Related Consumer Finance Programs - The following lists of companies and financial service providers offer services to assist you with handling your debts. Combine debt with a consolidation loan or use a credit counseling or debt relief program for help with lowering your payments and getting your credit card bills and other obligations under control.
- Debt Management Credit Counseling - Too many credit bills for you to handle with your budget? Compare different programs and find the one that is the right match for your individual situation.
- Debt Settlement Service - If you have too many credit cards and other small debts and are unable to make your payments, this form of debt negotiation may be right for you.
- Personal Loan Financing - This type of lending is most often structured as an unsecured debt. This means your personal property or house will not used as collateral. Your approval (or denial) will usually be based upon your payment / credit history and your ability to repay the loan. This type of credit is also often called a signature loan.
Start Smart: Money Management for Teens
Small Payments Can Mean Big Costs When Borrowing
Here's a situation you won't encounter for a few years, but it's never too early to begin learning how credit (borrowing) works. The main message is this: The longer you take to pay back what you owe on a credit card or loan, the more you'll pay the lender in interest charges. In particular, if you use a credit card to make a major purchase and you only pay back a little of what you owe each month, "it will take you a very long time to pay off the balance, and the interest costs can be shocking," according to Janet Kincaid, FDIC Senior Consumer Affairs Officer.
The chart below shows what an expensive purchase will really cost you if you charge it and only pay back the minimum amount due each month, which may be something like $20 or $30. In this example, a $500 stereo would end up costing you about $900 when you figure in the total interest you'd pay, and a $1,000 computer would set you back more than $2,100. If you instead pay back as much as you can each month—the entire balance, if possible—you can really limit interest charges.
| Item | Purchase Price | Years to Pay Off With Minimum Monthly Payments |
Total Interest Paid | Total Cost |
|---|---|---|---|---|
| Stereo | $500 | 7 | $367 | $867 |
| Computer | $1,000 | 13 | $1,129 | $2,129 |
| Note: Years are rounded to the nearest whole year. These examples assume an interest rate (Annual Percentage Rate) of 18 percent and a minimum monthly payment of the interest due plus one percent of the outstanding balance owed. | ||||
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Summer 2006 |
Getting a Loan: A Responsibility to Be Taken Seriously | |
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Last updated on 8/18/2006