While we LOVED the old church that was our office the new loft in Venice Beach (aka Silicon Beach) is far more practical. The circuit breakers don’t trip every afternoon, the A/C is ice cold AND there’s plenty of parking. Bliss.
In Company News
On 10, Oct 2010 | In Company News | By Bill
Credit cards are set up to allow cardholders to earn one or more points per dollar in spending and transfer them through a system known as “double-entry bookkeeping.”
The numbers add up
A study by the WalletHub credit score and credit score calculator found that the average annual salary of a cardholder with a $7,500 credit limit was $38,000.
The average annual salary of a cardholder with a $10,000 credit limit was $47,000.
If these cards had the same interest rates charged to traditional credit cards, the interest charges would amount to a whopping $24,000 a year. The impact to the average cardholder’s net worth could be even more significant, said Joshua Goldman, chief financial analyst at WalletHub.
“If you do the math, on the low end it’s $24,000,” Goldman said. “The middle-end of these numbers, if you pay $200 more a year in interest, it’s $76,000.”
A key question in a credit card portfolio is whether it would be better to buy the cards outright or consolidate a portion of your debt into the cards.
Debt consolidation involves buying two or more cards from different issuers in one single purchase at a much reduced rate. Depending on the type of credit score used, the additional card in the portfolio could or could not be allowed to offer the same rates as the original card.
The Visa Signature and Signature Plus, the two cards in each portfolio, offer the best interest rate, Goldman said. The Visa Platinum and Platinum Plus offered a range of 1.5% to 3.0%.
“If you want the minimum rate you need to give up cash back and sign a loan, then that’s where you are. You’re in the game of paying it off in the event you get a credit line.
High card balances can make it difficult to obtain credit lines.
But, a check on the Chase Freedom Unlimited card, which caps credit card interest rates at 18.74%, found it would be financially difficult to qualify for a credit line from the Chase if there was an existing credit line of $7,500.
And if there isn’t, it could not obtain a separate loan.
Overall, a high balance can prove costly. It can reduce the availability of credit, which can lead to an interest rate increase. If you have questions about your card’s interest, visit https://www.sofi.com/credit-card/.
Using Chase’s calculator to consider the impacts of the interest rates on the average loan debt of more than three credit cards in a portfolio, the average credit card holder would pay $1,113 in interest every year.
It would reduce the consumer’s net worth by $11,473.
A cardholder with a $7,500 balance, paying an 18.74% interest rate, would have $11,475 in total interest payments. If it wasn’t used to pay down debt, it would be available for other uses.