Credit Card Debt - Consumer Credit Card Relief
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Credit Card Debt

Credit Card Debt

Know the facts

It may be somewhat of a surprise to know that America’s average credit card debt has mounted to over $1 trillion by 2018.  Distributed among 126 million households, this number represents roughly 27% of the total American consumer debt. In response to this overwhelming reality, there are many credit card debt relief programs available to consumers whose goal is to be debt free.

Another interesting stat provided by the National Debt Relief Organization states that individuals with credit card debt have an average balance of over $3,000.  This number increases drastically for American households with credit card debt to more than $8,000. What is more, the average American household debt, including credit card debt, is almost at a  whopping $16,000.

Interest rates further compound the debt scenario.  On average, people with household debts of the above-mentioned size, are paying nearly $1000 in interest every year.  In other words, a significant amount of household debt payments are not significantly lowering the principal on the statement balance, but are paying for interest and fees annually.

There’s a good side to owing money

Sometimes, borrowing money can be a good thing.  One of the advantages of having credit card debt is getting to build up your credit score.  However, this happens when you are diligent in making payments on time. Building up your credit score will, in turn, allow you to be approved for higher credit limits at lower interest rates.  You might need it in the future, especially for buying a home or a car, or any big item. When you have several outstanding credit card balances and still have a high credit score because you have been paying on time, credit card debt consolidation may be feasible at a lower interest rate.

However, credit card debt can be very damaging as well.  If you borrow more than what you can afford to pay back and your monthly payments don’t bring your balance to zero or 30%  and lower than your credit limit on the credit card monthly bill, you might be heading for credit card debt relief. Being a sensible credit card user is, therefore, the way to a better future.  After all, no one wants to carry a wad of cash on hand. Convenience in payment is not the only reason to use a credit card. Purchasing big items, such as TVs and furniture, is possible by using a credit card in cases when there may not be enough cash in the bank account, or you are caught between paychecks.

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Resolving emergency situations constitutes another useful way of using credit cards. In such cases, credit cards are tools that can make a difference in someone’s life.   Credit cards also offer you the opportunity to track your expenses more closely and budget your life according to your means. In addition, when you lose your credit card, it’s not like misplacing a wallet full of cash.  With a simple, promptly made phone call to the credit card issuer your card will be blocked and you won’t have further financial responsibility or lose any money. Likewise, when identity theft occurs, you can see the unusual activity on your credit card, if you are in the good habit of checking it, and by contacting your credit card company, this too will be resolved without any financial responsibility on your part.  In most cases, the most you will pay in case of identity theft or a missing credit card is a $50 fee.

The sinkhole of credit card debt

Just as credit cards are convenient to use, they are also easy to abuse. There is only a thin line between the two.  This makes credit cards out to be like black holes. Once you have an available credit limit, it may be too tempting to hold back. After all, our society appeals to instant gratification tools such as credit cards.  People want what they want, and they want it now! Besides, you don’t have to pay at the time, and this tempting scenario gets many people charging items to their credit card and incrementing their credit card debt beyond their ability to pay off the balance each month.  Alternatively, worse yet, when laid off, or when emergencies occur, people abuse credit cards knowingly due to unexpected circumstances from which they may not be able to recover in a timely manner.

Additionally, credit card companies actively pursue and do a great job of persuading credit card users to continue scaling their credit card spending whether they can afford it or not.   One of the best credit card strategies to attract new users is offering an amazing 0% interest balance transfer card. Flocking towards this appealing lure, it is easy to increment credit card debt.  But many are unable to pay the skyrocketing interest rate once the 0% rate period disappears leaving a hefty balance to be paid at an ultra-high interest rate.

Other strategically planned credit card propoundments come in the form of reward points, airline miles, and cash-back rewards for using credit cards in your daily life.  Before getting excited about these offers, it is recommended that credit card users read the small print and do the math. A classic example of this is when you fall for the 2% cash back reward gimmick which is not more than 2 cents per dollar.  Realistically speaking, you’d have to spend $1000 to earn $20. So far so good, but how about the interest on the $1000? If you are paying 15% interest, for example, then the $20 earnings will be nullified.

Credit card debt relief

Not all credit card debt is a consequence of fickle consumer overspending.  Sometimes, when people don’t have another alternative, families are caught between a rock and a hard place having to pay for basic needs like food and medicine in situations beyond their control.  It may be due to a crunch that arises in between paychecks, or due to recessionary measures at the workplace. In such cases, many people resort to credit card debt in order to resolve a survival situation and overcome difficulties at a given time.

Whatever the case, taking responsibility for your credit card debt situation is the first step to recovery.  There are many credit card relief options available for consumers who make it their priority to be debt free. Credit card debt consolidation is one such alternative that may work in your favor.  It consists in acquiring a new debt that will allow you to pay off the rest. The trick is being able to secure a low enough interest rate for this option to be viable and affordable. In many cases, equity loans based on asset worthiness are approved at the lowest rates.  Research your options and do the math, first and foremost. Credit card debt consolidation is a debt relief option that can help you manifest a debt-free reality.