We'll be right back. Was that a strong sleep? It didn't feel like it. Yes, girl, I know.
We fell back yesterday. Yeah. I like this time of year. Yeah, it's okay, but I could have gone back two hours.
I could get a little more sleep. I don't know. Well, everybody survived a weekend of sugar after Halloween. Oh, my goodness.
So I feel that beginning of November is always the official kickoff to the holiday season. It's Thanksgiving. It's Christmas. It's New Year.
And it's going to come fast. It's here. It's going to come fast. And many things are more expensive this year than they have been.
That's right. And a lot of people are having adjustments with their, you know, pay they're bringing home. There's a lot going on that are impacting how much money people have to spend. Right.
And so a lot of people, let's just be honest, they're going to be whipping out some plastic to make it through this holiday season. That's right. And we want to share some facts and tips to help people that do use credit cards because they're not bad. We don't want people to think, oh, I don't get a credit card.
But we also want you to be safe with them because you want to be able to, you know, take care of your money. Right. Here's a statistic about last year's holiday season. So 31% of the people who took on credit card debt to get through the holidays last year, they've not paid off last year's holidays.
Oh, yikes. And we're headed to another set of holidays. Like it's time to start shopping. Yeah, that's not great.
So that means one in three people are still carrying credit card debt from last holiday. Still paying from last year. And we use them every day. You know, people make purchases.
And the credit is needed. You know, we buy homes on credit. People deal with emergencies. They buy what they need.
Buy cars. You know, whatever it is. I mean, even booking vacations and stuff. Yes, you need credit.
Right. You just got to be smart with it. You can get out of hand quickly. Right.
So a better statistic, I guess, is that about 60% of people who have credit cards, they are what's called convenience users. They avoid the interest by paying the balances off each month. Okay, that's higher than I thought it would be. It's quite a bit.
But I'll tell you my personal reason for doing this. I have a card that gives me some rewards that I like. And so I will use a card instead of paying another way just so I can collect those points. But then I turn around and pay it off every week.
Yeah, I know. I think a lot of people do that. I know we have also done that. It helps, like, hotel stays and stuff like that.
But you've got to be disciplined to try to get it paid off every month. Yes. Okay, so let's talk about if we don't get it paid off. Sarah, what are we talking about when we say the APR?
You've heard about APRs on your credit card. Right. Oh, this is where we need to start. Because somebody may be applying for a credit card for the first time, too, and they need to know what that means.
A lot of times at the register, if you're in store, you can go to the cash register. They'll say, do you want to get the card today and get purchase and all? Save some money. Right, right.
So an APR is the annual percentage rate. Okay? So that's basically another word for the interest rate. Okay.
So it is applied to your balance to calculate the interest that you owe. Oh, yeah, yeah. So it'll show up on your statement every month. There'll be a line.
Like, the dollar amount of interest you owe is going to be shown along with what you actually spent. And that'll give you your total for what you owe. So, you know, if you don't pay it off, you're going to be. You're going to have that line.
Here's how much interest. Right, so APR is your annual percentage rate. It's your percentage of interest. And that's what really makes it take longer to pay off these balances.
Because if I charge $200, I'm going to pay that $200 in most cases. I'm going to have to pay more than that because of that APR. Right, right. Now, there's a grace period for a lot of credit cards.
So basically, it's interest-free for a certain length of time. So if you pay your card in full by the due date, then that's the grace period, and I'll have to pay that interest. Right. And you generally have to pay the bill off.
Yes. Like, you can't have a remaining balance. Exactly, exactly. And I mean, that is okay for people that want to get points or want to get the discount off for having a card or whatever, but you've got to pay it off during that grace period.
Yeah, it doesn't go forever. No, no, it doesn't. And one thing to just point out, most credit cards don't give you a grace period if you use it for cash advances. So, you know, people can go and get cash off their credit card.
Many times, you pay a higher interest rate, too, on those cash advances, and also balance transfers. So no grace period, you usually are accumulating interest from the moment you do those. That's right. That's a good thing to mention, for sure.
Another thing to remember about your grace period, like, if you pay it off in January, but you don't in February, you may lose your grace period. So you should want yourself to get in the habit of paying it off every month, okay? So what happens to Neil if we only pay the minimum amount when we get our bill? Again, it's going to take us longer to pay it off, and we're going to end up paying more interest over the life of the, I don't want to say loan, but that's basically what it is, over the life of the purchase.
So if we go back to, we used credit last holiday season, okay? A year ago. A year ago, basically. The interest has been accruing since we made those purchases.
And if we're only paying the minimum on that card, we're going to be paying for those purchases for another few years before we get rid of it. I mean, the interest may outlive the product, you know? If you think about that. It probably will.
So we need to make sure we're paying as much as we can, as soon as we can. Those that get a tax refund, that's always a good opportunity to pay down credit card debt, because it's going to save you money in the long run. That's right. Bonuses at work, overtime, anytime there's a, what we call, windfall amount of money that's aside from your regular paycheck, then you can move a little extra towards your bill.
Absolutely. And look, we get it. Sometimes you can only pay the minimum. Right.
So that's better than not paying, because if you don't pay or don't pay on time, you're going to be charged a late fee, and it could also, remember that APR we talked about, the interest rate, they could bump that up on you, so your interest rate may go up. So at least pay, like, the minimum. Yes. And all things are in that little tiny writing on the back where it says, okay, this is your rate, but you can't go to this.
Stuff that nobody reads. Exactly. Yeah. So, like, don't skip a payment.
Even if you can only send the minimum, send that. Yeah. Pay that, because you don't want to be charged on top of this, a late fee, and you don't want to risk your percentage rate going up. Right.
And by the way, those late payments can affect your credit rating. Right. So, you know, if you get to where your 30 days passed due, they're going to report to the credit bureaus and say, oh, wait a minute, there's a problem going on. Right.
So that's one thing. The other thing is it's recommended that you don't use more than 30% of your available credit, because that also can have a negative effect on your credit. So if I've got a credit card that has a $1,000 credit limit, I need to keep my balance under $300 or so just to look better on my credit report. Because if you get up to $900, $950, it looks like I'm living on the edge.
It looks like I'm barely making it. Yeah. So that's not what creditors want to see. Well, that's good for you to know your credit limit, right?
You need to know that limit, yeah. And you can find that on your statement, but you should also know it as soon as you get your first card. Like, they'll tell you what your limit is. And that can change.
You know, they may, if you're paying, like you should be paying, they may up your credit limit. But you need to be aware of that and pay attention to it. So like you're saying, you don't go over or get, you know, that close line right there with it. Right.
Because there is the chance to go over your credit limit. If you're right up there close and they will authorize a purchase and they're going to pay it. If they authorize it and then there you go, you're over your limit and now your APR is up and you've got an over-limit fee and your credit is getting hit. So for this one item that you may have already tossed, you're paying all this stuff.
That my kid is already tired of playing with. The clothes that outgrown. So let's think about the fees that you might pay associated with your credit card. We've talked about there may be some people have an annual fee.
I automatically, Sarah, when it says annual fee, I don't want it. No. I don't want to pay to use a credit card when there's so many out there that don't have an annual fee. Exactly.
So do your homework before just getting it. Right. We've talked about late fees. You're late with a payment, what that could affect.
What about those return payment fees? Oh, this is if you send in a check. Because some people still do send in a check so you mail it in and for some reason, by the time the check hits your bank, there's not enough money in there to cover it. So now you owe the bank a non-sufficient fund fee and now you also owe your creditor a return payment fee and it's a late fee.
So be careful. There also may be fees associated with getting a cash in advance, you know, if you use it at ATM or something. Some credit cards charge you if you transfer a balance from another card. Also, think about if you're traveling out of the U.S., there may be a fee for using it in a foreign country.
So you need to check that out because a lot of people are allowed on credit cards when they're doing travel. Right. So you need to know that before you head out. And then if you lose your card and you need it ASAP, they may charge you to expedite that.
Right. Exactly. So let's just kind of bring this all together and get some tips. Just a quick tip because we are going to be using credit.
Shop around for the best card for your needs. Again, me personally, I don't want annual fees. You're going to find a lot of different interest rates. You're going to find a lot of different reward programs.
Some give you air miles. Some give you points to shop at Amazon or another retailer. You know, hotels. Yeah.
Yeah, whatever meets your needs. And then look for the interest rate. Look for those penalty fees, you know, waive by and label the payment. Yeah, you need to know the whole picture before you sign that loan.
Another tip, pay as much as you can. We talked about this a few minutes ago. Pay as much as you can as soon as you can and always try to pay by the due date. You know, like I said earlier, if you can't pay it off, at least pay the minimum.
And then when you can send more money, send it. Keep track of what you owe. Keep track of your spending. And then take into account the interest.
You know, when you get your bill, you're not shocked. And that's a good thing to point out because say I charge my $1,000 limit. I charge $950. Well, the interest also counts against my credit limit.
So maybe I didn't charge over my limit, but the interest has pushed it over the limit. And now I owe an over-limit fee. So we have to really watch out for that. Pay attention, yeah.
So to avoid being late paying, some people do automatic payments online. So if you have a regular income and you pay it out of the same account every month, go ahead and do regular payments, automatic payments. If you're going to mail it, you know, sometimes the mail can be unpredictable. They suggest a week.
And I think they are talking about the American Bankers Association. They say at least a week. You can try to do it a little bit earlier than that. Yeah, exactly.
You can also pay by phone. Sometimes several companies will charge you a fee if you do it by phone. Isn't that crazy? I know.
You want your money, don't you? Yeah. But, I mean, if it's between that and me being late, it may be worth it to pay the $10 fee or whatever it is to pay over the phone. So you have to decide about that.
You know, having a credit card is great, but it also comes with a lot of responsibility. So if you find yourself in a fund and you realize I might have an issue, you know, with my spending habits, with credit cards, you know, don't panic. But you can't avoid it. Right.
So you need to start right there and make your budget be realistic about it. You need to contact your creditors. Let them know that you want to pay, and maybe they can work out a new payment for you, a new payment plan. But you've got to call them.
You cannot avoid it. That can put you in legal issues, all kinds of stuff. So call them, have conversations about it. And then also, you can call 1-800-388-2227, and that is the Consumer Credit Counseling Services, where you can actually get some free help to deal with maybe your credit issue, your credit problem, your spending addiction, or whatever it is, to kind of help you get yourself back straight.
Right. And if you want to get some help with planning a budget, get some information on how to set up a budget so maybe you're not relying on credit for next year's holiday season, reach out to the local extension office. There are people just like Sarah and me there that would be willing to work with you, and we have forms that we can give you that can help you out. So just know, we're there.
A lot of free resources. A lot of resources. So Sarah, I'm going to put you on the spot. Will you be using a credit card for any of your shopping?
For the holidays? No, I try to go cash only. You know this. Cash only.
I try. Now, if I need to buy something from an online thing, I take my cash and put it in the bank and then use it. Okay. Okay.
Okay. Well, I will be using one of my reward cards and paying it off every week. This is just a habit I put myself in several years ago, and it keeps me from doing exactly what we call it. Yes, because we want to have a holiday season, and then forget about it.
We don't want to still be paying on it next year. So thank you all for joining this episode of Bringing It Home, and get the words of Bob Marley. I bet he didn't have to charge anything that he wanted to buy. Probably not, but we do need to be lifting up his own country.
We definitely do. We still are. Yes. Our thoughts are definitely with Jamaica.
Yes. Live the life you love. And love the life you live. Happy November, everyone.