Effects Of High Interest Rate Accounts

2007-09-21 14:18:39

( Financial )



HIGH INTEREST RATE ACCOUNTS

These days, credit acquisition is very accessible especially with the advent of credit cards. Credit cards are one of the easiest ways to access a loan with regards to purchasing basic items and other goods. Because of this, credit cards have become a household name in the American homes.

However, the sad news is that credit cards usually have high interest rate accounts because it is relatively easy to access. Most credit card users are not aware of the dangers of using credit cards. The alarming news is that most households are draining large sums of money paying off high interest rate accounts by simply using credit cards.

HOW WILL HIGH INTEREST RATE ACCOUNTS AFFECT YOUR CASH FLOW

The most dangerous form of accessing loans or quick credit acquisition is your lack of financial literacy. It has been reported that most credit card users are not even truly aware of how much interest rates they are paying. Because of this, they have become financially vulnerable. The worst scenario is that because of lack of financial literacy, most credit card users have been failing to religiously pay off monthly dues not fully aware that such failure will result to compounding interest rates.

These results to a large amount of cash flow allocated to payments of interest rates and principal loan. If this is what you are experiencing, chances are you are have missed out on analyzing the effects of high interest rate accounts with your cash flow. If you want to address this problem, you should start to re-assess your financial standing and take a heard look at the credits you have accumulated.

FINANCIAL LITERACY and HIGH INTEREST ACCOUNTS

To recover from a bad loan and financial vulnerability, you should start to assess your financial standing taking into consideration your current assets and your liabilities. Start making a list of all your valuables which may be in the form of real estate or movable properties including your cash at hand. After which, list all your outstanding loans and your payables. Compare the two lists. If your total assets exceed your liabilities, you still have a relatively good financial standing. However, if your liabilities exceed your assets, you are in a bad financial standing which may have been brought about by bad loans from high interest rate accounts.


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