Credit Card Debt
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www.personalfinancebudgeting.org
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Credit cards rule our lives. That’s a fact. It is so convenient to purchase goods and services on credit that you don’t even think about the dept you are incurring. Suddenly it starts to burn your pocket and you face the reality – credit card debt.
As any other financial product, credit card idea is pretty simple – a bank is lending you money for your purchases. And as any other loan there is an interest rate. So at the end you will pay off more than you have spent.
For some of us credit card debt has already become a serious issue. A good starting point is to educate yourself a bit before taking any action. You can hire a financial specialist to take you out of the debt swamp however financial services are quite expensive. Search the web for credit card debt articles and forums. There are specialized financial discussion groups where you can find a free advice from a financial savvy.
Here are a few tips about how to overcome credit card debt (and hopefully never be in this situation again).
Stop using your credit cards.
Ask your bank for lower interest rate. It’s a blind shot but sometimes it works.
Ask your credit card company for a special repayment plan. Most financial institutions have such schemes for customers experiencing financial difficulties.
Pay off the balance with the highest interest rate first.
Consider debt consolidation - combine your debts onto one of your cards with the lowest interest rate.
Apply for a credit card with zero annual interest rate and transfer your balance. It will not fix the problem but at least will help to reduce the debt amount.
If you have savings use them to pay off you debt. The interest rate on your savings is lower than the interest rate on your debt so this might be a wise move.
Ask your family or friend for a loan.
Get a home equity loan – normally the interest rates of home equity loans are lower than credit card interest rates.
File bankruptcy – if you really don’t see light at the end of the tunnel. You may escape paying off huge debts this time but bankruptcy will leave a serious stain in your credit history.
Finally a few simple tips that will help you not to be in credit card debt situation again:
Do not overextend. Keep track of your expenses to see where your money is going and how much you can afford to spend. The rule is simple – spend less than you earn.
Reduce the number of your credit cards – gain better control on your finances and better credit history.
Try to pay off your balance every moth.
Pay more than the minimum – this will only increase bank’s profits and your chances to fall into the debt trap. Pay as much as you can instead even if it’s just $100 more.
Check your bank statements regularly and with attention to detail.
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