Let’s break it down even more. Total student loan debt was up 7.35 percent in 2011 with the average debt per student coming in at $34,703. One in five U.S. households includes at least one person carrying student loan debt.

The average credit card balance for a consumer with outstanding debt was $15,328 and 9 percent of all outstanding debt was in some stage of delinquency.

Infographic by- The Credit Examiner

Anybody crippled by debt knows the effects. There’s little room for saving and that affects retirement, saving for education expenses, and building an emergency fund. You can’t budget for debt. You simply have to pay it and build your budget around your debt payments.

Debt causes stress on relationships. The New York Times reported that couples who routinely fight about money are 30 percent more likely to divorce. (And, we can be relatively certain that those fights aren’t centered on what to do with their vast riches.)

Here’s another effect that isn’t talked about enough. Debt takes away your ability to give to others. In 2011, Americans gave $347 billion to charity—a 7.5 percent increase from 2010, according to NBC News. But that’s nothing compared to the needs around the world. What if only a fraction of the $11 trillion collective debt load went to charitable causes around the world?

If you’re somebody with the average credit card balance of $15,328, you would pay about $22,000 in interest if you only paid the minimum each month. What if you had been able to donate even 10 percent of the interest payments to a charity of your choice? What if everybody like you did the same thing? What if, instead of a credit card company getting your money, a Third World nation filled with hungry children got it?

Let’s get serious about paying off debt. Here are a few practical ways to make headway on your debt load.

Student Loans

Now that 50 percent of those graduating from college are either unemployed or underemployed and college tuition inflation is generally double the rate of general inflation, financial experts want you to borrow only an amount equal to your first year’s salary.

That will likely mean making tough choices on your school of choice. A state school costs considerably less than a private out of state university. Your school of choice has an impact when interviewing for some jobs, but if you’re like the majority, amassing a large student debt load isn’t going to improve your job prospects enough to justify the costs.

However, for those already holding a large amount of debt, first examine your consolidation options. Even a small reduction in the interest rate reduces your total payments considerably over time. Second, some people are eligible for significant principal reduction or forgiveness of their balance if they are working in a qualified position while making 120 on-time payments.
Because you receive a deduction of up to $2,500 on your student loan interest, dedicate a portion of your tax return to the payment of debt. Go to the IRS Website for more information. Finally, pay the minimum until you pay the higher interest debts like credit cards and car loans.

Credit Card

If you have multiple cards with high balances, first consolidate. Roman Shteyn, co-founder of Credit-land.com says, “If you have several cards with balances, the first thing you should do is consolidate them onto one card, preferably a card with a 0 percent balance to give you time to pay down the debt.

These cards can give you up to 18 months interest free, which lets you greatly reduce or eliminate the actual debt and you don’t have to worry about the interest it is accruing each month.” Use this balance transfer calculator to help make informed decisions whether a balance transfer will enough to justify the work of transferring balances. The key to this strategy is to commit to eliminating or significantly lowering the balance during the time you are not paying interest.

There’s also the Debt Snowball plan made popular by personal finance expert, Dave Ramsey. Make only minimum payments on all but the credit card with the highest interest rate. On that card, pay as much as you can. Once you pay that card off, pay off the next highest interest card using the money previously applied to the now paid-off card.
By the time you get to the final card, you’ll have enough money left over to make sizable payments.

Car Loans

As with all debt, the best offense is a good defense. Do not purchase more car than you need and if you’re in debt, what you need is a reliable car with four wheels and an engine. If you’ve had a loan for multiple years, look for a lower rate. Many consumers don’t know that they can refinance car loans.

If you have a loan, and you purchased more car than you needed, consider trading down. How about a reliable used car that saves a considerable amount in payments? While you’re at it, if possible, downsize to save on gas and use the savings to further pay down debt. Debt reduction is about looking for savings opportunities and getting drastic. However, small reductions in expenses add up to more money going towards debt payments.

Bottom Line

Regardless of how dire your financial situation looks, there’s a way out, but it’s going to take drastic action. You have to set aside all of your wants and purchase only the needs. And you have to redefine what a need is in your life. (Is an iPhone a need? Is expensive cable TV a need?)

Once you get to the point where you have extra money in your budget to pay more toward your debt, the savings will multiply. As you pay less in monthly interest, you’ll have the ability to make larger payments. Start small and know that every dollar that goes toward your debt is a milestone.

For more information, contact Gerrid Smith, CEO of the charity-focused coupon website, Save1. They provide coupons and deals from over 5,000 online stores. Each time a coupon is used, they provide a meal to a child in need. You can connect with Save1 on Twitter, Facebook and Google+.

Incoming search terms:

• breaking the bondage of debt
• Debt|GenerationXFinance
• generation x debt
• how much to donate to charity if have credit card debt?
• student debt forgiveness programs
• student loan debt forgiveness program
• ways to work on debt

Although debt is bad it may not be the best idea to shun it completely. The goal is to have an understanding of debt that is good and debt that is bad. Having a knowledge of debt allows you to effectively manage borrowed money. Good debt will consist of things that you will need, but cannot afford to purchase using cash. Any items being bought with borrowed funds that are not otherwise affordable or not needed is bad debt.

One type of good debt that you will typically have results from the purchase of a home. The way that a home is typically purchased is by obtaining a mortgage. Mortgages come in various types with different interest rates. You need to determine the type of mortgage to meet your needs and the current mortgage rates that apply to these loans. A traditional mortgage requires twenty percent down to avoid PMI.

Being able to help your child afford college is a relatively good debt. However, this a type of debt a child should take instead of a parent. You do not want to spend funds set aside for retirement or used to pay for unexpected expenses to pay for your child’s education. Your home should also not be used as a source of funds to pay the tuition costs for a child. A few of the best ways to pay for your child’s college is to look into financial aid, scholarships, and grants.

The purchase of a car is also considered bad debt. Automobile loans can be obtained for lengths ranging from 60 months up to 72 months or more, unfortunately the value of this car drops, often times the value of the car will drop below the outstanding balance on your loan.

The best example of bad debt is credit card debt. Credit cards offer people a convenient way to make a purchase. However, they also provide the fastest way for people to get in trouble with their spending. Credit card users do not always think about the balance that needs to be paid back for each credit card that they use. The interest compounds the matter by making it harder to get out of debt. Credit card debt will continue to grow when only minimum payments are made on cards that have a high interest rate.

As you can see not all debt is created equal. Some debt funds things that are a necessity in life that you are not able to purchase outright, while other debt can get in you trouble quickly by allowing you to purchase things you cannot afford.

Incoming search terms:

• bad debt vs positive debt
• Good Debt vs Bad Debt
• Examples of Bad Debt
• good card verses bad car
• should you tithe if you have credit card debt

There are actually a few potentially positive benefits to co-signing a loan. If the loan is paid off in full and on time, then that record of repayment becomes a positive mark on your credit score. You also have the personal satisfaction of having helped a family member or friend to obtain money they needed but could not have obtained without your help. The transaction can also give you insights into how certain loans work and establish contacts with people in the lending community that you might otherwise have never met. Such information and contacts can be useful to you in the future.

However, despite these benefits co-signing a loan is something that most people approach with at least some hesitation, and with good reason. Being the co-signer of a loan means that you will have to assume important responsibilities in the event something goes wrong and the person you co-signed with is unable to keep up the payments. Under those circumstances you can be forced to assume responsibility for making the missed payments or even for paying off the loan in full, even if you personally never saw one cent of the money that was borrowed.

The situation can become even worse if you are not in a position to assume the payments. In that case the loan may go into default and you will find your credit score being damaged just as badly as the person you co-signed for. Therefore a co-signed loan that goes bad can leave you in debt for money you never received and your personal credit histoy damaged. Also, the amount you owe can be increased by penalties and collection fees, further crippling your financial health. You may also lose some of your own possessions if the lender goes to court and you are forced to sell your personal property to pay off the loan.

In other words, a co-signed loan that goes bad can become a financial nightmare. That is why you should always exercise extreme caution before agreeing to co-sign a loan for anyone. It is best to assume in advance that the loan may have to paid by you, and thereby consider the means by which you would repay it and whether the resulting financial situation is acceptable. Never co-sign for a loan with someone else that you can’t afford to pay off entirely yourself if circumstances require.

Of course it goes without saying that you would not co-sign a loan with someone who is not responsible or doesn’t have a reliable income. However, always remember that even the best intentioned people can have accidents, illnesses, and unexpected job losses that can suddenly put their ability to repay the loan in jeopardy. Therefore it is best to take certain precautionary measures in advance of co-signing a loan such as getting everything in writing.

Whatever personal arrangement you make with the person you are co-signing with should never be just verbal. You should get everything in writing, even though doing so may seem awkward when you are dealing with family or friends. Yet having a legally binding side document establishing everyone’s responsibilities in case of a default can actually help preserve a close relationship by clarifying in advance what will happen. Many personal relationships have been ruined by bad loans, but a binding agreement that anticipates in advance the aftermath of a default will actually help to minimize hard feelings in the long run.

That is why it is often a good idea to hire a lawyer to draw up an agreement clearly identifying the roles and responsibilities involved in any co-signed loan. Ideally everything will turn out fine and the agreement will never have to be enforced. But if the worst occurs, then you will be glad to have all the rights, responsibilities and obligations of both parties clearly spelled out.

Incoming search terms:

• pros and cons of cosigning a mortgage
• are you liable for co-signing a loan on a house
• Signing a mortgage for a family member
• pros/cons of cosigning real estate loan for children
• pros cons co-signing
• pros and cons when co signing for a car
• pros and cons or cosigning a mortgage
• pros and cons of signing for a loan
• pros and cons of co-signing a mortgage
• pros and cons mortgage co-signing

The reason has to do with how interest is calculated and applied to different types of debt. With a credit card, interest is calculated on the average balance and applied monthly. So as long as you carry a balance you’ll be paying the same percentage of that as interest from month to month. But when you look at an installment loan or other secured loans like on a home or a car, typically the interest is calculated differently. In these types of loans the interest front-loaded and based off an amortization schedule.

What this means is that in the early part of the loan term a much larger percentage of your monthly payment is being applied to interest than at the later part of your loan. To get an idea of how this works go ahead and pull up this auto loan calculator. If you view the report of the preset data you’ll get a monthly breakdown of payments.

As you can see, in the first year, nearly 30 percent of your payment is going towards interest. In the last year of the loan it’s a mere two to six percent on average. So in reality, during the first few years of the loan you may very well pay thousands of dollars in interest each year, but in the last year or two you’re likely only paying a couple of hundred dollars in interest.

So you really have to look at where you are in your loan to determine whether paying it off early results in the savings you’re looking for. Typically, the closer you are to the end of your loan the less benefit there will be to paying it off early because almost your entire monthly payment is now being applied to the principal. So, run through the calculator with your loan terms and see for yourself how much money you’d actually save and then decide if it’s worth paying the loan off early.

Also keep in mind that your auto loan, mortgage, or other installment loan may have a significantly lower interest rate than other debts you carry. With rates possibly as low as 2 to 5 percent, ask yourself if it’s really worth saving what could be just a couple hundred dollars by paying it off early when you’re carrying other debts with much higher interest rates and costing you more. Sure, it’s nice to enjoy the feeling of having one less monthly payment, but if the math doesn’t work, the math doesn’t work.

Finally, consider the situation of having a bird in the hand or two in the bush. Especially if you are deep into your loan and have already paid the bulk of the interest, does it really make sense to use a bunch of available cash to pay it off early when that money could be used elsewhere why you enjoy the remaining low monthly payments? Run the numbers and don’t be penny wise and pound foolish.

Incoming search terms:

• should you pay off your car loan early
• auto Loans livefyre
• pay off car loan early
• should you pay off car loan early
• how to pay off a car loan early
• should i pay off car early
• should I pay off car early or irs
• should i pay off car loan at 2 2%
• should you pay car loan early
• should you paying off auto loan early

Payday loans go by a variety of names: payday loans, cash advance loans, check advance loans, post-dated check loans, or deferred deposit check loans. They sound harmless, because in most cases you’re just borrowing money to get you through to pay day, but under the surface they are one of the most destructive loans available. A lot of people get payday loans with good intentions of just bridging the gap before their paycheck arrives so they can keep up on their bills, but what usually happens is they find themselves in a position where they can’t repay the loan in time.

Once that happens the high interest rates start to take their toll. Before you know it you’re having to take out another payday loan just to help you pay off the first, and the cycle continues. This leaves you in a state of financial ruin while everything you make is now going on to fund these high-interest loans.

What Are Payday Loans?

Payday loans are small, short-term loans with extremely high interest rates. The lender gives you cash and you either write a personal check payable to the lender for the amount you want to borrow, plus a fee, or you authorize an electronic withdrawal from your checking account on the due date. The loans are for short periods of time: one to four weeks. They are generally marketed as emergency loans or a cash advance. Whatever the name, they all work the same way.

How Do Payday Loans Work?

Let’s say you want to borrow $300 until your next paycheck. What you’ll do is write a personal check to the lender for $345 (the $300 you borrowed plus a $45 fee). The lender gives you $300 and agrees to hold your check until your next payday or other agreed-upon date in the very near future. When that date arrives, either you redeem the check by paying the $345 in cash, or the lender deposits your original check. You may also be able to roll over or extend the check by paying a fee to extend the loan for another two weeks. If you don’t have the money in your account to cover the check you wrote, you could incur overdraft fees for bounced checks.

Essentially, you’re giving the lender a postdated check and in return you get the cash. When the date for the check comes due the lender will cash the check to satisfy the loan, you can come in and repay the loan in cash so the check is voided, or ask for an extension. While convenient, it’s the fees that can really stick it to you.

Payday Loan Fees

Fees charged for payday loans are usually a percentage of the amount borrowed or so much for every $100 you borrow. If you extend or roll-over the loan, you’ll pay additional fees each time. The doesn’t sound bad because payday lenders always express it in a flat fee. In the example above we showed a fee of $45 to borrow $300. But studies show that interest rates on payday loans range from 390% to nearly 900% APR and that most lenders don’t quote accurate interest rates.

Going back to the example above, think about the percentage rate for a moment. A $45 fee on a $300 loan works out to 15% for a two week loan. That would be about 30% per month. When you consider that even the worst credit cards are typically up to 30% per year, payday loans can get out of hand quickly. But it isn’t the initial fee that gets you. If you’re in a pinch paying that $40 or so may save you from even bigger financial issues. But it’s when you can’t repay the payday loan and have to resort to extending it and rolling it over, which incurs more fees, which mean more interest and compounds the problem. This is where you can get into a situation where you’re paying hundreds of percent per year just to borrow a small amount of money.

What’s the Problem With Payday Loans?

These cash advance loans are a very expensive way to obtain short-term financing. In the above example, the cost of the initial loan is a $45 finance charge for two weeks, the equivalent of $1,170 for a year, or 390 percent APR (annual percentage rate). Even worse, many people find they’re in no better financial shape when the loan becomes due than they were when they borrowed the money, and they get caught up in a vicious cycle of constantly taking out and extending payday loans, which becomes exorbitantly expensive. The lender counts on the fact that most people won’t have the money to repay the loan plus the fee when they get their next paycheck, and will be forced to extend the loan for an additional fee, creating a snowball effect.

Some say it fills a need, but there’s a reason most payday loan places are located in low income neighborhoods and target those with bad credit scores. The lenders target people who are likely struggling and already living beyond their means so offering easy money is irresistible. The lenders also know that these people probably won’t be able to repay their loans and they are fine with that. Why? Because they charge ridiculous fees that over time offset all of the unpaid loans. Think about it. If you’re paying $45 every two weeks to satisfy a $300 loan you took out the lender will basically break even on your loan in about three months if you keep extending it and paying the fee. The longer you do that, the more fees you pay, and the fatter the lender’s wallet gets

What Are the Alternatives to Payday Loans if I Need Fast Cash?

Payday loans are not the only way to get through a financial emergency. The FTC has a few suggestions to consider before taking out a costly payday loan or cash advance:

• When you need credit, shop for it. Compare the Annual Percentage Rate (APR) and the finance charge, which includes any fees, and choose the offer with the lowest APR. It may be a credit card, line of credit, or loan.
• Consider a small loan from your credit union or bank. If you’re a long time customer they may be willing to help.
• Ask your employer for a pay advance. Not as likely in a large corporate environment, but worth a shot. You may also want to look to see if your employer offers any financial assistance programs.
• Ask your family or a friend for a loan. While I don’t like the idea of borrowing from friends and family, if the amount is small and a temporary need it may be a better alternative than getting taken by a loan shark.
• Even a cash advance on your credit card may be a better alternative. Remember, even the worst cards may have APRs of upwards of 30%, but that’s an annual rate, not a monthly rate like you might be paying with a payday loan.
• Ask your creditors for more time to pay your bills, and find out what that will cost you in fees or interest. Think about what you need the loan for. Is it to avoid a late fee on your phone bill? If you aren’t really late chances are the late fee would be far less than the payday loan fee, and if you talk to them they may even be able to waive the fee for a short time. Decide what bills you should pay first if you can’t afford to pay them all.

How Can I Avoid the Need for Emergency Payday Loans?

• Make a realistic budget and leave room for emergencies. Avoid unnecessary purchases. Even small purchases add up. Remember, some of our greatest money leaks come in the form of small monthly subscriptions. Build some savings to avoid borrowing for emergencies or unplanned expenses, even if you can only put away small amounts. For example, by saving the amount of the fee that would be paid on five average $300 payday loans in a year, you could have an extra $300 dollars available to act as a buffer in short-term cash emergencies.
• Talk to your bank about getting overdraft protection on your checking account to protect you from incurring fees for bounced checks. Overdraft fees can be as bad as payday loan fees, so you can save big money there.
• If you find yourself having short-term cash problems on a regular basis, or if you need help developing a budget or paying off debt, make an appointment with a consumer credit counseling service. They will talk to you for free and try to help you.
• If you decide you must use a payday loan, borrow only as much as you can afford to pay with your next paycheck and still have enough to make it to the following payday. The last thing you want to do is be short and have to resort to extending the loan. That’s where the real troubles begin.

The Bottom Line

Not everyone is in a good financial position, and that’s ok. There are times when money is tight and something comes up, but a payday loan can be more than you bargained for. Payday loan companies take advantage of your need for cash and rake in billions of dollars a year in fees at your expense. The best thing you can do to avoid needing a payday loan is to take a hard look at your budget and make sure you’ve trimmed all of the excess spending. Leave some room for short-term emergencies and put a little money aside in an emergency fund. And if you need to, keep a low interest and low limit credit card on hand for a small emergency. As bad as credit cards are for finances, they are still better than a payday loan in a pinch.

Incoming search terms:

• next payday advance reviews
• dont be broke reviews
• interest rates at payday lenders can range from
• $300 loan
• dont be broke interest rates
• how much interest does money mutual charge
• dontbebroke reviews
• next pay day advance reviews
• next day payday advance reviews
• nextpaydayadvance com reviews

With the debt snowball method, you create a payment plan to pay off your debt by focusing on one debt at a time and then keep paying until your debt is gone. If you use the method properly you can pay off thousands of dollars in debt in much less time than if you were to stick to making the minimum payments on all of your credit cards.

How a Debt Snowball Works

To get started with a debt snowball you should list all of your debts in ascending order starting with the smallest balance you have. Remember that you can use this method to pay off credit card debt, installment loans or any other kind of debt that has a defined balance. Ongoing accounts such as utilities and phone bills cannot be addressed with the snowball.

Once you have your debts listed, you then apply no less than the minimum monthly payment to each account. The money available in your budget that you have left over gets applied towards the account with the smallest balance. This means you are accelerating the repayment of the smallest debt first.

After you have paid off the smallest account balance, you then roll the payment you were using to tackle that card back into the snowball and start paying off the next lowest balance you have. The amount of money you are spending each month never changes, but once that first card is paid off and you apply that card’s payment toward the next card, the snowball starts to build and the cards get paid off one by one.

The system disregards interest rates, unless you have two accounts with very similar balances. When there are two accounts with similar balances, the account with the highest interest rate should get paid off first.

Why the Debt Snowball Works

The debt snowball works because you are always keeping your accounts current by paying your monthly minimum payments, and because you are never trying to pay debt with more money than you have and sacrificing other areas of your finances. As you pay off the smaller balances, you are freeing up more money to go after the bigger accounts.

Because you are not trying to come up with extra money to address your debt issues, it is easier to stay dedicated to the snowball plan. It becomes even easier when you do the math and realize how much extra money you will have every month when the debt snowball is done.

A Debt Snowball Example

The best way to understand how a debt snowball works is to see one in action. Let’s take this list of debts as part of the example:

• Credit Card 1 => Monthly Payment: $35 Total Balance: $350
• Credit Card 2 => Monthly Payment: $75 Total Balance: $1,500.00
• Credit Card 3=> Monthly Payment: $55 Total Balance: $800.00
• Installment Loan => Monthly Payment: $200.00 Total Balance: $6,500.00

Utilizing the debt snowball, we would list these debts in this order:

• Credit Card 1
• Credit Card 3
• Credit Card 2
• Installment Loan

The total for all of these monthly payments is $365.00. As part of the debt snowball, you must make all of the minimum payments each month. If you are able to apply $500.00 each month towards your debt snowball plan, then you would apply the extra $135.00 toward credit card 1. That means that you will be paying $170.00 per month to credit card 1.

Within two months, credit card 1 will be paid off and you will apply that same $170.00 per month toward paying off credit card 3. That means that your total payments towards credit card 3 would total $225.00 per month.

As you pay off each balance, you would apply that money towards paying off the next balance. With this plan, you would pay off all of this $9,150.00 in debt in two years or less compared to the many years it would take if you continued with just making the minimum payments.

The debt snowball does not take any extra money out of your pocket and it allows you to pay off your debt in a short period of time. This can be your answer to eliminating your excessive debt without breaking the bank. But remember, this only works if you stop spending and adding money to the balances of these debts. So, make sure you’ve put these cards out of reach so you don’t sabotage your debt snowball efforts.

Incoming search terms:

• how to eliminate credit card debt
• how to quickly snowball debt
• how to get out of debt quickly snowball
• how to get out of debt
• how to get out of credit card debt fast
• how to eliminate credit card debt fast
• best way to eliminate credit card debt fast
• how to debt snowball your debt
• how to become a fast millionaire
• how do i become debt snowball

What to Expect From Your Credit Counselor

Most credit counselors prefer to meet their clients face-to-face. Other agencies work through the Internet. They email, Skype, and communicate with clients over the phone. One counseling style is no better than the other one, so it’s up to the consumer to decide what he or she prefers.

First, the counselor will ask you for your financial paperwork. This includes bills, whether paid or unpaid, bank statements, collection letters and loan papers. They will look over your credit report and analyze your debt-to-income ratio. From there, they work with the client to determine how to fix his financial problems. The counselor may advise the client to start a debt repayment plan and teach him how to improve his credit score.

How to Research Counseling Agencies

You can research any credit counseling agency through the Better Business Bureau or the Attorney General in your state. Or you can even check with with the National Foundation for Credit Counseling.

Many agencies will provide free information or a free meeting to determine if it’s the right fit. Ask the counselor about the exact services he or she offers. Most agencies will help the client learn about basic money management in addition to debt management. Ask the counselor if he or she can develop a financial plan that will help you avoid problems in the future. Remember to ask about fees and get them in writing. Always get a contract with the company before you hand them any money.

Your counselor’s qualifications are also important, so ask him if he is licensed to work in the state. Find out about her educational background, especially as it pertains to credit counseling. Finally, ensure that your personal information will be kept confidential.

Managing Your Debt

Debt is a major problem that affects many people today. Credit agencies generally help clients sign up for debt management programs that help them pay off debts faster and with less interest. With debt management through a company, the client pays a certain amount of money to the company each month. The funds go toward paying off your debt, such as outstanding loans and credit card bills. Most agencies will help you lower your bills by negotiating lower interest rates. Debt settlement, on the other hand, is when the credit counselor helps you lower your payoffs. Companies that practice debt settlement must adhere to strict federal laws. For example, they are not allowed to collect any fees from the client before reducing/settling his debt.

Who Needs a Credit Counselor?

People who visit credit counselors come from all walks of life. College students, professionals and seniors all utilize the services of credit counselors. When they realize that they can no longer control their mounting debt, they visit an agency to learn about viable options. Getting out of debt is an important goal in your financial management plan, so don’t delay in setting up an appointment to speak with a professional if you need help.

Generation X is one of the identified generations, for those ages 30 through 46, and what is surprising is that they led the way in average total debt. They included all debts in this calculation, from student loan to credit card to mortgage loans, and Generation X led the way. In a close second place were the Baby Boomers, who are the next oldest generation at ages 47 through 65.

Experian found that Generation X had 42% more total debt compared to other generations, which isn’t surprising because it’s around that age where you start really taking on debt in the form of a mortgage. A quick peek at Generation Y, ages 19 through 29, and you’ll see that it’s likely that high student and auto loans carried over and, when coupled with mortgage loans, led to the higher debt load.

Another statistic that was staggering was how prevalent student loans were for Generation Y – an amazing 420% over average. This can be attributed to age, younger people are more likely to still have student loans, and the rising cost of education. With fewer years since graduation, it’s not surprising that many Gen Yers have a lot of student loan debt.

In looking at credit scores, it’s not surprising that the older you are, the better your score. While your age isn’t a factor in determining your credit score, many of the factors that do make an impact are affected by time. The longer your account history and payment history, to the extent you have good behavior, the better your score. The older you are, the more time you have to build that history of good credit behavior. I don’t usually take much stock in VantageScore but since FICO is governed by Fair Isaac, I have to assume Experian didn’t have access to that data to make a comparison based on that.

Finally, the fact that the Greatest Generation, aged 66 and above, still had nearly $40,000 in debt was somewhat scary. While the bulk of that was in 1st and 2nd mortgages, it’s still surprising to see someone in retirement having to service such a high level of debt. It could just be the product of the environment, it’s easy to have a mortgage with interest rates so low, but perhaps that’s a trend we could see diminish over time.

The infographic contains just the highest level data they collected, they put up a new site at livecreditsmart.com that contains some more information for those stats junkies out there (such as the highest credit scoring cities and states, trends, etc.).

What statistics did you find interesting from the infographic?

Incoming search terms:

• infographic generations
• boomers debt infographics
• generations and debt
• generations infographic
• infographic baby boomers
• infographic boomers genx age
• infographic on credit card debt for gen y
• infographic prepaid card
• infographic trends
• Infographics of Generations

These prepaid debit cards are notoriously marketed toward those on the lower end of the economic spectrum because these people often can’t open or maintain accounts at a traditional bank for a variety of reasons. Without a bank, and therefore a checking account and debit card, these prepaid cards can be used to store money in lieu of a bank and also be used for making purchases, obtaining cash at an ATM, and so on. But like everything, this doesn’t come without a cost. The company offering these products need to make money somehow, so it usually means charging fees.

Well, this is where things get interesting. Suze has long been a champion of getting out of debt, being smart with your money, and avoiding excessive fees. Unfortunately, she wants you to use her card that comes stacked with fees. Let me run through a few of them.

• $3.00 to purchase the card
• $3.00 per month just to have the card (first month’s fee is waived)
• $2.00 for ATM withdrawals (generally) plus ATM fees
• $1.00 for a balance inquiry
• $2.00 to speak to customer service (you get one free call per month)
• $2.00 for paper statement

Ok, so there are a few of the fees most users would find themselves subject to, although there are others. You can see all the fees here. Now, one might argue that these fees are better than what some other prepaid debit cards charge, and that is generally the case. But these products as a whole are not consumer-friendly by any stretch of the imagination. I mean is this a debit card or am I going to jail? I only get one free phone call for crying out loud!

The thing to keep in mind here is that the typical person using a card like this is not going to be loading it up with thousands of dollars. Because the amounts will generally be lower, these fees can add up and put a dent in the balance. Here’s an example:

Let’s assume somebody buys this card and loads it up with $250 from their paycheck to have some spending money. They will get charged $3.00 to obtain the card. Then you can figure the person will probably go to the ATM for cash maybe once a week. If they don’t have direct deposit set up or it’s done on a non-Allpoint machine it will be a $2.00 fee for each withdrawal, so that’s another $8.00. Don’t forget to add the $2-3 fee the ATM operator will charge as well. Doing the math, in the first month doing nothing more than obtaining the card and making a few withdrawals this person would be charged upwards of $20 in fees. If the balance remained around $250 for the month they are essentially being charged 8% in fees.  Is it better than a high-interest credit card? Sure. But when you’re talking about a segment of the population that might be only keeping a couple hundred dollars on the card, just regular use and a few withdrawals every month could basically mean they are being charged 10% to use their own money, and could amount to a few hundred dollars a year in fees.

Beyond the Fees

The fees are obviously what many people will focus on, but there is more to it than that. Suze is marketing this card as a revolutionary new way to build credit. One feature is that you get unlimited access to your credit report. The problem is it’s only through TransUnion and it doesn’t include the almighty credit or FICO score that she talks about ad nauseum because of her association with it. Besides, you can already get free credit reports each year from all three of the credit bureaus, so this “feature” isn’t much of a benefit for most people. But the real kicker is that some claims are being made that this card can help you build credit by reporting your spending to TransUnion. The problem is when you read the fine print in the terms:

The information we share with TransUnion concerning your Approved Card account will not appear in your credit report.

When asked about this, a company spokesperson said:

The Approved Card from Suze Orman is trying to transform the way the credit bureaus view Americans’ spending habits. This is an experiment and we won’t know for 18 to 24 months whether people will be able to get credit for responsibly handling their money.

This is interesting. So basically Suze Orman is running an experiment on real people and their money? She’s promising consumers that this debit card is different because they are sharing some information with TransUnion, yet there’s no guarantee it will really work. And even if it would somehow change the way credit reporting is done we won’t know for two years. Now I’m no expert in this area, but it seems like putting the cart before the horse. Rather than experiment with real people, largely those already in a less than stellar financial situation, I’d like to see an agreement in place with the credit bureaus about how they will use the data before just hoping it will make a difference.

From the Approved Card’s website:

As part of this project we are sharing your Approved Card purchase, payment and other transaction information with TransUnion so that they can help us understand the correlation between that information and the information that is currently included in most consumer credit reports. The transaction data we are providing to TransUnion is not attributed or identifiable to you or any other Approved Cardholder.

As you can see, all the data about your spending is completely anonymous. So even if this project did in fact pave the way to new credit reporting standards, none of your spending history tied to this card would ever have an impact on your personal credit because the data they received was not attributed or identifiable to you.

The bottom line is if you’re looking for a way to build a credit history because you don’t otherwise have access to lines of credit you’re much better off going with a secured credit card instead. These work almost exactly the same as this and other prepaid debit cards, and as long as you put money on the card anyone can get one.

Suze Turns on Bloggers

The card itself as outlined above isn’t necessarily good, nor is it incredibly bad. It’s just an odd financial product that has a limited market and makes a few dubious assumptions. The issue some reporters and financial bloggers have taken up is that this card is being put out there by Suze Orman, who has long provided financial advice for the middle class, helped people get out of debt, and make better choices with their money. Obviously, hawking a prepaid debit card stacked with fees, targeting people without a lot of money, and suggesting it may help build credit like never before, has irked a few people and they questioned her motives on blogs and on twitter.

This is where things get ugly. Suze has resorted to name calling. Two personal finance bloggers, PT Money and Briana, have taken the brunt of her insults. You can read many tweets there, but these are the two that sort of stood out:

Many others began jumping in on that discussion last night and it devolved into a bunch of “you’re wrong!” tweets along with links to any article that spoke favorably of the Approved card. Of course, Suze made sure to point out that those articles were written by “legit” reporters, so clearly she doesn’t have any respect for people covering finance unless they work at a major media outlet.

Either way, I found last night’s twitter discussion very uncouth, even for Suze. She is known for her no-nonsense attitude on her show, but what happened here was over the top. She has done a good job of turning some fans off. Think she will come to the 2012 Financial Blogger Conference? Or maybe the Approved Card will be a sponsor. That would be interesting. Of course, we aren’t legit and I’m sure she wouldn’t want to be caught dead being around a few hundred nobodies.

So, what do you think? Either about the card or Suze’s reaction to disagreeing bloggers?

Incoming search terms:

• DebitCards|GenerationXFinance
• colorful prepaid debit cards
• the approved card phone number
• Suzie Orman spokesperson
• suze ormanshows
• suze orman spokesperson
• suze orman show sponsors fico
• suze orman show copy-protected
• suze orman scottrade
• suze orman on chartered retirement planning counselor

Don’t know which actions to watch out for?  Avoid these credit killing mistakes and you will certainly improve your credit score.

1. Late payments

Delaying or skipping a credit card payment will hurt your credit score significantly.  Place yourself in the place of a lender.  If a potential borrower has a history of being late on payments would you want to be lending credit to them?  I know I wouldn’t.  Never skip a bill.  In fact, I recommend automatic bill pay so you never miss a payment.

2. Defaulting

Whether it is a car loan or college loan, defaulting will wreck your credit score.  It’s a very simple concept:  You have agreed to a contact and now you are failing to meet your obligations.  Result?  Default and your credit score plunges and if it’s a secured loan, property may be repossessed in addition.  Lesson?  Manage your money well and always make good on your debt payments. Ultimately, this simply means only borrow what you can afford to pay back.

3. Bankruptcy

With a slumping economy and small businesses going under all around us, bankruptcy is a serious reality for many people.  Unfortunately, bankruptcy has a serious negative impact on your credit score.  You should seek out alternatives to bankruptcy, because it is extremely hard to get your credit score back to where it once was. If bankruptcy seems to be your only option it could be time to look at negotiating your debt or settle some for a lesser amount. While those also aren’t good for your credit it’s better than bankruptcy.

4. One too many in-store credit cards

I know it’s tempting to open store cards for extra discount this time of year, but try to avoid the urge.  Credit agencies will see this as a credit risk and notch your score down.  Even if you pay them off immediately, it can be looked at as a negative in terms of “credit worthiness.”

5. Maxing out a credit card

It might appear to be common sense, but people still do it.  Again, this goes back to what the creditor thinks about your credit worthiness.  Maxing out a credit card is not only foolish, but takes away trust that a creditor has in you.  Avoid this by only spending 25% of your maximum credit limit if you can.

6. Closing credit cards

The length of your credit history is a large percentage of your credit score.  The longer your credit history, the higher your credit score will be.  Avoid closing your oldest card, and only consider closing your most recent cards if you have a reason to close any.

7. Applying for multiple cards

Did you know that each time you apply for a credit card your credit score may be dinged slightly?  If you plan on opening multiple credit cards, try to space them out.  For example, I will only open two cards a year.  I open travel reward cards for the bonus miles, however I keep myself patient and just wait for the next year to open an additional card if a better offer comes around.

8. Charging off an account

If you are regularly very late on payments or start getting too far behind, a lender may “charge off” the account.  Basically, a creditor will charge off your account if they think you have no hope of paying back your debt.  You can avoid this by living within your means and not getting yourself into a bad situation in the first place.

9. Foreclosure

A foreclosure will  also impact your credit score.  A foreclosure shows credit companies that you are not responsible with your money and therefore you deserve a lower credit score.  Avoid this situation by buying only enough house for your needs and stay clear of home equity loans.  Leave the extravagance for your friends.

10. Bad spending habits

This one sneaks up on most people without them realizing it.  The basic rule of thumb on this one is to never spend over 25% of your credit limit on a credit card.  A portion of your credit score is based off of “credit utilization.”  You want to avoid the appearance of irresponsible credit use. Just like having a maxed out card sends a bad message, so does constantly carrying a high balance, even if it isn’t maxed out.

There you go folks, a quick run through some of those most common mistake to avoid when it comes to your credit score.  A credit score is connected to so many things in our lives, so protecting it should be a priority. Even getting that next job may depend on it.

Incoming search terms:

• 10 mistake about your credit scores
• 5 mistakes that kill your credit
• my maxed out small credit card killed my credit score