Currently, for my husband and I combined, we spend $1,200 each month on health costs and debt. For health costs, this includes prescriptions, doctor’s visits, and a minimum of tests. For debts, this includes credit card, student loan, non-loan overdue university bills, bank fees (many of which we wouldn’t get hit with or would be lower if we had more money), and back taxes (from when we didn’t manage to pay enough estimated self-employment tax during that period when Husband worked full weeks and unpaid overtime but was only a “consultant” – just so that his employer wouldn’t have to provide him with benefits). And the monthly costs may increase soon since we’ll no longer be able to defer payment on my school loans, probably to about $1,400. We are 24 and 29. I’ve read that people in my generation have higher levels of debt in their 20’s than most previous generations.
With regards to credit card debt, I think I definitely fell victim to some predatory lending, and now I’ve got a debt with a really high interest rate and high over limit and missed payment fees too. I think I should have known better than that, but it’s too late now to ruminate. Now that things have calmed down, I’m going to see if I can get the rate down or transfer the balance to a card with a lower rate.
And now, I arm you with knowledge from Co-op America’s Real Money about predatory lending:
Predatory lending: Predatory lending is a fast-growing practice in which financial institutions use high fees, exorbitant costs, and other unscrupulous lending practices to take advantage of targeted groups—often the elderly, students, and low-income people. In the case of credit cards, banks may market cards to these groups that “contain hidden transfer charges, exorbitant late fees, and exploding interest rates,” according to the Center for Responsible Lending (CRL).
It’s not just target groups that suffer from such practices. A Woodstock Institute report states that “the intricate web of penalties and fees implemented by the credit card industry may be one of the key factors for the high level of indebtedness among Americans. In January 2005, the average US household had seven credit cards and carried a balance of $14,000, the highest level of debt ever.”
I feel a little better knowing I have less than average credit card debt…