Illinois consumers who use credit cards now have topped pre-Recession totals for credit card debt, but they are not alone. Following the same trend, consumers throughout the country now have sky-high credit card balances. Of course, numbers vary from state to state, and Illinois ranks 23rd for highest average credit card balance. Recently, Debt.com ran a state-by-state analysis of average consumer credit card debt with fairly shocking results. It turns out that it would take a really long time to pay off the average Illinois credit card balance by just making minimum payments. How long? Here’s a hint. You could raise a two-month-old infant to adulthood in as many years.
Why Illinois Consumers Should Avoid Only Making Minimum Payments When Tackling Credit Card Debt
According to the Debt.com study, the average Illinois consumer carries about $2,970 in credit card debt. With an average credit card interest rate of 15%, it would take about 17 years and 10 months to pay off this balance by only making minimum payments. In this scenario, the credit card holder would also end up paying around $3,192 in interest charges. Clearly, that is far too long to pay for anything that isn’t a house. After all, no one finances a car for nearly 18 years.
Also, it is likely that Illinois consumers with credit card debt have other financial obligations. You may have a mortgage or rent, a car payment, and other monthly bills. And it is important to remember that all of this debt counts when you apply for loans and new credit cards. Your debt to income (DTI) ratio refers to how much of your income goes toward debt every month. So, if your DTI is high, lenders and creditors may not trust that you can take on an additional payment and deny you approval. Therefore, paying credit cards down and getting rid of extra debt is always helpful.
Another reason to pay credit card balances down has to do with how your utilization rate affects your credit score. If you use too much of your available credit at once (more than 30%), your credit score can drop. This is because carrying high credit card balances makes you look too reliant on credit, and, potentially, a lending risk.
How Illinois Consumers Can Re-Budget their Income in Order to Pay Down Credit Card Debt
In order to pay down credit card debt, Debt.com recommends that Illinois consumers devote 15% of their income toward credit card payments. So, given that the median income in Illinois is around $61,386, this comes to $767 a month. At this rate, a consumer could pay off that $2,970 credit card balance in four months and only pay $93 in interest charges.
Of course, not every Illinois credit card user can afford to put this much money toward payments every month. If this is the case, try to cut back on unnecessary expenses to pay as much as possible toward credit card balances. At the very least, pay more than the minimum payments to get your balances down to 30% or less of your spending limits. That way, your credit score won’t drop.
Another Way for Illinois Consumers to Improve their Credit Scores
All credit card users in Illinois should check their credit reports on a regular basis. With high credit card activity comes the potential for errors and mistakes. Unfortunately, creditors and the credit bureaus misreport and mishandle consumer information. Then, their mistakes end up as errors on credit reports that can harm credit scores.
Only by frequently checking your credit reports can you find and report these errors, and protect your credit score. This, luckily, is easy to do. Just go to www.annualcreditreport.com, and request copies of your credit reports from TransUnion, Experian, and Equifax. The Fair and Accurate Credit Transactions Act (FACTA) entitles you to do this for free once every 12 months.
If, while reviewing your credit reports, you find inaccuracies, contact Credit Repair Lawyers of America in Illinois. Instead of handling the dispute process on your own, let an experienced credit attorney, fix your credit issues and get you clean credit reports – for free.
The Free and Legal Way to Get Better Credit
Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (773) 360-0665 or sending him a message through our contact page.
For more information about Free Credit Repair, please visit https://www.creditrepairlawyersam.com/illinois/credit-repair/.