decisions. A positive attitude is essential. If you’re using your credit card for things you can’t afford, it’s time to create a budget that works for you.
“When you look at your statement and see all the debt you have to deal with, you may think you’ll never be able to go out to dinner or go on vacation again,” says McNeil. “It’s not true. When you know what you’ve done, you can have a game plan that allows you to do it.”
This is also a great time to seek professional help. “Most Americans don’t know they have access to a non-profit credit counselor, but in fact every statement they receive has a direct phone number, as required by law,” he said. Nietzsche says. “It is a common experience among counselors for a new client to bring an unopened bag of envelopes into a counseling session.”
Not only can counselors review these statements for free, but at the end of the session you may be given the option to use a debt management plan. These payment arrangements lower credit card interest rates and can get you out of debt within three to five years.
Make it a habit to keep track of statements
Once you start the process of checking your credit report, you’ll find that it’s not as bad as you feared. Ultimately, the information in these documents can help you achieve your goals, from getting out of high debt to adjusting your budget so you can get what you really want in the future. increase.
You can also reduce anxiety by checking your credit card usage regularly. Log in to your account or download the app and check in at least once a week.
Pay close attention to your current balance. Put the brakes on charging if it creeps to the point where it becomes difficult or impossible to pay the entire bill. The month is almost over. You can even decide on weekly payments so you don’t end up in dreaded debt at the end of your billing cycle.
When you receive your statement, be sure to open it and take the time to read it carefully. If you find that this is causing you anxiety, create a calming ritual around bill time. Please give me. If you get into the habit of reviewing your statements regularly, you’ll find it becomes less difficult.
“Don’t think of reviewing your financial statements as a punishment,” McNeill says. “It’s self-care.”
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