5 WAYS YOUR MONEY COULD BE GOING DOWN THE DRAIN!

Could Poor Credit and Poor Money Management be to Blame?

By Conquest Credit

1.Paying High Interest Fees on Credit Cards- Poor Credit, a low FICO Score and poor money management usually equals higher interest rates and higher balances on credit cards, which can quickly suck your money down the drain.   For example, if you carry a balance of $1000 throughout the year on a credit card that charges an 18% interest rate, you could be spending up to $180 a year on interest rate fees alone. If you have more than one credit card or several credit cards that carry high balances, and high interest rates, not only will your credit score go down resulting in poor credit, but you could also be wasting up to $1000 a year on interest rate fees, compared to someone with Excellent or Good Credit.  

2.Paying High Interest Fees on a Car Loan- Depending on your Credit and FICO Score, the interest rate on a Car Loan can vary between 0% and 22%.  For example, a car loan for $25,000, 0 money down, with an 11% interest rate, and a 60 month payment or 5 year contract, will end up costing you an average of $1,522.72 a year in interest fees. That’s a grand total of $32,613.60. Now compare this to someone with good credit and a high FICO score. A car loan for $25,000, 0 money down, with a 1.99% interest rate, and a 60 month payment or 5 year contract, will end up spending an average of $256.96 a year in interest fees. A grand total of $26,284.80. This person saved $6,328.80.      

3.Paying Late Fees on Bills- Making several late payments on more than one account can quickly add up to hundreds of dollars a year in late fees. Credit Cards, Mortgage loans, Rent, Student Loans, Insurance bills, Utility and Phone bills.  Lenders, creditors and companies are quick to charge you a LATE FEE for missed payments. For example, if you miss your credit card payment by even one day, you will have to pay a $25 late fee ($35 if it’s the second time within six months).  If you miss your Mortgage or Rent, they will usually charge a 5% fee of the monthly amount. For example, if your mortgage payment or rent is $1,200 a month, a 5% late fee would cost you $60. If you are late more than once on several bills throughout the year, you could be spending up to $500 a year on late fees. To avoid these late fee, we recommend you use automatic bill pay

4.Payday Loan Fees- An emergency came up and you had to borrow quick cash from a Payday Loan Center. If you borrowed $300, you most likely paid a $35 fee. The next month comes around and you keep renewing the loan and borrowing the money because you can’t afford to pay it off.  You could be wasting up to $420 a year in fees, and if you have more than one payday loan, you could be spending over $1000 a year in payday loan fees.

5.Paying High Interest Fees on a Mortgage Loan- Depending on your Credit and FICO Score, the interest rate on your Mortgage Loan can vary between 4% and 9%.  On average, a FICO score of 720 will earn you a 4.1% APR on a 30 year fixed loan.  Compare this to a FICO score below 720, on average this score will earn you a 5.4% APR on a 30 year fixed loan.  The difference between both amounts is $242.11 a month.  On average, a better credit score will save you $242.11 a month, which comes out to $2,913.24 a year, and over the life of the loan, a grand total savings of $87,397.20. 

Depending on your financial situation, credit score and money management skills, you could be wasting between $300 and $800 a month on interest rate fees, late fees, and payday loan fees. Your money is literally going down the drain and landing into other people's pockets.

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