January 9, 2013
By Lila Quintiliani, AFC®
Military Saves Assistant Coordinator
Communication & Outreach
Americans have a lot of credit card debt. $852 billion dollars of it, as a matter of fact. A 2010 FINRA study of military families found that nearly 30% of those surveyed had at least $10,000 in credit card debt. Most households don’t even know how much their total debt is, and it’s very easy to fall into a pattern of just paying the minimum payment each month. But that may be because it can be difficult to understand the true cost of debt.
Credit Card Interest and Fees
When a credit card is not paid in full each month, the interest fees and finance charges start to add up. What those items at the register actually end up costing might be vastly different than the original price tag. But there are sites like Bankrate.com, which has a calculator that figures out the true cost of paying only the minimum payment. Before making a large purchase on credit, like a computer or a 3D TV, it might be useful to know what one will end up paying for an item. For instance, a new 64Gb Retina display iPad, which lists for $699, will end up costing a whopping $1171 when you factor in price plus interest and will take almost 6 ½ years to pay off. Given the life of electronics these days, will you still own it when you’re done paying it off?
Financial Problems Cause Stress
It’s no secret that debt is a stressor. According to the Blue Star Families 2012 Military Lifestyle Survey Report, 68% of those surveyed reported feeling stress from their current financial situation.
Loss of Security Clearance
One of the most serious consequences of debt for servicemembers is that it can cause them to lose their security clearance. According to the nonprofit VeteransPlus, financial problems are the top reason for military members to lose their security clearance.
You can save and we can help. Visit MilitarySaves.org for inspiration, information and tips on saving and getting out of debt. Take the Military Saves Pledge today!