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Money Talk Monday

Money Talk Monday: What affects my credit?

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Deb Avara helps you decipher credit in the latest Money Talk Monday. Read more [...]

Money Talk Monday: Investing is no simple task

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Can you explain investing and the stock market like I'm five? Or at least like I'm a new college student? Wow - that is a loaded question. And the simple answer is no. Investing in the stock market is not something to be done lightly. You must start by learning. Read more [...]

Money Talk Monday: Smart debt pays off

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Is there such a thing as "smart debt"? Is it really better to buy the big stuff on credit than to pay cash? If not, how do you build your credit without getting into massive debt? Yes, there is such a thing as smart debt. Most financial advisors say that smart debt is anything that can help you financially. Read more [...]

Money Talk Monday: Only take what you need

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If I've already taken out student loans, what can I do now to help me get ahead of the debt once I graduate? Very good question. The thing about student loans is that many students are taking them simply because they were told they qualify for them. Read more [...]

Money Talk Monday: Get to the core of credit scores

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By Debra Avara   At what age should young adults start concerning themselves with a credit score? What is the wisest way to go about building a good credit score? Young adults need to be concerned with good credit from the get go, as teenagers. Many young adults actually start late (age 21, 22) in building good credit, where others by that age have already destroyed their credit. As soon as a person starts to do anything at all with credit, they need to be concerned in building good credit. It takes years to build good credit, and only a few months to destroy it. Once it is destroyed, it can take 7 to 11 years to rebuild again. The legal age in Texas for a credit card is 18. You may get one younger, but it would probably come with a lot of restrictions. However, in 2010, Congress passed a bunch of new laws regarding credit cards. The biggest change was that people under 21 years of age now had to have a parent/guardian/adult co-sign for them. Their thinking is that the adults would know better and wouldn’t LET the ‘kids’ get out of control in their credit card debt. My thinking is once you understand credit cards, you will handle the card properly, regardless a co-signature or not! Two relatively easy ways to get a credit card: 1. Your parents can actually put you on their card as an authorized user. Of course, if your parents don’t have good credit, you don’t want to do that. But if they have good credit, this is a good way to start. Their credit becomes yours. Even if you never use the card, it can help you get another card. You and your parents should discuss and be in agreement as to how and when you can use this card, and obviously, you shouldn’t abuse it! 2. You can get a ‘secured’ credit card. If you have a savings account at your credit union or bank, you can ask them for a ‘secured’ card. This means that if you have $1000 in savings, ask them for a card with a $500 limit. You will not be able to use $500 of your Read more [...]

Money Talk Monday: How credit cards really work

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By Debra Avara

 

Having a credit card is not inherently bad. It does not jump out of your pocket, run to the store and buy stuff. YOU do that, which means YOU get to choose how to use your credit card.

Credit cards work like compounding interest, which we generally think of as good, but in this case, not so much.

Take a $1000 TV you put on a credit card with a 24% interest rate. IF you only pay the minimum amount, based on interest + 1% of the balance, your minimum payment would ONLY be $30.00.

BUT it will take you 125 months to be rid of your debt. In that time, you will pay $1,332.18 in interest.  BTW – 125 months = 10 1/2 years. Is your TV still going to be working?? And did you notice you were paying more in interest than you did for the TV??

YOU MUST MAKE MORE THAN THE MINIMUM PAYMENT.

IF you start off paying $30, and just don’t reduce that amount when it starts going down, it will take you 56 months to be rid of your debt. In that time, you will pay $664.42 in interest. 56 months is only 4 1/2 years. That’s quite a difference.

IF you pay $50 a month, $20 more than the minimum payment, it will take you 26 months to be rid of your debt. In that time, you will pay $289.87 in interest. That’s just over 2 years, and you’re saving $1042 in interest.

Credit card statements are now required to post how long it will take you to pay off your balance using the minimum payment. Pay attention to that area on your statement.

Credit is necessary today. If you want a good interest rate on a car loan, a house, or even to rent an apartment and get car insurance, you must have good credit. But you don’t need to abuse your cards to get good credit.

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