17 Feb Americans max out their credit cards! How to avoid the debt trap
A majority of United States consumers have multiple credit cards. Credit cards have become the go-to financial tool to fill gaps in the household budget. The cost of living increases each year, but unfortunately, most workers do not see their wages increase enough to be able to offset those losses. Many households rely on credit cards to help pay for everyday expenses such as groceries, utilities, clothing, and fuel for their cars. 1 in 3 consumers fears that they will max out a credit card. Here are some tips to tackle your credit card debt.
Begin with Performing an Audit of Your Monthly Expenses
Some people do not know what they spend on a daily basis because they are swiping their credit and debit cards frequently each week. Compile all of your bank, credit card, and other financial statements and make a list of each transaction so that you can see where and how you spend your money so that cuts can be made.
Contact Your Creditors Directly for Assistance
When you have a lot of credit card debt and you fall behind on your payments, you can reach out to your creditors and inquire about any programs that they have for people in your situation. You can stop incurring late fees, reduce your interest rate to zero percent on a temporary basis and even have some late fees waived for your participation in the program.
Consider Credit Card Debt Consolidation As a Solution
Credit card debt consolidation can be a great resource for people who are deep in debt and might max out a credit card. Many people reach the end of their credit lines quickly because they can’t meet their monthly bill requirements. When you consolidate credit card debt professionals will negotiate & combine all your credit card debt into one personal loan and then pay it off. This can help you because the interest rate is often lower than the interest rates that you were paying on your credit cards.
An additional benefit of consolidating your credit card debt is that you have one monthly loan payment instead of multiple credit card payments to keep track of each month. You will also be able to focus more attention on paying off your credit card debt if you stop incurring additional expenses.
Meet with a Financial Advisor for Help
Some people really struggle with mapping out their personal finances. This can lead you to take on a lot of credit card debt. You should reach out to a financial advisor who can meet with you to discuss your financial goals so that they can plot out a course for your financial future.
Get Help with Credit Card Debt from Professionals
There are companies out there that can help you tackle your credit card debt. These professionals will reach out to your creditors on your behalf to come up with a credit card debt settlement or repayment plan so that you can repair your credit history. Credit card debt relief can take time so be prepared for a marathon, not a sprint. You will need to make changes in the way that you handle your credit card debt. One great company to seek out these services can be found here
Ask for a Credit Card Debt Settlement
If you know that you have a credit card that you cannot afford to pay off in full then consider a credit card debt settlement. You can settle credit card debt for less than the outstanding balance. For example, you might offer to pay the creditor 60% of the total debt owed. This can be appealing to your creditors because they are getting money from you in a lump sum.
Create a Budget to Achieve Credit Card Debt Relief
An itemized monthly household budget can be a lifesaver for you so that you can live according to your means. If you live paycheck to paycheck then you need to wean yourself off of relying on credit cards to make ends meet. You should start out slowly, for example, cut down on eating out or clothing expenses. You will slowly see that savings begin to add up over time. Credit card debt is something that most people have. This can lead you to become complacent; This is the wrong mindset to have. You want to pay off your debt so that you can have a high credit score.
Reach Out to Your Loved Ones for Help with Credit Card Debt
If you are struggling with a sudden drop in your income or have medical issues, then you should reach out to your loved ones to see if they can help you stay on top of your finances. If you struggle with keeping things organized then it can be helpful to have someone to reach out to you for advice.
Examine Your Credit Score Each Month to Monitor Your Progress
You can signup to receive weekly or monthly alerts regarding your credit score. This can help you track the changes that are being made to your credit report as you pay down your debt. You want your credit score to be at least 650 or higher. This can save you a lot of money on interest fees if you decide to take out a mortgage or other type of loan down the road. Most people fail to recognize how credit card debt can change their lives. You may be denied from renting or owning a home. You can also struggle to take out a car loan or even get a cell phone plan.
Your credit report says a lot about you and how responsible you have been with your finances. You want to make a good first impression on potential creditors so always spend your money wisely and make your monthly bill payments on time. This will help to ensure that you have the brightest financial future possible.