How Much Interest Am I Paying Every Month?: Introduction

From my experience, how much interest am I paying every month is a question that nobody asks themselves. We’ve become a society based on credit. We have multiple credit cards, lines of credit, mortgages, car loans, student loans…

If I asked you how much interest you were paying each month I’d be willing to bet that not a single person could give me a correct answer. A monthly statement arrives either in the mail or electronically or an automatic payment comes out of your bank account or billed to your credit card. If you’re like most people the two things you see on a statement are the amount owing and the due date.

How Much Interest Am I Paying Every Month?: Start With Credit Cards

I think you’d be totally shocked at the amount of interest you’re paying each month, especially on high interest debt like credit cards. According to Capital Direct if you carry a balance of $8,000 on your credit card:

Your statement will show a minimum payment of $240. That may not seem like a big deal but did you know that if you pay the monthly minimum each month at an interest rate of 18.9%, it will take you 4 years to pay off the debt?
During this period you will pay $3,461 in interest charges.
The $8,000 debt will end up costing you $11,461.

How Much Interest Am I Paying Every Month?: How You Can Find Out

If you look at your credit card statement there will be a section that looks like this:

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This is the area of your credit card statement that everyone ignores. By focusing on this area, it will allow you to calculate the amount and answer the question “how much interest do I pay every month”

How Much Interest Am I Paying Every Month?: The Bizarre Truth

According to TransUnion:

Credit card delinquency rates jumped 14% year-over-year from 1.81% in the first quarter of 2015 to 2.06% in the first quarter of 2016.
Subprime borrowing is up. Subprime borrowers pay a higher interest rate because they have a poor credit history.
The average monthly balance for subprime credit card borrowers rose 5.7% to $6,601 in the first quarter.

How Much Interest Am I Paying Every Month?: What to do if you have too much high interest debt

Don’t get trapped in the cycle of high interest debt. The Ira Smith Team is here to help. With immediate action and a solid financial plan you can get escape the high interest debt cycle Starting Over, Starting Now. Give us a call today. You’ll be happy you did.

9 out of 10

9 out of 10 Canadians do not have a debt to CRA because they pay their taxes on time. Beginning in February every year, people who not only have too much debt on their credit cards right after the Holidays, but they also owe income taxes, consult us.

We have written on the topic before, including:

Their cute animated video

Do you have a debt to tax authorities? Do you owe taxes or other government amounts like overdue student loans, or EI and CPP overpayments? If so, the Canada Revenue Agency says it wants to help you get back on track. They tell you that paying what you owe to them is easier than ever with a variety of online payment alternatives. And if you can’t offer the full amount right off, they tell you that they can work with you to set up a payment plan that would allow you to make payments over a term.

Michael’s nice story

The tax collectors then tell you a nice story. Take Michael for instance. He has an indebtedness with and he can’t pay the full amount right now. On their website, he was able to set up a monthly pay plan to pay his debt to them. Michael was also happy to pay interest on his debt to CRA until it’s paid off.

This is such a nice sounding story. However, based on the people who consult with us over their debt to CRA, it ignores the fact that people with too much debt do not have the money to pay off their debt to CRA and their other debts. The people who consult with us want to pay off their debt to CRA, but can’t. Life has gotten in their way!

The real story

If you owe money to the CRA and you’ve been contacted by the CRA about it, collection acts could be underway. Shunning your indebtedness will not make it easier for you. By working together with the CRA as early as possible, you can hopefully avoid legal and monetary penalties.

However, there are issues in dealing with CRA directly and pitfalls to avoid. Here is our top list of things to be aware of:

The CRA collector does not have the authority to agree to accept a lesser amount than what you owe. The collector can only agree to you’re paying off 100% of the tax, penalty and interest you owe.
The CRA collector will be looking for you to pay off the full amount in a relatively short period of time; say, 6 months.
The CRA collector has a lot of information t his or her fingertips. After all, you have provided CRA with very personal information for many years!
The CRA collector will try to get updated financial information from you such as the identification of your bank accounts, current employment, do you own or rent, if you own, what mortgages are against your property. The reason for this is so that if you fail to reach a payment plan, or default on your payment plan, then they will try to garnish and seize your cash, wages and other assets. It is a lot easier for them to do so when you have already told them where to look!

What should you do if you have too much debt?

So if you can’t get some peace of mind by joining the 9 out of 10 Canadians who sleep easy knowing that their taxes are in order and their tax indebtedness has been paid – contact us. The Ira Smith Team has helped many individuals and corporations avoid bankruptcy and settle their debt to CRA for less than the full amount owing. Here is a little known secret – the only way CRA will accept less than 100% is if you are working with a professional licensed insolvency trustee in a debt restructuring proposal.

Starting Over, Starting Now, we can help you get squared away with CRA and return you to living a productive stress-free life. Call us today for our free consultation.